In this lesson we discuss about the industry specifications in the life science sector, customer personas, and prevalent business models within the industry.
Before we explore innovative business models, let's first identify the key drivers behind their emergence.
The industry is witnessing several trends, but two stand out prominently.
The first trend is the exponential growth and understanding of the genome. We now comprehend DNA processes at an unprecedented level, enabling us to target specific diseases precisely. Once we understand the disease state and the target, we can begin to develop personalized treatments or therapeutics, giving rise to the concept of personalized medicine.
On the other side is the idea that hospital costs are escalating, and many would say they're out of control. While there are many reasons for this, one of the reasons is the cost to deliver personalized care. What ends up happening is that pharma and med device companies are having to preserve their market share. And for them to do that, they must start bearing risk for those personalized treatments with the person who is delivering it, the doctor or the hospital.
The key to this whole program lies in striking a balance between risk-sharing and personalized care, which is crucial in shaping the new business models.
The video describes risk-sharing in healthcare, focusing on new business models, personalized treatments, fixed payments, and the collaborative roles of hospitals, doctors, life sciences, insurers, and patients.
We are beginning to observe the implementation of risk-sharing agreements in various regions, including the U.S. and other parts of the world. In SAP terminology, this aligns with the concept of the outcome-based economy.
In the healthcare sector, this approach is central to value-based care and serves as the foundation for these innovative business models.
Let's examine a current real-life example from the U.S. involving an orthopedic vendor and hospitals.
In this case, the orthopedic vendor guarantees that if the hospital uses its robot for knee surgery, along with its devices and treatment protocol, the total cost of the surgery will not exceed the Medicare reimbursement rates.
This arrangement is a win-win situation. The hospital not only reduces costs and paperwork, but also shares the risk and gains access to competitive product pricing from a single source vendor. Meanwhile, the vendor secures an exclusive supplier relationship, blocks competitors, and gains better insight into the activities of each account.
Lesson Summary
- Genome: The exponential growth in genome understanding allows precise disease targeting and personalized medicine progress.
- Costs: Escalating healthcare costs drive the need for personalized care.
- Risk: Pharma and med device companies must share risk to maintain market share.
- Balance: Balancing risk-sharing and personalized care shapes new business models.
- Value-Based Care: Risk-sharing agreements, aligned with outcome-based economy, central to healthcare value-based care.
- Example: Orthopedic vendor and hospitals’ risk-sharing agreement improves cost management and competitive pricing.