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Therapeutic Resource Centers

We introduced a product called Therapeutic Resource Center at Medco in 2007/8. It was an extremely innovative product that was soon copied by most of our competitors. 

Here’s a brief history of how we developed this product. 

Medco consisted of two main businesses – the PBM business which basically was adjudication of a patient’s drug benefit – which drugs would be covered, what would be on the formulary, copay a patient had to cover out of pocket when filling a prescription, how much would a pharmacy be paid, what would we bill a payer for this transaction; the second was the mail order pharmacy dispensing business. Here we asked patients on maintenance medications, to fill their prescription at mail order. A patient would request their doctor to send their prescription to our MO pharmacy. We would then fill a 90 day prescription for the same copay as a retail pharmacy for a 30 day prescription.

In 2006, we were at about 100MM prescriptions at mail order and about 765MM POS adjudications annually. To drive efficiencies, we digitized incoming Rx’s to route them to the closest mail order pharmacy location for dispensing in the most cost effective  way – so a patient on the west coast had their fill done from Las Vegas while a patient on the east coast would have our pharmacy in Tampa or Willingboro fulfill their order. 

Once we had the ability to digitize Rx’s, we were also able to group, sort or route to the most efficient way of doing business. We had the same ability with customer service phone calls coming in – recognizing the ANI allowed us to know who was calling and whether they had an order with our pharmacy. 

Since we also had a lot of patient data (Rx, medical claims etc.), we could stratify the patient population into various disease conditions, and if we used this stratification in routing prescriptions or calls, we had the ability to route all diabetics to a group of pharmacists that specialized in diabetes, or for neuropsych patients to the neuropsych TRC. Similarly we created the Cardiovascular, Oncology, Specialty and Women’s Health TRCs.   

We then discovered that our interactions with the patients were a lot more meaningful, with our pharmacists and CS representatives becoming trusted advisors to these patients. It also meant that we were able to keep patients more adherant on taking their prescriptions as well as intervene on behalf of the patients to request a gap in care intervention when we saw a missing therapy or course of actions. 

Using actuarial data, we were able to establish that while this intervention was more expensive than our regular cost effective dispensing and customer service operations, we were also able to improve patient health, bend the healthcare cost curve, reduce the adverse drug events and also introduce some new genetic testing as means of either avoiding certain treatments (using a genetic test (Abnormal CYP2D6 enzyme) before prescribing Tamoxifen for Breast Cancer treatments) or adjusting the dosage on some really poisonous ones (introducing genetic tests to regulate their dosage when a patient was first prescribed warfarin (a blood thinner)).

Given that our interventions were this effective and we had data to prove it, we introduced a product called TRC in 2007, which would entitle a client’s patients to our interventions, in return for a larger mail order penetration that drove our margins on the mail order side. This really helped both improve our margins as well as improve patient care.  

Medco’s Product’s & Services:

Therapeutic Resource Center Business Model:

The above context diagram describes how our product worked, please do reach out if there are questions regarding how we designed this.

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Healthcare Value Chain Innovation? An alternative model

What is ailing the healthcare market? Why do we(Americans) pay higher per capita for treating a disease condition? Is it just because we have access to the most innovative solutions? Do we have misaligned incentives? Is all the work that is done in the healthcare value chain value added work? Or are we classifying busy work as value add when all it’s doing is to sustain an over complicated system that existing players have an incentive to maintain.
Let’s talk about what ails healthcare. Why is it fundamentally a different kind of product? Why do the normal rules of market competition and capitalism not apply here?
  1. When someone needs acute treatment, the consumer usually does not have the time to shop around. For e.g. when a patient is in an ambulance for being treated for a heart attack – its not the time he/she checks the scores for the nearby hospitals about how cost effective they are or whether they provide value for money.
  2. It appears to be a zero sum competition – In which gains of one system participant come at the expense of others. This kind of competition does not create value for patients, but erodes quality, limits access, fosters inefficiency, creates excess capacity, drives up administrative costs among other nefarious effects. Why can providers of diabetes meters and wheel chairs advertise to the Medicare eligible patient community offering free stuff at Medicare’s expense. Why does CMS not have the ability to negotiate rates for common services given the volume it commands?
  3. Who is the consumer and who is actually making the decision on consumption? Healthcare products are not ordered by end consumers – Orders by workers on the frontline of healthcare delivery such as physicians, nurses and so on. Purchasing is thus not an organizational competence, let alone a core competence but rather the domain of non-business people.
  4. The provider industry is largely based on non profit ownership – No real emphasis on budgeting, process improvement or IT optimization. Also since a large portion of provider revenues flow from federal and state governments, some believe that providers have developed a welfare mentality rather than strong profit and loss mindset.
  5. Fragmented Industry – Despite consolidation, it is still a fragmented industry with no real leadership at any stage. Fragmentation complicates the task of connecting thousands of parties involved at each stage in the chain, and standardizing the format and content of their business transactions.
  6. Providers made investments in patient care rather than technology –  Procurement and other functions are based in dated legacy systems with little direct connectivity with manufacturers. Product master catalogs are often paper based, and their contents (product descriptions, prices) typically differ across players in the chain due to time lags in relaying and uploading new product and contract information.
  7. Treating the value chain as a supply chain and the focus of manufacturers on creating demand for a product using a push model rather than a pull model.
  8. Lack of transparency through negotiated contracts, pricing agreements and no easy way for a patient to tell what a healthcare product should actually cost.
Let’s imagine alternate models – one based on capitalism and competition (but unfettered and unconstrained). Another socialist but efficient universal healthcare.
To choose we must define what our core principles are as a society – do we consider healthcare a “right” or a “privilege”.
If it’s a privilege then why do we insist on the Hippocratic Oath – why can’t emergency rooms turn away dying patients unless they can pay upfront?
If it’s a right, then why should we not use the most efficient way delivering and  paying for healthcare? From a payment perspective, having a single payer for basic services is probably the most efficient, given the benefits of scale.
A combination of the two may be best suited for us – where basic healthcare and pursuit of the Hippocratic oath may be a base guarantee by the government (basic healthcare as a right), while add ons are optional and at the patient’s discretion for which they can choose to procure insurance – for e.g.  the type of room or facility you check into when being admitted for a procedure. Or the choice of a certain brand of a product that may be above and beyond what basic coverage is available for free.
Also allow for vertical integration across the value chain and let larger end to end entities compete. Remove the incentive of manufacturers to push product, instead they become a part of competing value chains they may compete in treatment levels that are simple, standard or complex.
In addition, the following steps should help make our healthcare delivery systems effective, efficient and outcome based for the patient.
  1. Establish the right (and mutually agreed upon) objectives for each player in the market.
  2. Simplify the market, regulations and system to only allow value added activities rather than the labyrinth of activities in current state for e.g. managing rebates, claw backs, pay backs as a way of keeping incentives for all players in line.
  3. Build transparency and an easy objective way of comparing value.
  4. Move from a manufacturing supply chain to a value chain way of operating.
  5. Analyze 3 critical flows – product, money and information for driving towards efficiency.
  6. Set up profit incentives for all players to become efficient and effective in their operations.
This is an extremely complicated topic and two of the books that have greatly influenced my thinking are Redefining Healthcare by Michael Porter and Elizabeth Teisberg and Healthcare Value Chains: Producers, Purchasers and Providers by Lawton R Burns at Wharton in addition to my own experience navigating this space in various roles at a PBM.
There may not be a silver bullet, but through debate, discussion and action we could move our healthcare system to a place where it delivers for its main beneficiary – “The Patient”.
Happy to receive feedback and look forward to a meaningful dialog…
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Difference in motivating your team – healthcare vs. finance

You may need different techniques for motivating your team in healthcare and finance domains. Here’s some experience from the field.

In the Healthcare domain, when I was running projects in the field – we were able to connect the project outcomes to a patient’s health. For e.g. on a project where we were automating information collection (using a tablet coupled with a workflow tool – filenet) for a nurse visit for a patient infusion – we could correlate the accuracy of the data collection and the subsequent real time interventions we predicted to a reduction in ADE (Adverse Drug Events). It was certainly very motivating for the team to link the project outcomes to better patient health and the ability to save a life.

On another project “Therapeutic Resource Centers (TRC)” – this was similar to organizing our pharmacy and call center staff in a cluster of different cells specializing in a certain disease condition like cardiovascular or diabetes or neuro-psych or specialty. We were able to use a patient’s prescription history and medical claims to stratify them to a TRC. Once we achieved this, for any inbound contact from the patient for either a prescription or a phone call, we were able to route them to our appropriate therapeutic resource center cell. This resulted in a much more meaningful conversation with the patient regarding their health including conversations about adherence and gaps in therapy that had a direct impact on patient health. We were then able to use actuarial studies to prove the value of this model and introduced innovative products in the market to drive mail order dispensing at a much higher rate within our drug benefit plans to employers and health plans while promising for an overall reduction in healthcare spend and patient health.

In the finance domain its a lot harder to connect the outcomes of your projects to a fulfilling objective like patient health. Instead I have used a couple of different techniques to motivate my teams –

Close engagement with the business working with the regulators to understand the impact of their work. For example when we ran the risk ranking project, what motivated the team was their working very closely with the business in being able to visualize our regulatory rules and to be able to easily explain why we arrived at the result we had. What was motivating was also the fact that my team had come up with a way of visualizing the rules, that the business had not experienced before. We also were able to provide a complete audit history of how the risk ranking had changed over time by using a bi-temporal model to store our evaluation results and reason codes and the change in which client characteristics led to our evaluation of a different risk metric for the client. The business was a lot more comfortable in our annual sign offs after this visualization of the rules and audit records being available when ever we needed them for a regulatory audit.

A second way that I have used for motivating my team is being able to tie in the flexibility of our systems to the rapid changes in the regulatory landscape. Once we have a good design in place – that was able to extract our business rules out of the bowels of a program, these became a lot more accessible to change outside of the usual code release window. We were able to change our rules using a separate change cycle as opposed to our regular monthly or quarterly code release cycle – and be able to change things like high risk jurisdiction countries at a much faster pace (as needed and approved by the business). Being able to tie in our design to reduction of capital needed for our projects and also having to avoid the rapid code changes into production for every rule change definitely helped team morale as they were not constantly supporting emergency changes related to a rapidly changing regulatory landscape.