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Health Care Communications Agencies Respond to Managed Care

Diane Breault

When health care reform and managed care catapulted to prominence in the early 1990s, health care communications agencies were worried. For decades, the success of these firms depended on established and proven strategies for delivering the pharmaceutical manufacturers' messages to one audience: the all-empowered physicians.

All of a sudden, or so it seemed, health care communications agencies faced a new situation: the growing power of managed care organizations (MCOs). They feared that this new force would dramatically and fundamentally alter their businesses. Anticipating restrictive drug policies, tightly enforced formularies, and greatly diminished physician prescribing authority, agencies rushed to court the managed care decision makers.

Now, with nearly a decade of experience, health care communications agencies have discovered that the emergence of managed care as a dominant force in the health care delivery system has required them to change, but it has not provoked the profound transformation initially anticipated. It has made managed care an important audience, but physicians have retained significant power and control. In addition, health care communications agencies and all stakeholders in the health care delivery system have begun to realize the powerful influence of the customer-that is, the patient. Overall, health care communications agencies have had to fundamentally re-think their communications philosophy. The result has been a shift in customer focus and a change in approach to message delivery.

Traditional Health Care Communications Strategies

Pharmaceutical manufacturers use the services of health care communications firms to help develop customer-specific messages and to communicate those messages to targeted audiences. Health care communications agencies use myriad channels. The most obvious and visible communication vehicles are pharmaceutical advertisements in professional journals and promotional literature. Other channels include medical education (to both health care professionals and patients), public relations, and, more recently, consumer-directed advertising.

Health care communications agencies historically targeted the preponderance of their pharmaceutical marketing toward physicians. Time and again, influencing physicians' prescribing habits has altered the course of a product's sales.

Historically, the health care communications firms were tremendously successful in promoting pharmaceuticals to the physician, the only health care professional with the actual power of the prescription pad. They understood the physician psyche; they knew how to deliver a compelling message and, ultimately, how to motivate the physician to put pen to paper. The drug decision process was straightforward (see Figure 1).

The Rush To Managed Care

As managed care practices, particularly the establishment of a formulary, became more widespread in the early 1990s, health care communications firms rushed to shift their focus away from physicians to managed care decision makers. The pendulum swung hard and fast.

The first task at hand for the health care communications agencies was to understand managed care-what it was, how it worked, who controlled it. Different agencies took various approaches to acquiring this knowledge. Some ap-pointed existing staff to become "experts" in managed care. Others hired experts with actual managed care experience from the customer side. Still other agencies formed strategic alliances with managed care consultants and continue to utilize them on an ongoing basis.

No matter what the approach, agencies learned that the managed care audience was completely different from the physician audience. A cadre of customers existed within the MCO, each with their individual role and influence on the drug approval process. More confusing still, while managed care organizations appeared to have similar organizational structures-a pharmacy and therapeutics (P&T) committee, formulary approval process, contracting procedure-each was subtly different. For example, many P&T committees contain plan administrators, quality managers, CEOs, and attorneys, as well as medical and pharmacy staff. Presentations to the P&T committee must balance clinical and nonclinical considerations.

With the marketing focus on managed care decision makers, the goal was to get the drug on formulary. Unfortunately, while this was a reasonable objective, achieving this goal alone did not drive market share. Formularies range from very restrictive to wide open. Even when the formularies were restricted or closed, few MCOs were actually able to enforce them.

The degree of control the MCO exerts over its physicians varies widely. Some variations are due to differences in the way the MCOs are organized (e.g., depending on model type). And within each model type regional variations exist. All in all, the drug decision process became vastly more complicated and time-consuming. (see Figure 2).

Finally, physicians who belonged to multiple MCOs were confused by conflicting formularies and determined not to acquiesce. Instead, they accepted whatever penalty, financial or otherwise, was imposed for prescribing outside the formulary. Therefore, in addition to gaining formulary access, traditional physician pull-through still was required in order to drive market share of a drug.

Redefining the Customer

"The marketing approach in managed care requires inclusion of all decision makers and influencers, from the prescribing physician to the ultimate consumer. The message should be consistent and address both clinical and economic considerations," says Rick Rutter, president of The GMR Group, a managed care consulting firm in Fort Washington, Pennsylvania.

Health care communications agencies adjusted their strategies again, striving to meet the needs of the managed care audience. Rather than compete on price alone for the coveted preferred position on a managed care formulary, the pharmaceutical and health care communications industries sought to provide value-added programs. They didn't always offer successful ones.

For example, computer-driven programs were introduced to managed care, only to find that most organizations did not have the integrated data systems required to implement them. It became apparent that research and input were needed in order to develop and implement programs that would truly add value.

The message from the managed care customers was heard loud and clear: they were not interested in participating in programs designed merely to promote drugs. If the pharmaceutical industry was indeed committed to a partnership with managed care, it would have to assist MCOs by addressing their priorities and helping them accomplish their business goals.

Research indicated that a single approach did not meet the needs of all MCOs. Each organization has unique characteristics in terms of level of managed care involvement, such as member demographics, model type, regional variation, and data management capabilities. These need to be considered in the development of any program or service. The goal is to create flexible programs that can be customized to meet the needs of the individual customer.

While differences exist, most MCOs share some common objectives: to gain and retain membership, to increase profitability while providing quality care, and to obtain and maintain National Committee on Quality Assurance accreditation. Interestingly, a common thread among these goals is patient satisfaction.

For the MCO, the customers are defined as the employer group (the ultimate payor of health care benefits) and the individual patient. Employers, especially the larger, self-funded companies, armed with multiple benefits consultants and HEDIS (Health Plan Employer Data and Information Set) guidelines, are demanding a higher level of service from their managed care providers. Likewise, patients have become educated health care consumers with increasing demands and expectations from the health care system.

The pharmaceutical and health care communications industries have embraced customer satisfaction as an opportunity to work with MCOs in achieving their business goals.

The Patient is the Customer

The health care industry is distinguished as one of the last business segments to acknowledge the influence of the consumer and the importance of customer satisfaction. Ironically, managed care itself assumes a certain accountability for empowering the patient. It has forced patients, partly in defense, to assume responsibility for their own health care. Patients have unprecedented quantities of medical- and health-related information available to them, while at the same time, due to constraints imposed by managed care, physicians have less time per office visit to spend with the patient.

Ultimately, however, the success of both the MCO and the managed care-affiliated physician hinges on membership growth and patient loyalty. "One goal unifies and ultimately motivates all stakeholders-the patient's perception of the quality of care received and the outcome of care on his or her health status. Patient satisfaction means positive results for every stakeholder," according to Bob Muratore, CEO and president of KPR, a health care communications agency in New York City (see Figure 3). "First, we must understand the patient perceptions and expectations regarding treatment and outcome. Only then can we determine how each stakeholder can satisfy this expectation and target each stakeholder accordingly."

Each stakeholder in the health care delivery system must assume responsibility for its respective aspect of patient care, giving rise to a total treatment management approach. The fundamental premise of this approach is that only when all stakeholders are working in cooperation, communicating with the patient and with each other, will optimum treatment be delivered, desired outcome achieved, and patient satisfaction realized.

This notion that patient satisfaction is tantamount to success for all stakeholders has set the pendulum swinging again, in search of yet another new equilibrium.

Direct-to-Consumer Seemingly at Odds with Managed Care

The power embodied in the patient has led to a burgeoning phenomenon in the industry: direct-to-consumer advertising (DTC). The potential exists for DTC campaigns to place the pharmaceutical industry in direct opposition to managed care. DTC advertising seeks to drive brand-specific demand, while MCOs attempt to control drug costs through the use of formularies.

"There is bound to be some natural tension in the relationship between managed care and pharmaceutical manufacturers," says Paul Klein, senior vice president and a consumer market specialist at KPR. "DTC shouldn't serve to heighten this, or otherwise strain the relationship. DTC is all about communication-better communication among the stakeholders needs to be part of the equation. Positive value is created by increasing patient awareness of disease-recognition of symptoms, need to treat and to comply-helping to avoid future health care costs."

MCOs have, for the most part, exhibited a negative reaction to consumer-directed advertising. They may have some cause. In some instances, because there was no advance announcement of upcoming DTC campaigns, MCOs and their physicians were caught unprepared for the barrage of patient-generated requests. In other cases, particularly successful campaigns have caused unanticipated increases in the pharmacy budget.

Pharmaceutical and health care communications industries have learned that a DTC strategy can backfire. The MCO may retaliate by deliberately blocking formulary access to the DTC-advertised drug and may also stonewall the manufacturer's other products. Likewise, the MCO is not immune to the influence of the manufacturer. By denying coverage of a customer-requested drug, a managed care organization jeopardizes patient satisfaction.

Nevertheless, DTC advertising has proven to be an effective marketing tool. To work effectively within the stakeholder matrix and to accomplish the mutual goal of satisfying the patient, pharmaceutical and health care communications industries need to coordinate DTC initiatives with managed care, allowing and encouraging different organizations to have input in the planning process. In turn, MCOs must be willing to acknowledge the benefit to the consumer in having greater information and choice.

The Future Will Focus on The Patient

Managed care has had a definite impact on the business of pharmaceutical marketing, contributing in no small way to the emergence of new communications philosophies. But as the focus of all health care stakeholders turns increasingly toward the patient, pharmaceutical marketing is likely to have an equal, if not greater, impact on managed health care. Unquestionably, the health care delivery system will continue to evolve. A trend toward more restrictive formularies is predicted, as is a trend toward greater use of consumer-directed advertising. Ultimately, the success of pharmaceutical and health care communications industries will depend on their ability to work cooperatively with MCOs to achieve improved treatment and outcomes for the ultimate customer: the patient.

Copyright � 1998, Academy of Managed Care Pharmacy, Inc. All rights reserved.