Outcomes-based payment models
Increased cost pressures are forcing a systematic reduction in the prices that are negotiated with life sciences companies for both new and existing medicines.
What EY can do for you
Health care systems around the world are fast reaching, or already at, a breaking point and struggling to balance the multitude of demands on their limited resources. Historically, health care has been paid for based on volume rather than value and outcomes.
Outcomes-based contracting (OBC) offers a different approach to tackling these challenges and is increasingly seen as a viable, and perhaps the only sustainable, way of aligning payment to value. This in turn incentivizes and enables greater efficiency and effectiveness across the system.
EY methodology enables you to transition to outcomes-based payment models, leveraging tactics such as outcomes-based contracts.
Our two-stage approach:
- Stage 1: Strategic assessment will help you define your outcomes and service strategy.
- Stage 2: Leveraging our cross-service line capabilities and collaborators, we help manage the end-to-end contracting process to facilitate pay based on outcomes and to demonstrate the value achieved from the medicine.
While many have been experimenting with OBC, few have managed to scale and exploit its full potential, which represents a huge opportunity. To get started, there are some critical “get rights”:
- Strong leadership commitment: OBC has the potential to be a strategic imperative for your business and may influence your long-term success. However, winning in this new world requires investment in new capabilities, and the vision and conviction to fundamentally transform how you operate while balancing short-term priorities.
- Change in your perspective of risk: By its very nature, OBCs can seem risky, but it is essential to not create contracts without downside risk. This destroys trust and goes against what you are trying to achieve. A meaningful and appropriate amount of risk and reward needs to be built in.
- Essential services: Services can help maximize outcomes and therefore guard against not achieving them. OBC provides the opportunity to reassess and rationalize your broader services strategy to focus only on the outcomes that matter.
- Customer centric cocreation: Work with forward-thinking customers who are equally committed to making this work. Avoid second guessing what your customers need and thinking in a purely product-centric way.
- Adoption of industry solutions: Ease of implementation for health care providers is a critical success factor. So, it requires a standard, cross-company approach. Our aim is to simplify things by operating on a standard, open industry infrastructure.
- Investment in building new capabilities: Life sciences companies need to build new capabilities now and they should not wait until it is too late to be able to respond.
- Experiments to test and learn: It is best for both sides to experiment and learn before jumping into a full-fledged contractual agreement that both parties may perceive as risky.
Our latest thinking
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