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Borderline cases in the healthcare ecosystem

Where does a customer end and where does a partner begin?

  • Thursday, 19. May 2022
Borderline cases in healthcare ecosystem
© Arkadiusz Szwed

For biotech and pharmaceutical companies, clinics are not only customers who purchase therapies and drugs from them. Nowadays, they are also indispensable for the companies’ internal workflows, as they take on tasks and collect information that pharmaceutical companies genuinely need. What used to be a paper-based customer relationship has now been integrated into the value chain ­– but it is one that is not yet fully taken account of in life-science companies.

The special requirements of working with the healthcare system

Companies depend on smoothly running supply chains. A car manufacturer cannot do without its suppliers, a plant manufacturer cannot do without data from the plant operators. The interrelationships between manufacturers, suppliers, and operators are so close that it sometimes feels wrong to speak of separate organizations since their goals and value creation are closely linked.

To some extent, this is also true of modern pharmaceutical and biotech organizations. Here, the dependencies are not material- but information-based. Treatment plans are becoming more and more integrative and individualized. Patient-specific markers are being collected, and diseases treated in the interplay of the various disciplines. Pharma and biotech companies are dependent on cooperation with clinics for these treatment plans. Clinics, for their part, have to adopt quality standards, conduct long-term observations, collect data, offer new (physician) services, and even take on aspects of the production process.

Mutual dependencies determine cooperation

This results in a complicated situation with respect to cooperation between pharmaceutical and biotech companies on the one hand and clinics on the other. Clinics and medical practitioners are some of pharmaceutical and biotech companies’ main customers. That they are, at the same time, needed for the further development of therapies and application of products also makes them important players in the value chain. Pharmaceutical and biotech companies try to take this into account in their division of labor. They have specialist units, each of which can only talk to clinics about narrowly defined sections and, for example, support clinics in becoming qualified for the application of new therapies.

In a clinic the division of labor is different. Clinic employees have to fulfill different rationalities and expectations. Of course, treatment providers want to use a therapy that is effective and improves the healthcare outcome for patients. However, the use of medications does not singularly depend on medical considerations. Organizational and economic rationales also determine the pros and cons. When it comes to these framework conditions, pharmaceutical and biotech organizations can often only watch from the outside – and deal with the circumstances they find.

Clinics’ financial rationales shouldn’t be underestimated

Financial rationales can influence which treatment options a clinic pursues – and which it rejects. Refusing to build up an infrastructure when the number of potential patients is still unknown, or not knowing what the reimbursement for the healthcare service will be is now part of the entrepreneurial risk calculation. “To which extend will physician services be reimbursed?” is a question that accompanies any infrastructure measure.

For example, if there is a new therapy that, from a medical standpoint, could replace a stem cell transplant that depends on a matching donor, it does not necessarily follow from the overall logic of a clinic that it is right to offer this therapy. From the clinic’s point of view, being able to offer stem cell transplants is not only an aspect of its qualification as a treatment center, but may also appear more financially attractive than the new therapy – because the “business model” behind the stem cell therapy is a well-known factor, processes and equipment have been optimized for the established therapy, and the relevant routines run smoothly.

New medical solutions heighten demands on organizational structure

Hospitals also have to adapt their organizational structures to the use of new medical solutions. This is not just a matter of infrastructural requirements. New therapies bring with them new documentation obligations vis-à-vis pharmaceutical companies and authorities. Pharmaceutical companies not only have to ensure the quality of their products; authorities require guaranteed quality in application as well. Pharmaceutical companies need to find a way to pass this requirement on to the clinics.

Collaborative partnerships do exist between pharmaceutical companies and clinics in other contexts – for example, new forms of therapy where the therapy is produced using cells from a diseased patient. The cells required can only be removed from patients in a clinic. The clinic is thus not only the healthcare service provider, but also part of the pharmaceutical company’s supply chain and has to organize delivery times and handovers, for example.

Finally, there are working relationships where the pharmaceutical and biotech companies depend on the goodwill of the clinics. This happens, for example, when companies are asked to confirm that their therapies and products are successful not only in clinical trials but also in everyday healthcare. The companies in question then have to turn to the clinics because that is where the patients are treated, and data of relevance to the industry can only be collected there. For the clinics, such surveys are often an additional expense that generates no immediate benefit. For pharmaceutical and biotech companies, however, the approval of their products depends on such data.

Boundary-spanning roles facilitate communication between organizations

Where organizations encounter such complex relationships in their ecosystem, they create special roles that in sociological terminology are known as boundary spanners. They are specialized positions in organizations that communicate with members of the healthcare ecosystem’s organizational field. Boundary spanners are supposed to pick up questions, problems, and inputs from the ecosystem and translate them for their own organization (e.g. field forces). The performance of boundary spanners begins with the observation of everyday issues. They match what their organization thinks is reality and what is happening in their specific observation setting (for example, a group of practitioners, a specific clinic, or an agency). Boundary spanners retrieve the information from the ecosystem, reduce it to aspects of relevance to the organization, free it from uncertainties, and reduce its complexity so as to make the information processable within the organization.

In pharmaceutical and biotech companies, boundary spanners who observe the local rationalities in clinics are especially necessary. A smart pharmaceutical company can ask its boundary spanners to check their part of the ecosystem for certain questions, and always do so at a medical, organizational and economic level:

  • What frameworks are set for the treatment providers?
  • What is the market situation from their point of view?
  • Which premises do physicians use in their considerations on new therapies?
  • What room for maneuver do they have in treatment plans?

Example: Why a medically superior product is unlikely to succeed in the market

If organizations succeed in tracking down this information, a key first step has been taken. Often, however, it is a challenge for organizations to absorb this information productively. When new information deviates from a previously held perspective, the boundary spanner has to prudently carry the information into the organization. One strength of organizations is to establish certainty of expectation. Information that can shake this certainty is often suppressed. Although boundary-spanning roles are supposed to seek out new information, it can be surprisingly difficult for organizations to draw conclusions on their own actions from information in the ecosystem. For organizations such as pharmaceutical and biotech companies, this may mean relying more on the tried-and-tested routines of a market launch, even when these roles transmit different signals.

Let’s take an illustrative example: A pharmaceutical company wanted to introduce an innovative therapy in a virology indication that could achieve better patient outcomes with less drug-regimen that was confirmed by studies. The company wanted to put these medical benefits centerstage. The launch, however, coincided with the Covid-19 pandemic. A great many physicians were so occupied with Covid-19 patients that their risk assessment changed across indications. They preferred the established therapy. Despite the given medical improvements, the use of a new therapy was too risky for them. Processes went unpracticed, patient reactions were unclear and, in addition, medical practitioners assumed they would be unable to pay the necessary attention to the new therapy in such a changing clinic environment. This rejection caught the company by surprise. There had been no reason to expect it given their routines and habitual assumptions. They had lost sight of the medical practitioners’ organizational rationalities.

How to empower boundary-spanning roles

Particularly in the case of pharmaceutical and biotech companies, where the interconnections and mutual dependencies between an organization and ecosystem actors are complex – in the case of clinics in some cases a customer, in other cases a partner or important supplier of information – it is important to be aware of all three clinic-related rationalities. And these companies have to be able to adapt their internal procedures to the new findings before they are taken by surprise. For this to succeed, it is essential to integrate the information acquired by the boundary spanners and to draw the necessary consequences from it – even if it results in organizational changes. That’s why we say:

  • Over-specialized boundary-spanning units only capture a very limited picture of the market, but an essential part of it!
  • The potential of market-related information only unfolds when it is integrated into a company’s internal discourse!
  • Companies that listen to their boundary-spanning units do need less market research!

So, if you start with the goal of addressing the conditions in health care, you discover you have to start with your own organization. Thus, the intended irritation of the ecosystem is actually an irritation of the internal logic of your organization. In this respect, the functions of boundary-spanning roles should not be underestimated.