Health systems that have basic review committees do not perform holistic reviews of drugs and devices. They ensure that products meet basic organizational standards and value products that are safe, offer some advantage based on clinical quality or outcomes, and are competitively priced.

Our survey data shows that 10% of provider organizations fall into this archetype today. Not only is this a small portion of health systems, but these organizations typically account for a small share of life sciences companies’ overall sales. This archetype will become less common in coming years. Industry disruptors will force organizations to adopt more holistic definitions of value, and technologies like health tech assessments (HTAs) that help providers holistically evaluate products will become more prevalent in the market. 

Life sciences companies can best demonstrate value to these customers by communicating easy-to-understand product benefits related to both quality and cost. Selling products based on a value proposition of long-term or strategic benefits may be difficult. 

Key factors that may indicate a customer falls into this archetype include:

• The organization is small, community hospital, in a rural area with few human, IT, and financial resources. As a result, it lacks the bandwidth to evaluate products holistically.
• Most of its business is fee-for-service. It is not yet a business imperative for the organization to consider factors like episodic cost of care or reducing unnecessary hospitalization.
• The organization has historically had small or negative margins. It is not growing and is actively trying to stave off decline. Therefore, the organization lacks the ability to invest in expensive innovation.

Where committees get product information:

• They rely on traditional, established sources for product data. This includes manufacturer themselves, peer-reviewed journal articles, or their group purchasing organization (GPO).
• They maintain few administrative committee staff who gather relevant data, meaning they rely heavily on physician opinions/expertise.

Who makes up the committees:

• They have multidisciplinary committees but struggle to engage clinicians across specialties, leading to few subcommittees.
• They maintain few administrative committee staff who move products through evaluation processes.

Strategic role of purchasing:

• They consider purchasing to be an operational function. Product use does not play a role in achieving organizational strategies.

Importance of product standardization and utilization management:

• They prioritize product standardization and are therefore less likely to buy a new product that is only marginally different than one they already use.
• They lack ability to enforce formulary/item-master decisions. Their limited amount of human and technological resources make it hard to know or control what products clinicians use.

Degree of purchasing “systemness”:

• They make most decisions at the site level. Some organizations may have structures in place to ensure system-level coordination.

Willingness to embrace innovation:

• They avoid risk and are laggards when it comes to investing in innovation. They purchase products that have demonstrated proof of quality and/or financial outcomes at hospitals similar to them. Case studies from major AMCs or research organizations are less impactful

1. Expect slower formulary/item-master decisions as a result of fewer committee administrative staff.
2. Rely on value propositions that revolve around basic financial and clinical quality benefits as opposed to connecting the product to the organization’s strategic priorities.
3. Communicate appropriate product use to differentiate offerings from ones the customer already uses in cases where they are reluctant to add additional vendors.
4. Form relationships with leaders and physician champions at the individual site level.
5. Expect limited interest in new, expensive, or innovative products. 

Health systems with traditionalist committees define value as a combination of a product’s clinical quality and financial impacts. However, they consider a broad set of product-related clinical quality and financial metrics like long-term outcomes and total cost of care during decision-making.

Our survey data shows that 33% of provider organizations fall into this archetype today. While this is a large part of the market, it is expected to shrink in coming years as emerging disruptors force these organizations to expand the number and types of metrics they consider in decisionmaking. 

Life sciences companies can best demonstrate value to these customers by showing how their products impact clinical quality and cost in the short and long term. Non-product-related considerations will be less important to this archetype on most occasions, except when differentiating between extremely similar product offerings. As such, life sciences companies should base the majority of their pitch on clinical quality and financial aspects

Key factors that may indicate a customer falls into this archetype include:

• The organization is a small to mid sized health systems, though stand-alone hospitals can fall into this category as well. Often, they have a limited ambulatory footprint.
• It has a positive and stable economic outlook. Most of the organization’s business is fee-forservice, and they have a good payer mix.
• The organization is in a market with little competition. They are often the largest player in the market and don’t have other systems expanding into their region. As such, factors like patient or clinician experience aren’t as critical during product decision-making due to the lack of alternative options for these groups.

Where committees get product information:

• They rely on traditional, established sources for product data. This includes manufacturers themselves, peer-reviewed journal articles, or their GPO.
• They explore the potential to invest in health technology assessments (HTAs) to better understand the long-term value of products without having to invest financial, human, and IT resources in building these capabilities in-house.

Who makes up the committees:

• They have multidisciplinary committees with a balance of clinician and non-clinician stakeholders.
• They do not typically include new decision-influencers like revenue cycle or patient experience representatives.

Strategic importance of purchasing:

• They consider purchasing to be an operational function. Product use plays a limited role in achieving organizational strategies.

Importance of product standardization and utilization management:

• They prioritize product standardization and are therefore less likely to buy a new product that is only marginally different than one they already use.
• They lack ability to enforce formulary/item-master decisions. Their limited amount of human and technological resources make it hard to know or control what products clinicians use.

Degree of purchasing “systemness”:

• They are progressing toward making decisions at the system level. However, few of these organizations have made the full transition to making decision at the system level.
• They do not extend purchasing purview to affiliated ambulatory sites.

Willingness to embrace innovation:

• They fall into the late majority when it comes to investing in innovation. They don't need the latest and most innovative products to succeed on their strategic goals and therefore will gravitate toward products that have well-established and demonstrated proof of quality and financial outcomes. 

1. Tailor messaging to traditional decision-makers and influencers like clinicians and supply chain representatives.
2. Rely on value propositions centered on short- and long-term financial or clinical quality benefits instead of connecting the product to the organization’s strategic priorities.
3. Help customers educate clinicians on appropriate product use to improve clinician compliance to the formulary/item-master and adherence to product use protocols.
4. Consider the similarities and differences among system and local site needs to appeal to leaders and physicians at both levels.
5. Expect limited interest in new, expensive, or innovative products

Health systems with holistic committees consider a wide range of metrics during product decision-making. Their definition of value extends beyond traditional clinical quality and financial considerations to include operational/non-product-related factors like clinician training required to use the product or supply chain considerations.

Our survey data shows that 16% of provider organizations fall into this archetype today. This archetype is expected to grow in coming years as more organizations consider how products impact health system strategic goals, design priorities around holistically evaluating products, and invest in HTAs to help them use more (and more complex) data.

Life sciences companies can best demonstrate value to these customers by preparing value stories that include clinical quality, financial, and operational or non-product-related benefits. Giving equal weight to each category allows providers to connect product use to success on many goals. This will help life science leaders differentiate their products from those with fewer value propositions and make partnerships with customer more strategic and long term. 

Key factors that may indicate a customer falls into this archetype include:

• The organization is a small to mid sized health system, though some large health systems fall into this category as well. It has growth ambitions and may have recently expanded its ambulatory footprint or merged with/acquired other provider organizations.
• The organization is in a competitive market. Its patients have many options for where to receive care and physicians have many options for where to practice. The organization must therefore consider a diverse set of metrics like clinician experience and patient experience to remain competitive in the region

Where committees get product information:

• They rely on traditional, established sources for product data. This includes manufacturers themselves, peer-reviewed journal articles, or their GPO.
• They leverage HTAs to help analyze all facets that they consider during product decision-making.

Who makes up the committees:

• They have multidisciplinary committees with a balance of clinician and non-clinician stakeholders representing various departments and specialties.
• They include decision-influencers who haven’t been historically involved in committees like revenue cycle, operational, and patient experience representatives.

Strategic importance of purchasing:

• They recognize that drugs and devices play a role in achieving system strategies. However, they don’t often consider product use proactively when forming initiatives aimed at strategic goals.

Importance of product standardization and utilization management:

• They prioritize product standardization and are therefore less likely to buy a new product that is only marginally different than one they already use.
• They effectively enforce formulary/item-master decisions either by proactively restricting clinicians from using off-formulary/item-master products, or by retroactively educating clinicians on why they should use certain products over others.

Degree of purchasing “systemness”:

• They make most decisions at the system level. However, individual sites have some power to adjust decisions based on local market factors.
• They sometimes extend purchasing purview to affiliated ambulatory sites.

Willingness to embrace innovation:

• They fall into the early majority when it comes to investing in innovation. They value the role that new and innovative products can play in helping an organization succeed but may opt to purchase products that already have case studies of success elsewhere.

• Provide in-depth product information packets, but also work with HTAs to ensure they share the most up-to-date product data.
• Develop value propositions that speak to many perspectives to ensure products resonate with traditional and emerging influencers such as revenue cycle or operational representatives.
• Learn about customers’ strategic goals and educate them on how product use can help achieve success on those initiatives.
• Expect committees to heavily restrict products that have not gone through the traditional approval process and scrutinize physicians that use off-formulary/item-master products.
• Build relationships with leaders and physician champions at the system level to ensure products are available across acute care sites.
• Expect interest in new, expensive, or innovative products that have demonstrated some success elsewhere. 

Health systems with clinically driven committees heavily weight factors that revolve around improving patient care and outcomes when making purchasing decisions. In addition, their view of value from a clinical-quality perspective extends beyond traditional metrics like short-and long-term outcomes to include factors like real-world outcomes, outcomes among diverse populations, and patient experience.

Our survey data shows that 9% of provider organizations fall into this archetype today. While this is a small portion of health systems, it includes nationally renowned health systems who have large purchasing power and are willing to run studies/trials on new products’ effectiveness. The size of this group is unlikely to change in coming years as these organizations typically have stable business models and don’t have to adjust their definition of value to succeed in the market.

Life sciences companies can best demonstrate value to these customers by showing how products contribute to high-quality outcomes or help providers differentiate themselves from competitors by using cutting-edge clinical innovations. Financial impacts will still be important, but mainly as supporting data.

Key factors that may indicate a customer falls into this archetype include:

• The organization is an academic medical center (AMC) and prioritizes clinical research. Alternatively, it may be in a market with progressive AMCs and needs cutting-edge products to compete.
• The organization focuses on being the market leader for a single service or set of services. It may have formed a Center of Excellence to attract payers or large employers in their market.
• The organization is in market dominated by independent physicians who have many choices of where to practice/refer patients. It can appeal to these clinicians by having the newest and best products that help physicians deliver high-quality outcomes. 

Where committees get product information:

• They rely on clinician or subject matter expertise when determining the impact of a product. They also value peer-reviewed journal articles and case studies that feature highly progressive organizations, as well as the opinions of professional associations.
• They leverage large, in-house research teams to determine the long-term financial, clinical quality, and operational impacts of products.

Who makes up the committees:

• They have committees led primarily by physicians. Strategic importance of purchasing:
• They consider product use to be a critical component of system strategy. Cutting-edge drugs, devices, and equipment that offer best-in-class patient care/outcomes are essential for their success.

Importance of product standardization and utilization management:

• They likely do not prioritize product standardization. They may place some parameters around product use to maintain a reliable clinical product but are willing to expand their vendor rolodex to ensure access to the newest innovations across the life sciences market.
• They avoid restricting physician product choice. They allow physicians to use the right product for the right patient, even if it’s not on the formulary/item-master.

Degree of purchasing “systemness”:

• They make most decisions at the system level but give significant leeway to individual sites to determine if a different product is better for their patient population.

Willingness to embrace innovation:

• They embrace innovation and are the earliest adopters when it comes to investing in innovation. Organizations in this category seek to be the first in their market to offers a certain type of procedure, therapy, or product.

1. Build relationships and develop value propositions that will resonate with well-respected clinician champions to win committee approvals.
2. Communicate how products can allow customers to differentiate themselves from competitors via greater clinical capabilities and patient outcomes.
3. Expect customers to allow clinicians to use off-formulary/item-master products to ensure patients gets the right product at the right time.
4. Develop relationships with clinician champions at both the system and site level to ensure products are available across acute care sites.
5. Expect interest in forming partnerships to generate real-world evidence and case studies for new, expensive, or innovative products.

Health systems with financially driven committees heavily weight factors that directly contribute to financial success. That doesn’t mean they always pick the lower-cost option though. They first ensure that the products are safe and effective, and then prioritize products that enable long-term financial success by reducing total cost of care or increasing revenue.

Our survey data shows that 10% of provider organizations fall into this archetype today. The small number of organizations in this category reflects the fact that many health systems still struggle to directly connect drug and device use to long-term margin improvement. The size of this group is unlikely to change in coming years.

Life sciences companies can best demonstrate value to these customers by first proving the product is safe and clinically effective as a baseline. However, once life sciences companies establish clinical quality, they must show how the product can help reduce long-term costs or grow revenue. As such, being the lowest cost vendor isn’t going to be as appealing as showing how the product can improve margins by improving population health or enabling the provider to serve a new patient population.

Key factors that may indicate a customer falls into this archetype include:

• The organization participates in value-based care programs with public and commercial payers. As such, it has long-standing population health initiatives. Its business model relies upon providing reliable, high-quality care at the lowest possible cost and will purchase products that help them achieve that type of financial success.
• The organization has a health plan arm aligned with the system. Therefore, it considers how a product impacts spend on health plan members when making formulary/item-master decisions.
• The organization employs most of its physicians. This allows them to be more restrictive with their formulary/item-master without having to worry about alienating physicians.

Where committees get product information:

• They rely on traditional, established sources like manufacturers themselves, peer-reviewed journal articles, or their GPO for product safety and efficacy information.
• They leverage HTAs to supplement clinical quality information and to help them understand a product’s impact on total cost of care or reimbursement/revenue potential.

Who makes up the committees:

• They have multidisciplinary committees with a balance of clinician and non-clinician stakeholders.
• They include financial representatives who run in-depth, product-related financial analyses.

Strategic importance of purchasing:

• • They consider product use to be a critical component of system strategy. Drugs, devices, and equipment that allow organizations in this category to reduce long-term costs or reach new patient populations to grow revenue are essential for their success.

Importance of product standardization and utilization management:

• They prioritize product standardization to get a better per-unit price from manufacturers and deliver a more clinically reliable product that could lead to success under value-based care programs.
• They heavily regulate physician product use to ensure they realize these benefits.

Degree of purchasing “systemness”:

• They make most decisions at the system level to benefit from economies of scale or ensure a clinically reliable product.
• They expand some formulary/item-master decisions to affiliated ambulatory sites.

Willingness to embrace innovation:

• They fall into the early majority when it comes to investing in innovation. They value the role that new and innovative products can play in helping them to grow revenue and reduce long-term costs.
• They avoid making large investments (particularly capital investments) in products that have yet to demonstrate positive financial impacts elsewhere. 

1. Tailor messaging to traditional decision-makers and influences like clinicians or supply chain reps, but also emerging influencers within revenue cycle or strategy roles.
2. Provide data on how products can help the organization achieve goals related to success in risk-based payment models and/or revenue growth.
3. Expect committees to heavily restrict products that have not gone through the traditional approval process and scrutinize physicians who use off-formulary/item-master products.
4. Build relationships with leaders and physician champions at the system level to ensure products are available across acute case sites as well as affiliated ambulatory sites.
5. Expect interest when selling new, expensive, or innovative products, but only when evidence of ROI has already been proven elsewhere.  

Health systems with trailblazer committees consider a wide-range of metrics during product decision-making. They have enough resources to consider the impact a product has on financial, clinical quality, and operational performance in the short and long term. In addition, they consider new metrics or factors that traditionally haven’t played a role in product decision-making.

Our survey data shows that 22% of provider organizations fall into this archetype today. The large size of this group is the result of more organizations holistically considering how products impact their long-term success on financial, clinical quality, and operational fronts. In addition, the growing prevalence of HTAs are helping committees make sense of more (and more complex) data.

Life sciences companies can best demonstrate value to these customers by developing a value proposition that includes clinical quality, financial, and operational or non-product-related benefits. In addition, life sciences leaders can expect customers to potentially consider niche or uncommon factors across these categories (e.g., how the product impacts revenue growth potential, real-world outcomes, or environmental sustainability). 

Key factors that may indicate a customer falls into this archetype include:

• The organization is a large health system (often including an AMC) that has made investments in human and IT resources in recent years. As such, it has capacity to review products holistically.
• The organization participates in value-based care programs with public and commercial payers. As such, it ensures that products not only enable the best possible outcomes, but also enable long-term benefits like reduced total cost of care or reducing unnecessary hospitalizations.
• The organization is in a competitive market. Patients have many options for where to receive care, and physicians have many options for where to practice. It must consider a diverse set of metrics like clinician experience and patient experience to remain competitive in its region.

Where committees get product information:

• They rely on traditional, established sources like manufacturers themselves, peer-reviewed journal articles, or their GPO for basic cost and outcomes-related product information.
• They develop large, in-house research teams to investigate the long-term financial, clinical quality, and operational impacts of products.
• They leverage HTAs to supplement information they can’t gather via traditional sources or their in-house research teams.

Who makes up the committees:

• They have multidisciplinary committees with a balance of clinician and non-clinician stakeholders.
• They create many subcommittees that lend expertise in specialty areas. Both their main committee and subcommittees are well represented from various departments across the organization.

Strategic importance of purchasing:

• They recognize that drugs and devices play a role in achieving system strategies.
• They likely have elevated the purchasing leader to the C-suite level, and it’s common for this individual, as well as other members of the C-suite, to sit on purchasing committees.

Importance of product standardization and utilization management:

• They prioritize product standardization. However, given that these organizations are large and spread across many markets, they often purchase from many vendors in each product category.
• They effectively enforce clinician compliance to the formulary/item master, either proactively by restricting the type of product the clinician can use or retroactively by sharing data on why the clinician should use a certain product.

Degree of purchasing “systemness”:

• They make almost all decisions at the system level, though larger systems that operate in many markets may take a regional approach to purchasing.

Willingness to embrace innovation:

• They fall into the early majority when it comes to investing in innovation. They value the role that new and innovative products can play in helping them to market share. 

1. Build relationships with well-respected clinician champions and offer to partner with in-house research teams to generate data on products’ financial and quality impacts.
2. Demonstrate product value to emerging decision-influencers in finance, operations, and/or strategy roles to ensure decision-makers view products favorably.
3. Communicate how product can help customers achieve strategic goals on financial, clinical quality, and operational fronts.
4. Build relationships with leaders and physician champions at the system level, but expect product preference and use to still vary substantially across regions.
5. Expect interest in new, expensive, or innovative products. Explore opportunities to form partnerships that generate real-world evidence and case studies.