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Adapting to Market Changes: Beyond Healthcare Reform

September/October 2011 Volume 4, Number 6 - Perspectives
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F. Randy Vogenberg, PhD, RPhChange in the marketplace cannot be stopped and, therefore, organizational development should not only reflect what is happening today but also prepare each organization to appropriately identify emerging changes in market conditions to best benefit from the opportunities for proper management and growth through change or account management.

This article reviews past and current trends in market changes to encourage those involved in prescribing, paying for, or developing drugs, devices, or diagnostic products to embrace the need to adapt to changes in the healthcare marketplace. Established training methods have delivered high return on investment performance during the past decade for various healthcare organizations and manufacturers. The need for training and for developing capability in healthcare organizations remains timely and perhaps even greater today than in the past.

Training for Market Changes

Many market changes or shifts in the US healthcare marketplace since the last World War in the 1950s have required retraining or updated education on a new environment toward patient care management. In the current economic state of tight budgets and the emphasis on return on investment for every dollar spent, it is natural for organizations to resist the notion of having to adapt to yet another change in course occurring in the US healthcare system.

And yet, as the need to positively address organizational development with applied training programs is mounting, and change in healthcare has slowly begun to take place, every healthcare organization is more or less exposed to the consequences of those changes, depending on its product portfolio or other variables directly related to market conditions.

From the perspective of personnel training and development needs, if an organization relies on only an immediate, needs-based approach to change or regards healthcare reform as a matter in the distant future, how will organizational development be determined when change is here, and it is clearly time to start training for that change?

The following brief review of market changes over the years establishes the case for decision makers in healthcare of the need to address the new reality that highlights the impetus for training for the emerging changes in the healthcare marketplace.

Transitions through Government Initiatives in Healthcare

Approximately 30 years after the economic crises brought on by the Great Depression, the Social Security Act of 1965 positioned the US government back at the forefront of healthcare. Medicare and Medicaid not only made the US government a purchaser of healthcare, they also placed the cost of healthcare under public scrutiny, as healthcare itself became an increasingly larger part of the gross domestic product.

If Social Security set the stage for managed care, the Health Maintenance Organization Act of 1973, signed by then-president Nixon, opened a viable economic stream for the development of the managed healthcare marketplace. However, it was not until the 1980s that significant insurance models were developed and truly became a part of the American lexicon.

To this day there remains a lack of consensus among healthcare stakeholders about some of the key concepts embedded in a managed care approach to care, such as a “system of care,” “highest quality care,” and “cost-effective and cost-efficient healthcare.” Such private-sector transitions in the way the “business of healthcare” was conducted were enabled by government regulation over a period of years; these new regulations required education and training for healthcare manufacturer sales personnel and other healthcare stakeholders to be in the most effective position to respond to market opportunities as they developed.

Managed Care Emerges: Payers’ Tactical Decisions

The use of case management emerged from the managed care trends prevalent in the 1980s, which successfully reduced costs by removing unnecessary hospitalizations, as well as through the introduction of new and innovative pharmaceuticals that allowed the settings of patient care to change.

The principles of risk management, cost minimization, and the search for positive outcomes converged over the previous 3 decades to provide a winning formula for purchasers of healthcare and for managed care payers. Such changes in day-to-day operations affected medical decision-making at several levels, including the use of acute versus ambulatory care facilities within the community.

These tactical decisions also required retraining of medical personnel and other healthcare stakeholders with regard to the optimal use of medical care resources, including drugs, devices, and diagnostics, as well as the setting for care delivery to the patient.

Commercial Payers Determine Plan Strategy

Such a change does not happen without dilemmas facing key market stakeholders. For example, politicians were loath to allow aggressive managed care management that limited patient choice, as well as purchasers’ insistence on lower cost despite the lack of improvement in patient outcomes. It is the payer environment—government, employers, union funds, and third-party administrators and health plans—that is driving the healthcare system in the United States. Various healthcare manufacturers, including pharmaceutical companies, are reacting to payers’ behavior that is often in conflict with the payers’ and manufacturers’ customer mix, making a win-win situation difficult, at best, for all parties.

For example, pharmacy benefits illustrate an intrinsic tie between pharmaceutical manufacturers and managed care payers. Because of the direct relationship between the success of a medication in the marketplace, or an effective plan management for patient care and the managed care organization, drug therapy itself has become a common denominator between the 2 organizations within the context of a benefit design.

However, too few managed care executives and pharmaceutical manufacturer sales or account teams truly understand the dynamics in which they are forced to operate. As biotechnology and pharmaceutical manufacturers merge, strategic approaches will become increasingly important as the so-called specialty pharmacy dollars represent bigger investments or offsets within a larger part of healthcare spending, namely, medical benefits.

Harkening back to risk management, cost minimization, and seeking positive outcomes, training for the future must include preparation for the anticipated changes rather than focusing on what has happened in the marketplace until now. A critical success factor missed by manufacturers is the ability to develop strategies, define performance, and assess talent to build the market capability to implement, sustain, and build on successful tactics. To be successful in that manner requires meaningful training and organizational development efforts at all levels of the organization, including the executive suite.

Healthcare Reform: The Affordable Care Act

With the signing of the Patient Protection and Affordable Care Act of 2010 (ACA) and the subsequent Health Care and Education Reconciliation Act, the business of US healthcare was changed. Although some immediate changes were mandated in 2010 (Table), most of the changes would not begin before 2012 or 2014, and then through the end of this decade.

Patient Protection and Affordable Care Act Implementation Overview

Congress is currently deadlocked on funding the implementation of many key portions of the ACA, but the market has already begun to change in response to commercial plan sponsor initiatives and the anticipated shifts in care coverage requirements in the early part of this decade.

Even with the 2000-plus pages of congressional legislation, most decisions on what will occur in the marketplace fall to a variety of regulatory agencies in the federal and state governments. Some 159 new boards, bureaucracies, and programs are contained within the healthcare reform legislation, making this one of the most complex pieces of legislation we have seen since the New Deal legislation of the 1930s. This means that true clarity regarding what is required in the marketplace by all stakeholders will not be available for most of this decade.

Therefore, for all manufacturer organizations in particular, reorienting organizational education and continued training to build managed market capability to effectively manage all the coming market changes are requisite to maintaining or optimizing business success through this decade. In particular, commercial plan sponsors are free to innovate and have already begun implementing changes related to integrated health management, even before any federal or state healthcare reform implementation.

Evolution through Biologics, Biotechnology, and Theranostics

New technologies represent advances in healthcare solutions that offer the desired combination of risk management, cost minimization, and positive outcomes; nevertheless, the anticipated cost of these new technologic solutions remains troublesome for most healthcare stakeholders. Biologic-based products and combinations of diagnostic tests and/or devices that target therapies (known as theranostics or personalized medicine) represent the emerging wave in the healthcare manufacturer research pipelines, but much of what is needed on a day to- day basis is not new.

Reimbursement experts, new insurance programs, and other healthcare specialists continue to exist, reinventing themselves and reemerging. New products, new methods of payment, new ways to mitigate risk, new ways to cover costs and share them, new sales forces that provide solutions, and new marketing strategies that seek to educate and improve outcomes are all parts of the continuing change seen in healthcare today. However, it is the increased pace of change that should have grabbed the attention of manufacturers seeking to identify aligned opportunities for improved outcomes.

The central themes of adapting proactively to change remain the same, as does the need for lifelong learning—to adapt and survive. Each organization may be more or less exposed to the changing healthcare ecosystem based on the change at hand; therefore, a cost-effective approach may lie in a more sound sequential and developmentally focused organizational development and training strategy, not tactic.

Strategies involve longer-term issues, whereas tactics are very short-term. Who will be affected first in the emerging and changing healthcare market? Are those groups ready now? What will they need to know? What will good training to meet anticipated near-term and future market needs look like?

Knowing the members or customers and their goals will provide the clues and direction needed to build relevant, enabling programs within each healthcare organization. A clear organizational alignment—with goals and objectives that provide structures and support to enable performance—is the foundation for effective training.

Contemporary business acumen, and addressing a clear strategy for building capability while adapting to market changes, must be embedded into all levels of organizational training to succeed in executing a successful corporate plan. Finally, measurements and metrics of progress made through building marketplace capability drive the market-driven lifelong learning program, as well as talent development.


Change in the US marketplace is inevitable and, there fore, effective, and high return on investment and organization development–aligned training should not only reflect what is happening today but also prepare the organization for the next 6 to 18 months. This strategic approach will help an organization to appropriately identify changing marketplace conditions and to best manage the opportunities for enhanced product or patient outcomes and management.

As seen in the evolution of managed care to date, Medicare Part D, and shifts in Medicaid coverage over the past 10 years, reactive or incomplete training failed to adequately support the organization to achieve a valuable return on investment for manufacturer organizations in healthcare.

Understanding the significance of the ACA among other commercial, sponsor-driven marketplace changes, including the emergence of various nongovernment plan sponsors, will only grow in importance over the coming months and through this decade. Based on past experience and proved models for successful, high–return on investment training, the time to start applying an organizational development–driven training system toward effectively managing the healthcare marketplace changes is now.

Author Disclosure Statement
Dr Vogenberg has reported no conflicts of interest.

Dr Vogenberg, Principal, Institute for Integrated Healthcare, Sharon, MA, Senior Fellow, Jefferson School of Population Health, Philadelphia, PA

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Last modified: August 30, 2021