2016 13th Annual MHA Business Summit Highlights
The 2016 13th Annual MHA Business Summit, which took place March 2-4 in Las Vegas, Nevada, was a tremendous success. The meeting brought together 1,400 health care professionals from long-term care, specialty, and home infusion pharmacies, as well as health care executives and industry partners.
With the presidential elections in the fall of 2016, MHA selected faculty that brought insight and experience to this election season, as well as how the political landscape may impact health care. Faculty for this meeting included the recent Speaker of the House of Representatives, two nationally-known political advisors, and two nationally-known financial analysts that specialize in the health care sector.
All the sessions were very well attended and engaging for MHA members and industry partners. In addition to national election issues, the agenda included interactive workshops and breakouts that discussed federal and state legislation, evaluated new information technologies, and provided methods to improve pharmacy operations and efficiency.
Key presentations include the following.
Michael J. Sicilian,
President, Managed Health Care Associates, Inc.
Mr. Sicilian opened the general session with an overview of the current state of the US health care system and how recent trends and developments are impacting the provider industries that MHA serves. While health care spending grew 5.5% from 2013 to 2014, prescription drug spending doubled from 12.6% to 25%, he said, due primarily to the introduction of costly specialty drugs. Nonetheless, prescription drugs ranked a distant third in US health care expenditures last year, after hospital costs and professional services.
Mr. Sicilian went on to discuss industry consolidation, describing a number of pharmaceutical, provider, and health plan/PBM mergers and acquisitions that took place in 2015 or will take place this year, noting that in the case of health plans and PBMs, the consolidation would significantly impact competition and lead to 1 billion scripts — 75% of the US total — being controlled by three players. He also reviewed the current experience with Accountable Care Act (ACA) enrollment versus projections, the financial struggles of the exchanges, and the large number of co-ops leaving the market. His discussion of the ACA continued with an outline of emerging payment models — particularly the trend toward value-based reimbursement.
Mr. Sicilian concluded the session with an exploration of the challenges and opportunities specific to the long-term care, home infusion, specialty pharmacy, and home medical equipment industries, as well as an overview of MHA’s legislative focus and what the organization is doing to support each of these provider industries.
The Honorable John Boehner – Former Speaker, United States House of Representatives
Speaker Boehner chronicled his improbable rise from homeowners association member — his initial foray into public office — to the third-highest elected office in the nation, Speaker of the US House of Representatives. All the skills he needed for public office were ones he learned growing up as one of 12 siblings in a middle class family, he noted. What he appreciated about serving in a legislative body, whether it was the state legislature or the US Congress, he said, was the amount of human interaction, and his 25 years of public service was a great experience. The former Speaker recounted the accomplishments he was most proud of during his nearly five years as Speaker of the House, from a $2 trillion savings deal he struck with President Obama in 2011 to protecting 99% of the American people from an increase in taxes when the Bush tax cuts expired, to ending earmarks, which he believed were corrupting the entire legislative process. He also cited an agreement with House Minority Leader Nancy Pelosi to fix the SGR, the process for paying doctors for Medicare patients, which was accomplished by small changes to Medicare that would save some $30 trillion in program spending over the next 30 to 40 years.
Speaker Boehner also discussed the lessons he learned during his years of leading the Congress, namely, having patience, being honest with oneself and others, and being humble. He explained that he didn’t go to Washington to be a Congressman but to so something on behalf of the American people — a lesson he tried to teach his colleagues. If you do the right things for the right reasons every day, he said, the right things will happen. He spoke about the unpredictable political environment characterizing the 2016 presidential race and the candidates, noting that whatever the result is come January 2017, the new President will have to take on some very daunting issues. The issues that MHA members most care about — the ones their industry is involved in — are going to be front and center, he said. Mr. Boehner ended his discussion by emphasizing that there’s no other country like America. You can grow up to be anything you want to be; you can try, you can innovate and succeed, and you can even fail — but if you do, you simply dust yourself off, get back up and go try again. It’s the only country where the son of a bartender can end up as Speaker of the House, he concluded.
James Carville and Mary Matalin, Political Consultants, Authors, TV and Radio Hosts
In this interactive session, husband-and-wife team James Carville and Mary Matalin — America’s political Odd Couple — entertained the audience with a lively discussion of political topics ranging from the current atmosphere on “The Hill” to the Democrat and Republican primary candidates to the 2016 presidential election.
The couple took questions from the audience, and on the topic of how the pharmaceutical industry might be affected by the current election cycle, Ms. Matalin stated that they don’t know yet, but based on what Hillary Clinton has said about the drug industry, she would disincentivize innovation by various economic, centrally controlled economic means. On the other hand, should parts of Obamacare be repealed, they will be replaced with market-based plans. Some country in the world has to be the innovator for pharmaceuticals, she emphasized, and we have been that — that need won’t go away; it would go to some other country, but it would disincentivize the research that has made our health industry so powerful.
Mr. Carville stated that pharmacy is a significant portion of the health care industry and people have a strong emotional relationship with the products that pharmacy is responsible for providing. The industry is deeply affected by government policy and as business people, those present have a stake in the outcomes, so he said it’s essential participants support their professional organizations in order to make sure their point of view gets heard. Ms. Matalin agreed, advising that one thing they can do in voicing their issues in Washington is to move the conversation away from emotion by providing an economic argument.
Harry M. Jansen Kraemer, Jr., Clinical Professor of Strategy
– Kellogg School of Management, Northwestern University
Mr. Kraemer’s presentation focused on values-based leadership and the four characteristics of strong leaders. He emphasized that it’s not just about being a leader, but how to become a better leader, and how to develop the next generation of leadership. The first characteristic he identified in strong leaders is someone who keeps things simple and has the ability to put things into perspective or to see things globally. In describing the second characteristic, Mr. Kraemer drew from a famous quote by Mark Twain, noting that “common sense is not common” — but it is one of the traits of an effective leader. Strong leaders, he said, not only keep things simple and cut through the morass, but they use common sense. The third characteristic is “starting ASAP,” not letting the organizational structure get in the way but taking action immediately — a concept he likened to “being in the movie versus watching the movie.” The fourth characteristic, he said, is recognizing leadership is not a destination, it’s a journey, and strong leaders recognize that they can improve as a leader and learn every day.
Mr. Kraemer next described the four principles that can help leaders on this journey, including self-reflection, balance, true self-confidence, and genuine humility, explaining how they relate to the characteristics of strong leadership and providing examples of each. All, and particularly the last, have an enormous impact on one’s ability to relate, influence, and lead people. The ultimate outcome of living these principles, he explained, is “becoming the best.”
Ronny Gal, PhD, Senior Analyst – Sanford C. Bernstein & Company
Mr. Gal described the challenges of manufacturing biosimilars and how these challenges have been resolved, noting for example how manufacturing costs have dropped dramatically over the years, especially for monoclonal antibodies, and how lower costs and higher prices have led to very high margins for innovators and available capacity.
Mr. Gal next spoke about the development process and regulatory emphasis on preclinical data, as well as the limitations of clinical trials with respect to biosimilars. He touched on the FDA and where it stands with approving biosimilars, as well as the debate over naming and labeling these drugs. The discussion also covered barriers to biosimilar adoption in the US beyond those posed by the FDA, including lack of payer approval and lack of physician and patient acceptance, although physicians appear to be more willing to accept biosimilars than in the past. Mr. Gal spoke about biosimilar adoption in the European Union (EU) and US, noting that their increasing acceptance in the EU is likely to be followed here, though the path will be more prolonged. He briefly described the competitive landscape, concluding with an analysis of who is making biosimilars and where they are in development.
Randall Stanicky, CFA, Managing Director – RBC Capital Markets, LLC
Mr. Stanicky shared his perspective on the generic pharmaceutical sector, which is undergoing significant changes due to widespread consolidation, the move to more complex products such as biosimilars, and changes at the FDA that could impact industry pricing. He said that the last five years has been a great time to be in the generics industry, but there are near-term headwinds, including pricing concerns, specialty pharmacy usage, and tax inversions. The FDA has gotten many more submissions than they expected, and the result is a growing backlog of drugs awaiting approval. If the FDA addresses the backlog by approving these Abbreviated New Drug Applications (ANDAs) at a record pace, from a pricing perspective it could create a challenge. Also, we’re still looking at a very fragmented base of competitors that needs to consolidate.
As for strategic changes, Mr. Stanicky said there are four structural shifts taking place. Supply chain customers are consolidating, providing benefits from scaled purchasing. Businesses are converging, including OTC, generic, brand, and biologic. We’re seeing a move to higher-value opportunities, such as biologics and complex formulations. And lastly, we have seen expansion outside the US to find more attractive growth. The net result is larger, more diversified global manufacturers.
With respect to mergers and acquisitions, Mr. Stanicky pointed out that we’re seeing record M&A activity, and we can expect deals to continue, though not at the same pace as during the last two years. He discussed tax inversions, which he said have become a trend since 2013 because of the competitive advantage that they provide, and also hostile acquisition attempts, including the “love triangle” between Mylan, Perrigo and Teva in 2015.
He concluded with areas where we expect to hear debate this year, such as whether generic pricing will remain stable if we see a spike in ANDA approvals and if branded pricing increases will moderate in the face of recent negative headlines.
How Alternative Payment Models and Market Dynamics Are Impacting Providers
Dan Mendelson, President – Avalere Health
Mr. Mendelson discussed alternate payment models (APMs) and their impact on providers. APMs are becoming increasingly common in health care markets as the emphasis shifts from fee-for-service arrangements to pay-for-value models. He described HHS’s role in driving the move toward APMs, noting that half of Medicare fee-for-service payments will be under alternate payment models by 2018. Health plans also are embracing APMs as evidenced by the steady increase in the number of accountable care organizations (ACOs) over the last five years. The shift to value has led to greater quality improvements and providers sharing more of the risk. He cited the Nursing Home Compare website and Five Star Quality Ratings as an early example of quality reporting, noting that star ratings will continue to be used by CMS as a measure of performance in the new payment models.
In summation, Mr. Mendelson indicated that the trend toward value-based payment models will not only continue but will accelerate, and success in this environment will depend on the ability to demonstrate quality, which will require deep data analytics capabilities. In short, providers that deliver value — and can prove it — stand to benefit from alternate payment models if they position themselves properly.
John Gorman, Founder & Executive Chairman – Gorman Health Group
Mr. Gorman discussed how commercial health coverage is declining and shifting while government health programs — Medicare, Medicaid, and Obamacare — are expanding and now comprise the largest source of revenue and growth. With an aging US population, Medicare is expected to grow about 3% annually, Medicare Advantage is expected to grow 7% annually over the next seven years, and dual eligibles will be migrating to health plans in large numbers. It is the best macroeconomic condition in more than a decade, he said, but the most dangerous compliance environment. Yet new or expanded compliance initiatives like risk-adjusted payments and Star Ratings present unique opportunities for LTC, home infusion, specialty, and alternate site pharmacy.
Star Ratings in particular will drive the market as the bar moves higher, he explained, putting increased pressure on facilities to perform better. This will provide new opportunities for LTC pharmacy collaboration in areas such as medication adherence, high-risk medications, medication review and pain screening in older adults, chronic disease management, and reducing fall risk. Success in the changing market, he said, will not be determined by size but by the ability to adapt.
Wayne Grau, Vice President of Legislative Affairs – MHA
Logan Davis, PharmD, MBA, Director of Franchise Development – Vital Care, Inc.
Eric Ho, PharmD, Vice President of Specialty Pharmacy & Industry Affairs, Paragon Healthcare, Inc.
Paul Mastrapa, President & CEO – Option Care
Tyler J. Wilson, President & CEO – National Home Infusion Association
Mr. Grau opened this panel discussion with an informal poll of participants on their level of advocacy or political/legislative activity at the local, state and national levels, emphasizing that it’s important for pharmacists to get their message out to legislators. He noted that pharmacy’s adversaries are a consistent presence on Capitol Hill, sending a message that is most likely not pro-independent pharmacy, so pharmacies need to represent their interests—and those of their patients—to legislators. He discussed what a successful legislative strategy entails, namely leadership, bipartisan, bicameral, and grassroots strategies. The Congressional district director and health legislative aide are the targets, he explained, because they have the ear of the Congressman or Congresswoman.
The panelists—all experts who have participated in legislative advocacy—expanded on Mr. Grau’s observations, offering specific steps that participants can take as advocates. It’s critical to keep things simple, they noted, and one of the best ways to get the message across to legislative staff is by discussing a specific patient example rather than discussing oneself or one’s pharmacy business. The panelists also emphasized that legislative staff are accessible and like to hear from constituents, so they urged participants to call, meet with, and build a relationship with legislative staff on behalf of themselves and the patients they serve. They also reminded participants to rely on the support of the panelists’ organizations.
Randy Falkenrath, Consultant to the Specialty Pharmacy Industry
Mr. Falkenrath began his session by outlining key trends impacting payors, such as a robust specialty drug pipeline and rapidly escalating costs, as well as industry consolidation and its effect on the market. He described the factors driving specialty growth and discussed payor cost and benefit controls at length, including site-of-service and provider contracting strategies. Mr. Falkenrath concluded with a discussion of network, distribution, clinical, and patient strategies that home infusion and specialty pharmacies can employ to stay competitive in the marketplace.
Elizabeth DeMeo, Vice President – LTC Pharmacy Account Management, MHA
Steve Hebel, RPh, Director of Operations, Corum Health Services
Brian Kramer, BA, BS, MBA, President, Forum Extended Care Services
Alan Obringer, Executive Director, Senior Care Pharmacy of Florida
Ms. DeMeo presented the results of the 2016 MHA Independent Long-Term Care Member Study, which she noted was a resource developed to help independent long-term care (LTC) pharmacies gain insight into financials, operations, and technology utilized by their peers for benchmarking purposes.
She explained that the majority of respondents in this nationwide survey, serviced fewer than 2,000 residents and 50 facilities; dispensed over 12,000 prescriptions, including 2,000 branded and 10,000 generic; and reported less than $5 million in annual gross revenue. Seventy-five percent of the revenue was derived from both skilled nursing and assisted living facilities. The average pharmacy respondent employed fewer than 40 full-time employees.
Ms. DeMeo was joined by a panel of LTC pharmacists that shared how they utilize the study — which they noted is the only one specific to long-term care pharmacy — to compare their businesses with others of similar size and geographic region. They also offered their insights into other key indicators discussed by Ms. DeMeo, highlighting trends that are impacting LTC pharmacies and offering suggestions for ways to stay competitive in the market.
Timothy Hutchison, President & CEO – SoftWriters, Inc.
Every age has had its one defining technology that shapes industry, and clearly, the transformative technology of our time is information technology, said Mr. Hutchison. IT has changed the way all businesses work and the way we do business.
Using diagrams, he contrasted the IT network infrastructure for small- and medium-sized businesses with the significantly more complex network infrastructure of a typical pharmacy with all its interrelated components and relationships. He then discussed trends in spending, revenue and budgets among businesses, noting the disconnect between increased revenue projections and flat IT spending. He reported that recent surveys show that only 40% of companies plan to increase their spending on IT in 2016, and 60% of CIOs and CTOs said that their IT budget is “somewhat inadequate” or “very inadequate.” The bottom line, he said, is that IT is being asked to do more with less.
Mr. Hutchison also discussed the survey responses on budget allocation, IT spending per user, hardware and software spending, managed services, IT initiatives, staffing, and security perceptions. Security, he said, is particularly underfunded, increasing organizations’ risk. All of these are important areas for increased technology investment.
Matthew Lewis, Director, Long-Term Care Pharmacy Sales Managed Health Care Associates, Inc.
Kendra Cairns, Business Office Manager – Senior Care Pharmacy of Florida
Kyle Janssen, PharmD, Owner & President – Community Pharmacy Services
Tami Laflen, Vice President of Finance – Consonus Pharmacy Services
Mr. Lewis led an interactive panel discussion centered on the challenges LTC pharmacies face with prior authorizations (PAs) and third-party audits, and best practices for dealing with them. He noted that prior authorizations and increased formulary restrictions create operational challenges, delays in medication dispensing, and ultimately delays in patients receiving their medications.
Some of the best practices discussed by the panelists for prior authorizations are having a staff pharmacist review rejected PAs in order to recommend an alternative to the prescriber, which is often the path of least resistance; streamlining operations by going “paperless” with software that tracks all PAs within an electronic system; and using a test-claim function so that it’s possible to know prior to actually creating a transaction whether it’s going to be rejected or not. The panelists were also unanimous in their suggestion to work at communication and building relationships — for example, having a point of contact at the nursing home who is in charge of PAs and is going to be held accountable on the facility end can help tremendously.
The best way to deal with a third-party audit, the panelists said, is to be proactive rather than reactive. Their best practices include having knowledgeable staff that are dedicated to audits; preparing for the audit thoroughly by having everything that was requested; providing the auditor with the most accurate information you can from the very beginning; and reviewing all documentation carefully in advance to make sure you have what’s needed and in the order in which it was requested.
Burt Zweigenhaft, President – National Association of Specialty Pharmacy
Heather Bonome, PharmD, Director of Pharmacy – URAC
Julie DeLong, CFA, CVA, Managing Director, Valuation & Financial Risk Management – Navigant Consulting, Inc.
Dino Martino, RPh, Executive Director and General Manager – PerformSpecialty
Thomas Nusbickel, Head, US Market Access, Biologics Hospira, a Pfizer Company
This panel representing a cross-section of the industry focused on trends including the exponential increase in the number of specialty pharmacies seeking accreditation to meet payor requirements for quality and participation in specialty pharmacy networks. There was discussion regarding the challenges in assessing fair market value given the different nature of specialty pharmacy, the broad array of services and data that specialty pharmacies provide, and the lack of a universal definition for work components beyond core activities for dispensing or purchasing drugs.
Panelists highlighted the move from standard dispensing and therapy to clinical assessment of every patient and establishment of care plans to manage chronic conditions. All panelists agreed there is an increased emphasis on adherence, outcomes, and outcomes measurement thru data and collaboration with partners. The challenges with specialty pharmaceutical product access and acquisition were also highlighted. The panel concluded with discussions on the educational needs and the partnership between manufacturers and specialty pharmacies in the emerging biosimilars market.