Enabling a New Line of Business and a Repeatable Model for Innovation


A Performance Improvement Case Study

North Highland expanded an ongoing relationship with a leading medical center to allow it to leverage its exemplary specialty pharmacy into a new line of business, creating significant value for patients, the industry, and the client’s bottom line.

THE CHALLENGE

A world-class academic medical center wanted to commercialize its strengths in various vertical business units, beginning with its industry-leading specialty pharmacy. Industry experts predict specialty drug spend will more than quadruple by 2020, reaching approximately $402 billion a year.1 Specialty pharmacies help control the skyrocketing cost of medications for conditions such as cancer and multiple sclerosis, often providing more cost-effective medications through an unprecedented level of coordinated care between medical providers and pharmacies. By tracking lab work, how drugs are taken, reactions, and medical conditions together, specialty pharmacies are in a unique position to reduce costs and improve patient outcomes. Analysis of such data in the aggregate has far-reaching implications for improving the efficacy and cost of specialty care.

The medical center is dedicated to patient care, research, and biomedical education with multiple hospitals and facilities. Its leadership wanted to evaluate potential organizational structures that might offer a suite of pharmacy services. North Highland helped the client evaluate the business cases including feasibility and client capability across potential services including pharmacy benefit management (PBM), mail order pharmacy, retail pharmacy, contract pharmacy, home infusion, medication therapy management, consulting, and managed services. The entity would enable affiliate hospitals to run specialty pharmacies and support them in providing a quality of care equal to that of the medical center.

The organization quickly entered uncharted territory. To develop this growth and innovation strategy, it needed help identifying the appropriate services to provide, infrastructure and investments needed, applicable rules and regulations, and revenue potential. It needed to determine the services it would offer, the best way to leverage existing infrastructure and investments in its specialty pharmacy, and identify all possible revenue streams of the new business.

The medical center’s leadership team engaged North Highland to complete the research and design an actionable framework for developing specialty pharmacies in other hospitals. The goal? Expand the customer base and grow revenues.


THE SOLUTION

North Highland had earlier helped develop the client’s prototype specialty pharmacy, a thriving entity that grew 400 percent in its first four years of operation. It leveraged these learnings as it began to identify business opportunities for the new pharmacy vertical and develop a scalable, repeatable process the client could use when opening and supporting specialty pharmacies in other medical systems.

To start, North Highland gathered diverse expertise, collaborating with the client’s subject matter experts for an iterative, holistic approach to the project. North Highland also conducted primary and secondary research, reviewing industry reports and white papers, evaluating external campaigns, and attending industry conferences to conduct market and competitor analysis. North Highland developed business assumptions, identified legal and licensure requirements, assessed potential capital sources, evaluated opportunities for partnership, and created high-level pro forma sales projections.

Based on revenues and capabilities, North Highland helped the client prioritize those areas of service.

To support sales enablement, North Highland developed a detailed playbook including products and services collateral, FAQs, industry and market information, and competitor profiles. A comprehensive staffing model, which included near-term and forecasted needs, was designed to effectively balance expenses with resource needs.

All findings were tempered with real experience; North Highland used actual data and costs from the medical center’s existing specialty pharmacy to inform and validate financial models associated with offering pharmacy services to affiliate hospitals. This allowed them to develop a detailed profit and loss statement to align expectations with reality for the new business.


THE RESULTS

No other organization was offering the same level of coordinated medical and pharmacy care. This represented an enticing market opportunity for the new entity to provide a full suite of pharmacy services to affiliate medical centers. Through a detailed sales forecast and cost assessment, North Highland evaluated the financial viability of the new business, making a case for funding to the client’s leadership.

Upon approval, North Highland created the legal entity and necessary operations to successfully move forward with the specialty pharmacy business model – producing a repeatable process the medical center can use to expand other lines of vertical specialties into separate, wholly-owned entities in the future.

Within a matter of months, and before the official launch of the entity, North Highland helped the client to secure customers for the new pharmacy business. The organization will pursue its goals by increasing the availability of specialty pharmacy services in the region, decreasing the cost of specialty medications and improving patient outcomes.

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