Category: Case Studies

Growth strategy for wound care management services organization

published date
December 1st, 2017 by

The company had developed a robust business managing advanced wound care services in the hospital setting and was seeking to accelerate its growth by opening freestanding hyperbaric oxygen (HBO) centers for wound care and other indications.

Health Business Group team performed a systematic review of the evidence base for each non-wound care indication for HBO, characterized patient demographics and market size by indication, and mapped out the reimbursement environment by geography and indication. Primary sources included interviews with competitors, equipment suppliers, trade associations, health plans, financial analysts and medical researchers. We also utilized independent evidence based clinical review publications and health plan policies to map out the scientific evidence by indication.

We developed a report card for each indication, presented an assessment of the market dynamics, and mapped out alterative market entry strategies including acquisition and greenfield development. Senior management and the board ultimately concluded that it was more promising to continue investing in the core business than to diversify into the freestanding market.

Sustainable business model development for multi-stakeholder organizations

published date
December 1st, 2017 by

Health Business Group has provided technical assistance in sustainable business model development and strategic planning under the auspices of a major philanthropic foundation. Since 2009 we have worked with grantee organizations in California, Maine, Massachusetts, Michigan, Minnesota, New Mexico, Ohio, Pennsylvania, Tennessee, Washington, and Wisconsin.

We employ a six-step approach, which we customize based on the needs of individual alliances:

  • Characterize stakeholders –by conducting in-person interviews with 20-50 current and potential stakeholders to understand their motivation for participating in the alliance, determine how the alliance fits into their overall objectives, generate suggestions for areas of focus, and to obtain initial buy-in to support sustainability
  • Develop value proposition –by determining the value that each stakeholder group assigns to each current and potential activity, using best practice findings from the Health Business Group knowledge base, and developing a map of value creation potential by stakeholder
  • Determine scope –by identifying the key dimensions for strategic decision making, specifying the discrete choices that can be made on each dimension, documenting the advantages and disadvantages inherent in each choice, and deciding which choices to make. The deliverable is a one-page summary of strategic alternatives with more detailed rationale pages for each choice
  • Define the business model –by specifying the service offerings to be delivered, defining ways those offerings could be paid for, and identifying who is likely to pay and how much. The deliverable is a simple business model schematic
  • Identity risks –by probing for potential weaknesses in the business model and considering the macroeconomic and political context. The deliverable for this step is a risk assessment and mitigation plan
  • Prepare transition plan. Most alliances can expect to continue to receive funding from the foundation for three or four years beyond our engagement. This provides the opportunity to develop a transition plan, which includes identifying gaps between the future sustainable state and the current state, developing a plan to close key gaps, outlining a process for monitoring and making course corrections

Medical benefits management diversification for PBM

published date
December 1st, 2017 by

A leading pharmacy benefit management (PBM) company had achieved a robust growth trajectory via organic growth and acquisitions. Health Business Group was asked to evaluate the attractiveness of other medical benefits markets including oncology, radiology, orthopedics, and medical devices and to develop an entry strategy for the more promising ones.

We developed a baseline market size estimate for each opportunity, using secondary sources to segment the market by key characteristics. We also researched pricing levels and market growth along the same dimensions.

We assessed the impact of ongoing and anticipated industry changes on the attractiveness of the market. Benefits management is a dynamic field, with significant changes underway in payment methodologies and reimbursement levels, evolution in evidence-based guidelines, concerns about patient safety, new technologies, and changes in patient mix.

We investigated the competitive landscape to understand current capabilities of the main players, and to assess the value of our client’s technology, knowhow and relationships in these fields

We worked to create a rigorous fact base built upon primary and secondary research. We provided a refined assessment of the attractiveness of the opportunity as well as market entry options with advantages and disadvantages of each. For the most promising segment we conducted acquisition screening and performed commercial due diligence on two companies.

Health plan IT systems due diligence for private equity firm

published date
December 1st, 2017 by

A large private equity firm asked Health Business Group to assist in the commercial due diligence of a core information technology provider for health plans.

The target was a leading player with smaller health plans and was aggressively trying to gain ground with larger customers but encountering entrenched competitors. The target had a compelling offering that matched up well with competitors along the areas of benefit administration, care management and member engagement. In addition the target offered a more modern, modular system design that provided superiority in terms of performance, flexibility and cost. Health Business Group was asked to focus efforts on validating the aggressive revenue plan necessary to justify the deal terms and valuation.

We provided input into key questions upon which valuation would depend:

  • From the customer perspective, how does the target’s offering compare to other direct and indirect competitors?
  • How satisfied are existing customers? What are the key sources of satisfaction and dissatisfaction?
  • What industry trends will drive new product requirements (e.g., ICD-10, new HEDIS reporting requirements, new payment models)?
  • How do prospective customers view the target? How well-positioned is the company to move up market?
  • What is the decision-making and contracting process? Who are the decision makers and influencers? How is the process conducted? What is the timeline?
  • What are typical budgets and price points?

Based upon management meetings, industry conferences, and discussions with health plan management across marketing, operations, IT, and provider services domains, the due diligence findings showed significant upside revenue potential but a longer sales cycle than projected. The transaction was ultimately completed but at a lower valuation.

Diversification strategy for healthcare analytics vendor

published date
December 1st, 2017 by

A client with cutting-edge technology for point-of-care clinical decision support for providers was pursuing opportunities to expand into the adjacent payer and pharmaceutical markets.

Expansion into new markets meant a whole new set of direct and indirect competitors. Health Business Group provided an in-depth perspective on the market and competitive environment for healthcare analytics across the relevant markets and helped the client understand how the market would evolve over time.

We segmented the analytics market by major customer type, estimated the size and growth of each segment, and identified the leading players in each segment. We did extensive analysis of the top 15 to 20 competitors in each major segment. This work included a detailed outline of service offerings, customer segments served, key customers, value proposition, size and growth, alliances, M&A activities, sources of data, pricing structure and levels, reputation, and strategic intent. A fact base was constructed through a combination of primary and secondary research, including company and customer interviews, industry conferences, market research, SEC filings, and analyst reports.

With a shared, in-depth understanding of the current and evolving healthcare analytics marketplace and the key players, we worked with management to develop a set of strategic and tactical implications, including business development, product development, pricing, positioning, and bundling.

The client highly valued our work product and collaborative process. Over the following year, the client was successful in expanding into new markets and was ultimately acquired by a national health plan.