Project Lever

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Prof. Zack Cooper is an Assistant Professor of Health Policy and of Economics at Yale University . Prof. Cooper is a health economist and an expert in health care policy. He received his PhD from London School of Economics in 2011.

In his speech at the Healthbox accelerator kick-off in Boston on Thursday, August 16^th, Prof. Cooper spoke of the need to shift from selling individual health care products towards selling health outcomes (a service). An example of such approach would be switching from selling a drug to selling a package to treat cancer patients. In the future, companies would be delivering the result, rather than selling a particular product.

The story of Warfarin drug illustrates the point particularly well. 40% of patients on Warfarin miss at least 20% of their doses. In an academic study, Volpp et al offered patients to participate in a lottery. If they took their pills, they had 1 in 5 chance to receive a $10 reward, and 1 in 100 chance to receive a $100 reward. As the result, the consumption of medication increased by 60%!

Here, instead of selling pill dispenses alone, healthcare innovators need to be selling adherence by packaging a pillbox, a lottery service and patient monitoring in a single package. If a young company is approaching Blue Cross Blue Shield with a similar product, they would be selling 30% increase in adherence rather than an individual item.

Ultimately in healthcare, the challenge for young companies is identifying their customers. It is not clear who is buying the service in the changing healthcare landscape. Companies need to ask themselves, what healthcare player is under the most pressure to reduce spending? Where is it going to come down? What part of healthcare ecosystem will be growing over the next 5-10 years? From the strategic vision, how do we align these pressures in the landscape we’re facing? The companies that find answers to these questions are going to succeed.

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