Johnson and Johnson CEO Alex Gorsky told investors that the healthcare industry’s investment in value-added services, like patient support programs, remains in “early innings.”
His remarks, made during the company’s year-end earnings call on Tuesday, signal an increased willingness from the drug and device giant to supplement its product portfolio with more services and partnerships.
Gorsky affirmed J&J’s role in implementing value-added services in response to a question from an analyst.
“Overall, we feel that we’re still in the very early innings of what I’d call is the market evolution,” Gorsky said. “The patient is weighing in much heavier in these decisions, as they take on higher co-pays, as they can get more information that’s available online.
“Frankly, they have just higher expectations about their ability to participate in the healthcare decision-making process,” he added.
The pharma industry has increasingly looked toward “beyond the pill” services as a way to satiate demand for outcomes-oriented care, spurred by the Affordable Care Act, the empowerment of consumers through online resources, newly cost-conscious patients who are concerned about the higher rates of cost-sharing they face and pressure on drug pricing from pharmacy benefit managers.
DePuy Synthes, J&J’s orthopaedic and neurosurgery devices arm, in November launched a comprehensive outpatient solutions program with the goal of improving patient outcomes in joint replacement.
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The support program—dubbed Depuy Synthes Advantage—includes a suite of educational services to impart best practices for providers on how to facilitate faster recovery times and better outcomes.
It also includes a subscription-based software service known as CareSense, which is aimed at allowing providers to more easily collect data on patient outcomes, patient satisfaction and the costs of care in outpatient services.
Hospital systems want to know how they can create better outcome-oriented partnerships with pharma companies, Gorsky said.
“What we see is an evolution more towards a business-to-business relationship, where customers want to see innovation,” he said. “[Those businesses want to know:] how can we work together as part of a broader partnership that ultimately is focusing not just on a product sell, but actually on an outcome, on an episode of care for the patient. We are seeing those organizations becoming more and more interested. And that’s why we’re adapting to make sure that we’re part of that.”
Johnson & Johnson’s medical device business reported sales of $25.1 billion for 2015—a decrease of 8.7% from 2014. J&J announced last week that it will cut 3,000 jobs in the same business unit over the next two years.
