I recently faced a tough decision- do I repair and revive my home air conditioning unit yet another year or do I replace it? As I discussed the options with the project manager for several hours on a Saturday morning, thankfully before this incredible heat wave, I was struck at how similar this decision was to the business decision to move Life Science Managed Markets divisions to the powerful world of Advanced Analytics.
Sound like a stretch? Let’s compare the 2 system purchasing scenarios; I think you will come to a similar conclusion.
Rationale- Both purchasing decisions are driven by a perceived inefficiencies, compelling events, and a need for improvement- “How much money could be saved through new technology driven efficiencies?”
Timing of Compelling Events- The compelling event is often driven by timing of anticipated changes. For me it was the typical hot and humid southern summer, for life science organizations it can be driven by the timing of health care reform market changes, generic intrusion, or new product launches.
Worthy Investment- Each purchase requires a look at the bigger financial picture- without it- the decision will always be “repair over replace”. Investment decisions include: “How long will it take to capture my return on investment? Will quality and dependability improve? Will the purchase improve my marketability and make me more competitive?"
Realized Savings- Savings for both systems will begin immediately upon installation and system use.
Improved Security- Each system includes advanced technology to alert users as conditions change.
Perhaps the comparison stretch is easier for me because I work with both issues directly or indirectly every day- and as the project manager outlined the 2 A/C options I faced, I noted similarities:
Option 1- Keep the existing system, recharge and repair it. The costs and time associated with this option are minimal, yet so are the benefits- leaving several concerns unaddressed. This is the least expensive option, at least from a cash outlay expense, yet is it really the least expensive? What about the opportunity cost of missed savings that can be found in the new system?
Option 2- Replace the old unit with a well-known brand that provides a high-efficiency, warrantied system with numerous upgrade options, removing the inherent concerns with the current system. For life science organizations concerns include: disparate data sets, outmoded modalities- such as spreadsheets, and insufficient capabilities- resulting in contracts that are seen through a limited perspective.
If you are running a life science managed markets division of any size you are weighing these 2 options every day whether you realize it or not, so what are you choosing? One vice president of Strategic Accounts stated, “In essence we are trying to optimize, but when it comes down to brass tacks, we get what we get”. That is a tough place to be in a multi-million dollar negotiation with a health plan or PBM. How long do you plan to stay at this disadvantaged position? Are you accepting this as your fate due to the compelling events mentioned above?
According to many of you interviewed by Pharmaceutical Executive, http://www.sas.com/reg/wp/corp/47003 you have reached the tipping point or the compelling event, yet you are unsure where to find Option 2. You recognize, “ A strong contracts analytics solution can ensure millions of dollars are not left on the table during contract negotiations.” Isn't it time to invest and improve your "comfort level" just as I did with my new home air conditioner?