Rae Woods (00:31):
From Advisory Board, we are bringing you a Radio Advisory, your weekly download on how to untangle healthcare's most pressing challenges. My name is Rachel Woods. You can call me Rae. We spend a lot of time on Radio Advisory focused on the financial headwinds facing providers and plans, but today I actually want to zoom out and think about some of the other players that operate in the broader healthcare ecosystem. As plans and providers face more pressure, they've got tighter margins, they're dealing with policy changes, aging populations, they're going to increasingly scrutinize their partnerships.

(01:05):
And that's going to be hard on medical device and pharmaceutical manufacturers who, by the way, have their own headwinds and policy shifts that they need to deal with. The reality though, is that life sciences organizations are going to need to rework their value narratives if they want to compete in today's healthcare market and win. To help us understand how life sciences organizations are actually doing that, I've invited advisory board life sciences experts, Gina Lohr and Nick Hula. Nick, Gina, welcome back to Radio Advisory.

Gina Lohr (01:37):
Thanks, Rae.

Nick Hula (01:39):
Thanks, Rae. Great to be here.

Rae Woods (01:40):
Obviously, everyone in healthcare is paying attention to the headwinds and the headlines and the things that make our business hard right now, but it's also impossible for any one leader, let alone any one sector to really understand the breadth of what's happening for a different stakeholder. You two speak to life sciences leaders every single day. What are they saying when it comes to the challenges that provider and payer businesses are experiencing in 2026?

Nick Hula (02:10):
I think that they understand that their health system and their payer partners are under pressure. They tell us they understand that pressure very clearly, but what their focus is right now is on, okay, how do we need to transform our business in response to that? How could we be best helping our partners solve challenges they are facing given those pressures?

Rae Woods (02:34):
Is that how they are predominantly responding?

Nick Hula (02:37):
Yeah. They need to be thinking about how are we changing the way that we are demonstrating or communicating value to these leaders to hopefully match how they think about solving challenges that are very pressing for them. So it's not just about saying, okay, let's have the best ad during the Olympics, which has finished up last month, but it's about really thinking about how are we communicating value in a new way to our payer or health system partners.

Gina Lohr (03:04):
I also think part of what's tricky right now is that the landscape has been changing so rapidly in front of us, and then we see more changes coming into the future. And so, as partners, as life sciences companies are thinking about what their providers and payers are needing, it's not just right now, but they're trying to forecast what are they going to be needing two and three and five years out so that they can be prepared to meet them there.

Nick Hula (03:37):
And the way that they meet their partners in that future requires them to make changes right now. Any type of clinical trial or product development that they need to put into place to be right for healthcare in 2030 or 2035, they can't make that change in 2030 or 2035, they need to start making that change now.

Rae Woods (03:57):
What actually needs to change to evolve to match the market so they can be prepared for 2030?

Nick Hula (04:05):
They need to be changing who they are communicating with. They need to change what they actually say to those leaders, and then they also need to change how they are generating the evidence that fuels their new value propositions.

Gina Lohr (04:21):
Sometimes that means that they need to be changing the narrative and what they're communicating. Sometimes that means that they actually need to be evolving their products. Sometimes it just means that they need to be getting better data to meet the needs of their customers to talk about the value that their products are bringing.

Rae Woods (04:38):
So this is actually a lot of change that life sciences leaders need to adapt to. Am I wrong on that?

Gina Lohr (04:43):
I mean, aren't we all adapting to a lot of change?

Nick Hula (04:46):
They're not alone in that.

Rae Woods (04:48):
Gina, you just said two things need to change. The product needs to change, but also the narrative. And I'm surprised that it's both and, because when I think about modernizing the part of healthcare that is responsible for developing medical products, I tend to think, oh, we just need to make the product better. Maybe it's a more tech-enabled product, which I'm hearing you say might be part of the solution, but it's not the entire solution.

Nick Hula (05:13):
Value is the most important thing that a life sciences companies need to be communicating about their product. At any conversation about value, that's going to require human judgment, that is going to require trade-offs that a human needs to make. Ultimately, life sciences can't rely on AI or technology or whatever that is to be a solution in making a sale or renewing a contract or being the center of why someone buys a new product. It's a part of it, but humans are going to be the ones who are deciding what is value for our product, and a buyer needs to interact with a human at some point who's communicating that value to them.

Rae Woods (05:53):
Let me say it in a different way. It's not enough anymore to just have a better product or to just have the next version of innovation in a clinical product.

Gina Lohr (06:04):
Sometimes value comes from a better product, the next generation, what have you. Sometimes the value comes from using the tried and true, well-tested, old, reliable standard and it's really the narrative and the value story that helps guide decision makers through that process

Nick Hula (06:24):
Right.

Gina Lohr (06:25):
Because it might depend on the patient or the goals that you're looking for and as those change, the best product will be different.

Nick Hula (06:35):
And can I put a spin on that as well in terms of technology not necessarily related to the product itself, but technology also related to the process of communicating value. AI and technology can also help in the process of communicating that value. It can allow life sciences companies to develop faster, more effective human relationships, really target, okay, this is what this one organization or partner I have is struggling with. AI can help them identify that so they can talk directly to that challenge, or it can allow an organization to knock on the right doors instead of more doors overall.

Rae Woods (07:11):
So we can't just think product only or product first. We have to think about the who, the what and the how, and tech can help improve who life sciences organizations communicate with, what they say to those leaders and how they generate evidence, which is where I want to go next in our conversation. And I want to start with the who. What are the perspectives that life sciences leaders need to take into account and frankly, ultimately win over to prove the value of their clinical products?

Nick Hula (07:40):
There are four stakeholders that I would call out that life scientist needs to win over. The first one is the payer and a purchaser. So they're the ones who are controlling whether or not a patient has access to a product or access to care that leverages a certain product. The second one is health systems. So, they're really critical right now because they are changing how would they define value.

Rae Woods (08:04):
Under the financial pressures that they're feeling. And I should say purchasers are feeling those financial pressures as well.

Nick Hula (08:09):
Exactly. Financial pressure they're facing, the business transformation, competitive pressures they're facing as well. They need to be reviewing products in new ways to match those new challenges that they're facing. The third one is ambulatory. This is of course a big hot topic across healthcare. It's a huge area of growth. I think life sciences needs to know, okay, how am I demonstrating value specifically towards that side of care delivery? And then the final one is the actual end user of a lot of these products that life sciences companies are coming out with, and that's the clinician. How are they helping clinicians determine, hey, this thing that I'm going to use to make my patient better is valuable.

Gina Lohr (08:49):
Historically, we thought of clinicians making the decision about what drug or device a patient uses, but as costs rise and as the healthcare industry organizes in different ways, we see payers and health systems also growing roles in informing that decision, we'll say. So, we went from used to seem like a much simpler system to much more complex with a lot of decision makers along the way, and now that is getting even more complicated because you have care moving from often a more controlled environment in hospitals now to outpatient and ambulatory environments that have a whole new set of decision makers.

Rae Woods (09:34):
Yeah, this is not a short list, and some of the players in this list are new, or even the things that the legacy players need to hear from their life sciences partners are different. Let's start with the purchaser here, which purchasers represent a pretty big bucket. We're talking about the health plan, the employer, the PBM in this case. And I'll admit here, I always thought that the intersection of life sciences and purchasers was merely a compliance task. Proving value of a product means, just to be simple, getting FDA approval for that product. Said another way, it was enough to check the box on safety and efficacy for payers to then turn around and cover a device or a drug. Is that no longer true?

Gina Lohr (10:21):
Right. Well, that's one of the places where we've seen the story changing across the last decade or more. It really used to be a question of, has it been approved by the FDA? Yes. Then you're likely to have payers paying for that drug, purchasers covering that drug. But more recently, purchasers want to know, is this a better and more cost-effective option compared to the status quo?

(10:48):
Ideally for a patient population that looks really similar to the types of patients that that purchaser cares about. And so, there has certainly been a rising burden on the life sciences companies to prove that products are safe, efficacious, cost-conscious in the real world, potentially for specific populations compared to the status quo for those to be covered.

Rae Woods (11:16):
The burden then on life sciences has gone up because the bar for evidence has gone up and the responsible party for providing that evidence, frankly, especially if that product is a drug, I think, is the life sciences company. How are they then doing that?

Gina Lohr (11:34):
It's been really interesting to watch how they are generating evidence differently, thinking differently about their movement into the market. I think a great example here is GLP-1s, because we've all watched how they were originally approved for diabetes-

Rae Woods (11:49):
Oh, yeah.

Gina Lohr (11:50):
And then obesity, but the FDA approval, especially for obesity, wasn't necessarily enough for payers to want to cover them. But life sciences companies saw the writing on the wall early on and they actually started studying some populations that might benefit. Early on, they started these clinical trials before it was even strongly on the market for diabetes and obesity demonstrating the value for sleep apnea or for cardiovascular disease.

Rae Woods (12:18):
They're spending a lot of money, time, resources, investing in that research, it's not free, it's not cheap to prove the value of different, in this case, different use cases for the same product.

Gina Lohr (12:33):
Exactly. And you can see some of the leading competitors in the GLP-1 space staking their market share based on the different additional conditions that they cover, like sleep apnea or MASH, and that is paving the way there.

Rae Woods (12:48):
GLP-1 is a really obvious example to me, I imagine that there are just going to be more examples of life sciences companies needing to do more of the evidence generation when the product is very expensive. GLP-1s happen to be one of those because of the cost of the drug and the size of the population, but I'm not sure that there are cheap new drugs anymore. And so life sciences companies are stepping in to fill these gaps above and beyond what the FDA has historically done.

Gina Lohr (13:14):
Something interesting that we're watching, speaking of expensive therapies, cell and gene therapies, even after some of those early to the market are approved by the FDA and payers are often covering them, we're seeing a trend of often those therapies are being covered under single use agreements. So, instead of the purchaser saying, "We will always cover this therapy for this particular condition." They're still waiting for more evidence, possibly real world evidence. How are these therapies performing five years out in the real world in real patients before they give it that final formulary approval?

Nick Hula (13:55):
This is not just something that drug manufacturers, pharmaceutical manufacturers need to be thinking about. For the [inaudible 00:14:02] side, it's worth engaging payers, purchasers, understanding how they determine value for two reasons. First, if payers and posters are putting pressure on health systems to be demonstrating quality, cost-effective care, it behooves a lot of life sciences, device suppliers to be also matching their value narrative to those pressures that their health system customers are facing, helping them communicate to health systems how, hey, using our product is going to help you position yourself to payers as a high quality, cost-effective provider.

(14:33):
The second thing I would always say to the suppliers in the med tech is, it's important to be engaging a lot of these payers and advocating for access to care that leverages your product. Payers may be thinking about covering a procedure in a new way if there's a new device that allows that procedure to be done differently. How are you communicating with payers to ensure that they're covering that? Or if a device or supply is more expensive, how are you advocating to payers that, "Hey, we need to be reimbursing providers at a greater rate to account for this new innovative supply that's coming out."

Rae Woods (15:59):
Let me name the risk of inaction here. The risk of inaction of just doing the compliance task, the safety and efficacy, is that the drug doesn't actually make it on formulary. The purchaser has decided this is not cost-effective compared to status quo, it's not higher quality compared to status quo. Or maybe it's the device that doesn't make it into the OR. How quickly do life sciences companies need to adjust their strategy here when it comes to evidence generation?

Nick Hula (16:25):
The urgency here to act now is really very high. Organizations need to be accounting for again this real world evidence generation or other payer needs before launch, as they're developing that product, as they're developing the evidence around this product, not after it's done at an, okay, we're going to spend the next four years now trying to develop this narrative while it was already out in the market. It needs to be done before you even bring it to market in the first place.

Gina Lohr (16:53):
So what we're seeing within life sciences companies is much more cross-functional work. You need your experts in plans and payers, your clinical experts, your commercial experts working together and figuring out what those real world studies look like well before launch date. And so, really life sciences companies are needing to implement just new ways of working across the whole company.

Rae Woods (17:23):
What are health system leaders demanding from their life sciences partners? If we just covered purchasers, what are the health systems looking for?

Nick Hula (17:29):
Health systems are looking for more, more, more. They're looking for more data that the product is going to help them achieve their own goal, be that financial sustainability, be that cementing their place in a marketplace, be that gaining referrals from physicians. We're seeing them just take more metrics into account when they're evaluating any product, be that a drug, be that a device.

Rae Woods (17:53):
You said more metrics and more people. And those two things can compound each other if those people are looking at and making decisions based on different metrics.

Nick Hula (18:04):
Right, exactly. Health systems are looking at things like real world evidence, revenue related metrics, vendor reliability even, in addition to all the stuff they used to look at in their value analysis committees or they're in their P&T committees, like the cost and the quality impact. But like you said, Rae, hey, it's the supply chain rep who's really going to be looking at that vendor reliability. It's that finance revenue cycle rep that's really looking at that revenue piece. And for life sciences, it gets a little complicated in targeting, okay, here's the right pieces of my product and value for my product to be pushing to the right decision makers and to the right influencers.

Rae Woods (18:44):
So step one is just identifying which metrics on what sounds like a growing list of metrics carry the most weight for any given leader or any given organization.

Nick Hula (18:54):
Right, exactly. There are going to be some organizations who are going to be looking at a product and really valuing the value narrative around, "Hey, this thing is going to allow you to be keeping up to pace with clinical innovation and being the most cutting edge provider in the market." And then there's going to be a different provider who's going to look at that same product and really value the value-based care narrative for that product. And there's going to be a third health system who's going to look at that exact same product and take a much more simplistic cost versus quality analysis of it.

(19:22):
And so for life sciences, the challenge there becomes doing those things like the segmenting, like the archetyping to say, "Okay, for these types of organizations, here is that value narrative that I need to run at them with versus this other organization." But also having that value narrative that's flexible enough and covers enough metrics to be able to fit what different health systems are looking for.

Gina Lohr (19:45):
Yeah. I hear from so many life sciences companies that they're rethinking their segmentation strategy and really leaning in on how do we break up the landscape of all of the health systems out there. And I'm a little worried that they're going to spend all of this investment in segmenting and then realize that we're in the era of special snowflakes and that the value is in the deep relationships that they build there. And I think it's interesting how they're deploying AI to help them to come up with some of those tailored narratives as well. I think that's an area that we're going to be seeing more and more of in the life sciences space.

Nick Hula (20:22):
I also think a lot of the takeaways are similar to the exact same thing that you just mentioned about purchasers too, of those like breaking down the barriers between silos, cross-functional across the life sciences organizations, leveraging those market facing teams to gather intel on like, "Hey, here's what we're hearing from customers." Feeding that to the marketing or health economics and outcome research teams to be building that evidence. Training teams who then training the commercial facing folks to be communicating that evidence and cycling through as a virtuous cycle of sorts, but breaking down those barriers between functions just as critical it is from the health system side, as it is in communicating value to the purchasers.

Rae Woods (21:01):
But if there's one thing that nearly every provider is focused on in 2026, it's ambulatory growth. How does proving the value of clinical products shift when we are moving outside of the four walls of the hospital and into the ambulatory space?

Nick Hula (21:18):
It's the same process of understanding what are those unique needs amongst the growing list of metrics that they can communicate the value of the products within, but it's just different metrics that are going to be important to the ambulatory sites. A life sciences organization can't just copy their value narrative, what worked in the hospital and paste that into selling that product to an ambulatory site and assume it's going to work.

Rae Woods (21:42):
And I imagine that's especially true when we're talking about medical devices.

Nick Hula (21:46):
Right. Thinking things like ambulatory surgery centers or freestanding ambulatory sites or office-based labs, a lot of these sites are operating on slimmer margins. A lot of these sites are smaller physically. A lot of these sites have more diverse ownership models, not just a health system owning them. It might be a private equity group or an independent physician group owning them. All of those differences are a different context in which their products are going to be used, requiring probably a whole new value narrative to be fitting that new context. So that means that products are going to need to be used on slimmer margins or fit into those smaller operating rooms or exam rooms, or could appeal to a physician who is the decision maker just as much as it can appeal to a private equity backed corporate entity who is the ultimate decision maker of this.

Gina Lohr (22:36):
Nick, I'm curious, I know you're studying ambulatory purchasing right now. Do you have a hypothesis on whether at the end of the day, ambulatory surgery centers are going to be sort of special snowflakes valuing different metrics like we see within health systems, or are you expecting that they're going to have a narrower range of what they're looking for because there's a more standardized set of procedures that they offer typically?

Nick Hula (23:05):
Right. That's a really great point, Gina. And you think you're absolutely right that because they're providing care just those usually lower acuity, more simple cases, where I'd push back on that is saying that a lot of these sites are going to be just focused on one single specialty. So, a cardiovascular ASC is probably going to be thinking about purchasing a lot different than an orthopedic ASC would. We're going to be thinking about things a lot differently than a place that just provides GI services or endoscopy, et cetera, et cetera. So I think the different specialties are going to be a great way for organizations to segment. And then on top of that comes back with an ownership model.

Rae Woods (23:41):
Which by the way, comes back to segmentation, dare we call it special snowflake.

Nick Hula (23:45):
Exactly. So I think when we're layering on all of those different qualifiers, it does get a little difficult for organizations to be selling to those ambulatory sites. Underscoring why for life sciences, they still need to be having that very flexible value narrative doing a lot of that segmentation and archetyping.

Rae Woods (24:04):
I feel like there's a lot of gates that life sciences organizations need to get through just so that their product can get in the hands of patients and consumers. The purchaser needs to approve to cover the drug or the device. The hospital or health system or ambulatory surgery center needs to find value in that particular product given their margin constraints. And then there's the original perspective that you need to win over, which is the clinician themselves. It doesn't matter if the payer, the health system, the ambulatory leader sees value in a product if the doctor doesn't. How is proving value to clinicians changing in 2026?

Nick Hula (24:44):
Yeah. I want everyone to picture the world that a lot of life science organizations have created for clinicians. And Gina, Rae, I want you guys to picture this world as well where we have theranostics and wearables and smart devices and drugs with little sensors in them and new devices, AI enabled equipment. And Gina and Rae, I'll ask you guys, because I can't ask all of our listeners here. Is that world that life sciences has created for clinicians a good thing or bad thing? What do you guys think?

Gina Lohr (25:17):
I mean, it's exciting and it's overwhelming.

Rae Woods (25:19):
Overwhelming is the word that I want to use. As somebody who is really pays a lot of attention to her own biometric data, I am already overwhelmed by my own data that I elect to measure and track myself.

Nick Hula (25:31):
Right, exactly. It's good, but it's overwhelming. In fact, two-thirds of clinicians report feeling overwhelmed by the amount of new data, clinical trials out there. That's how many of them feel when a life science leader comes to them and say, "Hey, here's this new product." Or "Here's this new evidence about this new product." That's again, going to improve quality, improve patient lives, but it is overwhelming.

Rae Woods (25:55):
So it sounds like life sciences companies need to help clinicians deal with the overwhelming amount of options and evidence that they have.

Nick Hula (26:04):
Exactly. They need to be communicating to clinicians, "Hey, here's just not the value of this product, but here is the appropriate use of this product." If a clinician doesn't know when to pull your tool from their growing toolbox, the odds are they're just not going to use the tool.

Gina Lohr (26:19):
I would add to that the way that clinicians are tracking what tool to pull out of their toolbox is so often digital now and so I do see smart leading life sciences companies looking for opportunities to give really clear guidelines to the EHR team to embed to aid clinical decision support within health systems or provider organizations, for example, or providing tools to physicians that can guide them simply in step-by-step to understand whether this particular product is right for our patient or not.

Rae Woods (26:59):
That brings me to our final stakeholder, which is the patient themselves. How do life sciences companies need to shift the way that they're proving value to the end user?

Gina Lohr (27:10):
I mean, certainly patients at many levels want to be more engaged and more involved in the decisions about their care, and we're seeing a lot of interest in the direct to consumer space right now. I think one of the biggest conversations that comes up over and over again are around drugs and the TrumpRX platform and new ways for patients to engage and purchase drugs independently, but even with devices like continuous glucose monitoring or lab tests, monitoring your functional lab tests.

(27:41):
There's a huge market here right now, but it's not just, as Nick mentioned earlier, the best advertisement during the Olympics, it's much more about how are companies working with other companies in new ways to help them provide value to patients via a convenient experience. So much of that direct to consumer is convenience, is control, is transparency and pricing, and that is changing all of the dynamics right now in the patient space.

Rae Woods (28:13):
And I suspect that this is just the beginning of the direct to consumer conversation for life sciences organizations.

Gina Lohr (28:21):
It is not slowing down.

Rae Woods (28:23):
Nick, Gina, thanks so much for coming on Radio Advisory.

Nick Hula (28:27):
Thanks for having us, Rae.

Gina Lohr (28:27):
This was great.

Rae Woods (28:33):
If you are a life sciences organization listening to this conversation, you might be feeling a bit overwhelmed, and it feels overwhelming because it is. You're having to shift not only what your products are, but also how you communicate the value of those products, and you've got to do it for seemingly every corner of the healthcare ecosystem. You're not doing that work alone. Remember, as always, we're here to help.

(29:28):
New episodes drop every Tuesday. If you like Radio Advisory, please share it with your networks. Subscribe wherever you get your podcasts and leave a rating and a review. Radio Advisory is a production of Advisory Board. This episode was produced by me, Rae Woods, as well as Abby Burns, Chloe Bakst, and Atticus Raasch. The episode was edited by Katy Anderson, with technical support provided by Dan Tayag, Chris Phelps, and Joe Shrum. Additional support was provided by Leanne Elston and Erin Collins. We'll see you next week.