25 Apr Innovative Health Strategies near Milwaukee set to profit from Medicare expansion
Terri Bernacchi knows how to survive. The Milwaukee-area entrepreneur “bootstrapped” Innovative Health Strategies, her pharmaceutical intelligence company, for three years before moving into bigger, better digs.
So now that IHS has begun to thrive, it is well positioned to help its pharmaceutical industry customers survive the massive new demands that Medicare Part D, the new Medicare prescription drug benefit, is poised to thrust on their staffs, budgets and time. Part D became reality with the Medicare Prescription Drug, Improvement and Modernization Act of 2003.
Upon President Bush’s signing in December 2003, the act immediately provided Medicare beneficiaries with discounts on prescription drugs and will provide comprehensive Medicare prescription drug coverage beginning Jan. 1, 2006, a new reality that pharmaceutical manufacturers are ill-prepared for, according to Bernacchi, whose business is eyeing a boom because of it.
“Pharma’s not ready for this, and it’s not just about technology,” said Bernacchi, whose company provides business solutions for pharmaceutical manufacturers, including business process outsourcing, Medicaid contracts and Medicare Part D. “It’s about the people that will manage the contracts, the technology that’s needed to be able to do it and the whole process, because it’s going to be highly subject to audit.”
IHS, which recently won a TKO Award at eInnovate‘s eForum conference in Waukesha for best technology-enabled business services company, also offers independent auditing, training, staff support and other managed services. The specter of Part D looms at a time when outside pressure prices have forced pharmaceutical companies to tighten their belts. Bernacchi ought to know – IHS serves six of the top 10 pharma companies in the U.S. and numerous smaller drug manufacturers. She predicts IHS’ business to grow from about $4 million this year to about $6 million next year, “primarily because of this (Part D).”
“The pharmaceutical manufacturers are not prepared from an infrastructure perspective to administer basically double the number of contracts they’re going to have to do, because these are pricing deals. On behalf of Medicare, they’re going to be getting lower prices.
“They’ve got penalties and fees and compliance rules they’ve got to be able to subject themselves to and recall if an auditor comes in,” she added. “That’s why from our perspective Part D is a massive impact on their infrastructure. Even if they wanted to, they can’t double their staffs – they’re all in a belt-tightening mode. Hey don’t necessarily have the time to build a new technology, so that’s why we’re looking at it having a really big impact on our business. The meetings we’ve had in the last two weeks are bearing that out in a big way.”
Gearing up for all this business is presenting a challenge to IHS, as well. Bernacchi noted that IHS has contracted with California-based information services giant Informatica, which lists all 12 of the largest U.S. pharmaceutical companies as clients, to help it get a handle on its internal extract, transform and load (ETL) process to automate the receipt of data and convert it to a standard format.
“That project is a huge one for us internally: For the first time, we’ve invested in more of an upscale software solution to help us actually do this, and we have used a consultant to help us automate our processes,” she said. “We’re using outside [help], but we’ll also be hiring internally. We have access to relatively affordable space in Milwaukee, so we should not have to expand our offices at this time.
“One of our biggest challenges is going to be making sure that we can handle it,” she added. “We’re hopeful that we’re going to be able to do it.”