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Ditch Those Legions of Attractive Sales Reps and Hire Some Health Economists Instead
Medical device companies should have a leaner sales force and develop the economic value of their products by hiring health economists.
June 7, 2013
4 Min Read
[Photo Credit: iStockphoto.com/pagadesign]
Please don't send me hate mail.
Yes, that is a provocative headline, but is reality that different? Life science companies have long hired attractive people (mainly women) to promote their products to doctors (mainly men).
That doesn't mean the sales reps aren't good at their jobs or aren't intelligent. But buying something becomes infinitely easier when the messenger bearing the goods is pleasing to the eye.
But the device industry is changing. Physician preference will soon become a relic of a bygone era when cost considerations didn't figure in the equation. Today's buyers want data - data on outcomes, data on cost effectiveness, any data that will convince them the purchase is prudent and will solve a particular problem, instead of simply making a star physician happy.
And the person with the expertise to do exactly that within vendor organizations is the health economist.
In a thoughtful report from L.E.K. Consulting about the kind of business model innovation that is needed at medical technology companies, report authors Stuart Jackson, global managing partner and Jonas Funk, managing director, advocate "reorienting selling models." They advise having a single account manager for a hospital customer who is supported by a team that would include health economists.
In other words have a leaner sales force and ramp up health economics expertise in house.
I asked three large medical device companies whether they have any health economists on staff and whether they were part of the sales and marketing teams. Here are their responses:
Medtronic didn't respond to my email.
St. Jude Medical responded with a single sentence. A spokeswoman said that there were people in different parts of the company's business who focus on health economics, but declined to provide details on organizational structure.
Boston Scientific, to its credit, gave the most complete answer and even offered up an interview with an executive. Here's what Peter Lucht, a spokesman, said:
We do have professionals from the Health Economics & Reimbursement team that call on customers. Not all are “health economists” per se, but we’ve found that sending a health economist to a hospital isn’t always necessary.
However, to address your wider point, an important and growing part of the information we share with customers goes to the overall value of what we provide, and we do back our assertions with economic analysis. That value discussion might include how a product saves a customer money immediately or in the longer run, but also how it might drive better patient outcomes or increase access to therapies.
So there are some people at both St. Jude Medical and Boston Scientific who focus on health economics but aren't necessarily health economists. That's a bit like saying, I understand the value of dance but I am not a dancer. Well, then how well would I explain the moves I have?
Funk of L.E.K. Consulting believes that hiring health economists would be a smart decision. Here's what he said in an email:
Large medtechs have traditionally had health economics departments that support marketing, but they tend to be few in number and not often used in sales calls. In addition, they have been more focused on evaluating and communicating MACRO health economics for reimbursement purposes, particularly with respect to payers considering broad patient populations. Historically, these health economists have not had as much focus on MICRO health economics at the individual hospital level. Moreover, smaller and medium sized medtechs often are lacking in-depth health economic capabilities. As a testament to the lack of resources with appropriate health economic capabilities (and the growing needs for them), L.E.K. Consulting has increasingly been engaged by medtechs (large and small) over the last two years to help articulate the economic value proposition of their products/solutions to hospital customers.
This then is the capability that needs to be built. What's more it is not an expensive proposition. Funk figures that the salary of a health economist may be equal or even slightly higher than the average sales rep. But when you figure in the cost for travel and entertainment, and commissions, sales reps actually cost more than health economists do.
A few years ago, a friend told me about how her medtech company had hired a coach to teach errant sales reps the A-Z of professional attire when going to hospitals to meet with physicians. I laughed heartily then. Now, I wonder whether the money could have been spent elsewhere. If the right cost and outcome data is at hand, would the hospital purchasing manager care that the sales rep had committed the cardinal sin of wearing open toe shoes or whether the top button under the tie was unbuttoned?
I would love to hear reader's opinions in the comment section.
-- By Arundhati Parmar, Senior Editor, MD+DI
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