A new report suggests that the medtech industry has to pivot to selling outcomes instead of products to truly thrive in a new healthcare economy.
Medtech vendors have historically had a transactional relationship with hospitals and that has to fundamentally change in a new world where outcomes is the currency that rules the day.
A new report from ZS Associates, a sales and marketing company, offers three ways medtech companies can elevate themselves to the role of partners of hospitals. The report is based on a survey of 85 hospital executives conducted in late 2015 and early this year. The executives were C-level executives and departmental leaders across business lines and the survey was intended to determine business priorities and to examine whether they differed by department.
Here are three recommendations that the report authors provide:
Rethink Value Proposition
Medtech companies need to determine what outcomes hospitals value most and position products based on how well they can perform against those outcomes measures.
That might also mean that they would need to reevaluate their product portfolio to make them even more compelling to address those outcomes.
Redefine Key Capabilities to Deliver Value
"Compare your current capabilities with what you'll need for your new commercial model, and identify the most critical gaps," the report states.
Aside from performing that gap analysis, the report recommends looking closely at business models and asking if medtech companies need to engage in risk-sharing and outcomes-based contracts.
Large companies like Medtronic, Stryker and Johnson & Johnson are among medtech players that have embraced risk-based contracting, with Stryker going so far as saying that it can provide a money-back guarantee if the product doesn't work as expected.
Transform your go-to-market strategy
It's imperative for medtech companies to find champions for their products and services among the business leaders of the hospital, and not simply physicians. The report points to an example of a wound-care company that had historically sold its products to physicians and then realized that the main customer had become the hospital instead.
"To directly address both clinical and economic outcomes, the company designed an integrated program of products and protocols that improves performance on the most important patient metrics, while saving money," the report said.
Also, companies must become flexible. For instance, one medtech company is installing coaches to observe and intervene if necessary on proper protocol for an extended amount of time. This is different from training every shift of nurses.
And finally, the flexibility also need to extend to payment. In the above example, the vendor should stand behind this new model and accept a deferred payment once the hospital realizes the value of this add-on service through an improved performance in outcomes or operating costs, the report states.