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Medtech Industry Needs to Build Trust With Hospitals

Article-Medtech Industry Needs to Build Trust With Hospitals

Medtech Industry Needs to Build Trust With Hospitals
A report from McKinsey & Co. states that medtech companies can get substantial benefits if they can build credibility among hospital customers. 

A report from McKinsey & Co. states that medtech companies can get substantial benefits if they can build credibility among hospital customers. 

Arundhati Parmar

A new report from consulting firm McKinsey & Co. shows that the medtech industry has a ways to go not only to build awareness of its products and solutions, but also to build credibility among hospital customers.

In "Improving healthcare while curbing cost: Med-tech companies offer a solution," authors point out that medtech companies can partner with hospitals to help them manage costs and deliver better care, but are hampered by the views that hospital executives hold regarding their capabilities.

Consider this: In the McKinsey survey of 157 hospital executives in the U.S. and Europe, fewer than half ranked the clinical and technical expertise of large equipment manufacturers as "excellent." The opinion declined a few more notches for makers of devices and consummables. Only 19% of hospital executives responded that large medtech makers' understanding of the hospital business was "excellent." 

Here is how U.S. and European hospital executives responded when asked to rank medtech's capabilities:

The report suggests that executing contractual agreements where medtech companies share risk would help to build credibility.

"With few exceptions, med-tech companies do not offer to share risk with their hospital customers," the report charges. "They focus on marketing the technical features of their products and price accordingly. Yet providers say they are more willing to work with med-tech partners if they know they share the risks as well as the benefits of the arrangement."

And those benefits are quite substantial. The report suggest that there is a cumulative $44 billion opportunity in the U.S. alone if medtech companies work with hospitals and provide "beyond the product" solutions. 

They could be:

  • Operational optimization - Medtech companies can provide tools to improve operational efficiency to realize 10-15% cost reductions. That could amount to a $6 billion opportunity
  • Clinical care optimization - $12 billion opportunity is available for companies that can help improve the efficiency and quality of services provided
  • Commercial, patient access - Medtech companies can help hospitals to gain access to new patients who can represent a new revenue stream. That represents a $13 billion opportunity.
  • Financial - Capital efficiency can be achieved by maximizing revenue for services provided. That could be another $13 billion opportunity.

For all this to happen of course, medtech companies will need to convince providers that they are partners committed to solving their problems as opposed to simply looking for ways to sell them more things. And the report suggests that there is a thaw in the relationship somewhat.

"Despite early skepticism, there is growing awareness among hospitals of the contribution that partnerships with med-tech companies can make to curtailing costs and improving care," the report says. 

Arundhati Parmar is senior editor at MD+DI. Reach her at [email protected] and on Twitter @aparmarbb

[Photo Credit - user MichaelSvoboda]

To learn more about medical devices and trends in the marketplace, attend the two-day MD&M Minneapolis conference, Nov. 4 and 5 at the Minneapolis Convention Center. 
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