AND HERE’S WHAT A MED TECH COMPANY NEEDS TO KNOW
Partnering with the right GPO can clear your path to success and profitability
As host of a popular podcast that strives to help medical device executives stay at least a step ahead of their industry Med Tech Gurus , I have experienced, first-hand, the very real frustration, confusion and angst when it comes to vetting, selecting and partnering with Group Purchasing Organizations [GPOs].
One size simply doesn’t fit all. And that’s a very good thing because no two med tech organizations are alike either.
Clearly in today’s marketplace, GPOs play a critical role when it comes to developing the right go-to-market strategy and moving quickly and efficiently along the path to success and profitability. The savvy med tech executive understands this and knows how to best utilize the services of a GPO.
But which one …?
From time to time, I come across skeptical or stubborn folks -- you choose the word -- who declare, “A GPO contract is no more than a hunting license!”
In many ways, they’re exactly right, So let’s stick with that for a moment.
If a GPO contract is indeed “no more than a hunting license”, why then is it some hunters are tremendously successful while others while away their time in the woods, oiling their guns, and never bagging a catch?
Successful hunters will tell you, you must first understand the animal and the ground you are hunting on. You can’t just wander in, look around and take a wild shot at matters or you’ll forever be relegated to the ready-fire-aim heap which is neither a fun nor a profitable place to be.
Let’s break this down a bit so you can emerge as the successful hunter and not the wannabe.
In a recent podcast [MedTech Gurus – Nine Ways to Find Success with Group Purchasing Organizations], Dale Wright, a former GPO executive and now a state representative in Missouri, acknowledges not all GPOs are created equal, and explains the three basic types:
Each behave differently so you, Mr. or Ms. Med Tech Representative, need to understand how they work to enhance your chances of establishing a long, lasting and profitable relationship with your GPO.
Typically, more difficult to contract with due to long contracting and bid cycles as due diligence is conducted, Single-Source GPOs normally only partner with proven and established market leaders. Thus, as a start-up or early-stage company, unless you have a clearly identified and proven value proposition, getting on contract with this type of GPO will likely be challenging, if not fruitless.
Single-Source GPOs are generally happy to let start-ups or early-stagers go elsewhere to cut their teeth and prove themselves. And maybe, after they amass some market share, consider putting them on agreement. If you have a new technology, it’s important to be aware of this.
But I say this with one caveat: Do not bypass this type of GPO altogether! Your National Accounts team will want to send regular updates and stay in communication with them so when the time is right, you’re both ready to pull the trigger. Like a hunter in the woods, patience with a Single-Source GPO is indeed a virtue.
Exactly like it sounds, Dual-Source GPOs often put two companies in the same product category, creating a choice for their members and, at the same time, fostering a bit of healthy, saw-sharpening competition among the two contracted suppliers.
With Dual-Source GPOs, there are some important considerations for the med tech entrepreneur. If you’ve done your value-analysis homework, you may have a realistic shot with this type of GPO.
First, there should be a solid discussion about how best to position your innovative, disruptive technology and compete with the market leader in this type of contracting strategy. Your value discussion will need to be sharp and focused as the GPO will naturally want to have the top-two market-share companies. If you have the right type of outcome data and ROI documentation, your technology can win the day here.
The challenge is in developing the right value-analysis documentation. To do this, I highly recommend your organization consider utilizing a coach. There are some very qualified, experienced and insightful coaches out there that can be invaluable to your organization. Allow me to introduce two of them that have been featured on the Med Tech Gurus podcast …
In my book, either one of these professionals would be an excellent choice as coach. They have tremendous experience, rock-solid credentials, and are worth your time and consideration.
Multi-Source GPOs are probably the easiest type of GPO to work with because they prefer to put smaller and regional suppliers on contract. The thought is to offer maximum choice to their members. Having said that, don’t think for a moment they skip over doing their due diligence, they don’t.
Similar to the Dual-Source GPO, you will want to have performed your value-analysis review and have your support documentation at the ready. Teams at Multi-Source GPOs need to be confident that you have a strong customer-service operation, and that quality metrics are in place. They will want the supplier to be able to demonstrate they can perform, and that their patient outcomes are superior.
Do. Your. Homework!
Key Takeaways …
The bottom-line with each of these GPOs is this: Like the hunter, you must understand the animal and the hunting grounds before you enter the woods.
All of these factors are critically important and, dare I say, the “make-or-break” when it comes to achieving success and profitability.
One last thing …
Like the wise hunter entering a new territory, you should seriously consider working with a guide; someone who knows the terrain like the back of their hand. A guide can keep you focused and help you avoid trouble areas. For that, I highly recommend any of my colleagues at Excelerant Consulting [www.excelerantconsulting.com]. Trust me, there is no higher sense of confidence than having a highly experienced professional at your side to help skillfully navigate your way to success.
#Medicaldevice #tMedicalproductlaunch #entrepreneur
Bringing a new technology to the medical device marketplace has certainly become extremely complex over the last 15 years. The barriers to entry have become so significant that it can take years to develop a market presence.
This situation has caused potential investors to shy away from the MedTech space. There are companies with amazing ideas that can demonstrate amazing outcomes that never see the light of day.
Entrepreneurs that are working in the current environment are driven by a mission. They want to help patients, clinicians, and society by bring new advances to healthcare. To be honest about it they are also looking for a healthy return on investment for the stakeholders as well. However, the clinical improvement is a huge reason why we are all in this game.
The question persists, how does an entrepreneur get their product noticed?
Things Have Changed
Many sales executives and consultants like me remember the old days where one could find a few surgeons, show them your product, and then get them to demand that the hospital start to use this product. Get 8 or 10 of these clinicians to use your product and voila’ your company was born and on a profitable track.
Those of us in the industry today know that this formula no longer works. There are GPOs, IDNs, regional contracts and value analysis committees standing in your way. It is not unusual to find that if you do not have a system agreement there might be 20, 30 or more hospitals in a network that you can’t even get in the door.
The old school way of going to the surgeons/physicians no longer works, as many of these clinicians are now employees of the system that you are trying to get into. Their influence has been much reduced.
So How Do You Get Your Technology Recognized?
Bryan Eckard of Verner International addresses these issues on Med Tech Gurus episode # 10
M ed Tech Gurus top-down-bottom-up-approach-to-launching-new-med-tech Mr. Bryan Eckard
In this episode Bryan discusses the benefits of using a fixed cost to marketing approach for new product launches. This includes a best practice of contracting with independent sales representatives (ISRs) or Regional Specialty Distributors RSDs). The clear benefit to this as a startup is that these organizations earn their living by selling. Thus, if they don’t produce you pay them zero.
This strategy will help a startup as by definition startups are always cash strapped. For the CEO, taking this fixed cost of marketing route can help preserve several hundreds of thousands of dollars in salaries, benefits and travel expenses.
There is a downside to this strategy, however. ISRs & RSDs by nature always carry multiple product lines or have relationships with several manufactures. The issue here is they may need some significant support. Meaning education and support in training and implementing into accounts.
The typical solution for the small manufacture is to hire 3 or 4 regional managers to support this field force. Bryan suggests a different strategy.
Instead of hiring the regional sales manager, hire a regional clinical support manager. This individual typically with an R.N. RT, or CST credential can be a significant addition to the equation. They will bring with them the credibility of their education and experience. The clinical decision maker will respect them as they will have ‘walk the walk” by having the clinical background.
This dual arrangement of engaging the ISR/RDS plus a clinical specialist can be amazingly effective. The local salesperson will have the relationship and the clinical specialist the clinical support. This will create a great deal of confidence with the decision maker.
A Unique Approach to The Clinical Specialist
Skender Daerti, CEO of the Clinician Exchange, has a novel solution to this challenge. Here is the issue. If a start up is struggling to hire regional salespeople, how can they afford to hire clinical specialists? The Clinician Exchange may be able to provide a solution. Much like an ISR?RSD provides a fixed cost to marketing. The Clinician Exchange can provide a fixed cost to education.
As Skender explains in Med Tech Gurus Episode # 7
Med Tech Gurus to-be-successful-you-must-learn-adapt Mr. Skender-Daerti
The Clinician Exchange will assist in putting together that educational campaign. Skender explains they have a data base of several thousand clinicians that can be brought in on a contracted basis. The Clinician Exchange will tailor this to every company’s needs. Thus, maximizing the result while minimizing the budgetary impact for the start up.
In this current medical device environment, a CEO must manage their investors dollars wisely. There is a significant need to bring unique value to gain attention and acceptance to a new product offering.
Sales cycles are longer, and a company must get the most out of their funding. By employing a bit of creativity, seeking out companies like Verner Medical and Bryan Eckard or the Clinician Exchange and Skender Daerti can pay huge dividends in getting a company launched.
Tom is a 35 year veteran in the Med Tech space. Having personally worked with dozens of new technologies. It is Tom's passion to enhance patient outcome by bringing new concepts and technologies that will help clinical performance.