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
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.