This blog post also appears on The Advanced Medical Technology Association's Medtech Conference blog.
Flipping through the duty-free catalog on a recent flight, I was amazed that the luxury watches section spanned 38 pages and touted features like triple-polished sapphire crystals, 300-meter water resistance, rotating bezels and dual faces with multiple time zones. I nervously glanced at my own Garmin GPS running watch and its blocky digital time display.
While the features sound impressive, I can’t imagine that they’re really all that useful to most customers—certainly not enough to justify the five-figure price tags that these duty-free luxuries command. That’s when I realized that the medtech industry has been employing a similar strategy, cramming in features to entice surgeons to buy their devices.
Medtech has been engaged in a “features war”: Manufacturers have been adding as many features as possible to their products. Often, those features are actually valuable to customers, such as remote monitoring to streamline patient care, increased image quality for diagnosing issues, and planning therapy and point-of-care testing for rapid decisions. But some features are there simply “because we can” and don’t provide any measurable value. New features kept the products from being categorized as commodities and gave the manufacturers a justification for higher prices, but they may not have made a substantial impact on patient care. Like the diver-approved watches in the duty-free catalog, sometimes the medtech products’ added features were never used or were only marginally understood.
This situation gave rise to the dreaded value analysis committee, formed to slow the spread of features-based innovation and ensure that the products entering a facility aren’t just new but also useful. In recent years, the game has changed and the definition of value has moved from an emphasis on features to something more complex. The features war is over, requiring the industry to behave much differently now. As payment models get more complex and quality metrics multiply, the industry needs to be much smarter.
We recently completed a study of some of the most valued medical devices in the hospital environment and found five ingredients that are critical to an effective value proposition. First, the value proposition should position the medtech offering as critical to achieving the customer organization’s mission. Second, the value proposition has to be relevant to each of the many influencers who now take part in purchase decisions. Third, medtech manufacturers have to meaningfully link their products or services to outcomes with financial impact. Fourth, the outcomes need to be measurable, and manufacturers should be equipped to provide their customers with the necessary data. And fifth, manufacturers have to ensure that the outcomes and value that they’re offering are achievable, offering training or other support services if necessary.
These five dimensions can be used as a test to determine a product’s value proposition and to predict the product’s chances of success. For example, knowing whether a product or service performs well against each measure can help the manufacturer understand if a product is ready to be launched. Manufacturers also can use these five tests to carefully consider and clean their pipeline. If one crucial ingredient is missing, then smart marketers can identify services or studies to bolster the presentation.
Despite the compelling product descriptions in that duty-free catalog, I didn’t order a watch. Not a single one of those features convinced me to retire my Garmin and go for the five-figure price tag. To hook me, the retailer would have had to focus on outcomes and on proof that those outcomes are achievable—for example, demonstrating how the watch could enable me to manage my time more effectively. Medtech manufacturers would be wise to take the same tack. In today’s evolving hospital environment, features simply aren’t enough: Products must create indisputable value. The features war is coming to a close.