Medtech has always been known as an innovative industry. Most organizations are primarily focused on the next growth-driving product launch, whether it is an entirely new product category or a simple line extension. While this approach has been immensely successful in the past, many organizations are being forced to rethink their product strategy as the medtech environment changes.
Almost every developed country is facing severe healthcare funding challenges. One of the quickest ways for governments and hospitals to cut costs is to reduce expenditure on ‘new’ and ‘expensive’ products reverting instead to basic products that, at a minimum, satisfy the clinical need. Not only has this hurt the industry’s ability to drive new product growth, but it has also hurt the easy return on investment that was once expected in this market. Now, companies are left scrambling for ways to continue to meet their investors’ high expectations.
Despite the doom and gloom, I believe there is hidden opportunity that exists in organizations that has yet to be realized. It is not from continuing to sell a single product but instead from creating solutions by leveraging the entire portfolio.
Our industry’s resolute focus on developing and/or acquiring new products has had an unexpected benefit. Many companies find themselves with portfolios of products that are constructed to meet all the clinical needs for a specific customer, patient and/or procedure. This portfolio benefit happens to align extremely well with the payer’s new focus on patient throughout and outcomes – if companies can capitalize on it. Focusing on the portfolio allows us to deliver our worth to the customer in a new way—via solutions. Offering portfolio solutions allows a company to share the clinical and financial risk with the customer in a new and compelling way.
Imagine for a moment a world where a company owns the entire implant procedure for a hospital. All the products needed for the surgery (implant, screws, saws, etc.) are provided at a fixed rate with the promise of faster procedure times and shorter patient length of stay. Or imagine a dysphagic (a patient with difficulty swallowing) whose entire food and drink regimen is carefully constructed and delivered by an outside vendor that also ensures the patient is supported when he or she leaves the hospital, resulting in a reduction of pneumonia-related readmissions. While these may seem like years away from the product-focused world we live in today, in fact, these and many more solutions are very successfully being implemented in selected countries and accounts today.
Switching from a product to a solution orientation is not easy, as it takes time and an organizational commitment to do so effectively. In my time working with companies to evaluate a solution orientation, we consider six key things:
- The portfolio must be sufficiently comprehensive to support a specific clinical stakeholder, patient type or procedure.
- The needs of the customer, both clinical and economic, are aligned with the company’s portfolio and solution’s value proposition.
- Clinical and financial evidence can be generated to support the solution’s claims.
- A new business model can be constructed to lock in the value of the solution.
- Some specific examples would be matching the DRG reimbursement or having the customer pay for outcomes.
- The commercial organization can support the go-to-market model and scale accordingly.
- The ability to track and report back success, and failure, to customers can be put into place.
Though our world is changing, significant growth is to be found if we can find the hidden value that already exists within our portfolios.