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Four Strategies for Medtech Firms Coping With Regional Healthcare Differences

Posted by Pete Masloski on August 11, 2015



iStock_000028840778_SmallA group of sales managers who work for a cardiovascular device company and I were recently talking about something they care deeply about: their sales territories. One of the managers asked, “How should we be factoring in things like Maryland’s Total Patient Revenue system (a capitated payment model for Maryland community hospitals) into our strategies and growth expectations?”

 

What a great question. We know consolidation between providers and payers is reshaping the healthcare landscape, and new payment models are emerging to address gaps in quality of care and rising costs. Some providers are pursuing accountable care organization (ACO) models aggressively, either as part of the Pioneer CMS initiative or with individual agreements with individual payers and state Medicaid plans, as they pilot their own new payment models with bundled and capitated payments, like Maryland’s TPR program. Additionally, integrated delivery networks (IDNs) are growing by gobbling up individual hospitals and are merging to form larger systems capable of greater negotiating leverage with payers, employers and their supply chain.

So naturally, when it comes to launching a major new product, why do we hire 50 traditional medical device reps to call on physicians and then spread them evenly around the country? Not so surprisingly, in some areas, those traditional sales reps perform quite well, thank you, and in other areas, not so much. 

So what is the problem, then?

For many, it’s not exactly clear how to compete in each of these cases. Should you do anything differently in Maryland, or just concentrate on winning with MDs and negotiating with hospitals like always. Even though a group of hospitals might be in a fully capitated system, they still need to treat patients, and reps still have that case to cover tomorrow. It’s easy to see how one can default to the old model. The landscape is also changing rapidly and it’s difficult to find the right type of information to base these decisions on. The complexity and the uncertainty of the situation can be paralyzing. However, as author and futurist William Gibson said, “The future is already here, it’s just unevenly distributed.” So we can look into the future by looking around at how things are changing now.

What’s needed?

A process for implementing a regionalized approach to the changing healthcare ecosystem involves four steps:

  1. Segment your geographies based on the evolution of the healthcare ecosystem. In some regions, the needs of providers will look much more like Maryland, where many are pursuing new ACO-type models. In other markets, provider consolidation may be the dominating characteristic. In others, it might be that providers are competing mostly in the old fee-for-service (FFS) model. In each market, the key dimensions to profile are the consolidation and where the decisions are taking place (payer, IDN, individual hospital, individual MD), including the level of integration across the ecosystem, as well as level of maturity of payment reform which links to how their needs are changing.
  2. Develop a value proposition for each different type of market. How will your company help the Maryland hospitals be more successful in their new capitated payment world? How will you compete with large, consolidated providers that can drive standardization in physician-preferred categories? Having a clear vision for how to differentiate in each type of segment is critical.
  3. Identify the best sales model to align with different markets and allocate resources accordingly.  In markets dominated by a few large integrated systems, the optimal model might be a sales leader with more key account managers, fewer traditional sales reps and more clinical specialists. In others, a more traditional model might still make the most sense.
  4. Develop a capability to track and adapt to changes and be nimble. Just having a process in place and accountability is a good first step. Companies also need to rethink the static model of fixed sales force deployments for 12 months or multiple years, and build a capability as part of the planning process to evolve the model and resources along with changes. Critical to this effort are strong, coordinated commercial analytics and sales operations functions to track evolution and performance and facilitate changes with sales leaders as markets evolve.

 

Wars are won one battle at a time, yet the battlegrounds can be quite different between Maryland, Massachusetts and Alabama. Structuring your go-to-market strategy and allocating resources based on unique characteristics of the local market will give your sales force army its best chance to succeed.

Pete Masloski is a principal in ZS’s Medical Products and Services practice. He has experience in an extensive range of sales and marketing issues, such as opportunity assessment, sales process design and account management.

Topics: medical devices, medical products and services, medtech, healthcare ecosystem, regional healthcare differences, Pete Masloski, aco

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AUTHORS
Brian_Chapman_thumbnail
Brian Chapman
Principal,
ZS Associates
Tobi_Laczkowski_thumbnail
Tobi Laczkowski
Principal,
ZS Associates
Will_Randall_thumbnail
Will Randall
Manager,
ZS Associates
Matt-Scheitlin-London_thumbnail
Matt Scheitlin
Associate Principal,
ZS Associates
Andy-kach_thumbnail
Andy Kach
Associate Principal,
ZS Associates
Bhargav_Mantha_thumbnail
Bhargav Mantha
Associate Principal,
ZS Associates
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