Jonathan Freaney co-wrote this blog post with Yuta Ito.
“Nothing happens until the pain of staying the same outweighs the pain of change.”
The CEO of Atrium Health, Eugene Woods, opened the 2018 Healthcare Transformation Summit, held June 7-8 in Austin, Texas, with this quote along with examples of the transformation initiatives that Atrium was undertaking. While change is happening at a different pace across the U.S. and taking form in many ways, there was an air of consensus that partnership and collaboration with suppliers outside of their traditional “swim lanes” will hold the key to a successful and agile transformation. At the conference, we learned how these partnerships are taking shape and making a remarkable impact on the health systems and the patients they serve.
We observed a few common threads in the successful “transformation through collaboration” stories that we encountered, and not every company had the luxury of unique product or service portfolios. Specifically, one story between a large manufacturer of medical supplies (Vendor A) and a nonprofit health system on the West Coast (IDN B) illustrates all of the key takeaways that medtech companies need to consider before developing elevated partnership models with hospital systems: The head of key accounts (let’s call her Julie) at Vendor A had been closely monitoring various initiatives along with the needs emerging at the hospitals under IDN B. She noticed that the inconsistent pre-surgical preparation by patients was causing major headaches for the hospitals, leading to high operational costs and a reduction in Medicare reimbursement due to high infection rates.
Despite Julie’s plea to work together to solve these problems, the supply chain team didn’t want anything to do with Vendor A beyond pricing discussions. Rather than pushing against a wall, Julie instead targeted the chief nursing officer (let’s call her Nancy) and shared her vision on how the two organizations can work together to co-create the pre-surgical kits, develop the patient onboarding and procurement processes, and craft the communication strategy. With Julie mobilizing her internal resources and Nancy obtaining the right approvals and leadership buy-in at all levels, the outcome was a significant improvement across multiple metrics, including lower infection rates and improved patient satisfaction.
This story, which was delivered by Julie and Nancy at the conference, has a few nuggets of wisdom that we can uncover for medtech companies aspiring to replicate this level of success with IDN customers:
- Find that itch. Vendor A had a talented customer-facing salesperson—Julie—who could uncover and recognize clinical, operational and financial outcomes that are important to healthcare executives. The problem was “big enough” for a C-suite executive to champion the initiative as her project (in this case, both the operational cost savings and the infection rates).
- Tell the story. Julie successfully articulated IDN B’s pain points and the root cause of the issue (the pre-surgical preparation of patients). That precision and clarity made it easier for both sides to co-develop a very tangible solution and mobilize the resources required from both entities to execute the plan.
- Round up the troops. Once Julie and Nancy were on the same wavelength, Julie had the backing of an internal operating model, which enabled her to efficiently and effectively navigate the machinations of the company to develop and deliver a solution that brings real impact. This required R&D, clinical, operations and commercial teams to work together to achieve the goals mapped out by Julie and Nancy.
- Stay out of the “supply side.” In discussing this story, Nancy offered advice to the manufacturers looking to build better relationships with hospital systems, which was to “stay out of the supply side.” Many medtech discussions end with supply chain either signing a preferred vendor contract with a steep discount or being part of a multi-vendor agreement. As she astutely pointed out, this is due largely to how supply chain is evaluated, which is by discounts and margin savings. If you have a partnership idea, always find at least one senior clinical champion who can think beyond the dollars and cents, and instead think about patients’ well-being. If there’s evidence that patients will benefit, that swings the decision-making pendulum away from supply chain, where value is defined by margin savings, and to the C-suite leadership focused on improved patient outcomes and better patient experiences.
Truly collaborative partnerships present a huge opportunity for medtech companies, but this isn’t a path that everyone should or can take. You have to be able to clearly and convincingly demonstrate how your products and services positively affect outcomes of importance to providers and payers.
The final words of Eugene Woods’ keynote address are very applicable here: “Start small, think big.” Manufacturers need to be thinking about how they can help health systems address targeted, specific outcomes that ultimately will increase the pace of their transformation in bringing more affordable and more valuable healthcare to their patients. If you’re unable to craft that story for any part of your portfolio, then you’ll have to remain in the “supply zone” and be resigned to the fact that your customers will look to you first when they’re looking to cut spending.
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