Recently, I was having a conversation with the vice president of sales at a medical diagnostics company—let’s call him Joe—on pain points and challenges that his organization is facing. He brought up integrated delivery networks’ consolidation and its impact on his sales strategy. The topic is by no means a new thing. In fact, hospital systems have been on a shopping spree for the last few years, and ZS has predicted that by 2020, the top 50 IDNs will manage 50% of all hospital admissions. What Joe was bringing to light were the implications of these integrations and how they directly impact his deployment considerations.
His example was the 2015 Geisinger and AtlantiCare merger. Up until that merger, there was one sales representative covering Geisinger and its central Pennsylvania customers. However, after the merger, this hospital system expanded out to southern New Jersey, spanning three sales reps’ territories. Joe was lamenting the additional layers of complexity that this one deal would create for his team, which certainly poses challenges to becoming a better partner to Geisinger.
Many U.S.-based life sciences companies face this dilemma, but perhaps not as acutely as medical devices and equipment companies like Joe’s. Contracting is a key part of sales in these industries, and even after earning preferred vendor status, medtech companies still have to battle to get their offerings picked up in each of the affiliated accounts. Companies often deploy corporate account directors and key account managers—the business guys—to negotiate contracts with IDN headquarters, then have sales reps at the ground level ensure product usage. In an article we wrote last fall, my colleague Pete Masloski and I spoke about medtech companies needing to be more key-account-centric. Joe’s situation is yet another reminder why repositioning the sales organizations around key accounts is critical for companies impacted by the converging provider landscape.
One low-risk and high-reward method is to try to contain IDNs within your sales geography or region. In other words, to best serve an IDN and best enable the sales team to succeed, a medtech company needs to balance its top-down approach (for example, solution design by the KAM) with its bottom-up approach (such as solution delivery by field personnel), so geographically aligning the key account managers with the field representatives becomes paramount. Both elements of the sales process need to be in sync to enable big deals. In Joe’s case, if a sales geography can contain most of the Geisinger facilities, the sales director for that region can work in tandem with the KAM and sales representatives to better meet Geisinger’s needs through streamlined communication and consistent activities.
Anecdotally, we often hear KAMs and field sales teams separately complain that coordination with their counterparts is a challenge, mostly because it’s too burdensome. Increasing containment can considerably reduce the need for larger groups to coordinate across field and KAM teams, and thus improve the efficiency and effectiveness of the strategy, planning and execution for the largest customer accounts. As the customer experience at these largest accounts improves because of better internal coordination, you get a step closer to becoming a better partner to IDNs.
With IDNs and hospital systems expanding nationally, you might be doubting your organization’s ability to design geographies that cleanly contain them all. Apart from cases involving national systems like Ascension and Mayo Clinic, it can be done. Here are four steps to get you started:
- Get your data right. Make sure that your parent-child affiliation information of IDNs is up to date, and maintained on an ongoing basis. In addition to their physical addresses, you’ll need information such as sales, the number of beds and procedure volumes.
- Analyze how much of a problem exists today. Taking a holistic view of that data, measure your sales regions’ level of IDN containment, breaking it down by the number of facilities, beds and sales. Look beyond the national containment percentage to assess individual IDNs. How well is Cleveland Clinic contained? Adventist Health System?
- Adjust your sales map. If you notice some issues, rethink your resource allocation. This may be minimal, or it could be a large-scale realignment. The level of required change should be driven by your key accounts and how they currently span across your sales regions.
- Develop key account strategies and get the team aligned. With your nicely contained sales map in hand, have your key account manager and regional director invite the field teams to join the business and account planning process, and clarify what their respective responsibilities are.
The journey to becoming a key-account-centric organization isn’t easy, but as more and more medical devices and equipment companies are realizing, it’s a necessary transition. IDN consolidation will continue, so medtech companies selling to hospitals need to start shifting both their sales approaches and their mindsets in order to stay competitive.