In a recent meeting with a group of marketing executives at a hospital equipment company, my colleagues and I learned of the executives’ plan to launch a series of clinical education programs as an add-on service to help drive product utilization and, ultimately, boost repeat orders. Like many other medtech companies, they were looking to go “beyond the device,” offering related value-adds in an attempt to differentiate themselves to IDNs’ that are most sensitive to the Centers for Medicare and Medicaid Services’ payment reforms, rather than simply trying to compete on price.
Expanding the portfolio beyond core devices is becoming a more common strategy, especially as medtech firms are aiming to establish better partnerships with IDNs that continue to consolidate, centralize decision-making and standardize vendors at a rapid pace. ZS estimates that 50 of the largest IDNs will control 50% of the market in five years, which should be alarming to companies without a clear key account strategy. Medtech firms often are challenged to successfully roll out services—such as our client’s clinical program, which attempts to prevent hospital incidents and minimize CMS reimbursement penalties—because they don’t quite know which IDN customers this value proposition will best resonate with. Moreover, the programs’ value can be difficult for customers to buy into without a price tag or a quantified impact, such as lower infection rates, to establish a link with a burning platform.
Another common challenge is that the manufacturer’s commercial teams aren’t organized in a way that will facilitate the delivery of this new service offering. For example, how are the local sales reps, clinical specialists and managers coordinating with the key accounts team and marketing to articulate that their net value is greater than that of the competition? More often than not, this coordination, if any, is happening in many-to-many instances, creating inefficiencies and, consequently, weakening the communication chain.
It’s time for medtech companies to evolve from the sales-force-centric model and adopt a key-account-centric approach, effectively “flipping the model.” This transformation will deemphasize the field sales force and allocate more resources and mindshare to serving select IDN customers. This is no small organizational feat. A new ZS white paper dives into the five key factors that will help enable this transformation:
- IDN insights: Manufacturers must understand and analyze the new IDN landscape. Who are your potential partners, and what are their pain points?
- Value proposition: With your customers’ needs in mind, how can your offerings address them? You’ll need to clearly and concisely define the value of your expanded portfolio—and of your partnering capability—to ensure that your customers see the full worth.
- Key account management program excellence: To effectively deliver the business solution to your key customers, it’s important to have a sophisticated KAM strategy with the right talent in the right roles.
- Local SG&A optimization: The field and key-account roles should be aligned geographically with IDNs in order to optimize SG&A spend.
- Commercial operations: A solid commercial operations capability is the underpinning of an organization’s successful transformation.
Becoming key-account-centric is no longer an option; it’s an imperative for medtech companies looking to stay in the game five or even 10 years from now. While it might take a year—or several—to enable this change, companies must get started on the journey now before pricing erosion drives you to the sideline, or worse yet, out of the stadium. It’s time to flip the model.
To learn about the five key factors—and more on the state of medtech’s evolving commercial strategy—check out ZS’s new white paper, “Positioning Key Accounts at the Center of Medtech’s Commercial Model.”