Introducing value into the healthcare industry has significantly disrupted everything from patient care and payment models to product positioning that delivers more than clinical outcomes and the lowest cost. How can medical device and software companies successfully embrace this disruption?
It begins by adopting an inclusive, value-based mindset that reflects the rapidly changing relationships between payers, providers, and suppliers. Companies that successfully overcome challenges to market acceptance, revenue growth, and profitability have learned that winning means helping healthcare providers improve business as well as clinical outcomes.
Healthcare Providers as Economic Buyers
The growing emphasis on value-based care has disrupted the traditional model away from charging fees for services and procedures to getting paid based on patient outcomes. This is driving providers to seek improved health outcomes relative to the cost of those outcomes.
This has turned providers into value-driven, economic buyers whose purchasing decisions are no longer ruled exclusively by clinical outcomes, low cost, or clinician preference. Instead, providers are using value-focused purchasing committees who make balanced decisions that emphasize better business results without sacrificing patient care outcomes.
Suppose a provider uses a $1 per unit consumable in a surgery whose readmission rate is 1%. Because the clinical outcome is less than desired, the provider is faced with a financially painful situation that directly impacts a reimbursement rate based on value. In this case, the provider might be willing to pay $5 per unit for a consumable that reduces readmissions by 50%.
The supplier’s challenge is to demonstrate how spending more on a higher-priced consumable improves patient outcomes and increases the provider’s reimbursement.
Selling to Economic Buyers
Medical device and technology companies that sell to healthcare providers must improve their ability to show a compelling business case for change. This analysis should identify and project the cost savings and revenue gains from deploying the new technology. And for maximum influence, it should also reflect the provider’s unique situation (e.g., facility type and patient population).
Sellers should consider the entire breadth of their product’s potential impact when building their financial justification. The buying committee will be looking for estimated benefits such as:
- Improved clinical workflows
- Less equipment downtime
- Fewer repeated procedures
- Lower readmission rates
- Income shifts and offsets (e.g., diagnostic to treatment)
- Higher patient satisfaction scores
- Improved clinical outcomes
- Decreased utilization of other resources
Medical manufacturers have historically built spreadsheets to accommodate different scenarios. But spreadsheets have limitations that do not address the growing demand for value-based initiatives. The most successful companies are now deploying flexible ROI tools that are developed around a specific product and easily configured to fit each provider’s environment.
Conclusion
Healthcare providers are rapidly turning into economic buyers who evaluate purchase decisions based upon business value. Although this approach is common in other B2B buying decisions, many healthcare technology companies still sell based on user preferences and other outdated concepts.
Companies must adapt to a value-driven market if they want to remain viable, much less grow sales and profitability. Using ROI tools can help develop a comprehensive business case that can persuade buying committees and demonstrate the economic value of their products.
Resources
Connect with David Svigel on LinkedIn.
Join the Value Selling for B2B Marketing and Sales Leaders LinkedIn Group.
Visit the ROI Selling Resource Center.
