Medical sales – A new sales environment as more physicians become hospital employees

Historically physicians owned their own practices, but times are changing. With healthcare reform, work-life balance issues, and the financial demands of setting up a practice, physicians are increasingly shifting from owning their own practice to being employed directly by hospitals.

According to the New England Journal of Medicine, U.S. hospitals have begun responding to the implementation of health care reform by accelerating their hiring of physicians. More than half of practicing U.S. physicians are now employed by hospitals or integrated delivery systems, a trend fueled by the creation of accountable care organizations (ACOs) and the prospect of more risk-based payment approaches.

The article shares that hospitals actively hiring physicians will be well positioned to compete under various reimbursement scenarios. If the fee-for-service system persists, large physician networks will provide hospitals with greater pricing power.

Conversely, if payment systems move toward risk-based reimbursement, then large outpatient networks will allow a system to shift patients away from higher-cost hospital-based care.

More importantly from a sales perspective, as more physicians become employees, hospitals will continue to seek to maintain productivity levels while seeking to reduce excess costs … and it’s anticipated that physicians who are employees will be more amenable to the message.

So, increasingly medical sales reps will walk into hospitals that are standardizing surgical supplies, choosing cost-effective medical devices, using health information technology, and maximizing asset utilization.

For medical sales reps, this means selling devices, equipment, and even consumables solely based on relationships or preferences will increasingly be insufficient for success.

Understanding both the clinical and business challenges in both the carpeted and clinical parts of the hospital will be critical for success. Clinical conversations will be necessary, but not sufficient. Medical sales reps will have to be able to have the “financial” talk, too.

Medical sales reps must keep a pulse with what’s driving the physicians with whom they work. Physician relationships and preferences alone will not win the day in today’s market.

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About Janet Spirer

For more than 30 years Dr. Richard Ruff and Dr. Janet Spirer - the founders of Sales Horizons - have worked with the Fortune 1000 - such as UPS, Canon USA, Smith & Nephew, Boston Scientific, Owens & Minor, Textron - to design and develop sales training programs. Janet has followed two different, yet complimentary paths. First, as a B-School Professor she taught marketing, sales, and business strategy courses. She also managed a consulting practice focusing on sales productivity and marketing – working with a variety of clients ranging from Xerox to IBM. She translated those experiences into a book – “Parlez-Vous Business” – that helps sales people develop the business savvy to sell successfully. Since co-founding Sales Momentum® in 2000 with Richard Dr. Spirer received her Ph.D. from The Ohio State University, an M.P.A. from The University of Texas at Austin, and a B.A. in Economics from Brooklyn College. She holds the appointment of Professor Emeritus at Marymount University.
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