Constant change has always characterized the business world – so looking in the rear view mirror has never been an ideal strategy for determining future direction.
Yet, from time to time the scale and speed of the changes are so large and so fast that they can only be described as disruptive. Today’s medical sales industry is a case in point.
To appreciate the scope of the change let’s travel back in time and stop a few years before Affordable Care Act. At this junction in the journey let’s look around and make an assessment of what’s going in the industry – what are hospitals buying, who’s doing the buying and what are they willing to pay for it? Now, quickly fast forward to today and make a comparative assessment. There is little doubt that the differences observed could only be described by words like “disruptive” and “transformational.”
Selling in the medical sales space is not business as usual! Reimbursements have decreased, costs increases have slowed but continue, profits have shrunk and outcome-based payment models have become a new topic of conversation. Hospitals are adapting to the changes by viewing quality, patient satisfaction and new technology through a financial lens, judging value by looking at new metrics, involving new cost-concerned stakeholders, considering supply chain costs versus purchased price and entertaining consolidating vendors.
At a business level more and more doctors are becoming hospital employees, hospitals are merging with other hospitals and then merging again to form super regionals and not to be left out – insurance giants are looking to acquire other insurance giants.
Now, let’s leap to the other side of table and view this world through the eyes of a VP of Sales for any medical device company. What does all this mean? Should they just hunker down until the dust settles and then determine what to do or is every day, another day too late? If they decide to do something, is it about doing something better or is it about doing something different?
Since there is no back to the future technology due to the shortages of DeLoreans, we sort of need to get this right the first time. So let’ take a look at some ideas.
- No new status quo. The future will be characterized by constant change – that is the dust is not going to settle, at least not in the foreseeable future. Initiatives to contain costs will continue to be center stage and mergers among all the various business players, including health care suppliers, will continue. Superimposed on these changes will be significant technological innovations in health care delivery from do-it-yourself biotechnology, to a new generation of surgical robots, to telemedicine and remote healthcare via wearable devices.
- New winners and losers. In any industry when there is a period of disruptive change one of the likely consequences is the emergence of a new set of winners and losers. This impacts all the players including hospitals, insurance companies and suppliers. Let’s look at suppliers.
As the future unfolds today’s market-leaders are not guaranteed to be the ones that will remain at the head of the table. To continue to occupy that seat requires a change in scope equal to the change on the buyer’s side of the table, which in this case is substantial. Therefore to be among the new set of winners, companies will indeed need to do things differently versus just doing things better. The trap will be doing too little; too late – unfortunately a common pitfall for some well-established companies.
On the sunny side of the street this same scenario can be an opportunity for new small companies that bring a better manufacturing capability and a more nimble operating approach to the market.
- Can’t win by product alone. Historically, once a new medical device was launched, innovations were introduced over time that increased the cost. And, all that was usually okay for both hospitals and suppliers: better product – higher cost. However, due to the trend to control cost fewer hospitals are demanding the “latest and greatest.” Everyone involved is weighting healthcare options more carefully – seeking value at a lower cost. In the new reality good may be good enough.
If you are not guaranteed a win by product alone because good is good enough, this means having a superior sales team is more important than ever. A superior sales team now becomes defined as one that can bring value by the way they sell, as well as, by what they sell. They have to be a competitive advantage and must be able to sell themselves and the company, as well as, the product. This is all easy to say but extremely difficult to do. Achieving this level of excellence has major implications not only for the sales function but also for sales training and marketing.
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