The physician is in favour of your product: it is innovative and has better outcomes than competing products, and there is a wealth of clinical evidence to prove this. However, the purchasing department didn’t see the value and thinks it’s too expensive, the physician says.
Do you recognize this scenario? I’m quite sure you do — It’s increasingly common in the changing medical devices market landscape. Decision power has slowly but surely moved more and more towards purchasers and hospital managers. Therefore, to increase medical device sales in the marketplace, medical device companies need to better communicate the business value of their products to economic decision-makers1.
The procurement process as it was before
Not so long ago, physicians were in the drivers’ seat when evaluating and procuring a medical device. Visits to key opinion leaders were made, training was provided, and pilots were carried out. Once the physician was persuaded about the benefits, the purchasing department merely played a facilitating role.
This practice is now history; the roles in the procurement process have changed dramatically during the last decade. There have been several developments within the healthcare market that have contributed to these changes:
- Increased focus on healthcare expenditures, further fueled by the recent economic crisis. A reduction of healthcare expenditures tops the agendas of almost every country.
- The introduction of new communication technologies have made it much easier to access data and compare clinical performance of medical devices.
- In many countries, there is a movement towards the centralization of care. This “commoditizes” the most-performed surgeries and related medical devices, because the higher the volume of a product needed, the stronger the role of the purchasing department will be (figure 1).
Power has shifted within the decision-making unit of the average hospital. Administrators and procurement managers no longer play a perfunctory role, but rather have a strong voice in purchasing, bolstered by number crunching — and those figures relate to finances, not clinical efficacy. They are also no longer afraid to question the decision of the physician to work with a certain product; the internet seemingly makes comparing different medical devices as easy as comparing destinations for the next summer holiday.
Different interests, different message
Within the decision-making unit of a hospital, there are two main groups: the clinicians and the purchasers. And they come to the table with very different views on what makes a new or innovative medical device an interesting opportunity.
From the physician’s viewpoint, a new medical device is interesting when:
- The device offers better clinical outcomes than the comparative product.
- The device improves the quality of care.
- The device is innovative (e.g. has new features such as improved material properties and specifications, or presents a more efficient way of working).
Through the eye of a purchaser a new medical device is interesting when:
- The device is “better” than, or at least comparable with, the competitor, and
- The device has a positive influence on the hospital’s budget!
Medical device companies want to bring innovative products to market — and they do. From high-tech materials previously exclusively used in aerospace to the newest manufacturing technologies, the innovation is there. But does innovation show any value to the purchasers or, in other words, the economically focused buyers?
In fact, it may do, and it often does. However, when the feature is not properly explained in a language that is understandable for purchasing managers, it is worthless. Sutures made from Shrilk may be a breakthrough technology from the physician perspective but, when the product doesn’t seem to influence cost-effectiveness, the medical device company will have a hard time driving sales.
Tune your message to the right audience
It’s hard to convince a purchasing manager with a presentation about the clinical benefits of your device. It is just not where they are looking for, nor something they can easily understand. That’s why it’s so critical to tailor your message to the specific needs of your audience.
The trick here is that the clinical benefits have to be translated into hospital administrator language. Here is an example of how a clinical benefit can be translated into an economic advantage:
The silver in our dressings becomes ionized in the presence of wound exudate, which bind to negatively charged molecules — such as multiple sites on microbial cells. When this binding occurs, silver can disrupt microbial cell membranes, cause cell leakage, interfere with protein and energy production, inhibit enzyme function and cell replication and, ultimately, result in cell death. The silver ions that are not donated to the wound bed remain inside the dressing, where they are able to neutralize the microbes in wound debris, biofilm and exudate that are drawn into the dressing, while storing these substances away from the wound bed to allow moist wound healing to take place. Silver is effective against a broad range of bacteria, fungi and viruses, including antibiotic-resistant bacteria. In addition, due to the mechanisms of action at the cellular level, silver does not contribute to antibiotic resistance. Furthermore, silver appears to improve other aspects of wound healing, such as inflammation and angiogenesis, which may lead to faster wound-healing in addition to lower infection rates — which, according to clinical evidence could be reduced by 50%. The dressing is available with and without and adhesive border, and can be used in combination with an absorbent secondary dressing in the presence of high exudate levels.
Silver has a long history of safe, effective use as a topical antimicrobial. The antimicrobial silver in our wound dressing, which is made with the needs of orthopedic procedures in mind, could reduce the number of surgical site infections by 50%. Given that the average additional costs of managing joint infection after orthopedic surgery are $68,000 to $120,000 per patient (depending on the type of bacterial strain)2, the average U.S. hospital could potentially save $18,000,000 per year. Furthermore, due to its mechanism of action, silver doesn’t contribute to the creation of bacteria resistant to antibiotics — a critical consideration when choosing a topical antimicrobial. Because the dressings are also available with an adhesive border, you don’t need to order and stock separate adhesive dressings. In addition, the improved handling and pliability of the dressing saves valuable nursing time at dressing change.
All your sales and marketing communications should target economic buyers — in sales talks, in brochures and on the web. See it as if you do business in a bilingual country, only the two languages are clinical and economical.
In the land of the blind, the one-eyed man is king
The good news is that many of your competitors haven’t adapted to this new business environment. Have a look at your competitors’ websites and you’ll see that most of them don’t have more than a general statement about their focus on health economics. Despite the fact that many of these companies have one or more health economists in the organization, they do often not (yet) translate the clinical advantages of their products to the language economic buyers respond to. The importance of specific messaging for purchasers is often underestimated, even though most companies feel their prices are under pressure. The only way to successfully sell a more expensive medical device to an economic buyer is to prove that the bottom-line costs are similar or lower, even if per-unit costs are not.
One of the best ways to do this is to create a budget-impact model for your device. This is a theoretical model that, based on clinical evidence, lets you show potential clients the cost-effectiveness of your device. Especially when it comes to the economic impact of post-operative complications, this is a very useful tool to show purchasing managers how your product helps decrease bottom-line costs.
While even a simple PowerPoint presentation can be useful to communicate the value message, there are also more sophisticated methods, such as interactive calculation tools that provide purchasers a tailor-made budget-impact analysis for their situation. Although a theoretical model can never exactly predict financial implications, it’s one of the best ways to increase the visibility of product value when communicating with purchasers.
A great resource about customer value communications is the book Mastering Customer Value Management: The Art and Science of Creating Competitive Advantage by Ray Kordupleski.
Share your thoughts
What are your experiences in communicating the value of your products? Share your story, questions or feedback in the comments section below.
1. Kordupleski, R. (2003). Mastering customer value management. Cincinnati, OH: Pinnaflex Educational Resource.
2. Parvizi, J., Pawasarat, I., Azzam, K., Hansen, E., Bozic, K., & Austin, M. (2010). Periprosthetic Joint Infection: The Economic Impact of Methicillin Resistant Infections. The Journal Of Arthroplasty, 25(3), e42. doi:10.1016/j.arth.2010.01.050