Five Ways to Price your New MedTech Product

Setting a price for your product is one of the most important decisions a medical device startup will ever make. A recent A16Z podcast reminds us that “There’s no other single number that ties to the valuation” of your company.

Once set, prices are hard to raise. If you price too low, you can leave millions of dollars of revenue and profits on the table, starving your company of the funds it needs to re-invest in growth. If you price too high, product adoption will suffer.

So, it’s worth investing a fair amount of time and money with pricing experts before you launch your product. They’ve done this a lot more often than you have. Continue reading “Five Ways to Price your New MedTech Product” →

Lessons from @IntuitiveSurg – Don’t sell your device, sell your program

1024x1024 As hospital systems consolidate, and as more physicians become hospital employees, the business side of the hospital has taken control over the acquisition of new procedures and technologies. For medical device companies, the days of driving sales via physician champions is over.

Each time I seen an announcement like the new Bridge Clinic at MGH or the new bladder-cancer detection system at Intermountain Medical Center, I am reminded that providers are fundamentally regional service businesses.

For providers, acquiring an innovative new medical device means offering a new service to patients. For a provider, the decision to acquire a new medical device is a business decision to grow the hospital’s service share. The more novel the service, the more business risk faced by the hospital, and the more complicated the purchasing decision. Philip Kotler’s book “Strategic Marketing For Health Care Organizations” gives an example of the new reality:

A hospital is considering adding a sports medicine program to its portfolio of services. Before deciding whether to launch such a program, it plans to do market research to gauge the size of the community need, discover which competitors already offer such a program, consider how it will organize and deliver the program, understand how to price its various services, and determine how profitable the program is likely to be.

Medical device sales and marketing needs to adapt. Intuitive Surgical shows us how.

Continue reading “Lessons from @IntuitiveSurg – Don’t sell your device, sell your program” →

Big Data Is Coming To Medical Device Marketing and Sales

While you might be sick of Amazon telling you that customers who bought product X also often bought product Y, Amazon knows what sells more products. I’ve used the same technique in medical device markets. Last year I wrote about medical device market segmentation using procedure data – finding prospects for your procedure X based on customers who perform procedure Y. Why target interventional cardiology as a whole, or so-called “early adopter interventional cardiologists,” or community hospitals versus academic medical centers, when you can specifically target sub-segments based on actual device use, e.g. IVUS users, chronic total occlusion specialists, or high volume stenters?

In 2014, big data powers marketing in consumer and tech, and it’s coming to medical device marketing and sales. Applied well, big data can focus sales efforts on the likeliest adopters, identify prospects that you never knew existed, and uncover market segments with unique product needs. If you don’t already know the power of big-data-driven marketing in the consumer world, read the recent (chilling) US Federal Trade Commission report on data brokers.

Medical device customers are consumers too. Here’s how I used big data at Candela in 2009 to re-imagine our marketing and sales approach.

Continue reading “Big Data Is Coming To Medical Device Marketing and Sales” →

Hospital System Consolidation: Will Your Medical Device Sales Model Adapt?

About two years ago I noted “The Looming Impact of Healthcare Service Consolidation.” That consolidation ramped up this week, as the second-largest U.S. hospital chain, Community Health Systems, announced it would buy Health Management Associates (which operates 71 hospitals) in the largest hospital acquisition since 2006.

Consolidated systems standardize practices across hospitals and centralize purchasing of new technologies. Yesterday’s physician-champion-decision-maker is being replaced by tomorrow’s hospital-exec/technocrat-decision-maker. Medical device companies can learn a lot from enterprise IT sales. Will your medical device sales methodology adapt?

US OIG Warns on Physician Owned Distributors

In 2011 I urged extreme caution for medical device companies considering selling products through physician-owned distributorships (Caution: Physician-Owned Distributorships Ahead). This week, the US Office of the Inspector General (US OIG) issued a fraud alert for physician-owned distributorships, stating that “OIG views PODs as inherently suspect.” Don’t say I didn’t warn you.

Doctor-Owned Device Suppliers Deemed Inherently Suspect – Bloomberg (bloomberg.com)
Buyer Beware: Fraud Alert For Doctor-Owned Device Businesses (commonhealth.wbur.org)

Medical Device Marketing – Segmentation With Procedure Data

Ask most medical device marketers about market segmentation, and you’ll get an earful about physician specialty (and subspecialty), hospital/facility size or type (academic, ASC, for profit, large system, etc), or adopter type (early adopters, followers, and skeptics). Unfortunately, these approaches rarely help companies identify customer groups that are differentially addressable – i.e. best served by different products or services, different price points, and/or different marketing channels and sales techniques.

Contrast the typical medical device approach to the sophisticated techniques of consumer product firms. Are you a Barry, Jill, Buzz, Ray, or Mr. Storefront? Best Buy’s in-store staff segments you with a few questions before steering you to the products you’re most likely to want. Amazon suggests possible purchases for you, based on your clicks plus the buying history of other customers who bought the same products you did. Target buys your demographic data to combine with your Target purchase history to create custom coupons for you.

Medical device firms can do much, much more to understand and better serve their markets. Even back in the 1980’s much more could be done. Let me explain how I approached market segmentation twenty-something years ago.

Continue reading “Medical Device Marketing – Segmentation With Procedure Data” →

The US Medical Device Sales Model is Changing

US healthcare system consolidation, and the increasing percentage of US employment of physicians directly by healthcare systems, are dramatically changing the US medical device market, as I’ve previously discussed here, here, and here.

This week, Evan Anderson presents a first-hand view of these changes in a great article on the Stanford Biodesign Alumni blog. Highly recommended.

Bringing your medical device to the U.S.? Start in Massachusetts

I’m fortunate to live in one of world’s great medical device hubs, so I hope you’ll forgive this unabashed promotion. Massachusetts is home to hundreds of innovative medical device companies, and we are well known as a source of med-tech start-ups. What’s less known is that Massachusetts is the best place for European and Israeli companies to set up their US operations.

Andover Massachusetts (population 33,201) is practically the United Nations of medical devices, hosting Switzerland-based Straumann, Netherlands-based Philips, Germany’s Draeger Medical, and UK’s Smith & Nephew.

Last year, Syneron merged with Candela in Wayland MA, becoming the largest Israeli medical device company in New England. Israeli start-up Odin Medical located its US HQ in MA prior to its acquisition by Medtronic, and Israeli start-up rcadia has their HQ in Newton, MA. EarlySense is the most recent Israeli company to locate here.

Ireland-based Creganna, a leading provider of medical device contract R&D, set up its first US location in Massachusetts and later expanded to locations in California and Cleveland. Ireland’s Shimmer Research, designer of new devices for wearable health sensing, set up their US operations in Boston.

I’d love to see more European and Israeli companies set up shop here. If you are developing a great new medical device outside the US, and thinking about entering the US market, you should be thinking about Massachusetts. Here’s why.

Continue reading “Bringing your medical device to the U.S.? Start in Massachusetts” →

A Tale of Two Specialties

If you haven’t already heard the big news from last week, Johnson and Johnson’s Cordis subsidiary announced its withdrawal from the drug-eluting (DES) stent market, a momentous event for the firm that launched the first DES and created a new multi-billion-dollar medical device sector. Cordis is also shutting down its Conor MedSystems DES business, which it acquired for $1.4 billion in 2007. My reaction: Wow!

Meanwhile, the same week, the NY Times reported that metal-on-metal hip implants may become “the largest product liability cases of this decade.” The FDA website states that “on May 6, 2011 the FDA issued orders for postmarket surveillance studies to manufacturers of metal-on-metal hip systems. The FDA sent 145 orders to 21 manufacturers.”

Two long-term implants. Two medical device sectors. One critical difference.

Continue reading “A Tale of Two Specialties” →

The Looming Impact of Healthcare Service Consolidation

St. James' and Murray Hospitals, Butte (1915) — Image by Butte-Silver Bow Public Library via Flickr

Last week, the Boston Globe reported that Lahey Clinic and Beth Israel Deaconess Medical Center held early discussions on a possible merger.

Last November, Cereberus Capital, a private equity firm, bought Caritas Christi, a group of six hospitals in the Boston area. In December the newly named Steward Health Care System bought two more hospitals in the region. This April, Steward added its ninth local hospital. In June, Steward offered to purchase Landmark Medical Center in Rhode Island. More acquisitions are planned.

In January, Northeast Hospital Corp (owner of Beverly Hospital, Addison Gilbert Hospital in Gloucester, BayRidge psychiatric hospital in Lynn, and a Danvers outpatient clinic) began exploring a merger or sale to a larger regional player. By June, Lahey Clinic, Beth Israel Deaconess, Steward Health Care System, and Vanguard Health Systems had all made offers to buy.

In April, Beth Israel Deaconess Medical Center and Milton Hospital announced plans to merge in six months.

Provider consolidation isn’t just a Boston phenomenon. Healthcare services M&A is heating up all across the US. What’s going on, and what does consolidation mean for medical device companies?

Continue reading “The Looming Impact of Healthcare Service Consolidation” →

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