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

1024x1024As 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”

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

A physician visiting the sick in a hospital, G...
A physician visiting the sick in a hospital, German engraving from 1682 (Photo credit: Wikipedia)

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?

There’s a Medical Device For That

English: Foldable, acrylic Intraocular Lens

Like virtually all cataract surgery patients, my parents were thrilled with their cataract procedures. Why not? After a quick office procedure, their new intraocular lenses (IOLs) gave them  better vision than they had experienced for more than a decade.

Now imagine a world with no devices for cataracts, only drugs.  Imagine taking one or more medications every day for the rest of your life – drugs which could not cure cataracts, but which slow the inevitable progression towards blindness. Imagine the typical chronic-medication side effects: somewhere between minor discomfort and an increased risk of cardiovascular mortality.  How does that sound?

When given a choice, I’ll take medical devices over drugs every time. Here’s why.

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Startup Medical Devices Change the World

RDN Procedure 2 - Catheter-based Energy DeliveryIn case you aren’t paying attention, novel medical devices are changing the world. Some recent clinical trial headlines:

Ardian’s Renal Denervation System Demonstrates Sustained Blood Pressure Reduction at 30 Month Follow Up

Asthmatx Bronchial Thermoplasty Provides Long Term Asthma Control Out to 5 Year Follow Up

Percutaneous Valve Technologies’ and CoreValve’s Real World Registry Data Show That Transcatheter Valves Dramatically Improve New York Heart Association class III/IV symptoms and Angina

Barrx’s Endoscopic Ablation Therapy Eliminates Precancerous Esophageal Tissue and Significantly Reduces Disease Progression In Patients with Low Grade Dysplasia

EndoGastric Solutions’ Incisionless Endoscopic Procedure Significantly More Effective at Eliminating Chronic GERD Symptoms than Maximum PPI Dose, New Data Show

CV Ingenuity’s drug-eluting balloon demonstrates good 12 month efficacy in peripheral arterial disease.

Making a real and lasting impact – that’s what medical device startups are all about.

That’s why I do what I do.

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.

Everything You Never Wanted To Know About The Medical Device Excise Tax

As the January 1st 2013 start-date approaches, the medical device excise tax is back in the news. Here’s the latest:

On Jan 25th Minn Representative Eric Paulsen and 225 cosponsors introduced H.R. 436: Protect Medical Innovation Act of 2011, which aims to repeal the tax. Despite congressional support, Minnesota Public Radio states that the bill is unlikely to make it through the Democrat-controlled US Senate.

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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?

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Caution: Physician-Owned Distributorships Ahead

Payments to physicians always raise conflict-of-interest issues for medical device companies (see my post on When Is It Okay to Pay Physicians?). These issues never go away. Today, the Wall Street Journal reported that five US Senators have requested an investigation into the legality of Physician-Owned Distributorships (PODs).

Not being in the spinal implant business, this is the first I’ve ever heard of PODs. What are PODs and what are the implications for medical device companies?

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Hospital Hiring Trends Impact Medical Device Opportunities

 

The Doctor, by Sir Luke Fildes (1891)
Image via Wikipedia

 

Kaiser Health News and NPR yesterday reported on an important US healthcare trend: Hospitals Lure Doctors Away From Private Practice. A dramatic shift from practice-owning physicians to salaried, hospital-employed physicians, could create an equally dramatic shift in medical device market opportunities.

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