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?

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”

Hospital-Employed Physicians and Medical Device Opportunities – Update

Steen Doctor and His Patient
Image via Wikipedia

A few weeks ago I wrote about the growing trend of physicians being employed directly by hospitals rather than in private practices, and how this trend impacts medical device opportunities.  Last week the Wall Street Journal published an article “Medical-Device Firms Lose Clout As Hospitals Buy Practices” which is well worth reading.  This week, PWC released a report “Health Reform is Driving Hospitals and Physicians Together.”  Have you analyzed the impact of this trend on your medical device market over the next few years?