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.
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.
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?
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.