Building Bridges In Today's Healthcare Environment

By John Donohue & Michael Thatcher

Partners, Excelerant Consulting

[March 24, 2022] – After a long and arduous journey, you can finally see it: success. It’s right there on the opposite bank of the river. But that river is swift and the currents strong. Going it alone and attempting to swim tumultuous waters could sink you, your brilliance and all the hard work you’ve expended to-date.

You need a bridge.

Far too many incredibly impressive and much-needed medical innovations have stalled on that riverbank or been swept downstream, never to be seen again, because otherwise bright, talented and experienced entrepreneurs chose to go it alone at this stage of a very challenging venture.

Don’t be that person.

There are a vast array of considerations that must be factored in if you are to advance your MedTech innovation from one side of the river to the other. Specifically, to advance it from concept, development and testing to contract to the marketplace and, ultimately, to facilities where medical professionals and their patients benefit most.

Steps Along the Way

In this blog, we’ll address two major factors to consider but let’s first take a look at the steps necessary to move from where you are today to where you want and need to be in the near future. And trust us, things are very different these days than they once were. Twenty years ago, you created a widget in your garage and simply walked into a doctor’s office or scrubbed in with a surgeon and caught their imagination. That doc or surgeon would then go to a hospital administrator and say, “Hey, I really like this product” and administrators would find a way to bring the product in, regardless of pricing or a committed contract. [We may have oversimplified that a bit but you get the point. It’s vastly different these days.]

InIn 2022 and undoubtedly long into the future, developing that widget will require significant investment capital; product testing and clinical trials that validate the fact you’re filling a current need that leads to improved patient outcomes, aligns with the workflow of the medical professional, and makes hospital purchasing staff and administrators smile. You also have to develop a sophisticated sales strategy, a tactical plan to apply said strategy to your hyper-targeted market space, and get in the right doors to speak to the right stakeholders at just the right time. Today’s go to-market process involves:

▪ Sufficient capital investment 

▪ Ability to rally sales professionals quickly and effectively, whether in-house, 1099-contracted or a combination of both 

▪ Identifying proper sales channels [direct, indirect and/or distributor] 

▪ National Market expertise across all surgical specialties 

▪ A comprehensive understanding of how to navigate the purchasing process, including procedures and protocol unique to each buyer 

▪ Call-point management 

▪ Trusted relationships at every level of the hospital from the OR to Materials Management to the C-Suite … or as we like to say, “The Blue Coats and The White Coats”

MAJOR FACTOR #1: Hospital Consolidation  

Today’s business environment is one of consolidation across many major market sectors – automotive, banking, airline, media, semiconductor and, yes, healthcare. Where once there may have been a dozen hospitals of varying sizes operating independently in a single market there are now a dozen hospitals flying one or two ownership flags. Basically, “the biggies” are buying up “the smallies” and that consolidation means fewer hospital professionals are available to do the necessary work of vetting healthcare innovations for efficacy, ease of adoption, cost/value and supply chain reliability.

As a result, an entrepreneur holding the next great healthcare innovation faces:

▪ Fewer call points 

▪ Less surgeon influence in the purchasing process 

▪ Higher levels of hospital engagement 

▪ Significantly reduced OR access [thank you, COVID-19] 

▪ A more informed, sophisticated and demanding buyer 

▪ Increased need for a well-thought-out strategy [or your tactics are useless]

▪ The ability to not only identify key decision-makers but to gain access to them 

▪ A well-defined value proposition and clear understanding of the Value Analysis Team’s specific protocols

But that’s not all …

MAJOR FACTOR #2: Group Purchasing Organization [GPO] Dominance  

Another 2022 reality is that hospital consolidation has elevated the role of the GPO … significantly. More and more, large hospitals systems are leaning on GPOs to address challenges previously handled in-house. Like it or not, hospital systems and GPOs walk arm-in-arm these days and have developed a strong, symbiotic relationship that must be accepted, embraced and respected.

Specifically, hospitals often farm out consulting and decision-making relative to vendors and products to the GPO. They simply don’t have the time and the staff bandwidth to do today what they have done in-house in the past. And you can bet, the more control handed over to GPOs, the greater the likelihood that GPO will remain on contract with the hospital system. Because of that, you must have expertise and understanding of how each GPO works. In particular:

▪ Knowing the decisions being off-loaded to the GPO 

▪ The collaborative’s level of involvement in the actual decision-making process

 ▪ Identifying all key decision-makers

▪ Understanding GPO contract schedules and when your deal-making window is open

Let’s Look a Little Closer at Today’s GPO  

GPOs have broadened their portfolio of services and have moved into healthcare segments they didn’t occupy a decade ago. The consulting arm of the GPO has also increased in importance and is a very strategic part of the ongoing relationship, a value-added dimension to the business model. This allows for even more synergies between GPO and hospital system.

Also, one major GPOs has gone public and must grow and attract talent and revenue streams to maintain/increase market value so they, in turn, maintain/increase the number of investors [shareholders] or individual investor holdings. As a result, there is a higher level of internal-management sophistication and experience which has led to the addition of key growth drivers such as adding clinical sales professionals to help with implementation and contract conversion, and selling new services and contracts to hospital systems. The pandemic also exposed a lack of supply-chain flexibility and small manufacturers are looking to add key GPOs for contracts and private-label or co-marketing opportunities.

Suffice to say, today’s GPO is not the GPO of yesteryear.

So, Still Want to Go It Alone? Yeah, Didn’t Think So.

If you remember nothing else from this blogpost, remember this: Navigating the 2022 healthcare marketplace is highly complex and demanding, and requires expertise you may not have. Moving your innovation from development and initial capital investment all the way through to GPO contract is not something you want to attempt by yourself.

You need a bridge … and we’re here to be that bridge. Call us!

info@excelerantconsulting.com

COMING NEXT: In our next blog installment, we’ll address other Major Factors you must consider in order to successfully advance your innovation into the healthcare marketplace.

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ABOUT JOHN DONOHUE – John has more than 25 years’ experience developing and leading all aspects of business development. He helped propel a $12 million medical device company to more than $600 million over a period of 24 years, positioning the enterprise as a power player in a highly competitive market. He is particularly adept at stimulating and accelerating revenue growth in diverse, rapidly evolving global environments in medical device, as well as developing comprehensive strategies for market penetration, the development of long-term strategic partnerships, and growing the customer base. He excels in solutions-selling, developing strategic partnerships, contract negotiation, revenue growth and expansion, and product launches.

John earned his B.A. from Valdosta State University and lives in the Atlanta area with his wife and daughter.

jdonohue@excelerantconsulting.com

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ABOUT MICHAEL THATCHER – Michael has more than a quarter-century of executive leadership with an established record of success-building and motivating high-achieving sales teams. He has led all aspects of business, including strategy development, establishment of sales goals, overseeing sales efforts, revenue growth and operational enhancements. A collaborative and dynamic leader, Michael is a problem-solver whose consultative approach includes the establishment and nurturing of strategic partnerships, contract negotiation, structuring sales organizations, targeting strategically, disruptive technology product launches, and revenue growth.

Michael earned his B.A. from University of Florida and was also a defensive tackle on the school’s football team. He resides in Tampa with his wife and has three adult sons.

mthatcher@excelerantconsulting.com

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ABOUT EXCELERANT CONSULTING

Excelerant Consulting is the go-to organization for med-tech companies that need to position products and services successfully for value analysis committees, contract acquisition, and sales modeling and execution to commercialize the launch of medical devices or services with Group Purchasing Organizations [GPO], Integrated Delivery Networks [IDN], or Regional Purchasing Coalitions [RPC]. Our clients rely on us to enhance their product positioning, navigate corporate contracting opportunities, and provide sales support to accelerate sales growth.

For more info, contact Excelerant Consulting at info@excelerantconsulting.com