9 min reading time

I was reading “10 Key Concepts for Higher Sales into ACOs” by the CMR Institute out of Virginia.

See http://medgroup.biz/Selling-into-ACOs

Anthony Slonim, MD, DrPH, CPE, FACPE, President and CEO of Renown Health (Reno, NV) is quoted on page 2.

“If you want to talk to us about devices, we certainly need to understand survival rates and complication rates. However, we also need to know how your product will help us fulfill our mission of providing care to the communities we serve with the best quality and service for the least cost.”

Do you agree?

Do your sales teams tell a “best quality and service for the least cost” story when presenting to ACOs and hospital systems?

The paper continues with 10 concepts including:

• Avoidable readmissions (penalties for high 30-day readmission rates; Medicare withholds up to 3% starting this year)

• Health economics and comparative effectiveness research (direct comparisons of two or more interventions)

• Patient experience (the Hospital Consumer Assessment of Healthcare Providers and Systems survey known as HCAHPS)

The 14-page PDF is worth a read:
http://medgroup.biz/Selling-into-ACOs

So, does “value” break through and get you the sale?

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Related:
ACO Collaboration event in Minneapolis, MN on March 26-27.
See for details.

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DISCUSSIONS

Going to Arab Health this week? Meet group members there!

Going to MD&M West Expo, Feb 10-12? List yourself.

Supplier is ISO certified but we are not certified.
Can we sell the products in the EU?

Process validation at your suppliers’ sites?

Which software and software as a service (SAAS) products for the device industry?

“Low-risk” products FDA won’t regulate

Pitfalls of working with a contract manufacturers?

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GO HAWKS

Guess the final Seahawks-Patriots score…
and win free 10x Medical Device Conference admission at http://medgroup.biz/superbowl.

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Make it a SUPER week.

Joe Hage
Medical Devices Group Leader

P.S. Do you do business in the Asia-Pacific? See http://AsiaPacificDeviceSummit.com, a new conference
(March 5-6, San Diego)

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Julie Omohundro
Principal Consultant at Class Three, LLC
Willi, thanks so much for taking the time to share this information. I have spent my career focused on FDA more than investors, in which I have taken an interest of late. I have not done extensive research so far, but what little searching I’ve done did not turn up much information that I found useful. I’m delighted to hear you are planning to write a book on the subject, and I promise to be first in line to buy it!

So, just one more quibble. I think the biggest losers in the VC dynamic as you describe it here are neither entrepreneurs nor investors, but patients.

Willi Glettig
Owner of LCC Engineering & Trading GmbH and co-owner of Koldsteril
Dear Julie, just responding to your questions. In two or three years I should have enough spare time to write a book about my personal observation regards evolution of VC Industry during the past forty years.
About 1985 a new breed of greed driven people entered the VC industry and put a wedge between investors and entrepreneurs. VC industry is a “shadow financial industry” will not finance experienced entrepreneurs. They are the pawns of finance managers in large life science companies. Their strategy is simple, to seduced young individuals with special scientific skills to commit formation of e new venture. They seek focused technical specialist that are novices in finance and marketing. The Entrepreneur has to sign term sheets that give the VC control over the Entrepreneur and the Investors. The looser in this relationship are always the Investor and the Entrepreneur but not the VC. They are part of the OPM (Other People Money) community. Do you know a VC that has lost more than his job? This business model outsource risk and to minimize responsibility. This blog is about Value. So let focus on people that are driven on creating Value , namely Entrepreneurs
What I like to do here is to define “Entrepreneur” because in the English language there is no uniform term definition and description of behavioral profile of what constitutes an Entrepreneur. Over the past many years I learned that people in business can be divided into six categories as follows: 1. Employees, 2. Self Employed, 3. Karaoke Singer, 4. Casino Capitalists 5. Entrepreneurs and 6. Investors. Again I have not sufficient time, I will only focus on entrepreneurs. I believe that entrepreneurs will only survive if they have an in-build value sensor. To survive they must permanently sense what their target market, their employees and society considers to be of value and then they must react to it.
I subdivide Entrepreneurs into a) Business Entrepreneur, b) Turn-Around Entrepreneur (TAE), and c) New Technology Entrepreneur (NTE) , They constitute about 1% of Working Population (WP) . Not included are Social Entrepreneurs (Mainly Government Employees) Aspiring Entrepreneurs (2 – 7 % of employed people) and Lifestyle Entrepreneurs (Most of them are self employed, about 15% WP ).
Entrepreneurs own or partially own a system or business in which they have invested their own risk equity
They are in control of the system
They control sufficient capital to finance themselves and to invest in either going enterprises, in bad performing / declining ventures or in new technologies so as to multiply their investment at their own risk.
People work for them, they have power but also responsibilities.
They must have courage and tenacity.
They are the “creators” and “builders” of ventures in our society. It is a combination of calculating rebels and dominators. This mixture of power, risk and responsibility enables Entrepreneurs to communicate effectively and efficiently and with empathy.
Most have a strong passion and conviction for developing the very best products or services and to build a fair enterprise, they appreciate their employees. They want to make a difference in people life, to change things to the better. They listen to people and accept constructive input but reject straightjackets.
In a few years I hope to quantify above profile with data.

Julie Omohundro
Principal Consultant at Class Three, LLC
Willi, that is the most cogent summary of the dynamics of the medical device industry I’ve ever read. Thanks.

That said, I still might like to quibble with one or two points. I’m not entirely convinced that entrepreneurs are “forced” to secure funding from VCs. I think VCs are the most obvious and easiest source of funding, and that it serves the VCs well for entrepreneurs to think they have no choice but to secure funding from them. I don’t know how crowdfunding is going to work out in the long run, but I appreciate that they have been so bold as to question the traditional way and seek an alternative that might better serve the goals of the entrepreneur.

I also wonder if by “entrepreneur” you mean the professional/serial entrepreneur, or an inventor. I think the professional entrepreneurs have become professional entrepreneurs because they have bought into, mastered, and are satisfied with the results of the traditional way. Therefore, they have no motivation to seek alternatives. I think many inventors are simply lambs to the slaughter when it comes to financing. While they may have motivation to seek a different way, they don’t know how, or often, even that it might be wise for them to do so.

Christina P.
Excellent -thanks. Tried to download – attempt – will try again later –

Michelle O’Connor
President and CEO | Director | Learning Strategy | Life Sciences Sales Training | Corporate Educational Partnerships
Value is a hot topic in healthcare, and I value your insights on the issues covered in our white paper. The discussion of value can go many ways, but I think the central message is this: The bar is being raised. Consider the recent article in Health Affairs by Chambers et al ([http://content.healthaffairs.org/content/34/2/253.abstract|leo://plh/http%3A*3*3content%2Ehealthaffairs%2Eorg*3content*334*32*3253%2Eabstract/nVit?_t=tracking_disc]). The study shows that CMS wants more evidence that devices and other innovations positively affect outcomes before they are covered. Similarly, providers moving toward value-based payment arrangements are asking that medical device companies evolve their sales approaches to have more of a long-term focus. It’s still early, and we may not have a clear picture of what “value-oriented” selling looks like in every market, but there’s no denying that customers are speaking the language of value and expect their partners in industry to engage in conversations that reflect this new focus.

Gunter Wessels,Ph.D.,M.B.A.
Practice General Manager at LiquidSMARTS
Willi makes an excellent point. There’s a broken theory of value (healthcare value that is) baked into the expectations of boards and investors. It’s all volume driven. Clinical innovations that create value should be adopted, but they’re not discrete packaged products as much as “solutions”, i.e. product-based vehicles for healthcare value creation; increasing quality and outcomes while reducing cost. Both outcomes and cost are required to be balanced for Value-Based selling in the MedDevice world.

Willi Glettig
Owner of LCC Engineering & Trading GmbH and co-owner of Koldsteril
Most buyers look for value but everybody is interpreting the term differently. The seller requires an insight in the value system of the target client and an understanding of his environment.
In most cases if somebody procures a product he wants to create more value with the procured product. A self-employed surgeon wants to earn money not only on his surgical time but also on the tools he uses. Thus the surgeon has to convince his patient that he is using the best products and best care

In the digital world however we have abandoned to communicate face to face with the end-user thus we don’t understand their personal value system. Instead we use “foot in the door” strategies to permanently bomb the client with simple messages. Some companies place cookies into our computer when we visit their websites. Later when we access to the internet again a photo of our desired product and price will appear.

Just look also into the dynamics of the medtech industry …Innovative entrepreneur develops unique high quality, highly differentiated product. He is forced to finance his venture mainly through VC. The financiers are not interested in the product but in selling the company to the highest bidder. The buyer will not pay much cash for his acquisition and so the assets in the procured company are striped, the entrepreneur removed and the products integrated into the buying concern. Later product managers will have responsibility for the product. They make bulk offers to say hospital purchasers and those in turn will request offers from a number of competitive suppliers. The hospital purchasers will then tell the product manager how much they are ready to pay. The product manager will agree since he can blame various divisions in his company e.g. for manufacturing at high cost, …for acquiring to expensive technology etc. No talk about value anymore…maybe a few years later we hear about discontinuing product line or about recall of the product because some low cost materials have been used to substitute.
We cant sell value if we don’t understand what our product procurer consider to be of value.

Rob Packard
510(k), CE Marking & Quality System Consultant
If you are interested in reading more about value-added pricing, you might try reading “The Art of Pricing”: [].

Rob Packard
510(k), CE Marking & Quality System Consultant
Normally I’m writing from a professional’s perspective, but in the last 5 months I’ve spent a little more time at the hospital than I would like. I have noticed a significant change in the post-operative care and follow-up for the two closest hospitals in my region. The difference is significant in how much attention is paid to make sure the patient has received all the appropriate information and the recommended treatments actually work when they get home. I don’t think the orthopedic company that made the plate and screws that are in my tibia will be able to do much to show hospitals how they are reducing repeat visits, but there is a huge opportunity for companies that make knee and leg braces. The challenge will be to fund the clinical studies (retrospective and prospective) to demonstrate that one product reduces repeat visits over another. This type of study is more like the post-market clinical follow-up studies that Europe is requiring, and we should expect to see a trend toward this type of study.

Gunter Wessels,Ph.D.,M.B.A.
Practice General Manager at LiquidSMARTS
We’ve been on the march to drive value-based selling and have simple fact to share: If you’re not selling value (as defined in healthcare as Outcomes/Cost) you’re not going to be selling much, or much longer in this industry. Proof of this is all over the news this week; CMS is demanding that 50% of payments be Value-based in three years. Welcome to new normal.

Thomas J Secor
Customer Development Coordinator at Bay Area Services
While I am not in the medical field I have found that over the years you can not get the best quality, the finest service and, the lowest cost. A decision needs to be made which of these 2 elements are the most important. It’s just not possible to deliver the best quality product along with the best service at the lowest cost.

Michael Ferguson, Ph.D.
Vice President, Global Healthcare Economics and Reimbursement at AtriCure, Inc.
Selling on value will become more important over time, especially being able to differentiate clinical/financial value to payors, hospitals/providers, patients and society. I see a changing over in some areas where economic buyers are dictating terms. However, value in itself may not produce price premiums as before, but may prevent price erosion…..there will still be a premium on lowest price, and other guarantees to protect hospital investment, such as warranties…..or other risk sharing models.

Kevin Ryan
Cardiology Account Manager at Abiomed
Keep the comments coming. Having sold in the medical device market now a little over ten years, this question is evolving and will continue to do so. Therefore, the answer needs to evolve in kind. Defining value is or should always be a key component to any good sales professional’s approach to successfully unearthing NEED. It should not, however, be solely left to sales to uncover and address that value/need. Far too frequently, sales is pushed for growth without strong understanding and promotion of value from their executive teams. Fluidity in conjoining sales, marketing and strong product or service development leads to success now and going forward…

Russ Emrick
Senior Strategist at MedTech Value Consulting, LLC
The question is more difficult because it isn’t “does the salesperson sell value.” Very often a company with a poor value proposition blaming sales instead of fixing a lack of market value or differentiation. The issues go in this order: does the customer appreciate and buy on value? Does the company have a solution that appeals to that customer. Lastly, can the sales team articulate that message? Obviously the topic is more nuanced. Salespeople should provide value, not simply message it. They should also be able to create demand, i.e. sell a customer on the need to appreciate value. One paragraph limits me to this message: stop blaming sales for products/services that don’t have enough strategic, clinical, or economic value to gain market share with Healthcare Systems.

Karen Cooper
Product Marketing | SaaS | Sales Enablement | Value Propositions | Positioning and Messaging
Based on the press release that CMS just put out yesterday, Yes, value and quality in terms of patient outcomes will very much be a major consideration for customers as they will get compensated more in demonstrating such. I don’t necessarily agree with the “for the least cost”. I believe it is up to the vendor to show positive return on investment for their product whether it be time saved or % better patient outcome for example. Show this to your customers in terms of real dollars don’t just say that your product does this.