Every day sales reps descend on hospitals with an intense desire to get to the coveted “C” suite. They want access to the carpeted area of the hospital because that is where the executive team resides. In the language of business, C-suite players are the individuals who are responsible for effective financial and human resource management. This includes making the final decision on the acquisition of products, services or integrated solutions that support key financial and clinical initiatives either alone or in conjunction with the governing board.
To get an appointment with this coveted group, you must understand how they think about the issues faced on a daily basis. Each hospital/system has its own special needs, opportunities and challenges. The 13 Ps will provide some insight.
Last week in Part one of this blog we reviewed people, physicians, patients, pay-4-performance, product and physical environment. This week in Part 2 we will focus on process, place, price, payers and payments, promotion, perception and population health.
7. Process – Lean, Kaizen, clinical protocols and other processes are all methods that enable hospitals to become more efficient and improve productivity. The C’s now use process methodologies that empower their employees to help drive down costs at an accelerated pace. If you sell solutions that improve work force productivity or patient throughput your sales team needs to understand the management tools that hospitals now use routinely. You must speak their language to be viewed as credible.
8. Place – Prior to healthcare reform, the first choice of healthcare delivery was the hospital environment. Today, the focus is on prevention of disease. Healthcare is moving outside of the acute care hospital and into out-patient clinics, surgery centers and other facilities. Sellers should understand the affect that healthcare reform is having on each hospital that they sell to. Currently, many hospitals are experiencing a 5-15% reduction in utilization. This affects their net margin and ability to spend money on capital and new products.
9. Price – The hospital price list or charge master is no longer a well kept secret. Price transparency enables consumers (think employers and not just consumers) to price shop their healthcare. This new paradigm has been picking up steam through a series of articles in The New York Times and Huffington Post in which they called attention to the wide disparity of prices between hospitals in the same market for the same condition. In our opinion this trend will accelerate. As end user pricing becomes transparent it will increase the hospitals’ focus on cost reduction for equipment and supplies. This will force MedTech suppliers to re-evaluate their entire supply chain and sales model.
10. Payers & Payments– Trying to keep up with the changes in payments and reimbursement (payment) is akin to trying to hold jello steady. The rules and regulations keep changing with new payment models evolving constantly.
The hospital “Cs” look at payments in several ways:
a. A DRG model, where prices are fixed and patient volume drive’s optimization.
b. The ACO model, where incentives are provided to keep patients out of the hospital through preventative medicine.
c. The uninsured is still an issue since the rates that hospitals will be paid will be reduced.
Under the Affordable Care Act hospital payments for Medicare and Medicaid patients are being cut dramatically. Since this is often a significant portion of every hospital’s revenue, costs must be re-calibrated and measured continually. As reimbursement decreases, hospitals are ever vigilant at looking at new ways to reduce costs. Since labor is a major operating cost, the need to review and adjust to current census conditions is a necessity. Within the last few months, there have been numerous announcements from hospitals and health systems that they will aggressively cut jobs to reduce their overall costs. This trend will continue especially with the consolidation of providers as duplication of personnel and services are removed.
11. Promotion– As we move forward, the hospital C’s are thinking about new ways to use branding and positioning as opportunities to market their business. Is it a hospital, healthcare system or both? What services do they want to promote in their local market? How do they differentiate themselves? Hospitals today are aggressively using their website to educate and inform consumers about their capabilities and disease prevention. Facebook, Twitter and other social media sites are staples in their marketing armamentarium. As a seller are you monitoring their social media? Are you aware of how they are using social media? How could you use that knowledge to your advantage?
12. Perception – Image has always been important to the hospital C’s but now, it’s taking on new meaning with price transparency. Websites such as the Leapfrog group and the federal database of national health care costs help to compare hospital safety and quality. As a seller are you monitoring what these and other groups are saying about the hospitals you do business with?
13. Population Health– Population health management (PHM) helps payers, hospitals and physicians assess their entire population and categorize them into:
a. Those who are well and need preventative care to stay healthy
b. Those who are potentially at risk and need to make “lifestyle changes and behavior modification’s to stay healthy.
c. Those who have chronic medical conditions and need to better manage potential complications through awareness and treatment.
Do you provide a product, service or solution that can help the hospital better manage a “population” and achieve its cost and quality objectives?
Parting Thoughts
Every day the hospital “C”s sees sales representatives. Whether they will see you depends upon your depth of understanding of their business, the issues they are focused on and your value proposition. Bring them knowledge, insight and solutions to what they are laser focused on (the 13 Ps) and not only will you gain entry but you will be welcomed back as a trusted advisor.
