Post on 19-Oct-2014
description
© TIGI 2012 All rights reserved
5 Medical Distribution Strategies Doomed
to Fail in 2012
Gunter Wessels, Ph.D., MBAPartner, Practice Principal, TIGI
gunter@mytigi.net@gunterwessels
Sam O’Rear, M.A. BASenior Partner, Founder, TIGI
sam@mytigi.net@TIGI_Inc
www.tigi.net
© TIGI 2012 All rights reserved
Help you make good decisions in an uncertain time.
How? →Discuss some observed mis-steps and best practices
Resulting in?→Actionable implications for your business
Objective
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What is failure?• Sluggish Growth
• Marketshare Decline
• Price/Margin Erosion
• Commoditization
• Diminished Profitability
• Increased Uncertainty
Failure Defined
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Major Changes in Healthcare:• Accountable Care Organizations
• Value Based Purchasing
• IT Integration and Health IT Incentives
• Reimbursement Declines
• Readmission Penalties
• Bundled Payments
The New Normal
Top 10 Concerns of Distributors
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Acquiring brands that open doors to parts of their portfolio
Obtaining product lines that turn over quickly
Maintaining focus within market segment
Supporting manufacturers while staying true to their own mission.
Finding products with low acquisition cost, high margin, high volume
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Top Concerns of Distributors
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Top Concerns of Distributors
Managing GPO Contracts
Backorders, support issues & customer service from manufacturers
Field support from manufacturers, and training
Avoiding/Mitigating channel conflict
Managing lead and referral processes and programs
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The Big Five
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Portfolio Expansion
Focus on High Volume SKUs
Manufacturer and Product Focus
Private Label Products
Feature-Advantage-Benefit Sales and Marketing
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Priority: Acquire OEM Brands that “open doors”
Portfolio Expansion1
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Portfolio Expansion Remedy
• Recognize that it’s your brand that opens doors
• Maintain Focus on your area of expertise and value-add
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Priority: Acquire High Volume, High Margin, or Low-Cost products
Focus on High-Volume SKUs2
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- High volume is correlated with increased price sensitivity, switching, and cost of sales
- Manufacturers control much of this market
- Exclusivity is rare in high volume
- Primary lines can unbalance the portfolio
- GPO contracts drive margins down in high volume SKUs
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Competing in Healthcare in 2012
Maximize
Maximize
Incr
ease
Offs
et
Minimize
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Focus on High-Volume SKUs - Remedy
• Look for areas where you can add stability to your transaction volume; high, medium, and low frequency purchases
• Recognize that high volume is not always associated with high value
• Look for gaps and hard-to-find products and consider specializing there
• Add complimentary products that relate to your focus and expertise
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Priority: Increase the value of your business with alignment in a category
Manufacturer and Product Focus3
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Service Lines Dominate HealthcareA Service Line is: - A Center of Excellence- Focused on a patient population with a range of conditions and
symptoms.- Engaged in meeting providers’ and patients’ needs for:
• Quality• Access• Convenience
Service Lines are comprehensive, “product lines” including:
Screening & Prevention Diagnosis Treatment Aftercare support
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Manufacturer & Product Focus Remedy
• Consider the VAR industry and adapt your business model to selling services and value-adds- Look at your portfolio and examine it for solutions- Sell implementation services and value-adds
• Consider where your infrastructure provides unique advantage for customers and manufacturers- e.g. Logistics, inventory management, service
and support, education
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Priority: Source un-branded products to substitute or bundle in sets or kits
Private Label Products4
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• Risks:
- Backorders
- Support
- Quality
- Regulatory review
- Liability
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Private Label Products - Remedy
- Focus your core business on service lines
- Sell services that solve the business problem associated with your lines
- Consider a spin-off of packaging business
- If you’re in this business, bulk up compliance and risk management
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Feature-Advantage-Benefit5
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A Balanced Approach
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What are the Hurts?
ClinicalUtility
OperationalEfficiency
FinancialPerformance
Department
Allocated Revenues and
Expenses
Equipment, Facilities,
Technology
Evidence-Based Medicine
Service Line
Favorable Market Conditions
Community Outreach and
Marketing
Definition of Services
Facility
Adequate EBITDA Margin
Staffing Skill-Mix Required MD/RN/
AH
Growing or Reducing
Services Offered
Capitalization, Debt Service,
Leverage, Acquisitions
Resource Coordination
Care Coordination and
Service Line Portfolios
IDN/System
Market Power Aggregation with
Suppliers and Payers
Shared Services and Process Outsourcing
Population Management
and Cooperation
ACO/Network
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• Sell Services: Create Solutions, Sell Related Services, Augment Core Product Lines
• Focus on Service Lines: Service Line Managers, Continuum of Care, Non-Acute and Acute Care
• Brand Building: Leverage Your Personal Brand, Brand the Company, Carefully Consider Private Branded Goods
• Upgrade skills: Business Acumen, Evidence-Based Medicine, Salesmanship, RFP Strategy
• Update the playbook: Corporate Accounts, GPO Contracts, Coverage Models
• Assess and Develop Talent: Specialists, Generalists, Managers, and Support
What to Do?
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Upcoming EventsWebinars:
June: How Healthcare Reform Impacts Your Business Today
July: 5 More Medical Device Strategies Doomed to Fail in 2012
To Register: http://www.tigi.net/webinar-calendar
Open Enrollment, 1 Day Workshop:
TIGI and MassDevice Present, TIGI Bootcamp 2012The Changing Healthcare Buying Environment: Adapting to the New Normal, August 13 in Boston & August 20 in the Midwest (location TBD).
To Register: http://www.tigi.net/the-changing-healthcare-buying-environment/
© TIGI 2012 All rights reserved
Thank You
Gunter Wessels, Ph.D., MBAPartner, Practice Principal, TIGI
gunter@mytigi.net@gunterwessels
Sam O’Rear, M.A. BASenior Partner, Founder, TIGI
sam@mytigi.net@TIGI_Inc
www.tigi.net