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MedTech companies today are finding themselves in a new era of healthcare, and this ever-evolving industry is disrupting old purchasing dynamics. Here at Salesforce, we are lucky to work with innovative companies across all healthcare segments. We benefit from a unique understanding of the industry and rising trends that are impacting the market.
Today, we see 4 major trends that MedTech companies must be aware of and prepared to respond to.
Over the past few years, it has been found that MedTech companies have a 3x higher cost of sales than other industries (source). Healthcare providers are now experiencing pressure to reduce costs from the Affordable Care Act, declining insurance reimbursement, and the commoditization of healthcare. The demand for more affordable healthcare is forcing hospitals to take a closer look at how much they spend and where they can save.
Patients’ expectations for more affordable care and a better care experience are creating competition among traditional healthcare providers. Patients have more options available to them now than ever before, and they are paying a larger portion of healthcare costs—which has led them to playing a more active role as consumers.
Hospitals are increasingly consolidating into large hospital networks in order to maximize their buying power. The industry is seeing a move towards more centralized purchasing for the purpose of reducing costs. Hospital consolidation is driving price transparency and putting more price pressures on suppliers.
Value-based care is emerging as a solution to address rising health care costs and to make it easier for people to get the care they need. This shift towards a value-based model will force companies to justify the costs of devices in terms of the improved outcomes they deliver. Companies will need to differentiate themselves in the market with a superior customer experience and services that add value. In order to best deliver value to their customers, companies are being forced to redefine their overall strategy.
All of these factors are driving decisions on what healthcare providers buy, what they are willing to spend, and how they make their purchases. With all of these different trends emerging in the market, MedTech companies need to be more connected than ever. They have to transform their internal systems and processes in order to be successful in responding to changes in healthcare provider purchasing dynamics.
There are 3 challenges that must be resolved to maintain revenue growth in this new era of healthcare.
Sales and operational inefficiencies cost companies millions in lost productivity. In a regulated industry where reps sell complicated products, the need for automation and modern sales tools is critical. Companies struggle when inflexible quoting and contracting tools delay bringing new products to market. At the same time, healthcare providers have come to expect a more frictionless purchase experience, similar to what they have in their personal lives. Making them wait days or weeks for a quote is no longer an acceptable way to do business.
Contracting has traditionally been done at the local level, which resulted in significant price inconsistencies within large health systems. As hospital consolidation continues, multihospital networks often know more about their relationship with a particular vendor than the vendor knows about its consumer. When sales reps don’t have visibility into their customers’ complete pricing and purchasing data, it can jeopardize long standing relationships and make for some very awkward negotiations. As you can imagine, a large health system does not react well to learning that a small hospital in their network has been purchasing lower quantities and getting better pricing. At the executive level, there is a lack of real time insight into average selling price and discount trends, which makes it challenging to make smart decisions for resource allocation within certain markets and geographies.
When reps have no constraints on discounting, you are left with dramatic price inconsistencies and oftentimes, declining margins. Smart MedTech suppliers put pricing discipline at the forefront of their sales efforts and they support it with the right tools. They put systems in place to guide sellers towards increasing deal sizes and including value added services.
In order to adapt to this new era of healthcare, MedTech companies need to create a connected selling experience on a single platform. With Salesforce CPQ, we enable organizations with a solution that helps them sell faster and smarter. This allows our customers to focus on innovation, invest more in research and development, and ultimately accelerate patient access to safe and effective products.
Our life science customers realize the benefits of CPQ in 3 main areas.
With advanced product configuration, contract management, and pricing automation, we reduce time wasted putting together the correct quote. We eliminate the possibility of reps creating quotes with inaccurate configurations or forgetting to include product training and support. We take hours out of administrative work that your employees can then put back into selling activities and your operations team can put back into the business. Improving productivity creates a frictionless sale for your reps and a better buying experience for your customers.
With all of your sales data on a single platform, we provide management with visibility into pricing and discounting data that they never had access to before—allowing executives to pivot their commercial model according to what is required in order to win. Decisions can be made based on data such as average selling price within certain markets or geographies. You can focus your limited resources and budgets towards markets where there is the most opportunity. At the same time, CPQ enables reps to have visibility into contracted prices. Providing sales reps with the required contract and pricing information for all healthcare facilities within the same network gives them a much better position when it comes to price negotiations. A higher level of insight also helps you build trust with your customers.
Quotes and contracts don’t stop with products. By creating service contracts with CPQ you can increase service revenue and have full visibility into product entitlements and case management. Service excellence can become a true source of competitive advantage, while providing an additional source of revenue.
Now that you’ve had a chance to learn about some of the advantages that CPQ offers, see how Salesforce CPQ helps organizations sell faster and smarter.
