To thrive in a post-Covid environment, forward-looking medtech companies are taking a more nuanced approach to achieving long-term growth. Already, the landscape is changing rapidly. Healthcare providers are reassessing how they deliver care, where physicians interact with patients and how best to procure supplies.
Commercial strategy. As the medtech market becomes more competitive, leadership teams are rethinking their commercial models to address customers’ changing needs. An important part of that process is differentiating the sales strategy and portfolio value proposition to improve the odds of winning as providers reduce the number of vendors they use. One way to do that is by embracing a category leadership strategy—seeking to lead in one or two segments instead of broadly.
Forward-looking medtech companies are also building commercial capabilities to compete effectively for the business of ambulatory surgery centers (ASCs) and office-based labs. These outpatient centers are growing as the volume of procedures continues to migrate away from hospitals. In addition to virtual selling strategies, medtech companies are developing flexible contracts and more just-in-time distribution, since alternative sites of care have less space for inventory.
However, ASCs and office-based labs may increase pressure on medtech companies’ costs if sales to these outpatient settings are lower margin than those to hospitals. To keep costs down, leaders are streamlining their commercial model design and defining and communicating clear roles for sales reps, inside sales, account executives and tech support so physicians can access the right support when needed. This is particularly important in multi-divisional companies where navigating across roles and divisions can be a challenge.
Sales coverage and virtual selling. While the pandemic required an immediate shift from in-person sales interactions to virtual ones, leadership teams are now focused on the broader, long-term shift in commercial strategy. Companies have the opportunity to apply virtual selling tools to differentiated go-to-market models. Leaders are using digital tools and technology to target the right channels at the right points in the customer journey.
Three key questions can help guide virtual selling decisions:
1) What could be done virtually
2) What customer episodes should be prioritized for virtual selling
3) How do companies successfully reach their ambitions?
Once the leadership team defines its goals for virtual sales coverage, it can focus on creating the conditions for success. A first step involves adjusting the operating model and redesigning the organizational structure to ensure maximum efficiency and optimal client coverage. Optimizing the sales technology engine is critical to supporting virtual sales. That includes assessing the existing technology infrastructure and investing where needed to deliver services and engage customers in a virtual environment such as digital platforms for customer engagement (e.g., telesales, virtual rep in the operating room), internal training and team collaboration. Telehealth and connected devices, including mobile diagnostics, data monitoring and device support, underpin real-time virtual physician consultations. Finally, a results delivery operation can help ensure the company meets its virtual selling goals. Leaders develop a pilot-based approach to scaling virtual selling, mitigating risks and investing in change management in order to deliver results.
Product portfolios. The shift to alternative sites of care such as ambulatory surgery centers and increased use of digital health and connected devices are pushing medtech companies to respond with new and innovative products, user interfaces, commercial models and supply chains. Leaders are developing new product features to address the needs of alternative sites of care. They also are investing in data-enabled, connected devices to support real-time tracking of location and status.
Well-capitalized, larger companies will be able to invest through the downturn to gain market share and increase category leadership through organic growth and acquisitions. For example, category leaders are guaranteeing supply to their best customers and providing innovative financing options to help customers manage their own cash constraints.
To expand their product portfolios, forward-looking medtech leadership teams regularly review acquisition opportunities. They realize that small, high-quality assets may be available at attractive valuations during the downturn. It’s also important to regularly reassess prior targets while scanning for new ones, given that valuations and liquidity situations evolve, along with the company’s strategic and financial rationale for an acquisition.
Complexity reduction. As healthcare organizations struggle financially, performance improvement will be increasingly important for all stakeholders. Successful medtech companies have started building more efficient cost structures. In particular, they are reducing complexity and simplifying organization design to achieve a sustained cost transformation.
In considering opportunities for complexity reduction, leadership teams focus on the company’s long-term cost ambitions. They ensure the team is aligned on the concept and benefits of reducing complexity, design a plan for real (not perceived) customer needs, and ensure operations and commercial buy-in. Those steps pave the way for launching a successful complexity reduction plan.
Covid-19 has triggered lasting changes to the healthcare ecosystem. Tomorrow’s leaders are ensuring future growth by rethinking their strategic portfolio strategy today.
Grappling with higher costs from Covid-19, healthcare providers are seeking procurement savings and consolidating vendors.As hospitals limit sales representatives’ access to surgeons, medtech companies are developing virtual selling strategies for differentiated go-to-market models.The shift to alternative sites of care and increased use of digital health and connected devices will require medtech companies to respond with new and innovative products.Medtech leaders are cutting unnecessary costs through process optimization, complexity reduction and organization redesign.