How Orthopedic and Cardiology Implantable Device Manufacturers Can See Double Digit Growth Using Bang Surgical
Bang Surgical and Orthopedic and Cardiology implant manufacturers modernize sale rep/distribution model and obtain double digit growth in 2015.
San Clemente, CA, July 11, 2014 --(PR.com)-- How Orthopedic & Cardiology Implantable Device Manufacturers Can See Double Digit Growth Over Next 5 Years.
Just how much can an implantable device manufacturer lower prices to hospitals and still maintain profitable margins? Zimmer recently acquired Biomet to help reduce operational costs and increase use of product to offset lower price points. Zimmer’s strategy will cost $13B, take years to fully mature, and they will still likely only see single digit growth.
How can Zimmer and the other top implant manufacturers see immediate double digit growth? Aging patient demographics requiring more implantable device surgeries will help offset lower price points with more surgeries, but only single digit growth. To see double digit growth, the sales model needs to be overhauled. One of the largest internal expenses of selling a medical implant is the costs to sell into a hospital. Hospitals require implant manufacturers to provide a representative on an ongoing basis to assume key roles such as supply chain (bringing product into the hospital and making sure the right equipment is always available) and OR team support (helping OR staff setup and use the voluminous trays of instruments that come with implantable devices). The cost of having an implant rep available at nearly every hospital and for every surgery requires the implant manufacturers to have a large sales/distributor network. Implant manufacturers build in this infrastructural cost by adding a ~ 5 to 40% cost markup. In other words, if implant manufacturers can improve their sales efficiencies, then they can reduce the 5 to 40% cost and greatly improve margins, getting closer to double digit growth. It is plausible and actually quite easy.
Modernizing the Role of the Implant Device Rep –There are companies and technologies now available for implant device sales teams to downsize at least 25% only keeping their top reps to support four times the ORs they are in today. This reduction would eliminate upwards of 25% of their existing sales costs to a hospital -- huge margin increase. Bang Surgical has done over 2,500 surgeries using OR grade video conferencing technology to allow a fully interactive live audio and video connection for reps to support cases in the US. One rep supports multiple cases each day, assuming the role of six reps.
In 2011, Zimmer tried to reduce the number of reps in their sales force by introducing easier to use instrumentation intended to negate the need for a rep in the OR. But most OR teams still needed help, especially in complicated surgeries. Some of the country’s top reps have seen 1,000s of surgeries (more than most surgeons) and can provide excellent insight, when needed, to a surgeon and OR team. The surgeon/rep dynamic often develops into a strong relationship and the surgeons want the rep in the OR. So, how can the rep be of value to the OR team, keep the surgeon happy yet remove the rep associated costs of physically being in the OR?
Getting Surgeons to Switch
Since the Affordable Care Act went into effect in January 2013, hospitals have created “Value Analysis or Justification Committees” to decide which medical devices a hospital will buy. Implant surgeons are a part of these committees and help decide which implantable device company to use based on two main factors. The first factor is clinical outcomes. Does a medical device manufacturer’s product improve a patient’s outcome (i.e. lifestyle, low percentage of complications, etc.) versus those of their competition? If patient outcomes are comparable then the second factor is evaluated: Cost. To ensure that hospitals and surgeons work collaboratively on “Value Analysis or Justification Committees” to drive down costs yet maintain outcomes, the Affordable Care Act (ACA) provides financial incentives to surgeons in two ways: higher payor reimbursements and ACOs.
Payor Reimbursements – Under the ACA, Medicare is ranking hospitals/surgeons nationally in terms of patient outcomes and the cost(s) of the procedure. Reimbursement from Medicare will be based on the hospital/surgeon ranking. If a hospital/surgeon ranks poorly on the national average (i.e. high costs or poor outcomes) then reimbursement to the hospital/surgeon will be reduced. Equally, or more importantly, the hospitals/surgeons that rank highly will get increased patient referrals by the payors thus increasing hospital surgery volume. Many hospitals will go out of business while the best hospitals will thrive.
ACOs – Accountable Care Organizations are a partnership between surgeons and a hospital. When a surgeon forms an ACO with a hospital, maintains clinical outcomes yet lowers costs, then an ACO partnership will allow hospitals to reimburse the surgeon a percentage of the cost savings.
Between the new payor reimbursement structure and ACO’s, surgeons are now working more closely with the hospitals in reducing costs. Moving forward, a surgeon is more likely to go along with a rep not being physically present if outcomes are high and costs are low. Once implant manufacturers begin modernizing their rep model, a new huge opportunity will present itself -- surgeon conversion. In the past, getting a surgeon to switch from one company to another was next to impossible. The relationship between the rep and surgeon hindered it, unless the rep switched companies. The logistics and costs for a surgeon to re-train on a new implant were too high. But with remote based support, surgeons can re-train without travel logistics making the prospect of conversion much more viable.
In summary, higher profit margins & double digit growth is obtainable without the high costs of M&As. Shifting the antiquated sales rep model from a one rep for one hospital scenario to a top rep supporting multiple US hospitals/surgeries generates a minimum 25% reduction in the cost to sell to a hospital. In addition to lower sales costs and improved margins, implant manufacturers will be poised for growth in a previously untouched market share of surgeon conversion. Double digit growth is an easy and attainable short term reality.
Contact
info@bangsurgical.com
Bang Surgical
1235 Puerta Del Sol #100
San Clemente, CA 92673
(949) 385-2220
Just how much can an implantable device manufacturer lower prices to hospitals and still maintain profitable margins? Zimmer recently acquired Biomet to help reduce operational costs and increase use of product to offset lower price points. Zimmer’s strategy will cost $13B, take years to fully mature, and they will still likely only see single digit growth.
How can Zimmer and the other top implant manufacturers see immediate double digit growth? Aging patient demographics requiring more implantable device surgeries will help offset lower price points with more surgeries, but only single digit growth. To see double digit growth, the sales model needs to be overhauled. One of the largest internal expenses of selling a medical implant is the costs to sell into a hospital. Hospitals require implant manufacturers to provide a representative on an ongoing basis to assume key roles such as supply chain (bringing product into the hospital and making sure the right equipment is always available) and OR team support (helping OR staff setup and use the voluminous trays of instruments that come with implantable devices). The cost of having an implant rep available at nearly every hospital and for every surgery requires the implant manufacturers to have a large sales/distributor network. Implant manufacturers build in this infrastructural cost by adding a ~ 5 to 40% cost markup. In other words, if implant manufacturers can improve their sales efficiencies, then they can reduce the 5 to 40% cost and greatly improve margins, getting closer to double digit growth. It is plausible and actually quite easy.
Modernizing the Role of the Implant Device Rep –There are companies and technologies now available for implant device sales teams to downsize at least 25% only keeping their top reps to support four times the ORs they are in today. This reduction would eliminate upwards of 25% of their existing sales costs to a hospital -- huge margin increase. Bang Surgical has done over 2,500 surgeries using OR grade video conferencing technology to allow a fully interactive live audio and video connection for reps to support cases in the US. One rep supports multiple cases each day, assuming the role of six reps.
In 2011, Zimmer tried to reduce the number of reps in their sales force by introducing easier to use instrumentation intended to negate the need for a rep in the OR. But most OR teams still needed help, especially in complicated surgeries. Some of the country’s top reps have seen 1,000s of surgeries (more than most surgeons) and can provide excellent insight, when needed, to a surgeon and OR team. The surgeon/rep dynamic often develops into a strong relationship and the surgeons want the rep in the OR. So, how can the rep be of value to the OR team, keep the surgeon happy yet remove the rep associated costs of physically being in the OR?
Getting Surgeons to Switch
Since the Affordable Care Act went into effect in January 2013, hospitals have created “Value Analysis or Justification Committees” to decide which medical devices a hospital will buy. Implant surgeons are a part of these committees and help decide which implantable device company to use based on two main factors. The first factor is clinical outcomes. Does a medical device manufacturer’s product improve a patient’s outcome (i.e. lifestyle, low percentage of complications, etc.) versus those of their competition? If patient outcomes are comparable then the second factor is evaluated: Cost. To ensure that hospitals and surgeons work collaboratively on “Value Analysis or Justification Committees” to drive down costs yet maintain outcomes, the Affordable Care Act (ACA) provides financial incentives to surgeons in two ways: higher payor reimbursements and ACOs.
Payor Reimbursements – Under the ACA, Medicare is ranking hospitals/surgeons nationally in terms of patient outcomes and the cost(s) of the procedure. Reimbursement from Medicare will be based on the hospital/surgeon ranking. If a hospital/surgeon ranks poorly on the national average (i.e. high costs or poor outcomes) then reimbursement to the hospital/surgeon will be reduced. Equally, or more importantly, the hospitals/surgeons that rank highly will get increased patient referrals by the payors thus increasing hospital surgery volume. Many hospitals will go out of business while the best hospitals will thrive.
ACOs – Accountable Care Organizations are a partnership between surgeons and a hospital. When a surgeon forms an ACO with a hospital, maintains clinical outcomes yet lowers costs, then an ACO partnership will allow hospitals to reimburse the surgeon a percentage of the cost savings.
Between the new payor reimbursement structure and ACO’s, surgeons are now working more closely with the hospitals in reducing costs. Moving forward, a surgeon is more likely to go along with a rep not being physically present if outcomes are high and costs are low. Once implant manufacturers begin modernizing their rep model, a new huge opportunity will present itself -- surgeon conversion. In the past, getting a surgeon to switch from one company to another was next to impossible. The relationship between the rep and surgeon hindered it, unless the rep switched companies. The logistics and costs for a surgeon to re-train on a new implant were too high. But with remote based support, surgeons can re-train without travel logistics making the prospect of conversion much more viable.
In summary, higher profit margins & double digit growth is obtainable without the high costs of M&As. Shifting the antiquated sales rep model from a one rep for one hospital scenario to a top rep supporting multiple US hospitals/surgeries generates a minimum 25% reduction in the cost to sell to a hospital. In addition to lower sales costs and improved margins, implant manufacturers will be poised for growth in a previously untouched market share of surgeon conversion. Double digit growth is an easy and attainable short term reality.
Contact
info@bangsurgical.com
Bang Surgical
1235 Puerta Del Sol #100
San Clemente, CA 92673
(949) 385-2220
Contact
Bang Surgical
Ted Schwartz
949-292-9001
www.bangsurgical.com
Ted Schwartz
949-292-9001
www.bangsurgical.com
Contact
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