Healthcare

MedTech’s Role in a Dynamic Healthcare Ecosystem

MedTech companies are ideally positioned to adapt to the rapidly evolving healthcare ecosystem. However, in the coming years, two primary factors will dominate MedTech go-to-market strategies. First, innovative solutions will continue to emerge to address health equity challenges, expand artificial intelligence and make patient care more efficient. Second, provider operational challenges will continue to cause pressure and opportunity―pressure on MedTech companies to compete in a strained market, yet opportunity to find different ways to support healthcare facilities to manage their industry-wide staffing and margin challenges.

To gain competitive share in a challenging market while supporting healthcare facilities in their pursuit of successful patient outcomes, new go-to-market strategies will be crucial for MedTech firms.

Flawlessly execute new product launch to ensure revenue impact meets investment projections.

Recalibrate the marketing strategy to adopt modern marketing techniques.

Adjust the commercial team structure and instill a customer success mindset that will continuously support healthcare provider challenges and cost constraints.

Enable the commercial organization with productivity driving programs.

Innovation Requires Investment in New Solutions

Health equity is a growing concern for providers and patients alike. For instance, there is increasing evidence of the vast disparity of disease states between patient populations. A study conducted by the National Center for Biotechnology Information reveals that minorities and non-Caucasians have a “higher overall prevalence of risk factors for coronary artery disease that are unrecognized and therefore not treated, which increases their likelihood of experiencing adverse outcome and, therefore, potentially higher morbidity and mortality,” along with worse outcomes for related coronary diseases. In addition, a University of Michigan study showed that pulse oximeter sensors are less accurate in people of color, resulting in a nearly 10% error rate. As more health inequity evidence emerges, there will be greater moral and financial incentive for MedTech companies to invest in products that reduce the disparity across patient populations.

The drive for greater care efficiency, and lower cost, will also continue to shape MedTech innovation. Healthcare facilities are experiencing major financial challenges due to inflation, staffing shortages and supply chains, negatively impacting margin. Inefficient care compounds those challenges. Longer patient procedure times and length of stay, higher readmission rates and higher acuity care are driving up provider costs. Given the strained economic environment, providers have a greater need to prioritize care efficiency while maintaining or improving patient outcomes. Reducing the length of a procedure or moving a procedure from inpatient to outpatient places a lower cost burden on the provider. MedTech companies will continue to innovate to address these opportunities. For example, advancements in hip and knee replacement technology in recent years has allowed for those procedures to be commonly performed in an outpatient setting. We should expect to see continued technology advancements as incentives for patients, providers and MedTech companies are squarely aligned.

Advanced MedTech Solutions Require Improved Go-to-Market Strategies

MedTech is addressing health equity and care efficiency with innovative solutions that support providers, improve patient outcomes, and position solution-minded organizations to capture market share. Solutions include digital advancements in patient care that improve outcomes and care efficiencies.

Robotics reduce variability, increase precision, and offer advanced surgical visibility. These procedures can also improve outcomes at a lower cost, and include cardiac, gastro-intestinal, gynecologic, urologic, thoracic, and general surgery types (source).

Cloud-based AI sensors now determine when to ween patients off ventilators and prepare them for discharge.

Advanced detection software evaluates EMR data to identify patients with early indications of lung cancer.

Cardiac devices monitor heart arrhythmias, collecting data that prevent potential strokes.

Insertable cardiac monitors can detect early signs of atrial fibrillation and undiagnosed conditions.

As new solutions come forward, expect significant advancement in MedTech investments to address ongoing market opportunities. When companies invest in product innovation, there is heightened focus on top and bottom line results. MedTech firms will need to adapt their go-to-market strategies to maximize the return on their product investment. Product launch strategies, customer journey mapping, sales roles and incentives are elements that should be evaluated. New products launched using an old go-to-market model typically underperform. MedTech companies must adapt their go-to-market models to leverage new technologies and gain share in the market.

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Provider Operational Challenges Continue

Staffing shortages are the most critical issue facing providers. Currently, travel nurse utilization is nearly double pre-pandemic levels. However, it is expected to decrease in the coming year while remaining higher than average, according to an Alexander Group’s Hospital Providers Survey. The American Hospital Association (AHA) reports that 23% of hospitals now experience a critical staffing shortage after 105,000 workers have exited the industry since 2020. Since the pandemic, labor expenses have increased by 13% overall and over 19% on a per patient basis. The use of contract labor, the aging workforce, and the lack of qualified educators contribute to the ongoing shortage, which will continue to drive up overall costs. 

In addition to rising labor costs and inflationary pressures, providers face margin decline. According to investor reports, for the top 15 U.S. IDNs in the first three quarters of 2022, margins dropped from 6.8% to 2.8%. The rising costs of drugs and supplies add to margin pressure even as revenue from outpatient procedures continues to climb. The survey also indicated that some providers are now prioritizing procedures based on profitability to improve margins.

The outpatient market continues to be an increasing source of revenue and will help reduce margin pressures. Providers are motivated to expand their outpatient care settings. The survey shows 73% of providers are expanding outpatient services to increase overall capacity. In addition, providers are expecting ASC revenue to increase from 17% pre-pandemic to 21% in the future. As a result, revenue contribution has been a 51%/49% ratio but should expand to 60%/40% in the near-term future.

labor expenses have increased by 13% overall and over 19% on a per patient basis

IDNs in the first three quarters of 2022, margins dropped from 6.8% to 2.8%

providers are expecting ASC revenue to increase from 17% pre-pandemic to 21% in the future

MedTech Solutions to Address Provider Operational Challenges

MedTech companies are devising solutions to the critical problems faced by healthcare providers. As one provider explained, “I don’t need to see more salespeople. I need more service and support resources.” Adopting a customer success mindset while realizing that these support services are the right thing to do will improve patient care. If done correctly, MedTech companies will also experience accelerated business results.

Adopting a customer success mindset is not just a buzzword but an essential way of viewing the situation from healthcare provider’s (HCP) eyes. Keeping patient outcomes at the forefront while efficiently utilizing facility resources leads to better results for the patient and the MedTech company. MedTech companies can learn to deploy resources to assess inventory levels and proactively notify appropriate parties and vendors. Expanding virtual training improves HCP skills while training new staff members, helping to alleviate high turnover and onboarding costs.

Addressing labor shortages is top-of-mind for providers. In one instance, a MedTech imaging company added a staffing service function. They provide temporary staffing for radiology and cardiac catheterization lab techs, providing skilled resources to address staffing gaps. As a result, the MedTech company addressed a provider gap and experienced greater imaging and diagnostic equipment utilization.

 

Rising costs affect everyone in the value chain, and MedTech companies continue to pass through price increases that average 8%, an acceptable increase for provider organizations and vendors according to the Healthcare Providers Survey. Cost pressures will continue in 2023 and beyond, and MedTech companies must optimize their omnichannel selling approach. Effective targeted marketing and segmentation strategies drive greater productivity in the commercial organization as sellers leverage inside sales and hybrid roles to scale coverage cost-effectively.

Leading MedTech companies are using marketing to drive productivity in the fragmented outpatient market. ASCs, urgent care centers and physician offices are just a few of the non-acute facilities that present an opportunity for MedTech companies. However, there are substantially more accounts to cover and significantly lower revenue opportunity per account than hospitals. Deploying field sales resources is inefficient. Aligning field or inside resources with targeted marketing strategies, campaigns, and advanced data yields higher productivity per resource. Alexander Group’s recent Healthcare Marketing Trends and Investment Priorities survey indicates that MedTech companies are behind in the quest toward becoming mature marketing organizations. Advanced marketing strategies are becoming a requirement to successfully navigate the non-acute market.

I don't need to see more salespeople. I need more service and support resources.

Healtcare Provider

Creating New Go-to-Market Healthcare Strategies

MedTech companies are adapting to these challenges by developing new go-to-market models that accelerate the adoption of new technologies and address near-term provider operational challenges. However, creating a space in the evolving healthcare ecosystem will require MedTech companies to re-evaluate their commercial model and manage these aspects.

Flawlessly execute new product launch to ensure revenue impact meets investment projections. Go-to-market product launch planning must cohesively execute all elements of product introduction. Buyer journey mapping, marketing messaging, sales roles, training, and incentives are core initiatives that must be well defined and aligned cross-functionally.

Adjust the commercial team structure and instill a customer success mindset that will continuously support healthcare provider challenges and cost constraints. New ways of servicing customers should be implemented. Virtual clinical education, service portals, and hybrid support roles are becoming more common in MedTech go-to-market models.

Recalibrate the marketing strategy to adopt modern marketing techniques. Incorporate holistic data for real-time segmentation that serves as the foundation for target marketing campaigns. Move beyond static, foundational patient revenue or claims data and layer in behavioral characteristics to drive greater productivity in your sales organization. Leading MedTech companies realize marketing must catch up to other industries as they battle for increased share in a constrained market.

Enable the commercial organization with productivity driving programs. Ensure incentive compensation plans are fine tuned to current strategy and role expectations. Institute leading metrics that provide insight to progress long before revenue meets (or falls short) of expectations. Effective enablement programs drive incremental results from the same resource investment.

Define Your Place in a Changing Healthcare Environment

When performed correctly, MedTech companies can expect to gain market share over their competitors while growing markets faster with innovative solutions that support provider constraints. Alexander Group has the experience to partner with MedTech leaders to develop GTM models that successfully establish their place in the growing healthcare ecosystem. Contact us for more information on how Alexander Group can assist with establishing a productive and profitable commercial strategy.
More Resources

Healthcare Practice Overview

Healthcare Hospital Providers Survey

Evolving Industry, Transforming Commercial Models

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