order to even consider these demands, suppliers are
pushing for increased purchase commitments and
supplier consolidations to offset their loss in price/
margin. This phenomenon is occurring within all
product categories, and physician preference items
approved spine vendors to achieve further procurement and supply chain efficiencies. One GPO is re-
taken to reduce variation, standardize care, enhance
clinical outcomes, and streamline efficiencies.
Consulting: Many GPOs are adding value to their
services beyond contracting and price savings. They
have developed consulting divisions as well, looking
at outcomes, quality and safety measures, population health, insurance, business intelligence, and
more. This enhances their relationship and value
offered to hospital clients, and those GPOs that are
only offering contract/purchasing services will likely
not survive the long haul.
Building a more effective sales organization for
other companies, had to supplement our prior
research, take what we learned from this changing
healthcare environment, and restructure our approach. Part of it is simple, starting with the basic
Historically,;medical;device;companies;per-formed bench-top and animal testing against competitive products to demonstrate the performance of their
products. Today, you have to go further. Compelling
results in the form of human clinical data are vital. This
reassures hospitals that your product will contribute to
better;overall;health;in;their;patient;population.;If;clini-cal data is not available, your chance of getting product
approval significantly diminishes, regardless of your
product quality and pricing.
Industry consolidation and horizontal integration:
This is the era of hospital and industry consolidation.
More mergers and acquisitions are happening among
suppliers (Medtronic/Covidien, Zimmer/Biomet) every
day.;IDNs;(Integrated;Delivery;Networks);are;ubiqui-tous, comprising hospitals, physician offices, clinics,
home health agencies and other healthcare entities.
MedAssets), whose contracting arms often negotiate for
GPOs, and even creating their own insurance plans.
These consolidations are leading to centralized purchasing models, largely driven by C-level roles and system-wide VACs (Value Analysis Committees). This adds
incremental layers of process as well as new stakeholder
touchpoints to ensure you are aligned with their overall
Lengthened purchasing process: VACs and product
approval processes are more cumbersome than ever.
As stated earlier, more stakeholders are influencing the
purchasing decision than ever before. Multiple administrative functions are now involved, as hospital C-suites
are looking to ensure that every avenue is examined
when it comes to creating value, reducing costs, and en-suring;profitable;outcomes.;Importantly,;many;of;these
hospitals are changing the way the committee approval
process operates, which cause significant slow-downs
and often halt the process. We’ve seen hospital commit-
new product for formulary.
Reduced suppliers: Supplier reductions are being
driven by both providers and suppliers. Providers need
to cut costs and are making significant price reduction
and product consolidation demands. And conversely, in