LEK 2017 Topical Issues for discussion Apr2017 v5 · 2018-02-21 · 2 CONFIDENTIAL | DRAFT What is...

L.E.K. ConsultingU.S. Healthcare Landscape Review

2017

The materials contained in this document are intended to supplement a discussion with L.E.K. Consulting. These perspectives are confidential and will only be meaningful to those in attendance.

1 CONFIDENTIAL | DRAFT

Monish Rajpal

16+ years experience (Consulting and Corporate / Industry)

Based in New York / Boston

Corporate / Growth strategy, Service Solutions, Digital & Innovation,Pricing, Commercial / GTM, Value prop. assessment, M&A and diligence

MBA (U Chicago - Booth), MS (Johns Hopkins Univ.), B. Engg. (Univ. of Pune)

[email protected](617) 901 1834

L.E.K. Consulting

L.E.K.’s Practice

Engaged with all of the top 10

largest medical device

companies

Deep experience with Corporate M&A Strategy,

Acquisition Screens, and

Diligence

Global network of 10,000+healthcare

industry experts and thought

leaders

Completed 600+ engagements in

the MedTechindustry

Work across all medical device categories and the entire value

chain

Customized and experienced

team of Ph.D.’s, M.D.’s, MBAs and industry

experts for each engagement

L.E.K. Consulting is a registered trademark of L.E.K. Consulting LLC. All other products and brands mentioned in this document are properties of their respective owners. © 2017 L.E.K. Consulting LLC


What is the 2017 L.E.K. Strategic Healthcare Landscape Review?

A tool for understanding hospital strategies and priorities in light of healthcare reform

A compendium of macroeconomic trends providing context for U.S. hospitals and the healthcare market

A guide for understanding hospital needs from MedTech suppliers

A free resource for healthcare industry executives, investors, policymakers and others

An internet survey of ~150 U.S. hospital decision-makers

A compilation of selected U.S. economic data

An annual benchmark study, first conducted in 2009

An evidence-based scorecard, with facts, figures and interpretation

A complimentary report, exclusively offered by L.E.K. Consulting, with details available upon request

Facts and information … … leading to actionable insights



L.E.K. has identified six key hospital trends that highlight opportunities for suppliers

Opportunity to help customers navigate expected expansion in value-based payment models

Continued trend towards accountable care

Potential for some delays among hospital purchasing or pursuit of large initiatives while in "wait and see" mode

Uncertainty around the repeal of PPACA

Opportunities to re-define and optimize traditional contracting, pricing and distribution models

Growing openness to new supply chain approaches$

1

2

Increasing importance to target top systems and tailor commercial models and product / solution offerings

Continued consolidation of hospitals / integration with non-acute

3

4

Opportunities to help providers standardize clinical approaches and purchasing

Continued effort to standardize products and protocols

5

Opportunities to engage with senior administrators with new service offerings and shared-savings programs

Growing interest in outsourcing and expanded partnerships

6

Implications for suppliersKey trends



These trends are impacting distinct segments of the hospital landscape differently

Source: L.E.K. research and analysis

• Limited consolidation and smaller in system scale, but have generally accepted greater accountability of care and active integration with non-acute

• Includes large Academic Medical Centers (ACMs)

“Local Stand-alones”• Systems with limited consolidation and

integration and largely includes stand-alone hospitals

• Represents nearly a half of hospitals (by number) but only 1/4th of total hospital spending

Smaller hospital systems with limited consolidation

Highly integrated hospital systems with high degree of

accountability

Less integrated hospital systems with low degree

of accountability

Larger hospital systems / highly consolidated

“Progressive Consolidators”

“Hospital Aggregators”• Aggregated hospitals to gain scale / leverage

with payers and suppliers, but still have some way to go in integrating with non-acute

• Includes large for-profit systems, and represents a small portion of hospital spending

• More centralized supply chain functions across large systems and taking steps to be more accountable

• Includes large systems that are not limited to a local catchment area

“Local Progressives”

Consolidation + Supply Chain

Inte

grat

ion

A

ccou

ntab

ility



Several existing and proposed changes will drive Medicaid and value based payments concerns for MedTechs

Level of Congressional Republican SupportLow High

Deg

ree

of Im

pact

(e

.g.,

num

ber o

f liv

es a

ffect

ed)

Limited

ExtensiveIndividualmandate

Public exchange premium subsidies

Dependent eligibility for plans through age 26

Guaranteedissue

MACRA

Medicaid expansion

Federal public exchanges

Research organizations (e.g., CMMI, AHRQ)

Essential health benefit regulations

State innovation grants

ACA taxes (Cadillac, device, etc.)

Expansion ofHSA enrollment

Price transparency

Interstate insurance sales

Medicare Advantage expansion

Medicaidblock grants

Age rating ratio

Fill Part D donut holeNo caps on lifetime /

annual coverage

Medicare premium support (vouchers)

Medicare drugprice negotiation

Premium and medical expense tax deductibility

Re-importation of medications

High-riskpools

Agency de-regulation (e.g. FDA)

ProposedExisting

DIRECTIONAL

DSHpayments

Saved & Potential New Major Regulations

Stay the Course?

Major Repeals– Replacements Likely Needed

Increase speedof FDA approval

State public exchanges

Potential for Repeal

1



Medicare and commercial payers have made significant and relatively rapid strides to shift risk to providers with a range of value-based models

10% 14% 15% 17%8%

10%12% 12%

14%

57% 51% 44% 41% 37% 34%

5% 6% 6% 7%

6% 7% 8% 8% 9% 10%

18% 18% 18%

16%12%

13%

4%

18%17%17%

30

0

20

40

10

60

50

80

70

100

90

P4P

Global payments

2019F2018F

Capitation

2017F2016F2014 2015F

Bundledpayments

3%

FFS

Mix of payment models among commercial payersPercent of total payments

Shared savings

80%70%

50%

20%30%

50%

100

90

80

20

60

70

50

30

10

40

0

Mix of Medicare (FFS)* payments Percent of total payments

2018F20162014

Alternative Payment Models (APMs)**Traditional FFS or P4P^

Note: * Excludes Medicare Advantage (MA); ** APMs include the following VBC models: bundled payments, shared saving / shared risk, global payments, capitation; this correspond to the following CMS programs: ACO, MSSP, BPCI, CPCM/MAPCP (primary care), some ESRD programs, and additional smaller payment programs; ^ Pay for performanceSource: L.E.K. analysis of CMS data, McKesson survey data

Value based payments

2

Stated CMS goal prior to the Trump administration



The top 125 systems are primarily Progressive Consolidators and Local Progressives and are continuing to take share from all others

0.0

12.3

CAGR%(2013-15)

5.7

8.5

7.2Total

100

500

0

300

200

400

~100

~20~15

~$385B

~20

2013

~20

~250

Top 125 system total spend by segment(2013-15)Billions of dollars

LocalProgressive

ProgressiveConsolidator

Local Traditionalist

~280

Hospital Aggregator

~125

~$445B

15*

Note: * Includes most current data reported for facility/systemSource: AHA; L.E.K. research and analysis

ILLUSTRATIVE

3.8

7.6

0.7

9.0

CAGR%(2013-15)

5.3

4.5

5.7Total

0

600

1,000

800

400

200

~35LocalTraditionalist

All acute total spend by segment(2013-15)Billions of dollars

ProgressiveConsolidator

LocalProgressive

HospitalAggregator~35

~270

~170

~295

15*

~205

~$735B

2013

~290~265

~$825B

ILLUSTRATIVE

4.1

6.8

3



Hospital consolidation is continuing, but is likely to be somewhat more gradual through 2022 than in recent years

Consolidation – Spectrum of options

Source: L.E.K. research and analysis

Local multi-site systems

Regional systems

Standalone Hospitals

Hospital systems with a national footprint (national systems)

Most Common Today

Most Common in 2014

Most Common in 2022

Competition from other hospitals and health systems as they consolidate

Increasingly fewer attractive targets for acquisition including anti-trust constraints in local markets

A ‘race to scale’ in local markets as larger systems begin to “own” more referral volume

Diminishing returns on scale for the systems that have consolidated

Reimbursement pressures as payers gain scale Increasing expectations from payers for highly, consolidated recent acquisitions

2016 consolidation trends Current and future consolidation pressures

3



Progressive systems appear to be integrating the most, particularly with ASCs and outpatient centers among other alternative sites of care

Note: Data on long term care not currently available; Overall level of integration determined by relative participation of a system across various types of alternative sites of care (e.g., assisted living services, home health, satellite emergency departments, etc.); 100% represents participation in all sites; ^Represents overall percent participation in all sites of careSource: AHA; L.E.K. research and analysis

Progressive consolidator

Local progressive

Local traditionalist

Hospital aggregator

Top systems

(Top 125)

Systems(Top 125-

200)

Other systems (200+)

Overall systems

Freestanding outpatient center 95.3% 81.6% 58.8% 34.2% 96.0% 81.3% 50.8% 71.7%

Urgent care center 92.9% 57.6% 38.8% 28.9% 80.8% 62.7% 36.5% 56.2%

Fully owned ASC 90.6% 67.1% 50.6% 34.2% 92.8% 68.0% 39.8% 62.7%

Physician / physician groups 87.1% 60.8% 34.1% 47.4% 83.2% 60.0% 37.6% 57.0%

Home health services 77.6% 56.3% 28.2% 34.2% 70.4% 56.0% 34.3% 50.4%

Partially owned ASC 69.4% 36.7% 8.2% 18.4% 61.6% 32.0% 16.6% 34.4%

Rural health clinic 64.7% 23.4% 28.2% 39.5% 42.4% 24.0% 33.1% 34.4%

Freestanding / satellite

emergency department

60.0% 28.5% 12.9% 21.1% 52.8% 33.3% 13.3% 30.2%

Imaging centers 49.4% 27.8% 9.4% 21.1% 46.4% 25.3% 13.8% 26.8%

Acute long term care 38.8% 14.6% 8.2% 52.6% 32.0% 18.7% 16.0% 21.8%

Limited servicehospital 32.9% 8.9% 7.1% 23.7% 29.6% 10.7% 6.6% 15.0%

SNFs / assisted living services 23.5% 5.7% 4.7% 5.3% 15.2% 4.0% 7.2% 9.2%

Overall (2013)^ 54% 39% 24% 30% 51% 40% 25% 36%

Overall (2015)^ 65% 39% 24% 30% 59% 40% 26% 39%

PPT ∆ 11% 0% 0% 0% 8% 0% 1% 3%

Percent of systems integrated with each care setting(2015)Percent

By segmentation By top systems

Alte

rnat

ive

site

s of

car

e

3



Evolution in the way providers are utilizing their supply chains has involved several different trends

Supply chain evolution Moderate

coordinationLimited supply chain

coordinationExtensive supply

chain coordination

Purchasing centralized for some products, but decentralized for others

Moderate use of GPOs, but considering use of alternative channels for

purchasing

Strategic partnerships with MedTechs within some areas

Purchasing centralized and standardized

Broader distributor services & more

direct distribution

Minimal use of National GPOs

Few, deep relationships with preferred

partners

Evolution of purchase decision making

Distribution control &

coordination

GPO usage

Relationships with MedTech

suppliers

Most Common Today

Most Common in 2014

Most Common in 2022

Supply Chain Evolution – Spectrum of options

Purchasing decentralized

across facilities

Fulfillment services from distributors

All sales through National GPO

Transactional relationships

with many supply partners

Expanded supply chain role for primary distributor or supporting role for self-distribution

4



Note: *To what extent are you interested in direct distribution of products from your largest medical device suppliers (i.e., not through distributors)? Please rate on a scale of 1 to 7 in which ‘1’ means “not interested” and ‘7’ means “very interested”Source: L.E.K. survey and analysis

Hospitals and hospital systems, particularly progressives, are interested in direct distribution from their largest medical device suppliers

4.1

4.8

4.0

4.9

0

20

40

60

80

100

Level of interest in direct distribution from largest medical device suppliers* (2017)(n=193)Percent of respondents

Hospital aggregator

Local progressive

Progressive consolidator

Local stand-alone

4 Mean

1 - Not interested

2

37 - Very interested

5

6

There is growing interest in direct distribution from MedTechs

- Progressive systems show a distinct interest in gaining direct distribution with MedTechs

- More than 40% of non-progressive systems have an interest in working directly with MedTechs

- Providers expect that direct distribution from MedTechs can help them manage their inventory better

4

“… I think manufacturers should increase direct sales to large systems. Volume drives partnerships between providers and manufacturers…”

Former CEO, Progressive Consolidator

“… purchasing direct from the manufacturer will be increasingly common…”

Former Hospital CEO, Progressive Consolidator



Providers are also increasingly utilizing regional GPOs as well as IDN purchasing groups in lieu of National GPOs

Moderate use of GPOs, but considering use of alternative channels for purchasing

Regional GPOcontracts

Most Common Today

Most Common In 2014

Most Common in 2022

National GPOcontracts

Many administrators in large IDNs see diminishing value from large GPOs, largely using them as benchmarking tools to facilitate pricing negotiations

2016 GPO trends Current and future GPO pressures

IDNs are forming their own GPO organizations to facilitate pricing negotiations

GPOs are being forced to respond to the changing expectations of their member hospitals and are acknowledging the need to deliver more value. Many are providing value-added services and increasing their portfolio of private-label products

The largest GPOs (e.g., Vizient, Premier) will continue branching out into other activities, such as clinical utilization programs, safety initiatives, consulting services and regional service centers

Systems are interested in directly contracting with MedTechs for high volume procedures and departments

4



Note: *For any individual product category through which you currently use GPOs, how receptive would your organization be to bypassing GPOs in favor of working directly with a manufacturer to secure competitive pricing? Please rate on a scale of 1 to 7 in which ‘1’ means “not at all receptive to bypassing GPO” and ‘7’ means “very receptive to bypassing GPO”Source: L.E.K. survey and analysis

There is increasing receptivity among hospitals to contract directly with MedTechs, particularly among progressive health systems

% mean change from 2016

7.3% 4.8% 5.3% 9.6% 8.7%

Progressive hospital systems appear more receptive to bypassing GPOs

1821212320

4348

3337

58

0

10

20

30

40

50

60

Diagnostic consumables

Low risk therapeutic

medical devices (e.g., non-invasive)

Receptiveness to bypassing GPOs in select product categories* (2017)(n=158)Percent of respondents scoring 6 or 7 on a scale of 1 to 7 (1 – Not at all receptive, 7 – Very receptive)

Medical and surgical

disposables

Medical capital equipment (e.g.,

therapeutic, diagnostic, etc.)

High risk therapeutic

devices (e.g., invasive and/or

implantable devices)

Non-ProgressiveProgressive

4



Note: Please rate the extent to which you agree or disagree with the following statements regarding your [hospital / hospital system]’s planned activities over the next 5 years. Please rate on a scale of 1 to 7 in which ‘1’ means “strongly disagree” and ‘7’ means “strongly agree”.Source: L.E.K. survey and analysis

0

20

40

60

80

100

Centralize purchasing decisions

Planned standardization activities over the next 5 years* (2017)(n=125)Percent of C-suite respondents

Rationalize suppliers

Expand clinical accountability

Standardize products / services

5 4 23 1 - Strongly disagree7 - Strongly agree 6

The health system C-suite sees opportunities to standardize their purchasing in several ways, including by driving clinical accountability

5

A majority of c-suite respondents (~65%) are seeking more accountability in supply chain and care delivery

- Cost savings is the primary reason for providers’ pursuing medical device standardization

- Standardization of products should reduce variability in procedures and control variability in outcomes

- Product standardization can also result in improved efficiency and consistency while training staff

“… It used to be that I may have one kind of a product, and another hospital would have a different type. We’ve now standardized to one brand for each product for everything across the board. We made a statement as a supply chain that we would cut $18M within 3 years. We don’t want doctors coming to us and asking for new products all the time …”

Materials Manager, Local Progressive



Note: *Q46: To what extent has your [hospital / hospital system] standardized purchasing of medical supplies and devices across the following departments / service lines at the individual facility level? Please rate on a scale of 1 to 7 in which ‘1’ means “not at all standardized” and ‘7’ means “highly standardized.” **Respondents who answered “Do not know” were excluded from the analysis ^Responded with a rating of 6 or 7Source: L.E.K. interviews, survey, and analysis

Additional standardization is likely to occur across hospital departments

5248

54

4343434243

61606265

59

54

5961

0

5

10

15

20

25

30

35

40

45

50

55

60

65

70

Cardiology PharmacyORsICURadiology Patient wardsOrthopedicsOncology

Purchasing (n=75)C-suite (n=125)

Level of hospital standardization by department* (2017)Percent of respondents who indicated two highest ratings for standardization^

5



Note: *To what extent are you currently in outcome / value-based pricing models (e.g., risk sharing, gain sharing, etc.) with MedTech suppliers for the following service lines? Please rate pricing models on a scale of 1 to 7 in which ‘1’ means “not at all outcome-based” and ‘7’ means “entirely outcome-based.” **Respondents who answered “Do not know” were excluded from the analysisSource: L.E.K. interviews, survey, and analysis

Larger and more progressive systems engage in outcomes-based pricing to a greater degree than smaller non-progressive systems

3.94.14.0

4.34.2 4.14.34.14.24.2

4.74.64.9

5.15.0 4.95.35.25.25.2

1

2

3

4

5

6

7

Cardiology

Level of current outcomes-based pricing models with MedTech suppliers (2017)* (n=190)**Average score

Orthopedics Radiology Oncology Pharmacy

Hospital aggregatorLocal progressiveProgressive consolidator

Local stand-alone

5



Note: *To what extent would you like to see MedTech companies playing a broader partnership role and offering services in the following hospital departments and service lines? Please rate on a scale of 1 to 7 in which ‘1’ means “not at all interested” and ‘7’ means “very interested.” **Respondents who answered “Do not know” were excluded from the analysisSource: L.E.K. interviews, survey, and analysis

4.34.34.54.64.64.74.74.7

0

20

40

60

80

100

Orthopedics ICU Patient wards

OncologyCardiologyPharmacyORs Radiology

Level of interest in seeing MedTech companies playing a broader partnership role within hospital departments (2017)* (n=200)**Percent of respondents

Mean

4

5

1 - Not at all interested

2

3

6

7 - Very interested

Survey respondents believe there is opportunity for MedTechs to play a broader partnership role across several major departments in hospitals6



How is the provider landscape evolving?

What are our customer needs and how do they vary?

What is the best commercial model for customers?

How can we quantify the value we bring to customers?

What are the M&A opportunities in 2017?

What services / solutions can address customer needs?

These factors have left MedTech suppliers asking several questions that have far-reaching implications

Key actions for MedTechs in 2017:

Investing in transformational M&A

Developing new solution offerings (often via M&A for non-traditional capabilities)

Targeting provider segments better and tailoring offerings accordingly

Updating commercial models to better align with evolving customer decision making

Engaging in alternative supply chain approaches (e.g., distribution, contracting)L.E.K. Consulting is a registered trademark of L.E.K. Consulting LLC. All other products and brands mentioned in this document are properties of their respective owners. © 2017 L.E.K. Consulting LLC


Large MedTech deals over the last two years provide analogs to consider for potential transformative opportunities

Source: Statista, MDDI

1.0

1.1

1.3

1.3

1.7

1.9

2.1

2.7

2.8

3.3

3.4

3.4

4.0

4.2

5.5

12.2

13.8

14.0

30.7

49.9

24.0

0 5 10 15 20 25 30 35 40 45 50 55 60

Stryker (Sage Products)EQT Partners (Siemens Audiology)

Hill-Rom (Welch Allyn)Cardinal Health (J&J Cordis)

Greatbatch (Lake Region Medical)Thermo Fischer Scientific (Affymetrix)

Stryker (Physio-Control)Medtronic (Heartware)

Zimmer Biomet (LDR Holding)

Top MedTech M&A deals, 2015-2017By deal value (billions USD)

LivaNova (Sorin)St Jude Medical (Thoratec)

Wright Medical (Tornier)

Becton Dickinson (Bard)

Danaher (Cepheid)Thermo Fischer Scientific (FEI)

Medtronic (Covidien)Abbott (St Jude Medical)

Zimmer Biomet (Biomet)Danaher (Pall)

Dentsply (Sirona Dental)

Becton Dickinson (CareFusion)Abbott (Alere) 8.4

Broadly speaking for transformational deals, the strategic rationale can fall into three categories:

1. Broaden portfolio within current call-points

2. Deepen capabilities to enable more comprehensive solutions

3. Expand scope into new segments and call-points

Not exhaustive



Deals that deepen capabilities and enable more comprehensive solutions appear to drive the highest stock price appreciation

Strategic rationale category Illustrative example Description 2-yr Stock price

Broaden portfolio within current call-points

Abbott St. Jude Expanded CV portfolio (e.g., into cardiac and CRM devices)

+11%(12 mo.)

Zimmer Biomet Expanded scale and portfolio within orthopedicimplants +0.4%

Deepen capabilities to enable more comprehensive solutions

BD CareFusion Deeping of BD medication management solution, from dispensing through administration +25%

Multiple vertical acquisitions to build

comprehensive capabilities for OR solution offering

+40%

Expand scope into new segments and call-points

Medtronic Covidien Diversified Medtronic’s acute, implant heavy

portfolio into consumables and minimally invasive surgery

+6%

Hill-Rom Welch Allyn Leveraged Welch Allyn’s position in point-of-care

diagnostics as new platform to strengthen Hill-Rom’s presence in hospitals and OR

+45%

1

3

2



How is the provider landscape evolving?

What are our customer needs and how do they vary?

What is the best commercial model for customers?

How can we quantify the value we bring to customers?

What are the M&A opportunities in 2017?

What services / solutions can address customer needs?

These factors have left MedTech suppliers asking several questions that have far-reaching implications

Key actions for MedTechs in 2017:

Investing in transformational M&A

Developing new solution offerings (often via M&A for non-traditional capabilities)

Targeting provider segments better and tailoring offerings accordingly

Updating commercial models to better align with evolving customer decision making

Engaging in alternative supply chain approaches (e.g., distribution, contracting)L.E.K. Consulting is a registered trademark of L.E.K. Consulting LLC. All other products and brands mentioned in this document are properties of their respective owners. © 2017 L.E.K. Consulting LLC


Leading medtechs are acquiring capabilities to strengthen their broader solutions

MedTech leader Implications

Increased scale and presence in hospitals Ability to offer broader solutions (e.g. cath

lab, remote monitoring, non-procedure)

Increased scale and presence in hospitals Ability to offer broader solutions (e.g.

pharmacy, lab, infection prevention)

Ability to offer broader solutions (e.g. OR, data analysis software)

Major and Strategic Acquisitions Increased scale and presence in hospitals Ability to offer broader solutions (e.g.

laboratory automation)


home monitoring, tissue monitoring)

Expansion into the orthopedics business Increased scale and broader solutions for

hospitals (e.g. visualization)

Ability to offer broader solutions (e.g. renal, pharmacy)

Expanded offering of physician preference items

Care coordination in non-acute settings


population health data and analysis) Ability to offer broader infrastructure

solutions across care continuum

Ability to offer broader solutions (e.g. predictive analytics, hospital consulting)

Ability to offer broader solutions (e.g. lab diagnostics, molecular diagnostics)

Increased ortho portfolio and scale Ability to offer broader solutions (e.g.

telehealth, diagnostics)

Source: S&P Capital IQ, Company websites, L.E.K. interviews and analysis L.E.K. Consulting is a registered trademark of L.E.K. Consulting LLC. All other products and brands mentioned in this document are properties of their respective owners. © 2017 L.E.K. Consulting LLC


A broad range of solution areas are available for consideration

Clinical, care-delivery focused

Operational focused

Full or partial ownership

Outsourced management services

Consulting services

Product services

Procedure-related services

L.E.K. Consulting is a registered trademark of L.E.K. Consulting LLC. All other products and brands mentioned in this document areproperties of their respective owners. © 2017 L.E.K. Consulting LLC


Various examples exist within these categories, though examples of full or partial ownership of clinical settings are more rare

Source: Company websites, L.E.K. analysis

Level of engagement



Either a JV focused on department / specialty or function (e.g., imaging / mammography, dialysis), or Full ownership, control and accountability of clinics

Although some dialysis manufacturers (e.g., Fresenius, NxStage) and select diabetes players (e.g., Medtronic) own clinics, this full or partial ownership model is a service that is least frequently seen among MedTechs

Outsourced management

services

Outsourced management

services

Outsourced operational management of a department (e.g., cathlabs, clinical labs)

Provision of clinical resources (e.g., outsourced, perfusionists, laborists, anesthesiologists) and/or care coordination services (e.g., discharge planning)

Consulting services

Consulting services

Project-based consulting engagements (e.g., best-practice, lean consulting, financial / operational optimization)

Similar to many department-specific consulting firms (e.g., OR, pharmacy)

Product servicesProduct services

Provision of product –related service, support, and managed services (e.g., supply chain mgmt.)

Traditional commercial approach for most MedTechs

Examples of services provided by MedTechs

Exa

mpl

esD

escr

iptio

n



Services to improve the clinical and patient use of products (e.g., procedure-related analytics, education, training modules, clinical enhancement tools)

An increased focus for many MedTechs, particularly those with a procedural focus



Change management capabilities

Senior hospital execs may like an idea, but adoption also requires significant change management assistance to ensure a solution “sticks” and delivers promised results

Offering to drive change management is a critical success factor, including the ability to define baseline metrics and measure / track performance going forward

Many medtechs lack this capability currently and need to acquire / partner to obtain these skills

Sufficient breadth and impact of

solution

Key Success Factors for Expanded Services / Solutions

Clear delineation between existing and new services

License to play in targeted area

Tangible value and option for gain

sharing

Service and solution expansion opportunities need to have adequate scale and breadth to excitesenior hospital executives, often a perquisite for success

Linking solutions to broader hospital priorities (e.g., patient satisfaction, lower HAIs, lower readmission) helps drive senior stakeholder interest

Medtechs need to be able to clearly articulate the value of new services / solutions

Capabilities to provide diagnostics and tools to estimate expected impact are critical

Successful solutions should eventually be monetized via gain-sharing models; these resonate with customers even if they are unable to accept them currently

Customers will become confused by what is already given (e.g., product training) vs. what is incremental

Clear delineation of what services are charged vs. “free” is critical

Sales reps and marketing need to be using consistent messaging and terminology as well as consistency in pricing

Some solutions may be good ideas, but may not necessarily be best offered by a specific medtech

Having customers’ “permission” and a “license to play” in a targeted area can impact which companies will succeed vs. fail in offering the same type of solution

License to play is at least partially impacted by the breadth and relevancy of a medtech’s product portfolio; key gaps could impair ability to provide a meaningful solution

Key lessons learned should be considered as medtechs pursue broader services and solutions


LEK 2017 Topical Issues for discussion Apr2017 v5 · 2018-02-21 · 2 CONFIDENTIAL | DRAFT What is...

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Transcript of LEK 2017 Topical Issues for discussion Apr2017 v5 · 2018-02-21 · 2 CONFIDENTIAL | DRAFT What is...