Image credit: Exponent
In the Healthcare industry, it is typical to see Value explained as an equation in which Value equals “Outcomes divided by Costs.” The variables can be further explained by using “Quality plus Service” instead of “Outcomes,” and “Direct/Indirect Costs” instead of only “Costs.” The idea is that Value is a product of the relation between the outcomes and costs.
However, no equation addresses the fact that Value is perception. And such perception comes not from who delivers Value, but from those who should benefit from it.
While Value must be quantified, there are two essential aspects to consider before deciding which outcomes and costs to consider.
It is almost a rule that medical companies consider the unique features of their technologies as the main source of Value. If a certain device is “easy-to-use,” then doctors must want it. Or, if we believe a technology can save costs, then why not emphasize this potential?
Among certain assumptions, there is one that is the most dangerous of all: the market should like our product just because it is “better”. In that sense, any feature can be extrapolated to create a false sensation of Value and fuel biased questions that only serve to force assumption into belief.
Product Manager: “Dear doctor, would you value our new system that provides much higher imaging resolution in comparison to other diagnostics?”
Doctor: “Probably…yes.” (and who wouldn’t?)
Meanwhile, the question that was never asked remains unanswered: “And do you really need a higher imaging resolution, doctor?”
When the self-fulfilling prophecy does not work, and it never does, companies are quick to state that “the market does not understand our product,” or “the sales teams need more training.”
Value is perception, and that is driven by the needs of market decision-makers, not by the key features of a product. Taking the example above, the message would be much different depending on the goal of the doctor/hospital. Do they want to reduce the time to make the diagnostic procedure? Or is it important to actually improve the accuracy of the results? Maybe there is a strategic goal of attracting more patients and being seen as a center of excellence? In summary, how do the product’s features help clients address their individual needs?
The needs of the market will determine the most important and relevant outcomes that a certain medical product should generate. Value is about focusing on few outcomes related to few, yet important, market needs.
Less is more.
Based on the number of annual patents filed, Medical Technology is the most innovative industry of all.
And with such rapid innovation, there are many products that are truly unique and cannot be compared to anything else because, in fact, there may be nothing similar in the market.
New treatments for conditions that were previously untreatable, robotic surgeries that achieve an unprecedented level of replication and success, devices that return full mobility to disabled patients – every day new technologies are launched that deliver unprecedented improvements to the human condition.
The problem arises when companies don’t want to compare their products to anything else and just focus on highlighting their unique solution. Even if nothing similar exists, there is always a comparator.
“My product cannot be compared to anything else because no other technology does what our product is doing.”
Then what was the market using before your product?
One cannot underestimate the importance of defining a comparator because it allows for true quantification of Value.
- “Our product reduces the rate of readmission by X% in comparison to…”
- “Our diagnostic provides results 2x faster than the traditional MRI.”
The process of finding the right comparator may be different across countries, as some may have similar technologies while others don’t. As a result, with different comparators, there will also be different Value Statements across markets.
One size does not fit all.
And as for the Value = Outcomes/Cost equation, try Value = Market Perception.
Obtaining market feedback is not an easy task, and some countries are more open than others. Also, matching market needs with product features is not an easy task. Feel free to let us know at email@example.com if you need more information or real case examples.