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During the past six months, we have perceived a significant increase in interest from the medical technology industry to develop market access and commercial strategies based on the value of their products. Due to the increasing importance of Value-Based Healthcare, there is a clear move to quantify the clinical and economic benefits of medical technologies for the market.
However, most medical companies with a number of different items in their portfolio will struggle to define exactly which of their products should be considered for Value-Based Selling strategies. After all, moving from a conventional feature-based selling approach to one that focuses on Value requires a certain investment of resources, time, and energy. And understandably, companies need to know what the return on investment will be.
Unfortunately, in some cases, we have seen companies simply giving up Value-Based Selling strategies because they cannot define which products to focus on. Hence, in this article, we provide a few simple considerations that could guide companies to evaluate which of their products could be more positively impacted by Value-Based Selling implementation.
Note: The following recommendations are not in any order of importance and certainly will not be applicable in all cases. Therefore, we recommend you consider them all together when assessing your portfolio.
The first impulse is to consider that products contributing more in terms of revenues should be prioritized. Or, one can also replace revenues by profits and assess the bottom line of a product portfolio instead. This is definitely not the optimal approach.
Value-Based Healthcare will become the dominant perspective in the market within the next years as several countries, including the U.S. and a number of others within Europe, have taken irreversible steps in this direction. This move means decision-makers and payment mechanisms (such as reimbursement) will eventually embrace the focus on Value.
On the other hand, products that address an actual unmet need (please read: "Is Your Unmet Need Actually Needed?") may have such a clear value proposition that stakeholders will be willing to review their approach.
For example, think about a new treatment for a disease that could only be monitored before. It might be there is no reimbursement for the novel treatment, but its value will likely convince clinical and economic decision-makers to propose innovative payment mechanisms based on the benefits of the new treatment. If there is such interest from stakeholders, they might apply the different conditional reimbursements or accelerated payment mechanisms that exist both in the U.S. and Europe today, even if the sales of the new product are close to zero.
There are medical companies who carry simpler products such as catheters, vials, connectors, tubes, screws, and others that might be (unfairly) considered as “commodities,” mainly because of their lower price and/or simplicity. On the other hand, the same company may also have complex technologies that involve significant training and investment.
A logical line of thought can assume that complex products (usually more expensive) deserve the investment of the company since “commodities” (note the use of the quotes here) may be evaluated by their volume/price and not by their value.
We have seen more than a few cases of simple products that created such an impact on the patient pathway that providers and payers were willing to immediately adopt them, even if paying from their own budget. It is not about the complexity of your product, but the extent of positive impact it causes across how patients are diagnosed, treated and/or monitored.
For example, when faced with the choice of prioritizing between a highly complex product that creates an isolated effect during a surgery or a simpler device capable of reducing post-surgical infections even at home, chose the second one because it generates benefits across different stages of the patient pathway and not only on a procedure.
The core of Value-Based Selling is the ability to prioritize and focus on how a certain product addresses the right Patient Outcomes. Making it simpler is how your product will address market needs in a quantified manner.
This brings us back to one of the fundamentals of the MedTech industry: different markets have different needs. Patient pathways, reimbursement, healthcare structure and so many other aspects are completely different across markets, even among those that look similar. Think Italy and its more than twenty different regional healthcare systems.
It is more effective to prioritize your products from a local perspective instead of a global generalization. The definition of value is certainly not the same everywhere, and your strategy must reflect this.
Such local focus also reinforces the strategy to start with pilots, generating the results needed to bring other departments and teams onboard Value-Based Selling. Starting with a global and single approach opens too many doors for poor results, leading to disbelief in the approach and return to the cozy status quo.
It is not about how you see your product in terms of revenues, profit, price, complexity or global importance. Instead, think how the local markets will perceive it in terms of unmet needs and patient pathway impact.
And remember, you set the criteria for how your products will be evaluated based on how you want them to be perceived. It is up to you to take charge and make it happen.
Defining the right products for a Value-Based Strategy is no simple task. There is much more information to consider, so contact us at [email protected] if you need detailed cases or would like to discuss your specific situation. We are here to help you.