5 Medical Distribution Strategies Doomed to Fail in 2012

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<p> TIGI 2012 All rights reserved</p> <p>5 Medical Distribution Strategies Doomed </p> <p>to Fail in 2012</p> <p>Gunter Wessels, Ph.D., MBAPartner, Practice Principal, TIGI</p> <p>gunter@mytigi.net@gunterwessels</p> <p>Sam ORear, M.A. BASenior Partner, Founder, TIGI</p> <p>sam@mytigi.net@TIGI_Inc</p> <p>www.tigi.net</p> <p> TIGI 2012 All rights reserved</p> <p>Help you make good decisions in an uncertain time.</p> <p>How? Discuss some observed mis-steps and best practices</p> <p>Resulting in?Actionable implications for your business</p> <p>Objective</p> <p> TIGI 2012 All rights reserved</p> <p>What is failure? Sluggish Growth Marketshare Decline Price/Margin Erosion Commoditization Diminished Profitability Increased Uncertainty</p> <p>Failure Defined</p> <p> TIGI 2012 All rights reserved</p> <p>Major Changes in Healthcare: Accountable Care Organizations Value Based Purchasing IT Integration and Health IT Incentives Reimbursement Declines Readmission Penalties Bundled Payments</p> <p>The New Normal</p> <p>Top 10 Concerns of Distributors</p> <p> TIGI 2012 All rights reserved</p> <p>Acquiring brands that open doors to parts of their portfolio</p> <p>Obtaining product lines that turn over quickly</p> <p>Maintaining focus within market segment </p> <p>Supporting manufacturers while staying true to their own mission.</p> <p>Finding products with low acquisition cost, high margin, high volume</p> <p>12345</p> <p>Top Concerns of Distributors</p> <p> TIGI 2012 All rights reserved</p> <p>678910</p> <p>Top Concerns of Distributors</p> <p>Managing GPO Contracts</p> <p>Backorders, support issues &amp; customer service from manufacturers</p> <p>Field support from manufacturers, and training</p> <p>Avoiding/Mitigating channel conflict</p> <p>Managing lead and referral processes and programs</p> <p> TIGI 2012 All rights reserved</p> <p>The Big Five</p> <p>12345</p> <p>Portfolio Expansion</p> <p>Focus on High Volume SKUs</p> <p>Manufacturer and Product Focus</p> <p>Private Label Products</p> <p>Feature-Advantage-Benefit Sales and Marketing</p> <p> TIGI 2012 All rights reserved</p> <p>Priority: Acquire OEM Brands that open doors</p> <p>Portfolio Expansion1</p> <p> TIGI 2012 All rights reserved</p> <p>Portfolio Expansion Remedy</p> <p> Recognize that its your brand that opens doors</p> <p> Maintain Focus on your area of expertise and value-add</p> <p> TIGI 2012 All rights reserved</p> <p>Priority: Acquire High Volume, High Margin, or Low-Cost products</p> <p>Focus on High-Volume SKUs2</p> <p> TIGI 2012 All rights reserved</p> <p>- High volume is correlated with increased price sensitivity, switching, and cost of sales</p> <p>- Manufacturers control much of this market- Exclusivity is rare in high volume- Primary lines can unbalance the portfolio- GPO contracts drive margins down in high </p> <p>volume SKUs</p> <p> TIGI 2012 All rights reserved</p> <p>Competing in Healthcare in 2012</p> <p>Maximize</p> <p>Maximize</p> <p>Incre</p> <p>ase</p> <p>Offs</p> <p>et</p> <p>Minimize</p> <p> TIGI 2012 All rights reserved</p> <p>Focus on High-Volume SKUs - Remedy</p> <p> Look for areas where you can add stability to your transaction volume; high, medium, and low frequency purchases</p> <p> Recognize that high volume is not always associated with high value</p> <p> Look for gaps and hard-to-find products and consider specializing there</p> <p> Add complimentary products that relate to your focus and expertise</p> <p> TIGI 2012 All rights reserved</p> <p>Priority: Increase the value of your business with alignment in a category</p> <p>Manufacturer and Product Focus3</p> <p> TIGI 2012 All rights reserved</p> <p>Service Lines Dominate HealthcareA Service Line is: - A Center of Excellence- Focused on a patient population with a range of conditions and </p> <p>symptoms.- Engaged in meeting providers and patients needs for:</p> <p> Quality Access Convenience</p> <p>Service Lines are comprehensive, product lines including:Screening &amp; Prevention Diagnosis Treatment Aftercare support</p> <p> TIGI 2012 All rights reserved</p> <p>Manufacturer &amp; Product Focus Remedy</p> <p> Consider the VAR industry and adapt your business model to selling services and value-adds- Look at your portfolio and examine it for solutions- Sell implementation services and value-adds</p> <p> Consider where your infrastructure provides unique advantage for customers and manufacturers- e.g. Logistics, inventory management, service </p> <p>and support, education</p> <p> TIGI 2012 All rights reserved</p> <p>Priority: Source un-branded products to substitute or bundle in sets or kits</p> <p>Private Label Products4</p> <p> TIGI 2012 All rights reserved</p> <p> Risks:- Backorders- Support- Quality- Regulatory review- Liability</p> <p> TIGI 2012 All rights reserved</p> <p>Private Label Products - Remedy</p> <p>- Focus your core business on service lines</p> <p>- Sell services that solve the business problem associated with your lines</p> <p>- Consider a spin-off of packaging business </p> <p>- If youre in this business, bulk up compliance and risk management</p> <p> TIGI 2012 All rights reserved</p> <p>Feature-Advantage-Benefit5</p> <p> TIGI 2012 All rights reserved</p> <p>A Balanced Approach</p> <p> TIGI 2012 All rights reserved</p> <p>What are the Hurts?</p> <p>ClinicalUtility</p> <p>OperationalEfficiency</p> <p>FinancialPerformance</p> <p>Department</p> <p>Allocated Revenues and </p> <p>Expenses</p> <p>Equipment, Facilities, </p> <p>Technology</p> <p>Evidence-Based Medicine</p> <p>Service Line</p> <p>Favorable Market Conditions</p> <p>Community Outreach and </p> <p>Marketing</p> <p>Definition of Services</p> <p>Facility</p> <p>Adequate EBITDA Margin</p> <p>Staffing Skill-Mix Required MD/RN/</p> <p>AH</p> <p>Growing or Reducing </p> <p>Services Offered</p> <p>Capitalization, Debt Service, </p> <p>Leverage, Acquisitions</p> <p>Resource Coordination</p> <p>Care Coordination and </p> <p>Service Line Portfolios</p> <p>IDN/System</p> <p>Market Power Aggregation with </p> <p>Suppliers and Payers</p> <p>Shared Services and Process Outsourcing</p> <p>Population Management </p> <p>and Cooperation</p> <p>ACO/Network</p> <p> TIGI 2012 All rights reserved</p> <p> Sell Services: Create Solutions, Sell Related Services, Augment Core Product Lines</p> <p> Focus on Service Lines: Service Line Managers, Continuum of Care, Non-Acute and Acute Care</p> <p> Brand Building: Leverage Your Personal Brand, Brand the Company, Carefully Consider Private Branded Goods</p> <p> Upgrade skills: Business Acumen, Evidence-Based Medicine, Salesmanship, RFP Strategy</p> <p> Update the playbook: Corporate Accounts, GPO Contracts, Coverage Models </p> <p> Assess and Develop Talent: Specialists, Generalists, Managers, and Support</p> <p>What to Do?</p> <p> TIGI 2012 All rights reserved</p> <p>Questions?</p> <p>www.tigi.net</p> <p> TIGI 2012 All rights reserved</p> <p>Upcoming EventsWebinars:</p> <p>June: How Healthcare Reform Impacts Your Business Today</p> <p>July: 5 More Medical Device Strategies Doomed to Fail in 2012</p> <p>To Register: http://www.tigi.net/webinar-calendar</p> <p>Open Enrollment, 1 Day Workshop:</p> <p>TIGI and MassDevice Present, TIGI Bootcamp 2012The Changing Healthcare Buying Environment: Adapting to the New Normal, August 13 in Boston &amp; August 20 in the Midwest (location TBD).</p> <p>To Register: http://www.tigi.net/the-changing-healthcare-buying-environment/</p> <p> TIGI 2012 All rights reserved</p> <p>Thank You</p> <p>Gunter Wessels, Ph.D., MBAPartner, Practice Principal, TIGI</p> <p>gunter@mytigi.net@gunterwessels</p> <p>Sam ORear, M.A. BASenior Partner, Founder, TIGI</p> <p>sam@mytigi.net@TIGI_Inc</p> <p>www.tigi.net</p>