Ways to Address the Marketing Challenge with Medical Devices and Supplies
There are three main relationships that must be considered when marketing products or services to a hospital or health system: the physician-manufacturer, the physician-hospital and the hospital-patient perspectives.
These relationships are best understood by reviewing the marketing and purchasing processes of physician preference items (PPIs). PPIs are specific medical devices or supplies that are “preferred” by a hospital’s doctors or surgeons; however, unlike most industries, the users, such as physicians and surgeons, are not the direct purchasers.
The bullets below detail how each unique perspective is affected by the marketing and purchasing of PPIs and what this means to the overall quality and cost of care:
• Manufacturer- Physician Perspective: Typically, manufacturers have used the strategy of introducing their brand to physicians early in their career to establish a long term relationship and develop brand loyalty. Furthermore, manufacturers also cultivate relationships with physicians in order to recruit them as consultants to assist in product design and clinical trials.
This unique manufacturer-physician relationship can sometimes put the hospital and the physician at odds. The physicians value their ability to select a PPI for their procedures; however, hospitals must consider the price difference between the PPI and insurance reimbursements. This brings us to our next perspective, the physician-hospital relationship.
• Physician-Hospital Perspective: Like the physician, the hospital aims to provide high quality care, but hospital administrators also have to work to simultaneously drive down costs.
Whereas physicians generally do not consider the price differences between PPIs, hospital material managers and other administrative decision-makers are attempting to standardize PPIs to control supply chain overspend and product waste. This can often lead to dissatisfaction among physicians, especially those who have used a particular product since earlier in their career.
• Hospital-Patient Perspective: In almost every other industry, consumers know the cost of a product or service before purchasing it; however, when it comes to healthcare, patients often do not know the cost of a procedure until after it has been performed. As patients face increased exposure to healthcare costs, there is a growing need for price transparency.
To increase price transparency, hospitals need more visibility into the costs of PPIs. This also presents a challenge for hospitals because many manufacturers have enforced price-confidentiality clauses for PPIs contracts, which have prevented hospitals from revealing prices to third parties that would help them negotiate prices and make informed purchasing decisions.
The idea that hospitals need to provide patients with more transparency was also highlighted in Bill Clinton’s 2013 HIMSS keynote, where he stated “there is no correlation between what people pay and the quality of healthcare they get.” He went on to emphasize a need for transparency, noting that “as much as 30 percent of our healthcare costs are either wasted money or we’re doing something that’s necessary but we’re being overcharged.”
By reviewing how the marketing and purchasing of PPIs affects each stakeholder, we are able to also shed some light on how intertwined these audiences are throughout the entire continuum of care. Each product purchased and dollar spent ultimately affects the quality of care that a patient receives and can greatly impact a hospital’s bottom line.