There’s a new kid in town. He’s a GPO field rep, calling on non-hospital providers, trying to attract them to his company’s contract portfolio. And he’s looking for help from his distribution counterparts.
GPOs are no strangers to the non-hospital setting. But now, they appear to be ramping up their efforts to put feet on the street in pursuit of non-acute-care customers.
“We decided that if we’re going to be successful, we need people getting up every day and going out and beating the bushes, working with distribution partners to grow new members in the non-acute market,” says Steve Tackett, vice president, national accounts and non-acute-care services, Amerinet.
What remains to be seen is how eager distributor reps are to play ball with their GPO counterparts.
“If you’re a distributor, you have to decide, ‘Do I want to enter this part of the market?’” says Henry Stone, president and owner of OneSource Healthcare, Peachtree City, Ga. “If you do, then you have to make the effort.”
By no means is Amerinet a stranger to the non-hospital market. As of December, the GPO’s total non-acute-care membership numbered 47,883. Of them, 18,640 were clinics, 5,688 were long-term-care facilities, 2,367 were surgery centers, and 2,238 were home health providers. “Home care is an area we’re looking to grow significantly,” says Tackett.
But last year, the GPO assembled a combined inside/field sales team to focus exclusively on the non-hospital market. Prior to that time, Amerinet’s reps had called on both acute-care and non-acute-care customers, says Tackett.
“Our board made the decision that we needed a very defined focus on acute care and non-acute-care,” says Tackett. So, today, Amerinet has 14 people – 10 reps, two sales leaders and two national accounts reps – facing the customer in the field. (The national accounts reps call on larger accounts, such as ambulatory surgery chains or large clinics.) Most are Amerinet reps who had experienced success in the non-hospital market.
The field reps are supported by 10 inside sales reps. “We’ve adopted a hunter/farmer strategy with regard to the field and inside reps,” says Tackett. Each field rep is matched with an inside rep. “The majority of the field person’s time is spent working with our distribution partners, identifying opportunities where we can bring in new members. They get them started on the contract, and then they engage the inside salespeople to work with the customer to gain more access to our contract portfolio.”
Sales force in place
MedAssets has had a non-acute-care sales force in place for some time, says Tonia Kraus, senior vice president, alternate care. With its recent acquisition of Broadlane, the Alpharetta, Ga.-based GPO now has some 75,000 non-acute-care members. Physician practices are the largest share. “The freestanding physician market is a rapidly growing market for us,” she says. MedAssets already had products and services, such as an online coding research service, specifically geared to physicians.
And Broadlane brought a wealth of contracts well-suited to the physician market, she adds. Indeed, Broadlane historically sought to negotiate acute-care pricing for the non-acute sites owned by its hospital members, says Kerry Tucker, MedAssets senior vice president, strategic sourcing solutions.
The MedAssets non-acute-provider field reps come from a variety of markets and backgrounds, says Kraus. They include clinicians, practice managers, billing specialists, people from manufacturing and distribution, and previous business owners. “We all bring something unique to the table, and combined, we’re unstoppable in servicing customers,” she says.
The field reps are supported by inside reps, many of them from Broadlane. “We are playing to the two companies’ strengths,” says Tucker.
GPOs believe non-acute-care providers are looking for ways to make their practices more efficient. “If you look at the economic climate, depending on which news service you listen to, we’re either slowly climbing our way out of [recession], or hanging on the precipice of doom and gloom,” says Tackett. “Either way, it’s a very difficult economic situation. Healthcare organizations are asking us to help them save money, help them be successful.”
The opportunity in non-hospital group purchasing has heightened competition among GPOs.
“There is significant attention drawn by all the group purchasing organizations in the non-acute market,” says Tackett. “It’s an area of growth, an area where GPOs want to increase their footprint. So it has become more competitive. And in the GPO world, there has been consolidation recently. That has changed the landscape as well. Competition will continue, [especially] since healthcare is continuing to be pushed into the alternate site.”
Hospitals in non-hospital market
Hospitals or hospital systems that own non-acute-care sites, such as physician practices or surgery centers, may be feeling the need to contain costs even more than those that don’t. That’s another entrée for GPOs.
“If you look at the large IDNs, the supply chain people are looking to try to integrate those clinics and facilities into their supply chain network,” says Tackett. “If it’s a large IDN and they’ve acquired non-acute locations, their intention is to drive standardization across the network.”
That said, Tackett believes the trend of hospitals acquiring physician practices may be slowing down. “Some of our members have seen this starting to unravel.” In other words, some hospital systems are shedding non-hospital entities they acquired just a short time ago, just as they did 10 to 15 years ago. “I don’t know if there’s enough data out there yet for us to truly say the trend is over and starting to reverse,” he says. “But people in the marketplace need to be aware that the market is dynamic and continuing to evolve.”
Even so, hospitals and hospital systems are still looking to provide “valued-added offerings” to the physician community, even if they do not employ those physicians, says Kraus. “We’ve been approached by IDNs across the country to build a program that they could co-brand with their physicians. They want to continue to build those relationships.”
Working with distributors
As promising as the non-acute-care market might be, GPOs understand that without the cooperation of distributor reps, they will have a tough time penetrating it. But few believe that enlisting the support of distributors will be easy.
“Our biggest competitive pressure comes from the purchasers, who believe they’re getting the best price all the time, based on long-term relationships with people in their communities,” says Kraus. Our mission is to bring them the best product at the best price. But they often see us trying to sell against their local relationships. And I’m not talking just about [med/surg] distributors, but it could be the local office supply company or any number of smaller local companies.”
More tensions might arise as hospital contracting executives become more involved in newly acquired non-hospital sites.
“In the acute-care market, transparency of manufacturer agreements and distributor markups is standard,” says Tucker. “With healthcare reform, you’re seeing transparency being demanded more and more by the industry as a whole. Customers become more engaged with their GPO and pay close attention to their supply expenses and where distributors can provide the most value. It will come to this marketplace.” So-called accountable care organizations, which will presumably bring physicians and hospitals together to provide seamless care to their patients, will be another driving force, he says.
For all these reasons, GPO executives believe that providers and suppliers will benefit most if distributors and GPOs can work together to service their mutual customers. For their part, GPOs say they’re working hard to make that happen.
“We have inside reps who are dedicated to distributor reps, so there is always a resource for them to contact,” says Kraus. We make our distributor relationships a priority from a sales perspective, and we want to make it as easy as possible for them to do their jobs.” The ingredients, she says, are open communication, easy access to information, and dedicated resources to answer distributor reps’ questions.
“Our big ally in all this are the distributors, given the fact that they have many more feet on the street than we do,” says Tackett. “Our intent is to continue to develop the relationships we have with them.
“We have a shared customer in whatever class of trade you’re talking about – physician clinics, multispecialty clinics, surgery clinics, long-term-care, etc. I think the relationship we want is one that the field reps of both organizations sit down and have an open dialogue as to how we can help that customer be successful in the marketplace today, given the challenges that everyone faces insofar as the need to standardize, maximize utilization of product and reduce overall supply chain costs.”
Yes, there may be some mistrust to overcome. But there’s only one way to do it, says Tackett. “We’re making it a requirement that our field teams go out and meet with their counterparts in distribution. To me, it comes back to the basics of selling. People have to trust you. And the only way you’re going to get there is through open dialogue, open communication, and sitting down and building a relationship with someone. It’s still a relationship business – with business partner or customers.”
Having made the decision to embrace group purchasing, distributors and GPOs have no choice but to respect one another, says Stone, whose company works with Amerinet and Novation. “You have to understand that you’re all working for the same thing – the good of the customer.
And my experience in working with them is that working with GPO reps is no different than working with manufacturer reps.” Just as a manufacturer rep likes communication with the distributor, so too does the GPO rep.
“Ultimately, I’m trying to get what’s best for my customer,” he says. “That’s No. 1. I have done research and gone in to customers to tell them they should be on a higher tier with that manufacturer. I’m showing them that I will get together with the GPO rep and the manufacturer rep and move them from Tier 1 to Tier 3. The customer appreciates me doing that; it builds trust with them. And the GPOs appreciate it.
“We’ve built a wonderful model in serving customers. We create value for them.”