The customer imperative

Distributors adjust their business and selling models to respond to customers’ needs

The macro forces changing healthcare today – e.g., physician/hospital alignment, value-based purchasing, reimbursement cuts, etc. – are affecting medical products distributors in a macro way. And those changes are reflected in how individual sales reps are approaching their customers. Speaking at the Welch Allyn “Dialogue on the New Healthcare Marketplace,” a panel of distribution executives explained.

Looking at the changing healthcare landscape, Jacksonville, Fla.-based Physician Sales and Service sees IDNs as an emerging opportunity, said John Sasen, executive vice president and chief marketing officer. In fact, the company has dedicated a number of reps to IDN customers.

“Having a new customer call point, usually in the hospital setting, has been a little bit of a mystery to us,” he said. But after a closer look, the mystery is disappearing. “They’re all looking for ways to increase productivity.” PSS feels it can help IDNs do that by continuing to serve their affiliated physicians.

“For us to differentiate ourselves with our customers, we need more than product,” Sasen said. “We have to deliver products quickly, we have to have a great deal of knowledge about how they use those products. So there’s a lot of education going on.” The distributor’s relationship with its manufacturers will continue to shift from transactional to strategic.

PSS has made a commitment to strive to improve the financial well-being of its customers by 20 percent. “That’s our goal in life – to care for the caregivers; because if we don’t, we won’t have a business,” said Sasen. The challenge for PSS is to help customers meet that goal even though supplies only consume roughly 2 percent of the average physician practice’s spending.

Rather than conducting simple sales calls, PSS reps strive to conduct regular business meetings with their customers, in which they jointly review P&L statements, examine revenues and look at potential efficiencies. “We’re starting to measure our people by the number of business meetings they have with their customers,” said Sasen. Naturally, clinical products and services remain important. But increasingly, financial and IT products and services are key.

“In the past, our task was to bring [manufacturers’] products to the customer and make the sale,” he said. “We still do that, but now, it’s in the context of how they’re caring for the patient. We’re moving as quickly as we can from product demonstration to application. It’s important we understand the specialty’s need and application of the product. We have to sell products responsibly and help our customers get healthier.”

Hospital supplier perspective
Hospital supplier Owens & Minor is approaching successful, aggressive IDNs with a variety of targeted offerings, such as integrated service centers, said Gavin Jeffs, operating vice president, international strategic sourcing. Like physician distributors, Owens & Minor is examining its ability to help its customers address SG&A costs. And regarding physician employment by hospital systems, “If the customer wants us to assist them in these models, we will. We want to follow the IDN.” And the IDN is following the patient, wherever he or she goes, including the outpatient setting. “Where the IDN has a holistic view of the patient,” Owens & Minor will try to accommodate it, said Jeffs.

Looking ahead, Owens & Minor foresees more consolidation among providers. Solo hospitals and systems will join larger systems, and physician groups will continue to seek employment and/or partnership with IDNs. As they do so, they will look to reduce the number of suppliers they deal with.

Trusted advisors
Physician supplier Henry Schein Medical is focused on the “C”s of the industry, starting with the C-suite, said President Dave McKinley. But there’s also the Centers for Medicare & Medicaid Services, chronic care prevention and wellness, clinical outcomes, comparative effectiveness, consolidation, etc. Two of the weightier C words are “change” and “customers.”

“Our customers are changing,” said McKinley. The decision-makers in physician practices are becoming more business-oriented, forcing distributors to approach them in a new way. “We have to follow our customers,” he said. Those customers are leading the distributor to new places, such as larger group practices, community health centers and IDNs. At the same time, patients are receiving more care at home. Henry Schein – and society at large – has to figure out how to address the chronic diseases and conditions that affect a large portion of the population.

All of these big-picture trends are affecting sales reps, said McKinley. Today, Schein’s customers are making more strategic buying decisions, he said. “We’re looking for a long-term institutional relationship.”

Look for Henry Schein to continue to practice a “customer-centric” rather than “product-centric” approach to the market, particularly as physician practices become more business-oriented, said McKinley. “We think we can help our customers run better practices if they allow us to get closer to them. We want to bring more to our customers to allow them to find ways to increase revenues and lower costs. How can we help them communicate with their customer base as well as other physicians?”

Henry Schein is specializing its sales force in order to address different segments of the market. The specialty sales force continues to focus on those segments that probably will remain independent of hospitals for the foreseeable future, such as dermatology, ENT and sports medicine. As a result of all these changes, selling has become much more of a team effort, McKinley said. That reflects what’s happening among its customers, he pointed out.

And, like its customers and society at large, Henry Schein takes prevention and wellness very seriously, said McKinley. For example, its “Health Home®: Solutions for Coordinating Prevention and Wellness” program combines the company’s medical and oral health offerings to community health care centers, including supplies and equipment, electronic health care records software, health center design and planning; and 340B drug pricing, diagnostic, and influenza vaccine programs.

“We’re repositioning our company to be a network of trusted advisors. We can bring a lot of expertise to our customers.”