Medical device companies globally are facing profitability pressures as a result of decreases in reimbursement, and the cost pressures this puts on medical device company’s’ customers. These hospitals and other healthcare provider customers then push back on medical device companies to decrease their pricing.
The challenge for medical device companies is to adapt to these margin pressures in ways that don’t endanger revenue, profitability, quality or safety.
One outcome of this margin pressure is often industry consolidation through acquisitions or mergers, to drive scale and cost efficiencies. This creates larger entities, with complex and potentially broad portfolios of medical devices and components. These larger portfolios can be challenging for the existing sales teams to manage and sell, giving each product line the attention and clinical attention or depth of understanding that is required.
Another situation that often result from this profitability pressure is one where a medical device company is faced with being forced to choose from among several bad choices:
Reducing headcount in operations, sales or marketing; three essential functions for driving revenue growth
Sacrificing quality by reducing quality control staff, clinical staff, or trying to engineer significant cost reductions.
Reducing pricing; to remain competitive by sacrificing profit margin
One solution to avoid choosing from among these bad choices, often used by successful medical device companies, is the use of scalable digital tools to reduce the cost of selling, servicing and acquiring customers.
Using a commerce platform to provide a 24/7 place for customers to transact, see order history and status, and easily find products and parts. This allows for self service by the customer, and reduces the cost per transaction.
Utilizing a quoting platform that can easily integrate with CRM that allows for pre-validated pricing, so that more quotes can be produced easier and faster, for more customers. This reduces the time and effort by sales and finance to acquire new business, and results in more potential revenues by reacting faster to customer opportunities.
Automated service capabilities such as chat bots, which can triage customer service issues between automated responses, or when a customer service agent or specialist is required.
- Focusing on digital marketing and marketing automation so that customers can be segmented, individualized campaigns can be created, and the cost of acquiring or keeping customers purchasing can be reduced versus more traditional means.
- Incorporating feedback mechanisms and surveys into operational data so that problems are identified, and actions can be taken to fix issues. For example, customer surveys that identify common device problems, which can be traced back through product numbers all the way to the production shift where problems may have occurred. The ability to react fast to customer complaints and take action is a key competitive advantage.
Change is rarely easy, if ever. The ability to change in ways that drive scale and reduce costs is a key competitive advantage.
Investing in the ability drive scalable change will differentiate the successful participants in medical devices from those who are forced to choose from among tough choices.