Buying Groups Help Distributors Win In Healthcare
- Communicating Value
- Providing The Tools For Success
Healthcare spending is on the rise, which makes it an enticing market for jan/san distributors to explore if it’s not part of their existing sales. But as anyone with recent healthcare sales experience will tell you, pulling back the curtain on this industry reveals a complex system of processes and regulations that can challenge even the most tenured salesperson.
It hasn’t always been this way; in fact, much of the challenge has been driven by rapid consolidation within the industry throughout the past 10 years. This consolidation has impacted both acute care (typically hospitals where a patient receives treatment for an injury or illness) and non-acute care (i.e., surgery centers, physician offices and clinics) — facilities that previously operated independently of one another.
“The trend happening right now that is difficult for distributors is that health systems are made up of more than just hospitals,” says Lynda Whittle, director of marketing and sales operations, Network Services Company, Schaumburg, Illinois. “A patient goes in for a procedure then they are sent somewhere else. As a distributor, how do we service all of those entities? We have to make adjustments on how to service the business.”
Although the ultimate goal of healthcare consolidation is to improve efficiency, cost controls and patient care, new systems and processes have made it increasingly complex for distributors to navigate. When one adds in requirements and agreements from group purchasing organizations (GPOs), challenges from nontraditional suppliers, and decisions that occur well beyond the environmental services department, distributors have their work cut out for them.
That’s where buying groups have become successful partners for jan/san distributors. Marketing tools, developing proposals, identifying decision makers, healthcare focused training — these are just a few of the tools and resources that buying groups offer to help their members win in healthcare.
The Challenges Of Cost
GPOs such as Vizient, Premier and many others have become dominant forces in healthcare, representing a majority of most major medical groups nationwide. Their goal is to help healthcare organizations leverage their purchasing volume by negotiating supplier pricing, but their complex systems and agreements can require time and resources to navigate — something not many distributors have. Adding to the complexity is the fact that not all GPOs or GPO agreements are created equal.
“No one has the time to read a 55-page agreement anymore,” says Marie Carr, director of healthcare, AFFLINK, Tuscaloosa, Alabama. “Ultimately, the GPO is trying to take care of their customer, the hospital, but it makes it difficult for distributors. That’s where joining a buying group can be very useful. We help distributors understand how to navigate the world of GPOs and not give margin away when understanding these agreements.”
AFFLINK works with its distributors to simplify GPO documentation so they can better understand key points contained within it. With this summary in hand, AFFLINK helps its members identify services they offer that can work within the agreement — ultimately so they can avoid giving away any margin.
Whether a healthcare group works with a GPO or not, often, purchasing decisions are made beyond the environmental services department — even outside of the facility. Facing competition from new suppliers to the jan/san market, such as Amazon and office supply companies, distributors are forced to compete on just cost. This commoditization of custodial supplies ignores the value a distributor sales representative brings to an organization.
“The process of selling into healthcare has become a more complex process than showing a product and buying,” says Mitch Rosenfield, director of healthcare, Strategic Market Alliance, Charlotte, North Carolina. “Decisions are made by value analysis teams for large [healthcare] systems who don’t see where they need the service and make purchasing decisions on cost alone.”
In most situations, it’s not an “apples-to-apples” comparison, because distributors often build additional services like training into the price where other suppliers base costs solely on the product, says Rosenfield. When cost is the only consideration, healthcare organizations don’t receive the service they need.
“You can always tell when a medical organization buys that way, because you’ll see a roll of toilet paper sitting on the handicap rail because it doesn’t fit the dispenser,” says Rosenfield. “We work with our members to help them articulate that they offer much more than just the products — and a lot of healthcare organizations are starting to see that.”
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