L.E.K. Study Reveals Hospitals Focused on Improving Quality Metrics to Gain Competitive Edge

 
BOSTON - April 9, 2013 - PRLog -- Boston, MA – April 9, 2013 – U.S. hospital executives anticipate consistent spending growth over the next five years to support significant investments in IT and facilities, while rising enrollment in Medicare and Medicaid programs will further erode margins, according to the L.E.K. Consulting (http://www.lek.com/) Strategic Hospital Priorities Study. L.E.K.’s fourth annual study of nearly 200 senior hospital decision-makers tracks changes in hospital strategies and purchasing trends.

Sixty percent of respondents expect bigger budgets in 2013, with the highest level of spending dedicated to IT, followed by drugs/pharmaceuticals, facilities and  medical devices. The most critical initiatives of hospitals’ strategic plans in 2013 continue to be “cost management,” “data connectivity across the spectrum of clinical care,” and “utilization of outcomes data.”

“Hospitals are investing in mechanisms that help them improve quality metrics and outcomes and gain a competitive advantage in the marketplace, whether it is through more robust technology or unique offerings,” said Bob Lavoie (https://www.lek.com/experts/bob-lavoie), Vice President and Head of L.E.K. Consulting’s global MedTech Practice (https://www.lek.com/industries/medtech). “Executives are opening their doors to new models that minimize eroding margins and extract added value, as well as seeking true partners who understand the disruption to their business and offer more holistic solutions.”

Purchasing Dynamics Shifting

The survey tracked disruptions to the traditional healthcare models that have been underway for the past few years. L.E.K.’s survey found that accountable care organizations (ACOs) are taking hold with over 80 percent of surveyed hospitals making future plans to join or already participating in an ACO. In addition, hospitals are expanding capabilities and adopting new models, with 12 percent of hospital executives reporting their organization will likely adopt payer capabilities over the next five years. As these new models evolve, hospital purchasing decisions are changing in unison.

One of the most significant purchasing shifts has been driven by hospitals acquiring physician practices. Hospital administrators and purchasing departments are centralizing more decisions and using more complex cost/benefit analyses to inform purchases. This changing dynamic has rattled the traditional sales model for MedTech companies – nearly 80 percent of administrators rank group purchasing organizations (GPOs) as having the greatest influence on their purchasing decisions, followed by distributors (50 percent) and manufacturer’s sales reps (45 percent).  
Physician referrals and preferences, though still required, are no longer sufficient in the purchasing decision relationship. Now, 75 percent of hospitals require sales representatives to make an appointment instead of dropping in on physicians. More than half of respondents (53 percent) say they limit reps’ interaction to purchasing departments only.

“The MedTech sales force needs a radical new approach that ties directly to hospitals’ most pressing needs around better data, greater efficiency, cost reductions and improved quality of care,” said L.E.K. Vice President, Lucas Pain (https://www.lek.com/experts/lucas-pain). “To sustain long-term performance, MedTech companies must transform their approach, and become true partners, finding ways to move beyond the transactional relationships many MedTech companies currently find themselves in.”

Additional findings are available in the L.E.K. Strategic Hospital Priorities Study Executive Insights report (http://www.lek.com/sites/default/files/2013_L.E.K._Hospital_Priorities_Study.pdf). More information about the four fundamentals of a true customer-centric model and opportunities for MedTech companies can be found in the Customer Excellence: Business Model Innovation for MedTechs Executive Insights report (http://www.lek.com/sites/default/files/L.E.K._Customer_Excellence_-_Business_Model_Innovation_for_MedTechs.pdf).

About the Study

The fourth annual L.E.K. Strategic Hospital Priorities Study was fielded in December 2012. L.E.K. surveyed nearly 200 U.S. hospital decision makers including CEOs, CFOs, COOs, material managers and purchasing directors for the study.

About L.E.K. Consulting  

L.E.K. Consulting is a global management consulting firm (http://www.lek.com/) that uses deep industry expertise and analytical rigor to help clients solve their most critical business problems. Founded 30 years ago, L.E.K. employs more than 1,000 professionals in 22 offices (http://www.lek.com/offices) across Europe, the Americas and Asia-Pacific. L.E.K. advises and supports global companies that are leaders in their industries – including the largest private and public sector organizations, private equity firms and emerging entrepreneurial businesses. L.E.K. helps business leaders consistently make better decisions, deliver improved business performance and create greater shareholder returns. For more information, go to www.lek.com.

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For further information contact:

Andrea Friedman

Bliss Integrated Communication        

212-584-5476

andrea@blissintegrated.com
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Tags:L.E.K., Medtech, Hospitals, Strategy
Industry:Management consulting, Health
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