11 Things You Should Know About the Hospital You Sell To! Part 1

SCOTTSDALE, Ariz. - July 26, 2013 - PRLog -- It’s no secret that selling a product or service into a hospital for either the first time or as repeat purchase is getting harder and taking longer. In today’s cost conscious economic climate there are more buying influences involved, each with different wants and desires. To increase your chances of winning a sale (whether you sell high priced capital equipment, implantable devices, other services, or just want a multi-year contract for consumables) you should know the following about every hospital you sell to:

1.  Leadership Structure: Take note of the Healthcare Systems organizational chart. You should make it a point to know (from an information standpoint) who is at the C-Suite Level (CEO/COO/CMO/CIO/CNO/CMIO, other), as well as the other senior level V.P.’s in administration.  Once you diagram this you can see where and how your contact, department, and/or service line reports within the organization. This will also provide insight into who will have and/or give signature approval for purchase.

2.  Board Composition: For-Profit hospitals have a Board of Directors. Not-For-Profit hospitals have a Governing Board. Savvy sellers learn the composition of the board, when they meet, how they approve projects and if their capital equipment project is on the next meeting’s agenda.

3.  Hospital Strategic Initiatives (Current State – Future State): Want to know how the hospital is going to spend its money in 3-5 years? Understand their strategic initiatives. The Strategic Plan is a visual roadmap for future purchase initiatives that are key to their success. The direction and vision that the CEO articulates, coupled with the Hospitals Mission Statement, in many cases can help you align your products and services to help the hospital address both short term and long term needs. Example: When the hospital CEO announces in the press or in their annual report that his/her goal is to make Health System X the premier cardiac care center in the region over the next 3-5 years…you don’t have to guess where capital and disposable dollars are going to be spent during that period of time. If you sell products and services that impact that service line…this account should move up on your target list.

4.  Financial Health: Is your customer operating in the black or in the red? What Service Lines and Departments generate the most (positive or negative) revenue at the institution? How much of their revenue is from philanthropic sources? Knowing the answers to these questions can often tell you how much pressure/scrutiny your product or service will come under, or… how much of a positive impact your product or service could have in helping your customer address these issues.  

5.  Signature Approval Levels: Who can release the funds differs by role and responsibility. Each department manager, director, vice president and C-Suite executive has a signature approval level. If the purchase exceeds the hospital CEOs level then it must go to someone in the corporate office (if a For-Profit hospital) or the Governing Board if it is a Not-For-Profit hospital. Savvy sellers know the approval levels, the approval process, the decision making process and the final yes.

6.  Payor Mix - The reimbursement rates are different for CMS (Medicare & Medicare) and commercial payors (United, Blue Cross, Aetna, etc). This information is important in order for the Health System to determine projected revenue based on the reimbursement rates from various payors. Today their projected revenue is a fee-for-service model which is based on volume and the reimbursement rates for the procedures performed. So imagine if your selling orthopedic implants in a retirement area/city in Florida…your hospitals dominate payor for those procedures is probably Medicare.  Will you be paid on a fee-for-service model or as the future portends a more holistic approach that measures a patients overall health, wellness and quality of care received? Given all that is happening with Healthcare reform…you should be able to predict (pro or con) what could happen to your business.

In next week’s blog we will discuss the importance of understanding the hospitals capital budget cycle, decision making process and committees, their fiscal year end, type of hospital and the role of GPOs, IDNS and RPCs.

Authors: Thomas J. Williams & Glen Hall

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