Recent trends within medtech—particularly within the area of pricing and contracting (P&C)—have compelled organizations to take a hard look at how they can overcome new challenges and take advantage of opportunities. Rapid changes in the provider ecosystem, for example, have encouraged a shift away from one-size-fits-all pricing structures into more flexible models. New modes of customer engagement have prompted valuable questions about how to create a cohesive offering that truly meets customer needs. For a multinational medical supplies manufacturer, one of the driving concerns was how to get the right insights from its pricing and contracting data within a rapidly changing ecosystem.
In the competitive medtech market, companies succeed not only on the quality of their products but also on their ability to attract and maintain customers through discounts or other incentives. Balancing these tactics against profitability across multiple customers can be a complex task. For the company’s P&C team, analytics and tracking of KPIs was a considerable issue, making it difficult to identify problems, spot trends and get a consolidated view of average sale price, variance to target price, or customer performance. Additionally, a lack of oversight on manually executed price adjustments had led to misalignments with pricing strategy, and limited insight into rebates obscured the impact those payouts had on individual contract performance.
The company recognized that its existing P&C analytics capabilities would need to evolve to provide more operationalized, accurate insights on a cadence that met commercial needs. Building a more effective, data-driven P&C infrastructure would be a daunting but necessary challenge, requiring broad expertise in business strategy, data management and the distinctive nuances of the medtech market. Fortunately, they found a proficient partner in ZS.
The company engaged ZS to help build models that would work best for their organization. ZS provided an overall analytics assessment, taking a deep dive into commercial operations processes as well as analyzing quick wins such as elasticity, profit waterfall and case pricing profitability. This assessment helped identify specific pain points within the company’s P&C analytics, offering guidance on how exactly the solutions needed to answer the overall problem.
A new pricing dashboard, built on Tableau’s cloud-based platform, facilitated pricing analysts’ views of customer data ranging from macro to highly specific data points. This dashboard also provided information on group purchasing organizations to identify price-referencing risks for accounts within the same group. New contracting dashboards gave key account managers (KAMs) the ability to view historical information on individual hospital agreements, then examine the effects of past contract adjustments or price changes on customer performance. Finally, a self-serve analytics layer developed with over 50 initial data sources greatly improved reporting capabilities by allowing the commercial analytics team to create tailored analyses for reps, managers and C-level leadership.
The new P&C tools began having an impact within the first few months of implementation. By gaining quicker access to standardized pricing analytics, the company was able to build more successful pricing strategies upfront. The new pricing dashboard, for example, placed a greater emphasis on identification and correction of non-profitable customer accounts, allowing the company to fix pricing at the basic level through better analytics.
“I use [the contracting dashboard] every day,” said one KAM. “I’ve never had access to data like this. It’s incredibly powerful to easily compare pricing between my key accounts and identify the discrepancies.”
The contracting dashboards resulted in greater collaboration and improved efficiency across the commercial operations teams, offering KAMs real-time data at their fingertips for the first time. Contract negotiations could now be supplemented by comparisons to other customers, and impact analysis of changes to any customer agreements helped the team better quantify risks that mergers, acquisitions and price referencing may have created. Over 500 of the company’s employees across all levels of the organization have also seen benefit from receiving the customized reporting through the ad hoc analytics layer using insights targeted to the needs of individual roles.
The solutions as a whole supported discounting decisions made by the sales team while giving management clearer and more relevant data on its own process. This allowed leadership to better control the way discounts were being offered and maintain the integrity of the company’s pricing strategies. By prioritizing analytics in the P&C space, the company takes advantage of deeper business insights, leading to more data-driven and effective commercial strategies to increase profitability.