Building Better Pricing and Contracting Analytics

Howard Deutsch, Carlos Garmendia, John Moran

Why you don't need to start with a contract management solution

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Medical device manufacturers’ business rests on an intricate web of contracts. You may, for example, have individual hospital contracts, health system contracts and GPO contracts all attached to a particular customer, so you’re challenged to figure out what terms apply. Medtech firms also are working with different pricing and contracting models in different parts of the industry. The contracting model for blood glucose meters and test strips looks a whole lot different from that of large capital equipment like MRI machines. If your company operates multiple business lines, there could be significant variability in your contracting practices across the enterprise, making a “one size fits all” approach difficult, if not impossible.

The sheer volume of contracts alone can be overwhelming, and the marketplace for medical devices in the United States continues to evolve. The healthcare industry is transitioning from its traditional “fee for service” model to a value-based model. Moreover, medtech’s competition has intensified, with more players and increasing innovation, and the customer landscape has consolidated dramatically, with little sign of slowing down. These mega-providers bring both increased sophistication and bargaining clout when managing relationships with their suppliers.

Amidst these challenges, medical device manufacturers face significant growth and margin pressures. Put simply, medtech customers are growing bigger and more complex, requiring medtech manufacturers to become more sophisticated in their pricing and contract management, working to optimize price offers, maintain contract compliance and maximize the sales available through those contracts. Transforming pricing and contract management practices often appears to be easier said than done, but it’s worth the effort—and it’s achievable. One ZS client’s average annual revenue growth rate hovers around 4%. By tightening up its pricing and contracting strategy, the client estimates that it could yield 3 to 5% more revenue. In other words, the firm stands to double its annual revenue growth rate by improving its pricing and contracting capabilities. The ROI is there, and it could be significant.

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About the Experts

Howard Deutsch is a principal in ZS’s Boston office, and is a leader in the firm’s pricing and contracting strategy practice. Contact Howard at

Carlos Garmendia is an associate principal in ZS’s Boston office, and leads the contracting analytics offering in the medical products and services practice. Contact Carlos at

John Moran is an associate principal in ZS’s San Diego office. He is the leader of the medical products and services operations and technology practice area. Contact John at