Hospital as Factory: What Medtech Can Learn From Other Industries

Brian Chapman, Tobi Laczkowski, Rodolfo Luzardo, Scott Sims, Marshall Solem, Tony Yeung

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How much can suppliers of medical equipment and supplies glean from other industries that have had to face go-to-market challenges? And is it useful to think of the hospital in industrial terms as makers of medical equipment reexamine their sales and marketing approaches?

Those two key questions drove a lively discussion among a panel of ZS experts whose backgrounds and perspectives range from industrial manufacturing and distribution to specialty chemicals. The discussion opened with the provocative hospital-as-factory hypothesis, explored other industries’ value-chain thinking and their use of distribution channels, and revealed examples of what medtech already does right. 

Here are a few highlights:

  • Re-imagine the hospital as a factory: As part of the value-chain approach, medtech companies would do well to reconceive the hospital as a factory. Explained one panelist: “A factory takes inputs such as raw materials and labor. There’s capital at work. The outcome is a finished product. Similarly in hospitals: Sick patients go in, the hospital does a procedure and healed patients come out. You can measure the quality, you can measure the cost, you can measure the throughput. You spread your capital and your fixed costs across it. All of these notions are exactly analogous to a factory.”
  • Medtech must interact differently with hospitals: The panelists took a few moments to revisit why medtech needs fresh go-to-market concepts in the first place. “Most of them can no longer rely on product innovation to drive growth in revenue and margins,” said another panelist. The discussion underscored a hard truth for those on medtech’s front lines: Clinicians no longer have the buying power they used to, and are aligning increasingly with the care providers’ other buying influencers.
  • Product innovation isn’t dead, but...: So does this mean that medtech makers should ease up on product innovation? The resounding response from the panelists: not at all. There are still many medtech start-ups and plenty of full product pipelines. However, that does not imply that innovation can or should happen as it has always done. One indication of that: Whereas medtech has been able to push through price hikes with each wave of innovation, that’s not typical of the high-tech world, whose latest, more advanced products usually launch at the same or lower prices. Another panelist challenged the medtech sector to view innovation differently: “The scope of innovation has expanded. Product is not the only thing you now have to innovate on. Now you’ve got to think about a bunch of other stuff you’ve never thought about, like how your products are used, and what are the implications on cost for the user.”

Read the full report to learn more.

About the Experts

Brian Chapman is a Principal in ZS’s Evanston, Ill., office, where he leads the consulting practice for ZS’s Medical Products and Services team. While at ZS, he has worked with companies on issues ranging from sales force effectiveness, organizational design, opportunity assessment and channel design to new product launch strategy, value proposition development, territory alignment and incentive compensation.

Tobi Laczkowski is an Associate Principal in ZS’s Evanston, Ill., office and was previously based in the firm’s Zurich office. He has worked primarily with medical products clients in numerous practice areas, including sales force effectiveness, go-to-market strategy and transformation, compensation design, value proposition design and recruiting effectiveness.

Rodolfo Luzardo is a Principal in ZS’s Chicago office. He has extensive experience advising companies in sectors such as specialty chemicals, industrial, basic materials, distribution, retail and private equity. His expertise is in B2B sales and marketing strategy and effectiveness, with a focus on large-scale commercial transformations relating to go-to-market strategy, sales effectiveness initiatives and integrations, and pricing optimization.

Scott Sims is the Office Managing Principal of ZS’s Chicago office and leader of the firm's Energy and Industrial practices, where he focuses on sales transformation, go-to-market and incentive compensation issues. Scott has worked with more than 200 companies in high tech, telecommunications, industrial and professional services markets.

Marshall Solem is a Principal in ZS’s Evanston, Ill., office and a longtime specialist in medical equipment and services. Previously, he led the firm’s global Sales Solutions Practice. He helps clients to implement their new sales strategies by providing guidance on territory design, talent management, incentive compensation design, sales force effectiveness and commercial analytics.

Tony Yeung is a Principal based in Toronto and is a leader in ZS’s B2B sales and marketing practice. He has focused on client engagements in sales and marketing strategy and execution across industries ranging from consumer products, transportation and logistics to industrial products and medical devices. His areas of expertise include go-to-market strategy, sales force design and sales effectiveness.