Patient experience, outcomes and cost all factors to consider in equipment sales
Equipment selling has never been for the impatient. Sales cycles are longer than those for most med/surg items. More dollars are typically at stake. More people are involved in the decision-making process – particularly as physician practices are acquired by IDNs and health systems. And GPOs are working to increase their role in the process too.
It may be challenging, but for the distributor sales rep, some simple truths remain fixed.
Ben Mosley, director, vendor marketing and programs, NDC, says the successful distributor equipment salesperson:
- Shows up
- Follows up
- Earns the trust of the customer
KC Meleski, national sales manager, Claflin Medical Equipment, believes that the successful rep is:
- Intelligent
- Meticulous
- A good communicator (both written and spoken)
- Motivated
- Personable
And Cindy Juhas, chief strategy officer for Claflin Medical Equipment, says the successful equipment rep has:
- Attention to detail
- Mental acuity
- Drive
First step
Taking the time to research and understand the customer’s needs is the first step in successful equipment selling, according to those with whom Repertoire spoke.
“To sell equipment in today’s healthcare, you can’t just present features and benefits,” says Matt Bourne, vice president of medical sales for Midmark. “You can’t just present it as a return on investment. You really have to embrace the strategy of that customer you’re working with. You have to understand what they’re going to need in the next three to five years to drive the measures they have put in place to be successful.”
Your customers’ needs are changing – rapidly. So is the way they are buying equipment.
“As a great deal of medical spend has moved to the large health system, many times we are dealing with multiple influencers and stakeholders when it comes to equipment purchasing habits or preferences,” says Dick Moorman, vice president of distribution relations for Midmark. “We are seldom dealing with a single decision-maker like we did in the single practitioner’s office. Each of those influencers will have different wants and needs. We need to know and understand what those are.
With today’s educated and diverse buyers, reps must be able to justify the solutions they are proposing, he continues. And those solutions must address three things:
- Does the equipment improve the patient experience?
- Does it lead to better outcomes?
- Does it result in a lower cost to serve?
More and more hospital systems are standardizing what they purchase, says Juhas. “Consumables and high ticket items have been standardized for years, but equipment was usually a crapshoot of sorts. Now, every system seems to be focusing on standardizing equipment.”
Nor is price their only consideration, she continues. “They look at longevity, patient and staff satisfaction, safety, quality, accuracy (if it is measuring something), conductivity (if applicable) and logistics (how much extra will the logistics cost). The price of some equipment includes a hefty logistics fee that needs to be considered in the overall cost of the equipment.”
IDN-owned practices
The landscape for equipment buying and selling is changing as physician practices get acquired by health systems, says Juhas. “Independent physicians are either buying nothing or used equipment first. Some groups do some investing, but they are usually the bigger ones. Hospital systems are looking at two-tiered standards, in some cases: one standard for the hospital and another for their non-acute facilities. If hospitals do buy a practice, they usually refresh the office and standardize certain pieces of equipment.”
Mosley agrees that the acquisition of physician practices by health systems has had a dramatic effect on equipment selling. “This evolution has moved the purchase decision up the corporate ladder, which has added complexity to sign a purchase order,” he says.
“Economies of scale come into play, because hospitals and health systems have increased opportunities for added value than a single physician-owned practice. Larger entities can leverage economies of scale with equipment standardization for volume purchases, improved cross-utilization and shortened learning curves for staff. On top of the internal benefits, the hospital or health system may have access to more favorable contract pricing and/or direct manufacturer access.”
Internet and the competition
Steve Ervin, national sales manager for Henry Schein Medical’s equipment specialist team, believes the growth of the Internet has had a significant effect on medical equipment selling.
Today’s online equipment buyer can scrutinize equipment options from many suppliers, he says. It’s up to the equipment rep to emphasize to his or her accounts the hidden costs associated with online purchases, such as delivery, installation, service and training. “Oftentimes, these things aren’t disclosed upfront [on the Internet], nor are they asked about.”
As physician practices continue to get acquired by health systems, physicians and their office staff may need guidance or key information from their equipment rep, continues Ervin. They need to know, for example, if the equipment they are buying is interoperable with the practice’s – or health system’s – electronic health record system. Data collection and the transferring of data are crucial in the changing health environment.
As more decision-makers are involved in the budgeting and buying process, the rep may need to help the recently acquired practice obtain and review the details of the equipment being purchased, such as shipping, service and warranty information or specification sheets, says Ervin. The rep also needs to share with office managers and doctors the existing standardization decisions that may have occurred regarding equipment as they work through the budgeting process.
The GPO: Partner or not?
Group purchasing organizations play a big role in equipment buying today, according to observers.
“I would believe that equipment sold through GPO contracts has increased over the last five years based on the growth of GPOs,” says Mosley. “As GPO membership has increased and the drive for GPO compliance has increased, this would drive equipment as well. I have also seen support for this observation based on input from equipment manufacturers.”
Says Moorman, “I believe it is obvious that [GPO involvement] has increased, and increased dramatically. The biggest change for a distributor rep is that price is transparent and no longer an advantage. That requires a very different approach to the customer.
“If we can truly impact the patient experience and patient satisfaction, and if we can truly improve outcomes, drive efficiency, improve patient and caregiver safety, etc., the customer will invest at a higher dollar amount. Keep in mind you have health systems that have objectives to reduce cost/spend by millions of dollars. They can’t get there with another 2 percent discount on supplies and equipment. There are bigger costs in that health system than medical equipment spend. Understand how you impact those costs and you become a great partner to invest in.”
Juhas says that Claflin has also found that customers’ reliance on GPO contracts is increasing. “We align ourselves with the GPO reps in all of our major accounts. They are part of the supply chain in our world and are part of that team for the customer.”
“There is a greater amount of interest from the customer in trying to be GPO-compliant,” says Scott Manecke, vice president, capital equipment group, Henry Schein Medical. “We continue to see the percentages of our overall customer base increase as far as those tied to GPOs.”
That is particularly true for larger health systems and physicians whose practices are owned or affiliated by them, he says. “They are more interested in ensuring GPO compliance, and oftentimes, that philosophy is being driven down from the corporate office of the IDN.”
“Our reps are encouraged to take advantage of local GPO partners when making their sales calls,” says Ervin. GPOs can play a critical role in the construction and furnishing of new offices, he adds. “I’ve seen more contracts for equipment from GPOs than I have in the past. They are a new partner to work with and to help us attract new customers.”
Caveats
No one said selling equipment is easy. Mistakes will be made.
“Probably the biggest mistake made by distributor reps is not focusing on solving the customers’ needs or problems,” says Mosley. “Capital equipment can be a solution for many needs, from patient care, patient satisfaction, or financial benefits. Equipment can serve all of these needs, but addressing the most salient needs makes it easier for the customer to make the purchase decision.”
Moorman believes that selling categories of products can take the distributor’s focus away from the customer’s true equipment needs.
“Distributor salespeople have been trained to sell categories of products,” he says. “Virtually all of distribution has category managers, who are responsible for various manufacturers’ product lines.
“The reason for category management is certainly understood, and it is not an easy job for a distributor category manager to manage multiple manufacturers. That being said, what a distributor brings to a customer should be the best possible solutions with a manufacturer who truly understands the medical space they play in. One who can really deliver to the end user the solutions they need.”
Says Juhas, “Many of today’s distributor reps don’t have the technical expertise nor do they have the time to spend on the extra detail required to do equipment selling right.” Successful equipment reps are hands-on, savvy about technology, and pay a great deal of attention to detail, she says.
Juhas recalls one competitor who gave a customer a quote for an exam table – but neglected to include the upholstered top. Not surprisingly, its bid came in lower than that of Claflin. “Once we pointed that out to the end user, they sent an email out to all of their peers and told them to use us for this kind of equipment in the future. We knew what we were selling!”
Successful reps need to be independently motivated and willing to attack the market, says Ervin. But lone wolves aren’t wanted.
“Healthcare has become so complex that going it alone oftentimes means you’ll overlook opportunities, under-penetrate the customer, or quote pricing too soon,” he says. “At times, you may only be talking to the office manager, but there may be three or four other decision-makers you weren’t even aware of.
“The team selling concept is something we strive for,” he says. “Our specialists assist the traditional sales rep, and together they help the customer make the most sound purchasing decision.”
Equipment reps – like their med/surg counterparts – need to transition from the transactional approach of selling to a more consultative approach that builds trust and provides value to customers, adds Manecke. “There will always be those transactional opportunities, where the rep walks in and the customer says, ‘I need an EKG machine.’ But at Henry Schein, our strategy is to educate the sales team on how to be a trusted advisor so that our customers can rely on us to offer a broad portfolio of solutions that help meet individual practice needs.”
When is the best time to sell equipment? How about now?
Traditionally, providers get highly motivated to buy equipment toward the end of their fiscal year, because they don’t want precious budgeted dollars go to waste. To a large extent, that is still true, according to those with whom Repertoire spoke. Distributors should plan accordingly. But waiting until Q4 is waiting too long.
“The smart salesperson knows when all his/her customers’ year-ends are and starts six months ahead of time to create needs for capital equipment,” says Midmark Vice President of Distributor Relations Dick Moorman.
Steve Ervin, national sales manager for Henry Schein Medical’s equipment specialist team, points out that physician practices are so preoccupied throughout the year with their day-to-day patients, practice operations and professional conferences, that they have little time to think about year-end equipment purchases and tax implications…until year-end. “If our sale reps have done their due diligence in providing equipment solutions, [physician practices] will start to make those decisions about what equipment to invest in and how to get it in the practice before the end of the year.”
Says Scott Manecke, vice president, capital equipment group, Henry Schein Medical, “When mid-November approaches, it’s often a race to the finish, as practice owners have a heightened awareness of the tax-saving benefits, which results in a greater impact on equipment purchases in the fourth quarter.”
The fourth-quarter budget crunch continues, says Ben Mosley, director, vendor marketing and programs, NDC. “For the owner/operator who has tax planning or Section 179 incentives, they have to get the equipment in use before year end. For the larger corporate entities, there is incentive to spend budgeted dollars before year end.”
Section 179
Section 179 – that part of the IRS code that allows businesses to deduct the full purchase price of qualifying equipment (up to $500,000) in the year it is put into service – remains a motivator for many equipment purchasers, especially those in physician practices.
“Section 179 and [disabled access tax credit] Code 44 are still effective selling tools to the right audience,” says Moorman. “That being said, a salesperson needs to qualify their statements by saying something on the order of, ‘Consult your tax advisor before taking action on any advice given around Section 179 and Code 44.’ No salesperson should be seen as giving tax advice to their customer.
“Keep in mind no one cares how much something costs, nor about the tax savings possible, until they have decided if they want it or need it. Creating ‘the want’ or ‘the need’ is a much more effective selling proposition.”
The Section 179 deduction is not much of a selling tool for Claflin Medical Equipment, says Cindy Juhas, chief strategy officer. “We typically work with medical systems and IDNs. They buy equipment because they are expanding, remodeling or building something new. The dollars are budgeted and part of their growth strategy.”
Says Mosley, Section 179 continues to be an effective selling tool for the customer who is a practice owner. “This deduction offers tremendous benefits, but it has been around so long that it may not offer the urgency to ‘buy now’ as it once had. The $500,000 deduction limit has been in place since 2010, so telling your customer that it may not be available next year may not be the best strategy.”
Manecke says, “Now that a definitive amount – $500,000 – has been implemented and hopefully will stay in place for many years to come, we’re hopeful that will eliminate the fourth-quarter rush.” No longer will buyers be kept in suspense until mid-year or later to find out whether the deduction will be in place, and if so, at what dollar limit. “People were hesitant to go down this road [of making equipment decisions] because of the uncertainty,” he says.