HIDA Chairman Mike Orscheln makes a case for the service component of innovation
Mike Orscheln
Right product. Right place. Right time.
Distributors have always striven to provide all three. And they always will.
But today, providers want more, and distributors must deliver, says Mike Orscheln, CEO of Performance Health and 2017 chairman of the Health Industry Distributors Association.
“Customers’ extreme focus on outcomes and shifting payer models have forced distribution to continue to innovate to ensure practitioners are focused on patient care and satisfaction scores,” he says. “The customer wants a seamless supply chain that ensures the supplies they need to deliver great outcomes and high patient satisfaction scores are always there, 24/7. Distribution plays a huge role in this.”
Embrace change
Orscheln has been around the block. “I moved nine times in my first 11 years in healthcare,” he says.
All that moving around taught him one thing: To succeed, you have to embrace change. “Focus, execute, be first to the market, focus on your customer and meet the customer’s needs in a differentiated manner,” he says.
Orscheln started his healthcare career in 1981 with American Hospital Supply (acquired in 1985 by Baxter Healthcare). He left the company to become vice president/general manager of healthcare for Moore North America, a $1.5 billion company involved in print and digital technologies. In June 2000, he joined Cardinal Health Medical Products and Services as vice president of sales for e-business. He became vice president and general manager of Cardinal’s ambulatory care business in October 2001. In 2007, he stepped away from distribution to become president and CEO of hearing-aid manufacturer Phonak US LLC.
“It was a great experience,” he says, in reference to his five years at Phonak. “I learned a ton about innovation. We were doing new-product launches every six months. Seventy percent of my revenue was from products launched within the prior 12 months. Speed to market and innovation were critical.”
He got reconnected with HIDA when he joined Patterson Medical – now Performance Health – in 2013. He was surprised – and pleased – with what he discovered.
“HIDA and the industry have re-invented themselves in many ways,” he says. “I like what Matt Rowan [HIDA president and CEO] and the board of directors have done to increase collaboration across the industry, using HIDA as a conduit.”
Stepping into the HIDA board of directors, he noted that its members weren’t afraid to talk about the tough issues facing the industry – industry dynamics, consolidation, etc. “HIDA has become a confident and collaborative entity, and leads the industry by example,” he says.
The value of distribution
Uppermost in the minds of HIDA and its members is the continual need to demonstrate the value of distribution to manufacturers and providers alike, he says.
“The service component of innovation is alive and well in the distribution world.” Distributors continue to demonstrate that spirit through innovations in logistics, such as stockless and just-in-time programs. Through consolidation and by improving their internal processes, distributors have become more efficient, driving “massive cost reductions that have been passed through to healthcare institutions, to help them compete,” he says. “This will only become more profound in the future.”
Despite what happens in terms of healthcare reform on Capitol Hill, Orscheln believes at least three trends will continue to drive healthcare for the foreseeable future, and that HIDA members can play a role in each:
- Medicine will continue to drive toward less-invasive protocols.
- Outcomes will continue to be the primary focus for providers (and payers).
- The U.S. healthcare industry will continue to move away from its traditional emphasis on “sick care,” and instead focus on “health care.”
“The best way to reduce healthcare spending is not to spend healthcare dollars,” he says. No, that doesn’t mean denying care to people who need it, or simply continuing to cut product prices. Rather, it means focusing on keeping people well, and continuing to improve supply chain processes.
“HIDA distributors must continue to take costs out of the supply chain through innovation and efficiency, and leveraging their existing product portfolios to offer better value – not necessarily lower prices.” For example, in the physical therapy sector, companies such as Performance Health can bring to the market technologies that help caregivers monitor patient compliance to PT protocols at home. “When I do my PT at home versus two or three times per week in a clinic, my condition improves faster,” says Orscheln, who was recovering from a ruptured Achilles tendon when he spoke with Repertoire.
As the government and private payers step up bundled-payment programs – designed to coordinate care among acute-care and non-acute-care providers – distributors that sell into just one market (e.g., hospital, physician, long-term care, etc.) may have to adapt, says Orscheln. “Either they change their capabilities to be able to serve the continuum, or they partner with others to deliver to the breadth of healthcare settings,” he says. Performance Health is an example.
“We are adopting an omni-channel approach to the rehab, recovery and sports medicine markets,” he says. “We want to make our products available where the consumer wants to purchase them – whether that is a hands-on practitioner buying products for inpatient or outpatient rehab, a consumer who needs our products to perform exercises at home, or a healthy athlete wanting to buy our exercise products.”
Central to the continued success of the distribution industry are the reps who call on customers, says Orscheln.
“As challenging as this market is, and the unknowns of the new administration, our customers need distributor reps to lead them through the challenging and changing landscape of the markets we serve and use their own unique creativity to deliver innovation outside of what your company’s stated value-adds are.
“Sit down with your customer and brainstorm/dream about what you can do together to deliver care to patients that is outcomes-driven and measureable. In my career, I have seen more innovation come from the field sales teams than anywhere else. Listen; take time to think about what your customers are telling you; and get creative.”
The year ahead
As 2017 HIDA chairman, Orscheln is committed to increasing funding of the HIDA political action committee, “given the impact the government relations team has had on topics that have had a very negative impact on our industry, like the repeal of the medical device tax.”
He will continue to foster the networking aspect of HIDA, which, “if used to one’s advantage, can have a very powerful impact on the success of a company. I am very bullish on HIDA’s value proposition…and I am committed to recruiting more new members in 2017 than we have in the recent past.”