The current healthcare and surgical environment are continuing to pressure hospitals to reduce costs because every dollar saved drops straight through to their bottom line.
The inevitable is happening as hospitals increasingly move towards a rep-less model or using contract reps to reduce costs and overall traffic in the operating room (OR).
On the other hand, medical device manufacturers need to seek out new opportunities such as contract sales and case coverage support to maintain a mutually beneficial relationship with hospitals.
Contracted Medical Device Sales Reps and The ‘Rep-less’ Model Explained
Rep-less Model: This model eliminates the sales representative from the OR and replaces them with hospital personnel.
How it Works:
The device manufacturer sells their equipment directly to the hospital at a significant discount of 40-50% and with no sales representative support.
The hospitals that purchase these products then hire and train their own staff to perform the sales and support functions.
Examples of companies using the rep-less sales model are Royal Oak Medical Devices, Renovis Surgical Technologies, Cardinal Health in partnership with Emerge Medical, Microport Implant Partners , and Smith & Nephew Syncera.
Contracted Medical Device Sales Reps: Manufacturers align with a third party like Rep-Lite, who can provide the technical know-how, reduce overhead, and streamline sales and support processes.
How it Works:
The thing is, with the rep-less model, the hospital staff is required to fulfill the role and function that is currently being provided by these highly trained and skilled individuals.
But with the contract sales rep model, the contractor is the one who handles everything from HR, management, recruitment, to sales and technical support.
First, Rep-Lite conducts meetings with the manufacturer to define parameters of coverage and identify hospital targets.
Then, Rep-Lite builds out complete structure of the program and hire techs. Manufacturer begins training process for new techs and they are introduced to hospital staff.
Finally, the device contract sales reps go through needed hospital orientation and are incorporated into OR team.
Under this model, the medical device techs are aligned with the manufacturer’s operational management team so the program is really customized to the hospital’s specific needs and challenges.
Rep-Lite as a Disruptive Innovator
Driven by cost pressure and the excessively influential reps, some hospitals kicked out the sales reps and argued for lower prices. They relentlessly focus on unit price but they still end up paying for SG&A costs, and personnel training related costs.
While it’s true that moving to buying medical devices direct from manufacturers at a substantial discount can yield huge financial benefits for hospitals, investments must still be made in the proper tools and processes to replace the medical device reps.
Hospitals must invest in training for surgical techs to acquire the knowledge and to take place in the OR. They must also put in place systems to properly manage the devices that were previously consigned, or many of the financial benefits may never be realized.
Vendors are forced to remove excessive sales expense from the price equation because offering lower cost models to the hospital erodes revenue growth and profitability—results that investors don’t like to see.
The solution? Leave it to the contractor to provide medical device sales reps instead of investing too much time and resources for hospital staff.
A survey conducted by researchers at New York’s Albany Medical College found that 88% of 43 device reps said they had provided verbal instructions to a doctor during surgery, while 37% had participated in a surgery in which they felt their involvement was excessive, often because the surgeon lacked sufficient expertise.
Today’s device sales rep delivers a huge amount of extended services to the hospital. Leading device vendor reps reveal that most of their time can be spent not selling but rather delivering services that hospitals value, and thus may be willing to pay for, including:
- In-servicing and training department staff on the use and maintenance of the product
- Attending cases and providing real-time consulting/solutions to unanticipated problems
- Cleaning and sterilizing products
- Ordering, shipping, unboxing and stocking products on shelves
- Arranging trays and kits, and more
As with the ‘rep-less’ model, this is a big change in the culture, and no one should make that change easily. You have OR staff who’ve only known one way of doing things, doctors who are afraid to try it and administrators worried that docs would turn on them.
Consider the repositioning of the manufacturer’s relationship with the hospital by working with experts to manage these aspects of case management.
Working in collaboration with the program such as Rep-Lite is a win-win situation for both manufacturers and hospitals, as specific devices and systems are placed based on surgeon preference.
Revenue and Growth
The off-loading of HR burden and case management support will have a significant impact on the manufacturer’s revenue as they focus more on their sales strategies and reduce the allocation of resources to providing technical support.
For manufacturers who employ the services of a distributor, this move can provide clear cost saving in addition to creating a more open and direct sales channel to hospitals.
Mercy Hospital Springfield in Missouri (spine devices) and Loma Linda University Medical Center in California (orthopedic implants) have gone rep-less and by all reports have cut their device spend materially.
However, they’ve also hired full-time hospital technicians to handle the services once delivered by the quota-carrying device sales rep. So the rep-less models will require additional spend in either hospital employees or purchased services.
The Rep-Lite approach is very cost-efficient that it presents a lucrative opportunity for equipment vendors to grow in product development, advancing and improving technology, and pioneering within the medical devices industry.
Medical device manufacturers will be free to focus on what they do best –creating and selling equipment which will harness the greatest benefit to everyone
Questions to Ponder
Before a hospital can go rep-less, they must be able to consider many factors. Here are some of the most essential:
- Will patient outcomes be equal to or better with a new model?
- Will the monthly savings generated be sufficient to warrant the change and is it sustainable?
- What challenges must be anticipated and then overcome when the hospital goes to a contract model?
- How will the change affect the culture within the OR?
- Can the incentives be aligned properly to create a win-win environment?
Hospitals must be prepared for the journey by having the right tools in place to replace the sales reps when gone. Until then, they must be smart enough to use a reliable and cost-effective system that will become even more important as cost and traffic reduction initiatives become more and more prevalent.
With 27 years of experience in various medical device industries, Rep-Lite has a proven track record of success. Rep-Lite is changing how manufacturers accomplish business in the current environment by providing cost-efficient solutions using overhead reduction revenue generation.
Call Us at 1-833-REP-LITE or Schedule A Consultation to learn more about our step-by-step process.
Rep-Lite only provides high-level sales and technical support to surgeons and hospitals and works closely with manufacturers to customize the program to their specific needs and challenges.
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