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Continued: Schafer: Maturing medical device industry must change

  • Article by: LEE SCHAFER , Star Tribune
  • Last update: May 21, 2013 - 7:57 PM

These reps had to be skilled enough technically to teach physicians and solve problems with new technology, skilled enough socially to build deep relationships with doctors, and skilled enough in business to negotiate purchase orders and supply contracts.

But the nature of the device customer is changing rapidly. Physicians are more comfortable with devices of all kinds and need far less hand-holding.

They are also losing their ability to influence purchasing decisions. Executives at hospitals and other health care systems are increasingly decisionmakers, and they continue to narrow their list of vendors and seek more attractive business terms from the vendors they keep.

Once the purchasing decision for the year is made at a big health care provider, say, 80 percent of the annual buy will go to Medtronic and 20 percent to St. Jude Medical, what is left for the high-cost sales rep to do?

“Do I still need to have a specialized physician sales rep?” Gunderson said. “Maybe I need a specialized physician educator. But that person doesn’t make $350,000 a year.”

You can understand management’s reluctance to embrace a lower-cost model for selling, since getting rid of your experienced salespeople is not exactly a proven formula for making sure this year’s sales goals are met.

“Imagine yourself in the position of [managing] the medical device company,” said Peter Lawyer, senior partner and managing director in Minneapolis for the Boston Consulting Group. “You really don’t have tremendous insight into individual accounts. That relationship has always been held by the individual rep. So changing that is an incredibly scary proposition.”

Lawyer hesitates to call the traditional model dead, but he said he has advised medical device clients that “it’s much better to get ahead of the curve on this one.”

That’s advice that Dann has also offered, speaking in a couple of different forums over the last year.

“It’s not that this is some magic and I spewed out something no one knows,” he said. “The difficulty is in doing it.” • 612-673-4302

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