Medsider: Learn from Medtech and Healthtech Founders and CEOs - 4 Can’t Miss Opportunities That All Medtech Companies Need to Consider

Episode Date: September 27, 2013

According to a recent L.E.K. survey of hospital executives, 56% of the respondents haven taken steps to reduce medical device sales rep access to their facilities. In fact, the CEO of an Illinois hospital stated, “We’re constantly trying to limit the sales reps…We want to see what they’re selling before they get a hold of...[read more]Related StoriesSubstantial and Sustainable – 2 Words That Medtech Companies Should Get Used ToSocial Media Best Practices for Marketing Medical DevicesAre Medical Device Models the Key to Building a Lean Medtech Startup? 

Welcome to Medsider, where you can learn from experienced medical device and med tech experts through uncut and unedited interviews. Now, here's your host, Scott Nelson. According to a recent LEK survey of hospital executives, 56% of the respondents have taken steps to reduce medical device sales rep access to their facilities. In fact, the CEO of an Illinois hospital stated, we're constantly trying to limit. at the sales reps. We want to see what they're selling before they get a hold of a doctor who brings it in without our knowledge. At least one answer is obvious, right? Hospitals are clearly not looking for advice for medical device sales reps. So what solutions are they looking for? Here's what a director of purchasing in a Minnesota hospital wants. We would really like

clinical outcomes data. For example, we want to know if a knee replacement that costs two times as much as a competitor's knee is actually going to last double the time as the competitor's model. In other words, hospitals want to understand the cost-benefit analysis for the medical devices they purchase. That's one idea of Med-Het companies need to embrace, but what are the other three? In this interview with Jonas Funk, managing director in L.E.K.'s Chicago office, we learn about the four-step process that medical device companies should consider in light of the current health care environment. Here are a few of the points that we're going to cover in this interview with Jonas. What are the most pressing challenges that MedTech executives are facing right now? We're going to learn and get an overview of LEK's most recent strategic hospitals priority study, how it was conducted, who was involved, etc.

In the pursuit of customer excellence, what are the four key questions that med tech companies need to answer right now? Are hospital administrators the new KOLs? And what is the one concept that medical device companies need to implement right now? Of course, there's a lot of other subjects that we're going to cover in this interview, but before we did, hand listening to these brief two messages. First, to get free email updates when another Medsider episode goes live, simply go to Medsider.com forward slash free. We don't send emails often, but when we do, they're full of valuable content.

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That really helps us out. Okay, for you ambitious doers, here's your program. Hello, everyone, it's Scott Nelson, and welcome to another edition of MedSider. And for those of you who are new to the program, this is a show where I interview, experienced med tech and medical device thought leaders in an effort to learn as much as possible and then hopefully implement one or two big takeaways. And today's guest on the program is Jonas Funk, who is a managing director and partner in L.EK Consulting's Chicago office.

He has more than 15 years of experience in L.E.K. And has directed hundreds of consulting engagements, primarily focused on growth strategy and mergers and acquisitions support within the MedTech and Life Sciences Verticals. Jonas also co-founded the Tokyo office and has assisted. dozens of clients in developing their Asian strategies. So without further do, welcome to the program, Jonah. Great to be here, Scott. Thanks. Okay. So Jonah, let's start here.

You have the opportunity to consult with, discuss with, and probably in a lot of cases present to a lot of MedTech executives and decision makers. So in your opinion, what do you think are the one or two most pressing challenges that those folks are facing right now? Yeah. I mean, I think the biggest challenges that they face kind of relate to how to navigate some pretty substantial changes that are occurring in the healthcare industry, and, you know,

particularly with respect to transforming their organizations to be successful, to be successful med techs going forward. And, you know, fundamentally what we're seeing is a shift from, you know, you know, the old fee-for-service world to a new world where outcomes are going to be much more important and costs are much more important. And the old model that MedTechs were very successful with is not going to be successful in the future. So the kind of, you know, making great products and convincing clinicians to use them worked well for a long time, but given some of the macro changes that we're seeing, that model is very much changing.

and the challenges that a lot of our clients are facing is how to essentially, you know, respond to those changes given that a lot of the historical focus and capabilities have been in, you know, kind of areas that might not be as well aligned with the success in the future. So that's probably the high-level summary of what's keeping them up at night. Got it. And we'll probably, we'll definitely get a chance to dig into some more, some more details for sure. But you've been with L.E.K. now for quite a few years. Does it seem like, before I ask you a little bit about your background in L.E.K. in general, does it seem like now is just a more crazy time than it ever has been within sort of the healthcare space? Yeah, I think that's right. And I think some of the, you know, changes are actually happening. faster than the healthcare industry has been used to.

And so it is required for executives to be able to respond faster than I think was required in the past. So, yeah, I think that's right. A lot of changes, both from a reimbursement, a regulatory perspective, are out there. But at the end of the day, it's hitting the manufacturers in very specific and important ways that I think they're collectively trying to get their heads around and respond to. Got it. Okay, so we're definitely going to dive into the release of your 2013 hospital priorities study. But before I ask you about that study and then some of the ramifications or outcomes that you

uncovered in this most recent study, give me in the audience a little bit of an overview about your background and then also LEK in general. Sure. So I think you summarized my background pretty well. I've been doing this for about 15 years. I spend pretty much all of my time in what we call the MedTech space and helping our med tech clients grow and develop strategies to grow. LECA is a global management consulting firm, about 1,000 people worldwide offices in 12.

20-plus countries. And our hospital survey that you alluded to is our fourth annual hospital survey. So we've done this four years in a row. And the goal of the study is to essentially get a good sense of what hospitals are thinking in terms of their purchasing patterns and their needs with respect to med tech companies. And so we've been surveying and monitoring those. needs and perspectives for the last several years to get a kind of ongoing sense of what

their wishes are of their suppliers as well to get a better sense of how some of the industry changes are manifesting in kind of the hospital's minds. Got it. Okay. And I want to ask you a little bit more about how this particular study is conducted each year. But in regards to your background, if we have time, I definitely want to ask you about your time in Asia because that's definitely interesting. So hopefully we'll have time for that. But one question in regards to LEK, your LEC's consulting sort of services, you span a lot of different verticals. It's not just med tech and life sciences, correct? That's right. But in the U.S., almost 50% of what we do is, is health care related. And within

healthcare, we have sectors that are focused on the payers or the providers. biopharmaceutical companies, and then for me personally, I'm focused in our med tech practice. Okay. Working with a lot of the big medical device and diagnostic players. Got it. Okay. So let's transition to the 2013 hospital study. Can you provide us with a little bit more detail in regards to, you know, how it's typically conducted, you know, who's involved, and maybe more specifically, where are you getting the responses from in terms of the role, you know, the role at the hospital that, you know, a particular

person would play. And then, and then, you know, let's talk about some of the, and then we'll segue sort of into some of the key outcomes of the study. Yeah, of course. So it's, for the last four years we've done it, and it's been focused on hospital administrators versus clinicians. So very intentionally, we've been focusing on the administrators and about 200 respondents. to our survey across representative mix of hospitals, big and small, academic, non-academic,

urban, rural, and so on and so forth. And of the respondents, about 100 of those are C-suite, so CEO, CFOs, C-O's, versus the other 50% that are other administrators that are involved in the purchase decision-making process. So VPs of procurement, materials managers, and people basically end up purchasing functions at hospitals. Got it. Okay. And you mentioned just that's an interesting sort of side note, but you touched on it just real briefly. These are responses not just from, you know, larger, you know, 500 plus bed hospitals in major metropolitan cities.

You're also getting responses from more, you know, from the outlying community hospitals as well. That's right. That's right. It's intentionally representative mix of the overall market. Got it. And your hospital priority study, has it always focused on administrators versus or in contrast to clinicians? It has, although I think over the last year or two, we're particularly, I'd say, glad that has been focused on administrators because several years ago, we saw the beginning of a trend. trend for greater influence among the administrators and purchase decision making.

So we thought it would be a good group to start surveying. And indeed, over the last several years, we're seeing a very pronounced trend for a greater, greater involvement and influence of the administrators in the decision making process and their respective needs for kind of more economic considerations, not just the clinical considerations that, you know, we've typically been used to among the clinician stakeholder groups that have been the primary call-point targets for MedTech companies for a long time. Yeah, and that's why I'm pretty anxious to get into the outcomes of this study and what

it means for MedTech and medical device companies. But I love the fact that it's administrator-focused because, you know, so many times there were KOL or key opinion leader, you know, within the MedTech space is often thought of as the clinician or the physician. But more so now than ever, you know, it's going to be probably, you know, administrators within large health systems and, or not just health systems, but administrators in the hospital, you know, in large hospitals as well that that are, you know, going to be considered KOLs, which is, you know, kind of an interesting concept if you're, if you've been sort of entrenched in med tech for a while. Yeah, I think that's generally right. I don't want to kind of overstate it. The clinicians, in person, you know, particular, you know, leading clinicians and key opinion leaders and department heads certainly have, you know, a point of view that they will share that can be, you know, very influential

and specific departments or for specific products, but the general trend that we're seeing is kind of gradual migration from kind of the, you know, the clinician chooses what product he or she uses to, at the minimum, you know, kind of a conversation or, you know, value analysis committee decision that involves administrators where there's much more scrutiny on, well, what's the benefit here that we're potentially paying more for? And we're seeing, you know, obviously the clinicians becoming employees of hospitals and hospitals systems. So their kind of independence and kind of ability to kind of dictate what products they want

to use is also kind of declining. So there is this trend that we do think is important, but I don't want to. want to give the suggestion that it's completely, you know, outside of doctor and clinicians. Right. Yeah, no, no, I wholeheartedly agree with you. And anyone who thinks that, you know, that physicians have no impact, I mean, it's foolish. In fact, they still have, in my opinion, they still have a lot, if not the majority of the influence. But with that said, you know, if you, you know, they just have less arrows in their quiver, you know, to sort of use, you know,

when they're in some of these value analysis sort of meetings and whatnot. But anything else about the survey that stands out before we kind of get into some of the key outcomes? No, I think we've covered the main points of it. Okay, so let's jump to sort of the four key questions, I said the quay, the four key questions, I should say, that med tech companies need to answer. in light of, you know, the data from the survey as well as just your, you know, your research and sort of insight in dealing with the space.

Yeah, sure. So there's, I think there's four key questions that we kind of identified that I think together help kind of illuminate the need for companies to kind of go from just thinking about excellent products, to be thinking about what we call customer excellence in addition to product excellence. So the four questions that kind of relate to customer excellence is, is first and foremost, what problems can we solve, or at least help solve, for our customers? So, you know, obviously, you know, every company has a portfolio of products and,

There's a range of different things that those products do, but often it can get very muddled, particularly from the point of view of a hospital administrator that's looking at a large number of potential partners and that's trying to find a smaller number of partners to work with more closely. And, you know, it's really helpful if those partners can be very clear about what problems they're solving. Is it they're going to help reduce hospital-acquired infections, or are they, going to help lower readmission rates for certain types of patients like heart failure patients? Are they going to help improve productivity or efficiency in a certain department like the OR or the CASLAB? Are they going to help reduce medication errors? There's a whole host of

problems that hospitals have and having good clarity about what problems a med tech company is really all about solving is a pretty critical first. question to answer and it's not to not to suggest that there isn't multiple problems that a single company can can be trying to solve but I think that's a good starting point what are the key problems that you know you're trying to solve for your customers got it and before you move on to the second one I love the fact that that you touched on this and that that that seems fairly obvious you know figure out what problems are you know customers are motivated to you know to you know to solve that are relevant to you know your exact opposite

offerings. But so many MedTech companies lose sight on the fact that they need to be more clear and communicate better in regards to how their products solve those problems. So I'm glad you touched on that. The second one is, you know, given that problem, what's the optimal solution for that problem in terms of not just the products, but also some of the services that could be part of that solution. and sometimes the optimal solution can involve kind of capability that might be outside of a MedTech sweet spot. And that doesn't mean that that can't be part of the solution, whether it's via acquisition or partnership. MedTechs, we think, are going to need to be more proactive in essentially reaching out, finding the, you know, both product and service kind of extensions to make their solution really come to light. And, you know, a lot of that's going to involve healthcare IT platforms and partnerships

as so much is kind of moving towards a need for better metrics and monitoring of outcomes. So just having a good product isn't good enough if you can't help monitor and measure its outcomes. And so, you know, a closer review of what actually is the solution and what appropriate products and services should be part of that is the second question. Got it. And a recent example of that would maybe, tell me if you agree with this, would be Medtronic's recent acquisition of, is it Cardiocom, I think, was the company?

Would that be an example of this? Yeah, that's a perfect example. I think Medtronic is probably taken the lead in communicating, at least, the broader goal of becoming more of a solution player, of expanding into more healthcare services, recognizing how the landscape is shifting, and Cardiocom, which is a company that Medtronic just acquired, I think it was just a week ago, maybe two weeks ago, to help with remote monitor. of patients for heart failure and ultimately for other chronic disease states as well. That kind of bridges the gap between acute settings and non-acute settings and ultimately metronic, I think rightfully, is positioning itself to be a broader kind of solution player that isn't just dealing with the problems within the hospital but also is helping kind of

take it outside of the hospital, which I would expect to be attractive to, you know, COs and more integrated systems, you know, as they take on more accountability and care a lot more about things like readmissions for heart failure patients. Got it. So, yeah, that's a great example. You know, others, I like the striker acquisition of assent, you know, a reprocessing company that, you know, takes devices and reprocesses them to give hospitals an option for a lower-cost solution for its instrumentation in the OR. So, you know, kind of giving not just the existing

products, but a reprocessing service on top of that is another good example. BD made an acquisition of a company called Cato, CATO. That's a software company, you know, kind of outside of BD's, you know, kind of traditional core, but again, kind of expanding their reach and broadening their solution to help hospitals reduce the risk of medication errors. So just a couple of examples of companies that are taking some steps outside of their comfort zones, but expanding their offerings to be a bit broader solutions that ultimately I think will be kind of the way that all companies will need to be successful. Got it.

Those are great examples. And in fact, I don't know when BD acquired Cato. So I'm not sure when that was, but that's another interesting example. So good, let's shift to that third kind of key question. Yeah, so we talked about knowing what your problem to solve is, that the first one. The second one is around understanding what the optimal solution should be. And the third question is, well, how much value can you actually bring to your customers with that solution and how do you quantify it?

Because increasingly the threshold for kind of success or the need that the hospitals are asking for is just a much higher threshold for how does this solution actually help me. So, you know, just saying that your products or solution is going to help reduce, say, hospital-acquired infections isn't good enough. You have to actually be able to show very specifically,

Well, these are the types of infections that the solution will address. This is the frequency by which those infections will be reduced. This is the cost of those infections. Being very clear about what that value is that the MedTech company is bringing to the customers is really becoming much more critical as hospital customers and administrators are just putting, you know, looking at things in a finer light and needing. to have a strong economic argument to justify any sort of significant change and certainly to justify any sort of solution that's priced at a premium.

Got it. There's, you know, we're talking a lot about economic value, and I'm emphasizing that over kind of the clinical value because I think MedTech companies have historically placed a lot of emphasis on the clinical value in communicating that to the clinicians. not suggesting that that clinical value is still important. I'm just kind of making the point that increasingly the need to communicate how much value in economic terms is becoming table stakes as well, even though currently the MedTech companies aren't doing a great job of that.

Mm-hmm. Yep. Great. That makes sense. And so let's move on to that fourth major question. Yeah. Well, that's just an extension of that. the last question about the value proposition, and that's, you know, what's the best way to

communicate and deliver on that value proposition? So, you know, what types of documentation or evidence and tools can help the MedTech company focus and clarify the value proposition to the right stakeholders? So in many instances, you know, the stakeholders might, that benefit, the stakeholders that might benefit from a solution might be in multiple different departments and have very different needs and kind of perspective. So, you know, for example, you know, helping reduce medication errors or infection, let's say infection control, you know, that can help, you know, administrators reduce costs

associated with those H-AIs. It can help kind of the risk management people within the administration. And obviously, it can help the clinicians and, and, um, and, and, um, and, and, um, and, and other nurses and doctors as well. So a bunch of different stakeholders will benefit, but actually being able to put together a clear set of documentation and tools that appropriately focused the right message

to each of those stakeholder groups in their terms is the last thing that I think Med-Tex should be thinking about in terms of how do they effectively take that solution, define the value proposition, and communicate, define the value proposition, and community. to the right folks. Got it. Yeah.

And like you just said earlier, that fourth key question is basically we've got our sales and marketing arm. How do we take what we've learned and what we feel like hospitals need and the problems that we can address? How do we actually communicate that effectively? Yeah. And one of the things that, you know, going back to your earlier question about kind of the challenges that executives are facing, I mean, there's existing large established sales

forces out there that have been doing things well for a long time, and it's hard to suddenly shake that up and say, well, now we need to be talking to these stakeholders and be making these different types of arguments and messaging, and that's just a bit of a sea change that takes some time for companies to transition through. And while on that topic, I presume you think you see that as a slow, transition but but maybe can you can you speak to like how you see that transition actually taking place is this a is this a you know taking an existing you know sales force you know for example kind of just focusing on

sales for you know for for lack of time versus marketing but and coaching them up to be better better communicate you know communicators or maybe sell to different stakeholders or is that or do you see that transition happening where sales forces are simply reduced or replaced by folks that are maybe more proficient in communicating economic value, for example. Can you speak to that topic? Yeah, I mean, I think it's a little bit of all of the above, and there isn't kind of a single, you know, right solution, but I think, you know, arming the sales organization with the right tools. and a lot of that is the economic tools,

is certainly part of that. And whether it's kind of making changes to kind of the existing people or kind of re- tooling and re-arming those same people, I think is kind of dependent on individual companies and obviously individual people. But I do think there is an organizational element to this as well where instead of having

you know, an army of kind of current traditional sales reps that are relatively kind of product focused, kind of going at the same institution, and frankly often causing some frustration among the administrators and causing, you know, kind of confusing messages for clinicians that are getting a lot of different reps talking to them. I think what we're seeing, at least from our hospital survey is a wish for a more coordinated approach, fewer people, fewer touch points, but much higher kind of value delivered when those coordinated visits are made. And so you might have a single point of contact, you know, for an entire IDN, or at least for, you know, kind of, you know, key stakeholders at large systems that bring in specialists in, you know,

health economics or product specialists or clinical specialists, you know, as needed to help address specific questions with a deeper, kind of more valuable answer versus a generalist that is forced to try to, you know, touch a lot of different stakeholders asking for different things. So I do think there's kind of some structural change in how the sales organizations are deployed and some corresponding rearmament of the tools and messaging that needs to go with that. Yeah, I like that description, a kind of a retooling is probably what we're going to be seeing over the next several years. So using those four key questions as sort of the foundation, let's talk about the kind of the four-step process.

that you feel MedTech companies need to embrace in order to get to that customer, that level of customer excellence. Sure. So the first one is what we call developing a deep understanding of customer needs, and that's obviously related to understanding what problems in MedTech is intending to solve or as customers. You've got to understand your customer's needs, and that's just basic marketing 101. The problem, though, is that a lot of med techs have historically, you know, spent less time on

understanding customers' needs as opposed to trying to figure out ways to kind of incrementally improve products or kind of tweak the products to add additional features and functions, you know, often independent of understanding how those might fit to customers' needs. And, you know, when we talk about customer needs, definitely don't want to give the impression that hospitals are monolithic and all I'll have the same. knees. In fact, you know, there's such huge variation that one of the things that we find a lot of our MedTech clients asking for these days is understanding hospital segments and how is the right way to think about the universe of hospitals out there so that you're not kind of giving the same

solution or the same messaging to a small rural hospital as you are to, you know, a Mayo clinic. they just have a very different kind of set of behavioral characteristics and the need to understand how those behavioral characteristics vary and what the appropriate segments to go after, we think is an important kind of element of understanding customer needs as you're developing solutions to address those problem areas. Got it. Okay. Okay. The second one would be around kind of that optimal solution

for the problem at hand, and what we call here is an integrated portfolio that almost necessarily includes services that help make those products come to life more. And, you know, again, this is not limited to, you know, you don't have to have all of the components yourself as a med tech. You might partner with, you know, a healthcare IT company, or partner with, you know, a health care IT company, or partner with a service-focused company to help provide that. But you're quarterbacking that delivery, pulling it together, and making it into an integrated solution that can actually address that need to reduce hospital-acquired infections,

reduce readmission rates or whatever the problem is that you're targeting. Okay. Do you have an example of maybe what that looks like or will look like if it hasn't been, if it's not, you know, being offered right now from MedTechs? Well, I mean, that's where I think the CardioComs and the, you know, Striker Asense or the BD Cato software acquisitions come into play. I mean, I think you're seeing, you know, companies that are starting to branch out their portfolios in kind of new ways.

But we, LEK, are also seeing our MedTech clients coming to us and saying, gee, what about services? What can we do in services? Are there things that we can do in procurement or inventory management or in clinical decision support systems and analytics that go beyond kind of just the products? And what's the need out there? what are companies that are doing these things today? How can we partner with them or potentially even acquire to offer that broader functionality? Got it. And that's why you mentioned, you know,

maybe a big growth engine, you know, looking in the future is going to be health IT because so many of these, you know, whether it's an analytics platform or a clinical decision-making platform or some sort of economic, you know, economical platform, it's going to be largely driven by technology or by, you know, more specifically by software. So that's why you, I can see that you mentioned, you know, health IT is going to be big, you know, looking into the future. Yeah, or at least data and data analytics, which, you know, everyone knows that that's important and that's obviously where most of the hospital spending

growth is. Most of the spending, you know, a lot of spending has been done on developing, IT systems, now a lot of the money is being shifted towards how do they integrate those systems and do analytics with the data that they have so that it can actually use the data, not just collect the data. So that spend on healthcare IT will continue in the future for sure, but I think the challenge for the MedTech will be to leverage. the data that is useful and help the hospitals convert that into something that can actually

result in, you know, kind of improved efficiency or outcomes within the department or hospital functional areas that those med tech companies are focusing on. Okay. Yep. That makes sense. Great. So let's move on to kind of the, is there anything else to add under this sort of this bullet point of kind of the integrated portfolio and value-added services umbrella? No, I think the next point probably brings it to life a bit more, which is around making very sure that the solution that you are offering is clearly articulated. And it might sound obvious and easy to do, but it's shocking how rarely we see med tech companies do a good job of this.

I mean, in most other industries where you, you know, whenever you make a claim about your value proposition, you often have to back it up and show it. But I think in healthcare it's tricky. And med tech companies historically have not had the need to do so because the clinicians have been very happy to adopt the latest and greatest technology without really kind of putting the, you know, the pressure on to say, well, how exactly is this helping in terms of reducing our costs or improving outcomes in non-clinical ways? So the bar, I think, is growing for med-deck companies to do a better job of articulating the value proposition in economic terms.

A good example here, we've done some work helping a client that had a pre-filled syringe solution that would help hospitals in a lot of ways. So everyone knows that, well, pre-filled syringe solutions are good at helping reduce medication errors. They reduce some of the labor that's involved in preparing the syringes. they can help reduce some types of waste. And there's some other kind of smaller benefits that are out there. But the problem was these benefits accrue to different types of stakeholders, and a lot of these benefits are just very difficult to quantify.

And that made it difficult for our client to be able to actually get the pharmacy directors to approve, purchase. of pre-filled syringes because the pharmacy directors really just cared about their budget and didn't care as much about some of the things that were happening outside of the pharmacy. And it required a robust effort to walk through the process, identify all the points in the workflow where medication errors can occur, what the rate of medications errors is, what type of errors could be addressed by pre-filled syringes,

how much direct cost those errors tend to incur, how much the indirect costs can incur, and turning this into a clear economic model that actually shows how all of those different benefits that in this case, pre-filled syringes, could provide to the hospital that went well beyond just the pharmacy director. And that's the type of exercise that I think

think MedTechs are going to have to do much more consistently to show in economic terms at the end of the day why a hospital should adopt their solutions versus either staying with the status quo or going with someone else's. Got it. Okay. No, that's good stuff. That's good stuff. Let's move on to that fourth step in this process. Yeah. Well, the fourth step then is just is then just taking that clearly articulated value proposition and turning it into the appropriate set of tools and documentation and knowing which people to share that with.

So, you know, for example, even knowing at an individual hospital, who are the right influencers? You know, is it part of an IDN? Is the decision being made at an even more centralized location? what is the right target to go after is often not as clear as it used to be, right? And if the call point in the past was the orthopedic surgeon that was in the ER, but now, you know, there's more centralized decision-making and obviously the IDNs are consolidating and buying up other hospitals.

So it's becoming a little bit harder to know even what, how do you define an account? Who are the decision makers within that account? And then once you can answer those questions, then it's a matter of, well, who are the right people within the MedTech organization that should be calling on those decision makers? And oftentimes we're talking about pretty senior centralized decision makers that are going to need to see

very compelling arguments backed up by economic models and clear value proposition articulation that frankly is not really being delivered today in many companies. So you don't want to develop the value proposition but leave it kind of on the table or trying to share it with people that aren't going to be able to do anything about it. Right. Yeah, that is certainly the clear last step

or in step in the process is taking that data, that value, that message and actually delivering it at the right time and to the right people. And I think if I remember correctly, leading up to this interview, you sent me maybe a different report. And I remember reading a comment from, or maybe it was a couple comments from hospital administrators to that point. You know, they've got like a lot of contacts at med tech companies, but they were, you know, rather frustrated that they would actually prefer one contact versus, you know, versus many, for example. That's right. Yeah.

And that goes back to the kind of, you know, the single point of contact with a set of specialists versus kind of a kind of generalist army that goes after, you know, primarily clinicians. Yeah. And that's obviously in contrast to a lot of, you know, how device companies are organized and, you know, oftentimes divided into the sort of business. units by by therapeutic area but you know maybe maybe that's not maybe looking into the future that's not the best way or maybe the most effective way from an organization standpoint so let's just let's just review because there's there's there's a lot of really good really good stuff in those four steps let's just review those real quick so the first step would be you know you know you know have a deep understanding of what your customers in this case hospitals need not just physical

but you know hospital all key stakeholders basically what they really truly need be able to offer an integrated portfolio of products and in some cases complementary services being able to you know third being able to clearly articulate you know that that value proposition and then you know lastly you know that just to sort of not necessarily sum it up but that kind of the last step in the process would be making sure that you present that data and that that offering to the right folks, to the right audience and the right team. Is that a decent summary?

I think that's right. I think, you know, for someone that might be outside of the MED-deck industry, that might sound just very, very obvious. And perhaps to people within the MET-DEC industry, too. But, again, if you kind of apply kind of a reasonable perspective on kind of how, how MedTech companies have been doing this for the last 30 years, you know, I think it's fair to say that these four steps are often not well executed. So understanding customer needs has not been kind of first and foremost,

having integrated portfolios that actually kind of holistically address a problem in a very kind of customer-centric solution-oriented manner, not often well executed. Understanding and articulating the economic value proposition, very unusual and very, very rare for med-deck companies to do that on a consistent basis. And then finally, on the delivering the message to the right audience, given the changes in decision-making, it's not surprising that it's hard to flip a switch and change all the relationships that have been built up over the last few decades among the sales

organizations and suddenly say, okay, now go talk to different people with different set of needs. So it's not surprising that it's kind of evolved the way it has, but going back to your initial question, you know, what keeps the executives up at night in the METEC industry? I think it's how do they evolve from kind of the past state to kind of the new world and the new world in the future where, you know, these four steps are just going to have to be, you know, like clockwork. Right. And it almost, you know, as simple as, as simple as, as simple as, as simple as, you know, as those four steps sound, you know, there's so many moving parts that when you actually take each step and sort of silo it, if you will, you know, because of all the moving parts and the

constant change, it actually gets somewhat overwhelming when you, you know, kind of begin to think about, you know, like a particular, you know, product franchise, for example. And so, you know, I'm not sure if you would agree with this, Jonas. But, but maybe a good exercise would be if you're, if you're director over a certain product franchise within the MedTech company, you know, maybe sitting down and looking at each of your, you know,

your product buckets and going, you know, going through this four-step process would be, you know, a great idea. You know, does this product, do I really truly understand the needs that this product is,

is supposedly meeting, you know, what other value added services could we potentially offer alongside this product? You know, are we clearly articulating the value of this product and which, and then, And then lastly, are we presenting to the wrong audience? Do we have the right message, et cetera?

So, yeah, I like what you said, though, is as simple as, as simple as maybe those sound, it almost, because there's so many moving parts, it almost, it's a really good thing to kind of go back to those basics in a sense. Great. So in light of that, and are you, do you offer this survey? I presume you're willing to offer it to anyone who request it, correct? Yeah, no, the hospital survey that we do every year is something that we do to share with our clients and prospective clients. So yeah, happy to share that with that, share that with people that are interested.

Yeah, so, and I presume, I guess let's let me ask you that before we move on. to the next question. What is the best way for, you know, folks listening to this that want to either reach out to you directly or maybe want a copy of this survey, what would be the best way to do that? I think probably just go to the L.E. Hey, Jonas? Jonas? Yeah, Scott, I was just saying the best way to reach me or LECA would be just coming to the

LECA website. Okay. That's L-E-K-com. And within that, it's not hard to navigate to our med-tech practice. And from there, a lot of the information is, in fact, available in our executive insight documents, and my contact information is in there as well. Okay.

So, L-E-K-com, I'll, of course, link up to that in these show notes for this interview. So in light of that four-step process, and then even before that, the four key questions that we covered. In your opinion, what do you think, you know, MedTech companies need to implement like right now or immediately versus maybe something that they need at least, at the very least, have on their radar, you know, looking three, four, four, five years down the road? Yeah. I mean, I think the thing that I would recommend is something that I get a lot of calls about, which is making sure that the current products that MedTech companies,

have do in fact create economic value for their customers because I think the bar for clinical value is set. That's just table stakes. If you can do better, that's great, but the good enough mentality is becoming pretty strong. And so in order to gain traction, there is a need to show the administrators that there's an economic benefit as well. And so the discipline of putting into effect in the organizations, a more clear articulation of that value proposition,

I think, is very doable because I think what will happen is, in some cases, you know, if people look up in the mirror and see, you know what, we're actually not creating a lot of value with this product or this set of products. Well, that should, you know, raise a red flag. flag to either kind of move to others or find ways to make the existing products, you know, actually do more. And so, and the reason why this is particularly important is because in the next several years,

we expect that hospitals are going to increasingly look for some kind of risk sharing and gain sharing arrangements with their suppliers. and if you're unable to clearly understand your own economic, if you're unable to clearly understand the economic value that you're bringing to your customers, you will not be in a position to offer any sort of risk sharing or gain sharing arrangements. So this is a kind of prerequisite for those types of programs,

which we think in the future will become much more likely. I think that's really important, and we don't have a lot of time, but can you briefly touch on that concept or that idea of risk sharing and gain sharing? Sure. I mean, if you ask the hospitals what they want to see from MedTech companies in the future, the thing that pops to the top of the list in terms of kind of changes from today is they want to see more of that, more risk sharing and having their suppliers take, you know, basically put their money where their mouths are, right?

say, hey, we're going to adopt these products, but we want you to be our partner and share in the risks and rewards associated with that. And so there's a strong, latent need from hospitals for those types of arrangements, but frankly, the hospitals don't know much about what that involves other than wanting to shift some of the risk away from themselves, And so the current state of risk-sharing programs is very nascent, and you don't really have any good examples within the device base of true risk-sharing arrangements that I've seen. But that's not because there isn't demand for it. I think it's more because the suppliers haven't been able to figure out a way to offer it that actually works and that has available metrics to monitor to enable kind of a two-way win.

But before they can get there, again, they need to understand how much value they're creating in the first place to be able to say how much they can share and how much risk they're willing internally to take on. Yeah, nearly impossible to come up with some sort of risk-sharing agreement that would work without understanding, clearly understanding the economic value that you actually bring to the table. That's right. No, great, great stuff.

You still have a few minutes? Is this okay? Yeah. Okay. Real quick, I mentioned this at the beginning of the interview, but you opened or co-founded L.EK's Tokyo office, correct? Okay, so we're back. A slight technical difficulty there.

But the last question I had for you, Jonas, is I believe you opened or co-founded the Tokyo office for L-E-K. Can you speak about that? Because you're kind of a Midwest guy. You at least went to school in the Midwest. So how did you end up over in Japan? It was, at the time, a neat opportunity to spend a bit of time in Japan. And it turned into the six-month project turned into a six-year stint. It wasn't planned, but an interesting path to take nonetheless.

I got to think, though, that your experience over in Japan is probably a huge value ad that you bring to the table in terms of helping med techs, though, focus on their kind of their strategies in Asia, though. Yeah, I mean, Japan was and still is a critical part of a lot of device companies' geographies. It's been a large, profitable market, even though it might not be growing as fast some of the other Asian countries. But, yeah, it has a lot of unique characteristics and challenges to overcome to kind of tap into that opportunity. So, you know, that was something I helped a lot of our clients deal with. Got it. No, great stuff. And I can't thank you enough for coming out on the program and taking some time at your schedule to kind of

help us learn a little bit more about the insights that you glean from this most recent L.EK hospital survey and what the impact is for MedTech companies. So thanks again for your willingness to do this. No, my pleasure, Scott. Appreciate it. And for those listening who have hung on this long, if you're interested in listening to other MedSider interviews, just go to medsider.com and click on the radio button, and that will provide you with a couple of different links to download all of the audio files, whether you listen to them in iTunes or Stitcher Radio or whatever app you prefer. So check it out when you get a chance.

Anyway, until the next episode of MedSiter, everyone, take care.