Medical Sales: Time for a Deep Dive

Last week we talked about the differences and similarities between being a pharmaceutical rep and a medical device rep.  I spent 18 years on the medical device side of the business, which leads me to today's blog post topic, a deep dive into medical sales.

There are a lot of moving parts when it comes to medical sales, and I want to give you some basic terms, definitions and acronyms so that you can follow along during an interview.  The first thing to keep in mind with medical sales is that you will be making a clinical case for your product (to clinicians) and a financial case for your product (to supply chain).  Sometimes you do both to both parties, but the key is that you have to win both clinically and from a business standpoint to sell your device into a hospital or clinic. 

To secure clinical buy-in, it is a rep's job to identify and cultivate a “clinical champion” in one of the units of the hospital, and then you have to make a clinical and a business case to the purchasing department of the hospital.

Value Analysis is a committee that every hospital has. It consists of important clinical representatives from various units, including the OR, ER, critical care areas, an infection prevention representative, and a member of the purchasing department (aka supply chain). This committee typically meets monthly to look at proposed new products for purchasing. They will review the clinical and financial impact/benefits of the products. Reps are usually not allowed in these meetings, so it is incumbent upon us to do an effective job of “pre-selling” our clinical champions to help them sell the product in.

But it gets a little more complicated than that. There are “contracted” items through partnerships that hospitals have with organizations called Group Purchasing Organizations (GPO’s). Think of them like the Sam’s Club of hospital purchasing. These organizations aggregate the sales of their members to create larger “buying power” for the hospitals. Even if I were to secure a clinical champion and had a good business case for purchasing, if my product is not contracted with that hospital’s GPO, there is a good chance they will not purchase it. It is the rep’s responsibility to understand the hospitals in their territory, and where you have the “license to hunt” based on the GPO contracts and your product’s contract position. The main national GPO’s are Vizient, Premier, Healthcare Purchasing Group (HGP), Ascend and Intalere. The Veteran Administration (VA) hospitals and Department of Defense (DoD) hospitals have government pricing contracts. Learning which hospital has which GPO and where your product falls on any one GPO’s contract, etc. is a big part of the learning curve when you get into the industry, but you’ll pick it up over time. When I first started out, I created a cheat sheet. As soon as I learned a hospital’s GPO and distributor, I wrote them down in my notebook. I am a visual learner, so this list helped me commit this information to memory. I wanted you to be familiar with the term and have an understanding of what GPO’s are going into a medical sales interview.

IDN stands for Integrated Delivery Network. Many independent community hospitals have consolidated into one system and are run by a larger corporate umbrella. Because I spent my career in North Texas, I will give you two regional examples from my neck of the woods. Baylor Scott & White and Texas Health Resources are two examples of IDN’s in North Texas. Baylor Scott & White has 51 owned, operated, joint-ventured and affiliated hospitals in their network, and Texas Health Resources has 29 facilities in their network. Often, purchasing decisions are made at the corporate level, and all of their hospitals will make a new product conversion at the same time. Going back to the GPO, the larger the hospital, the greater their buying power, and the larger their savings through the GPO contract pricing. If you are not already familiar, do a Google search to find out which IDN hospitals are in your geographic area. Hospitals use medical distributors to deliver their products directly to them. Sometimes trucks come daily from the distribution warehouses to deliver new supplies to the hospitals. The shipments are received in the purchasing department, and then the products are distributed to the individual hospital units from there. A distribution representative (another good potential job opportunity) usually has an office onsite at the hospital to monitor the daily demand of orders. There are some smaller, regional distributors across the country, but the main players are Cardinal, Owens & Minor and Medline. Successful reps learn how to work closely with the distributor reps because they are the “eyes and ears” in the hospitals. They can be a great advocate for your product (or foe, as sometimes they have products that compete with yours). But ultimately, we are more likely friends than enemies.

I know this is a lot, so let me know if you have any questions.  If you want to schedule a session with me to find out if medical sales is the right career for you, please schedule a session under the "coaching" tab on my website.  Have a great week!