Edition: May 2002 - Vol 10 Number 05
Article#: 1234
Author: Amanda J. Forster

Tucson, AZ –

The 2002 Executive Conference was characterized by those in attendance as ''a truly compelling business event.'' Distributor and manufacturer executives had the chance to meet face-to-face with one another, as well as to get education on the state of the industry during the general and breakout sessions. All of this was set against the backdrop of the beautiful Arizona Mountains.

HIDA Leadership Meeting
Before the kickoff of the Executive Conference, HIDA and HIDA Educational Foundation board members discussed the overall state of the distribution industry and learned of the effectiveness of the HIDA strategic plan. HIDA President and CEO Matt Rowan explained how strategic goals regarding communication, government relations, and education often overlap, particularly as they pertain to highlighting the value of distribution. Going forward, however, board members expressed a desire to hone HIDA's activities and focus additional efforts on improving communications and the levels of trust between manufacturers, customers, and distributors.

In the opening session, terrorism expert and government insider Sam Watson discussed threats to the U.S. medical system, including chemical, explosive, radiological, nuclear, and biological threats. In particular, Watson urged distributors and manufacturers to make efforts in their business to ensure that terrorists can't use them to cause more damage and/or further their aims. To that end, Watson encouraged distributors and manufacturers to put quality assurance practices in place that enable the efficient delivery of safe medical products. In addition, Watson recommended background checks for key employees. Following this, panel members from the Association of Hospital Resource and Materials Managers and the Advanced Medical Technology Association (AdvaMed) highlighted the need for continued discussions as to how and why distributors and manufacturers should participate in emergency preparedness activities, particularly as it relates to preventing hospital stockpiling initiatives.

Independent Distributors Speak
During the first breakout session, independent distributors highlighted the need for exemplary customer service and aggressive partnerships with manufacturers in order to win business from larger, more established distribution competitors. In fact, some panelists noted that winning a new account away from a larger partners can take up to a year, during which time the independent company is working to establish solid relationships with everyone in the facility or practice, and getting to know the customer's business. According to some, when the process is complete, the independent distributor with the business knows as much, if not more, about the customer than those that work there. When that happens, independent distributors say account ownership is complete, and few customers are willing or able to walk away from the service and the support they receive from their distribution partners.

Customers Outline Concerns
In a particularly spirited session, hospital CEOs told the audience that too few distributors come to them with solid business proposals as to how to work with the hospital to reduce overall costs, which opened the door for group purchasing organizations (GPOs). However, hospital CEOs say they would be willing to work purely with distributors and decrease their dependence on GPOs if distributors would match GPO pricing and services. Panelists also expressed concern that manufacturer margins are too high. In the physician market session, physicians expressed growing interest in ancillary services and products (such as bone densitometry, lasers, and lab testing) that would allow them to make up for decreasing third-party reimbursements. In the long-term care customer panel, nursing home administrators described the ongoing challenges they face, including tight reimbursement, staffing shortages, and heavy regulations. However, they did indicate that there are signs of improvement in the market.

The Value of Distribution
In the second general session, Lawton R. Burns, Ph.D., explained that the healthcare market largely is fragmented and is slow to change. As a result, trust between partners is low, information is limited, and cooperation is virtually non-existent. All this has led to a situation where buyers are uninformed and are too focused on lowest product prices, not total cost reduction. Likewise, suppliers and manufacturers often have an ambivalent attitude toward distributors, appreciating their services while fearing their influence with the customer. According to Burns, all this has limited distribution activities and created an environment that necessitates documented distribution value as a competitive necessity. Burns also claims that now are the best time to stress the value of distribution, as there currently is no fad or wide-reaching paradigm distracting healthcare professionals.

Editor's Note: Information in this article was taken in part from HIDA's Member News e-mail newsletter. HIDA Members may sign up for the newsletter by sending their email address to: medsurg@hida.org.