Understanding IDNs' Needs

Edition: June 2002 - Vol 10 Number 06
Article#: 1247
Author: Greg Firestone

I would like to pose a question to the vendor community: When was the last time your organization conducted a market assessment to determine the needs of today's IDNs?

In this dynamic market we all work within, change is the only thing that is constant. In most journals we read and at the healthcare meetings we attend, someone invariably refers to the fact that healthcare is regionalized. Ironically, though, a large majority of vendors use the same sales approach, marketing strategy and product offering for every IDN across the country.

I like to refer to this sales behavior as the emotionally tied syndrome – whatever the company we work for or product(s) we sell, we believe we have exactly what the doctor ordered, so to speak. And, if the customer doesn't buy it, they must just be behind the times. Of course, most vendors do very little customer intelligence work prior to the appointment, and seldom ask the customer for their opinion. They just open the meeting with a presentation about their company and its products and expect the customer to buy.

But today's customers are looking for solutions – not just products. Sure, there are some IDNs that are still interested in getting a better price on a widget; but as the future unfolds, they will be fewer and farther between. The more progressive IDNs are looking for market-educated sellers to provide them with a consultative approach that meets their challenges, rather than simply sell them a product.

To assist in the process of targeting the correct message and solution to each IDN customer, it is imperative to take the time to assess that particular IDN's organizational structure and strategic initiatives. To assist with this process, NCI solicited several IDNs to determine what they consider most important for vendors to understand about IDNs before making a sales call. The IDNs came up with a ''Top 10 List'' that, if incorporated in your business, should provide your organization a great deal of value.

Top 10 Things You Need to Know Before Calling on an IDN

  1. Organizational structure of IDN, i.e., owned (assets merged), managed, etc.
  2. Financial viability of IDN (view latest financial reports available)
  3. Vision, mission, values and strategic direction of the IDN
  4. Patient-based market share control in its primary service area
  5. The IDN's major competitors
  6. Stage of supply chain development
  7. GPO affiliation (shareholder?)
  8. Contracting strategy of IDN (is purchasing centralized?) Involvement of Clinicians and Physicians in product and/or service decisions
  9. Process for measuring vendor performance

''Stage of Supply Chain Development'' is the sixth item on this list. Each IDN is an evolving entity, so achieving a better understanding of a prospective IDN's maturity stage of supply chain integration will provide you with realistic compliance expectations. NCI has developed a four-stage structure that provides key indicators for evaluating an IDN's supply chain landscape.

Stages of IDN Supply Chain Integration Included in each stage:
• GPO Affiliation
• Contracting Strategy
• Strategic Supplier Relationships
• Product Utilization/ Standardization
• Compliance
• Technology Integration

Stage I
•Multiple GPO affiliations
•Multiple distributor relations
•Contracts managed by facility at department levels
•No formal strategic supplier relationship
•Limited product utilization programs in place
•Deliver little to no compliance
•Multiple disparate information systems

Stage II
•Affiliation with two GPOs
•Relationships with two distributors
•Contracts managed by facility, with some high-volume agreements negotiated by materials management
•Limited strategic supplier relationships
•Limited product utilization programs in place (DRG focused)
•Moderate compliance
•Limited information systems integration within facilities

Stage III
•Single GPO affiliations for med/surg & pharmacy
•Single distributor relationships for med/surg & pharmacy
•High-volume contracts managed by corporate materials management
•Multiple strategic supplier relationships
•Multiple product utilization programs in place (DRG focused)
•Some committed compliance
•Moderate information systems integration within facilities

Stage IV
•Single GPO affiliation or direct contracting model
•Single distributor relationship or self-distribution model
•Formal corporate materials management contracting strategy
•Multiple committed volume risk-sharing agreements
•Clinicians/Physicians included in corporate materials management product utilization committees
•Committed compliance
•(80% or better)
•Some cross-network information systems integration/full integration initiatives in strategic plan

We find that when vendors take the time to assess, in detail, each IDN customer and develop a sales and marketing strategy to meet their individual requirements, it yields successful business partnerships, increased closure rates, and dramatically increased market penetration. Companies see more success when retaining an outside firm to assess the needs of customers. Why? Because an outside firm does not suffer from emotionally tied syndrome and possesses the big-picture experience necessary to help you tailor your approaches for these highly individualized IDN customers.

Greg Firestone is CEO of NCI, a healthcare consulting company specializing in supply chain management, information technology, professional education, and alignment of healthcare stakeholders. He can be reached at 727-773-8824.