Proof of Value
Edition: July 2012 - Vol 20 Number 07
LAS VEGAS, NEV–A more discriminating consumer. An influx of people into the healthcare system. Increased competition among providers for access to those patients. Regulatory forces that are changing rules and incentives quickly. “All this makes for a very challenging environment,” says McKesson Medical-Surgical President Stanton McComb. “I think it also offers McKesson an opportunity to help our customers.” McComb spoke with Repertoire Corporate Vice President Scott Adams at McKesson Medical-Surgical’s national sales meeting in Las Vegas.
The opportunity – and the mandate – for McKesson Medical-Surgical and its suppliers is to continue to provide quality products and services, while also demonstrating a strong ROI for the customer, says McComb. “I have spent a fair amount of time on the technology side of healthcare. In those situations, our customers simply cannot invest in technology unless there’s a very strong and highly credible ROI behind the value propositions that you bring them. The same should be true of the way providers think about working with their medical-surgical suppliers.”
McComb was president of McKesson Automation, a provider of hospital pharmacy automation products and services, prior to being named president of McKesson Medical-Surgical in April 2011. He first joined McKesson in 2002 and has held several leadership roles in its technology businesses, working with pharmacies and hospitals. Prior to joining McKesson, he worked for Citigroup Investments’ Technology Group, where he made and managed a portfolio of later-stage venture capital investments in the medical device and healthcare technology sector. He began his career at the Health Care Advisory Board, a for-profit research and consulting company in Washington, D.C.
Continuous pressure on reimbursement
Today’s healthcare environment is creating extreme pressure for providers and, hence, their suppliers, says McComb. “The most well-known trend is the continuous pressure on reimbursement. We don’t see that trend diminishing. What is exacerbating this pressure, however, is the increased volatility and long-term inflation of costs, be those labor costs, regulatory compliance costs, supply costs, etc. From the top-line and the cost perspective, providers are feeling the squeeze more than ever.”
Consumers are also experiencing some heightened pain with higher co-pays and higher deductibles. As a result, they are becoming more informed than ever. “Whether visiting the physician’s office, thinking about the convenience of urgent care or using healthcare products at home, consumers are becoming far more discriminating about the value they’re getting with their own healthcare dollar,” he says.
These pressures are exacerbated by expected demographic and reform waves. “We all know about the Baby Boomer surge,” he says. And should healthcare reform hold up, as many as 30 million previously uninsured patients could enter the system in the near future. “Irrespective of how you see that forecast, there will be more demand put upon a healthcare system that is already wound pretty tight.”
More discriminating demand and tighter margins have increased competition among providers, notes McComb. Hospital systems and IDNs are acquiring physician practices. And urgent care centers, community health clinics and retail clinics are offering stiff competition to traditional providers. “All of these dynamics are forcing conventional practices to think outside the box,” he says.
“Competition is a good thing. In both our physician office and extended care worlds, increased competition is pressuring our traditional customers to serve more patients, at higher velocities, deliver higher service levels, provide greater transparency around the quality of their work, coordinate their care more effectively, price their services more competitively and do all of this while also trying to cut their own costs. It is a pretty daunting proposition for most providers.”
All of this spells challenge – and opportunity – for McKesson Medical-Surgical.
Ambulatory care value proposition
“We have a very strong value proposition” for the ambulatory care markets, says McComb, adding that McKesson Medical-Surgical has enjoyed success deploying its solutions in all settings, including independent practices and practices owned or affiliated with IDNs. And despite the steady acquisition of providers by IDNs, McKesson Medical-Surgical’s value propositions have remained of value to IDNs, he says. “There’s recognition [by IDN executives] that the existence of the community physician and his or her presence and engagement out in the community is critical to the underlying success of the IDN’s demand management strategy.
“These IDNs do not want to roll everything into the four traditional walls of a hospital. And as soon as you accept that notion, you quickly recognize that the value propositions that a network of various community practices requires is materially different than the value propositions which are required in a hospital setting.”
McKesson is well-positioned to help its customers meet the challenges ahead, says McComb. “I’m proud of our investments in technology, solutions and programs that take us beyond distribution. Obviously, we pick, pack and ship every day at the highest levels of service and value. But we help our customers do so much more than just get product in the door. I’m excited about the strategic value we can bring to our customers.”
But to continue to be successful, McKesson Medical-Surgical needs support from its manufacturers, says McComb. “One challenge we face is, ‘How do we work with our supplier partners to make them a part of our story, our value proposition?’ We’re counting on them to be innovative, but we also need their help in substantiating the value of their innovations, in the form of ever more quantifiable clinical and economic benefits. How will their products help our mutual customers compete under these conditions?”
Perhaps the biggest advantage McKesson Medical-Surgical enjoys in the market is its sales force, says McComb. “I’m confident we have the greatest sales force out there. Without our sales force, we could not consult with our customers, help identify their issues or needs, and propose and deploy solutions. At the end of the day, our sales force makes it happen for us and for our customers and I am thrilled to be working with what I believe to be the greatest sales team in our industry.
“Being here [at the McKesson national sales meeting], I see so much energy, enthusiasm and friendship amongst our sales representatives. We have one of the most tenured sales forces around. They know each other and they know all of the different McKesson products and value propositions that they can share with their valued customers. They have tight networks that they can call upon for support and advice. And this talented sales team has used all of these strengths to earn a seat at the table with our customers and they are now looking to elevate the dialogue with our customers and ask, ‘How can we help you meet your challenges?’ With this team and our solutions, I very much like our odds at leading our customers through these times.”
Road to better health
More than 1,200 attendees and 100 manufacturers attended McKesson Medical-Surgical’s recent national sales meeting.
The theme of the meeting – “Take the Lead: The Road to Better Health” – represented McKesson’s leadership position in healthcare and the solutions it offers to customers to help them achieve better business health and, ultimately, better patient health, according to a company spokesperson. The meeting was focused around providing sales reps training on the company’s tools, solutions and products that can help customers succeed in the current healthcare environment, she said.