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NCI 03-29-05 Presentation


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NCI 03-29-05 Presentation

  1. 1. COLLABORATION when Contracting Locally for Medical Devices William McIlhargey Principal WPM Enterprises March, 2005 Confidential William McIlhargey – 978.500.9666
  2. 2. Implantable Medical Devices Projected US Demand 2 50 0 0 20000 150 0 0 11.0% C A GR 10 0 0 0 50 0 0 The Feedona Group 0 October, 2003 2003 2004 2005 2006 2007 Fueled by Supporting Technology Pure Play Revolutionary contribution to the next level of care Disruptive technology with short product live cycles driven by innovation Skill Based Evolutionary,dealing with incremental change Driven by technique (delivery) orientation Both driven by regulatory indications requiring costly educational support to clinical community 2 Confidential William McIlhargey – 978.500.9666
  3. 3. INDUSTRY PREMISE Supplying Health Care has proven to be a local business that reflects individual processes and relationships, with community rooted differences noted in infrastructures, business strategies and utilization patterns. Lack of financial alignment within the System hinders collaboration among stakeholders and makes cost restructuring difficult for those held accountable. Continued growth of specialty hospitals and ambulatory surgical centers siphon off profitable procedures from the community hospitals and add to their financial concerns. High profile expenses for medical devices continue to elude cost restructuring, while adding to the natural rift between administrative and clinical factions. 3 Confidential William McIlhargey – 978.500.9666
  4. 4. BUYER POSITION on MEDICAL DEVICES Historically, the clinical value of medical devices is not accompanied with an economic profile that embraces their financial viability to buyers entrusted in containing costs. Suppliers are viewed as utilizing clinical relations to undermine hospital efficiencies, expanding buyer/seller tension and turning a “deaf ear” to the financial crisis within the Health Care System. The resulting impact on purchasing decisions and related efforts to standardize clinical techniques has been greatly underestimated, furthering the rift between administration and physicians. 4 Confidential William McIlhargey – 978.500.9666
  5. 5. SUPPLIER POSITION on MEDICAL DEVICES Suppliers with a traditional focus on procedural issues, struggle with the perceived inefficiencies of hospital economics and become further entrenched in their primary mission. With distribution channels geared toward education, delivery and surgeon acceptance, suppliers are not enamored with the prospects of retooling their sales forces. Recent history has indicated a lack of volume movement through price concessions and make suppliers leery to “throw good money after bad”. 5 Confidential William McIlhargey – 978.500.9666
  6. 6. RESULTING EFFECT A Polarized Environment With the growth of this fragmented and seemingly hostile environment, there appears to be little opportunity to advance the relations, understanding and creditability needed to effect resolution 6 Confidential William McIlhargey – 978.500.9666
  7. 7. THE SHORT OF IT Create Collaborative Balance – recognize buyer/supplier values in developing platform flexibility and pursue extended opportunities Establish Creditability – through third party insight . . . assure strengths & weaknesses of contracting parties are put on the table Arbitrate Negotiations – vis a vis an understanding of the underlying need within each party and determine leverage points that promote partnerships Coordinate Communications – coordinate/participate in facility and supplier downstream communications, monitoring for flow-through consistency Follow-up Performance Reviews – create a review process that benchmarks performance drivers under scheduled evaluations 7 Confidential William McIlhargey – 978.500.9666
  8. 8. PROCESS FLOW Step One – Preparation Step Two – Build a Negotiation Platform Step Three – Go/No-Go Commitment Step Four – Develop Contract Structure Step Five – Implementation Follow-up – Mthly/Qtrly Reviews 8 Confidential William McIlhargey – 978.500.9666
  9. 9. A WORD ON VALIDATION Past experience indicates minimum buyer/seller collaboration after the signing of a physician preference agreement. This produces a gap in realizing contract expectations and becomes a major contributor to previously unsuccessful approaches. Therefore, critical to the success of this effort is establishing definable and measurable performance criteria supporting intent. This automatically leads to performance drivers which are monitored during Scheduled Performance Evaluations. 9 Confidential William McIlhargey – 978.500.9666