Hospital Procurement: What You Need To Know

​Last July, we published a blog on Mapping the Medical Sales Cycle, and a key part of the medical sales process includes understanding the steps involved in hospital procurement. The end goal for selling your medical technology very likely has important implications for physician and patient satisfaction (as well as clinical outcomes). However, the new reality is that buyers of your medical technology also need to understand the financial impact.

The hospital procurement process is integral to whether a sales rep sells a product or sits on unsold inventory. By learning more about hospital procurement, the overall medical sales cycle can be navigated with significantly less friction.

What is Hospital Procurement?

Procurement is “a term of art for obtaining goods/services which ideally are cost effective and provide the best quality outcomes for service users. Effective procurement needs effective commissioning guidelines as well as a transparent and open process in which to apply to provide services and goods.” Medical sales representative will typically interact with members of a Value Analysis Teams (VAT) or Value Analysis Committees (VAC), made up of a variety of stakeholders from within the hospital.

A Primer on Value Analysis Committees

VAT or VACs are the groups within the hospital that focus their attention on the procurement process. The stakeholders involved in VATs could include physicians or surgeons, nurses and physician assistants, hospital purchasing agents, finance team members, and clinical engineers. However, depending on the size of the organization, VATs can also include hospital administrators—like the hospital CEO, CFO, and CMO—and board members. Ancillary groups that are important to the VAT group are the patient populations who would potentially be impacted by the purchase decision as well as the medical technology company pitching their product or service through the hospital procurement process.

What VAC’s Improve

According to Robert Yokl, one of the founding fathers of healthcare value analytics, VACs can achieve their health savings goals by measuring the management of the following three areas by each service area or technology category:

1. Year-over-year usage
2. Utilization misalignments
3. Best value products or services

Simply put, VATs have been proven to increase outcomes and the bottom line.

The Hospital Procurement Process

As a medical technology sales representative, you should approach the hospital procurement process with a well-organized and executed strategy. Consider the following four steps to create that strategy that will help you successfully navigate the process: data gathering that addresses a problem, negotiating how to best address the problem, testing to see if the problem can be resolved, and approving or rejecting the solution to the problem.

Data Gathering
​Data gathering includes all product literature, studies/white papers, FDA approvals, MSDS documents (if applicable), pricing plans, promotions, and structures, pertinent company contact information, and any other form of documentation that may be necessary to close a sale. Having all of these documents upfront will enable you to move forward in the sales process and not be left waiting for the next scheduled meeting.

If you get to this point in the hospital procurement process, you have already lined up your product champions and end users. You should validate with those clinicians that they are on board with moving forward and will support your endeavors to navigate the procurement process. Before presenting the information to the hospital VAT, make sure you have some sort of testimonial or signed documentation stating that the physician is receptive to moving forward with the sales plan. This way if the physician is unable to attend the VAT meeting, his concerns are not ignored.

Negotiating
​Hospitals care about physician satisfaction, patient outcomes and their bottom line. If you can sell them on benefits across the spectrum, your sales pitch will be well received.

Hospitals also want to determine if the pricing being offered on your product or service not only aligns with the value it delivers but is also competitive to alternative solutions. Be prepared for probing questions about competition and pricing structures. Defend your pricing in terms of the value of your product, the problems it solves and impact it will have on the hospital’s clinical staff and patient populations.

Testing and Trialing
​The testing process will be heavily influenced by the type of product or service you are selling. It may be simple or involve many steps, spanning months. Usually a discount is offered during the pilot period to try to get other physicians and hospital staff interested in the product.

The testing and trial period should be limited in scope and the parameters of it should be spelled out so that this period of time is not considered a norm.

You will have to consider the broader impact your product or service will have on a variety of potential workflows and stakeholders in order to prepare for and execute your trial program. No matter the scope of the beta program, communication will be key to educating and evangelizing the availability and capabilities of your product during the pilot period.

Resolving
​VATs were created to focus on improving patient outcomes and decreasing waste; however it’s easy to fall into the trap of viewing these processes as barriers to the sales process. Successful outcomes come down to a rep’s level of preparedness before the decision is made. VATs should not base new hospital product decisions on cost alone but the most successful sales executives navigate both the clinical and financial assessments of their process.

Minimize the chances for errors on your end and always ensure the information you supply is handed over ethically and honestly. Even if you are not successful in bringing a specific product into a hospital, VAT members will respect you for being organized, thoughtful and professional during the process. It may help with future pitches.

Potential Procurement Roadblocks

​A couple of hiccups can arise during the hospital procurement process that should be reviewed. The hospital you are working with may not operate with the modern technology and technological devices employed by your medical company. Be wary of the entire procurement process dragging on and becoming a waste of time and money for all parties involved. Before beginning the hospital procurement process network inside the organization to learn about the potential roadblocks that can hinder your process.

Hospital procurement processes are typically very structured. By learning more about how each of your prospect’s individual procurement processes function in your own territory, you can more easily and predictably navigate a system that can initially appear complicated and burdensome to master.