Smartly Targeted Solutions Noticeably Elevating Needed Patient Outcomes

Achieving a competitive advantage and ensuring permanent growth within the dynamic landscapes of the MedTech and Pharma sectors remains an ongoing challenge. To delve into this complex arena, we've engaged in an interview with Klaus Andersen , Managing Partner of Aquilo Consulting. In this discussion, we seek insights into methodologies and pragmatic solutions that can significantly influence the success of MedTech and Pharma endeavours, ultimately enhancing patient outcomes for healthcare organizations.

Karsten:

Thank you for taking the time for this interview, Klaus. To kick off, could you share some of the key challenges your team encounters when working with MedTech and Pharma clients aiming to boost market share through value-adding services in the hospital or clinic market?

Klaus:

Certainly, Karsten. It's a bit of a catch-22 situation. The Healthcare Industry (MedTech and Pharma) in EMEA faces both price and market share erosion in significant product categories. Regarding market share erosion, some managers may not recognize it or choose to overlook it, especially when their businesses are technically growing year on year, albeit at a slower pace than the market. This growth is often driven by demographics, but it results in a loss of market share. The erosion is particularly prominent in blockbuster segments where copycats, often from the East, enter with considerably lower prices.

The catch-22 dilemma arises when managers realize the necessity of differentiation through services, which is a sound strategy. However, due to the ongoing challenges with price and market share erosion, they find themselves lacking the financial muscle to implement this differentiation effectively. Even in cases where there's sufficient budgetary strength, managers tend to adopt a traditional approach: engaging one of the big four consulting firms to determine the services that should be offered, aiming to make their combined package (products and services) so compelling that hospitals and clinics prefer the seemingly more expensive "legacy" manufacturer.

Karsten:

So, what's the issue with that approach?

Klaus:

Essentially, everything. The traditional method begins with an analysis of challenges in hospitals and clinics within the XYZ therapeutic area. The idea is to gain an overview across EMEA (or any other region), identify commonalities, and then craft services that align with the most prevalent challenges across the region. The problem is that this often leads to the creation of excellent services that are only desired by at most, 5-10% of the targeted hospitals and clinics.

Karsten:

How can that be??

Klaus:

The underlying issue lies in the perception that B2B customers in the MedTech and Pharma sector, particularly hospitals and clinics, are perceived as more uniform than they actually are. Consultants tasked with identifying and addressing common challenges across regions do an admirable job, often crafting services that align well with shared concerns. However, what's often overlooked is the significant variability in the top challenges faced by seemingly similar institutions within the same healthcare system, such as a hospital in Berlin versus one in Hamburg, both treating identical patient groups.

As a result, MedTech and Pharma companies tend to develop a suite of 10 standardized services tailored to the common challenges across the EMEA region. Regrettably, only a small fraction, around 5-10% of the customer base, finds these services directly addressing their top 3 issues. While the analysis and services crafted by consultants are technically sound, the challenge lies in ensuring alignment with the unique top challenges faced by each hospital or clinic, which currently remains unmet in most cases.

While it is accurate that a majority of hospitals and clinics in the EMEA region encounter challenges that can be addressed by the 10 standardized services, only a minority consider these challenges as their top 3 priorities. If, as a MedTech or Pharma company, you exclusively address challenges ranked 7, 9, and 13, you risk being perceived as merely a "product-only company" with incidental add-on services. This highlights a common obstacle faced by many in the industry – the struggle to establish a successful value-added service platform and create a viable business case for services.

In an era where MedTech and Pharma are moving towards individualized treatment pathways for patients, it raises the question: Why not apply the same approach when offering services to customers, namely hospitals and clinics?

Karsten:

So, what is the solution?

Klaus:

An excellent question. Recognizing the inherent uniqueness of every hospital, we acknowledge that no two institutions share the same top three challenges. Consequently, we refrain from conducting a regional or country-wide analysis to identify common challenges before introducing a Customized Services platform for our clients. In constructing these platforms, we adopt an approach centred on individualized consultations with each hospital or clinic. We inquire about their specific top three challenges and craft Customized Services tailored precisely to their needs.

Karsten:

Very interesting! However, I'm curious about the feasibility of this for your clients. Developing individual services for each hospital or clinic seems like it could be quite costly.

Klaus:

Indeed, the traditional business school model often emphasizes profitability through the "Coca Cola Model" – a one-size-fits-all approach. While this approach holds true to some extent, the true value lies in success or conversion rates. A standardized service offering may have a 5-10% success rate (conversion rate), making it imperative for service development to be cost-effective to maintain profitability.

Conversely, a Customized Services platform with an 80-90% success rate significantly changes the economics. With such success rates, it becomes viable to invest more in the development and implementation of services for each hospital or clinic. Typically, clients, including MedTech and Pharma companies, experience a return on investment (ROI) of 6-9X on their Customized Services platform investments. This not only ensures profitability but also secures new market share gains for the next 3-5 years.

Karsten:

What regulatory aspects should be considered during the development and implementation of these Customized Services?

Klaus:

The regulatory considerations are quite similar to those for any other services. Clients' compliance officers must collaborate closely in the process of service development and implementation.

Karsten:

In the rapidly evolving landscape of healthcare technology, how do you perceive digital health and other technological advancements shaping the strategies of MedTech and Pharma companies to improve patient care and outcomes?

Klaus:?

Great question. We hold a somewhat unconventional perspective on technology in healthcare. While senior management in various global MedTech and Pharma companies is undoubtedly closely monitoring and investing in this field, we believe that some of the focus on technology, digital health, and AI is misdirected. Consider this: hospitals and clinics are still comprised of 80% people (staff and patients), 10% infrastructure, and 10% technology.

This fact might be overlooked because intriguing, but no revolutionary technological and digital advances have been made in hospitals over the past two decades. Reflect on this scenario: What if all healthcare professionals (HCPs) did not show up for work in a hospital or clinic? The entire operation would grind to a halt, right? Now, envision a scenario where the entire IT infrastructure of a hospital or clinic does not show up for work. While inconvenient and troublesome, staff would find a way to treat patients regardless.

Until the healthcare system evolves into one heavily reliant on AI diagnostics, with robots replacing HCPs, and becomes an organism comprised of, for instance, 10% people, 10% infrastructure, and 80% technology, the top three challenges of a hospital or clinic cannot be solely addressed through an app, software, or a semi-robotic surgical tool supporting decision-making. While these "gadgets" have their merits, the message we convey to clients is that, as a MedTech or Pharma company, developing intriguing apps or software to complement your device, implant, or medication is worthwhile. However, as long as hospitals and clinics are predominantly composed of 80% humans, these innovations will only make a modest impact on their top three challenges and may not significantly drive revenue growth.

In summary, MedTech and Pharma companies must invest in technology, AI, and software to usher hospitals and clinics into a future that is less dependent on humans. The current disconnect arises from managers overestimating the impact their apps, software, and semi-robots can have on hospital and clinic challenges, given that these institutions are still predominantly human-centric. Essentially, the healthcare industry (MedTech and Pharma) faces the challenge of being a value-adding partner today by addressing the current top three challenges for hospitals and clinics, which are currently 80% people-oriented. Simultaneously, there's a need to invest for the future, anticipating a time, perhaps 15 years from now, when hospitals and clinics may only be composed of 10-20% people.?

Karsten:

So, what can effectively address the top three challenges in hospitals and clinics if not an app, software, or semi-robot?

Klaus:?

We've identified frustration among staff at hospitals and clinics, particularly healthcare professionals (HCPs), in several key areas:

• Poor top-down leadership: The frustration stems from a lack of effective leadership at the top levels.
• Lack of responsibility for the patient: The system is perceived as responsible, but there's a notable absence of individual accountability for patient care.
• Resulting in a lack of team spirit: The above issues contribute to a sense of disconnectedness and a lack of unity among the staff.
• Unpredictability in working hours: The irregularities in work schedules further intensify frustration among the healthcare professionals.

Karsten:

This seems somewhat disheartening – is there any good news or a silver lining?

Klaus:?

The positive news is that most of these challenges can be effectively addressed through what might be considered old-school and perhaps "boring" analogue management training. By imparting traditional management skills and teaching hospital managers how to construct high-performance teams, substantial progress can be made.

Regarding the frustration arising from the perception that the system is responsible without individual accountability, a critical step is eliminating the concept of the matrix organization. Instead, empower hospital and clinic leaders with both the responsibility and the tools to forge high-performance teams. Additionally, provide appropriate compensation for their efforts. Simultaneously, take decisive action when leaders fail to uphold their responsibility to both patients and staff.

Illustration: Building Customized Services for Healthcare Organizations

Karsten: Thank you, Klaus, for providing your insightful perspective on this challenging topic. I believe our readers now have a clearer understanding of how Customized Services can serve as a catalyst for building high-performing teams in healthcare organizations, ultimately benefiting patient outcomes.

In conclusion, Customized Services emerge as an innovative approach to confront diverse challenges within healthcare organizations, challenging the effectiveness of a one-size-fits-all strategy. While technology plays a crucial role, maintaining a balanced perspective that acknowledges the existing human-centric nature of healthcare is paramount. Addressing frustrations among healthcare professionals often involves targeted management training and leadership as well as the cultivation of high-performance teams.

Your perspective matters! Do you consider a customized approach essential to tackle the distinctive challenges of hospitals and clinics, or do you believe a standardized model can adequately meet their needs? Please share your valuable thoughts below!

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