Being aware of what interests your stakeholders financially is crucial to any business plan. We spoke with Dr Thomas Seeger, Managing Director of Medalliance Consulting GmbH, to throw some light on the dark art of stakeholder management
‘It’s very important that you distinguish what sector or segment your device belongs in. There are very different stakeholders in each area,’ Seeger begins. Understanding their different needs and motivations is key to successful stakeholder management. In most markets, there are three core segments, each with its own distinct environment and stakeholders:
Once you’ve identified your segment, you then need to determine whether the device fits into the existing framework for that sector. Can it be allocated to current benefit catalogues and price categories? If so, and the price you propose is within range of other existing products, identifying your potential stakeholders should be easy. You’ll be talking to physicians and key opinion leaders, and your aim will be to introduce your technology and get them excited about it.
Your next stakeholder would be the team/individual(s) in charge of budgetary requirements for the hospital, for example, the purchasing department or controller.
If your device is very new or innovative, and doesn’t fit into an existing benefit category, you’ll have other parties to consider, such as those who define the catalogues. You may also need to deal with health technology assessment agencies. In the German-speaking markets, this situation is more common in the substantial outpatient segment.
Medical and administration staff will often have different views on which products should be purchased. Doctors are likely to be convinced by medical and technological factors; administration staff will be more influenced by a budget-impact model. It will depends on the individual situation in a hospital or practice as to who will have the most say; no general assumptions can be made.
In the hospital segment, doctors generally don’t have much of a financial motivation when considering a medical device. They are usually in a salaried position and, unless they hold shares, won’t get directly involved in the hospital’s financial decisions. It’s the hospital administration who are interested in the financial side. Typically, they want to save money and negotiate a good price.
Manufacturers in the German device market negotiate directly with hospitals. There’s no way to set a universal price for your device with the government, so those familiar with the US system will find this very different. ‘If you want to sell something to a hospital, you have to go to that hospital,’ says Seeger. This also means you have to establish and defend your price on an individual basis.
If the price of your device is within the range a hospital is used to (perhaps another 5 to 10 per cent more compared to other vendors), it should be relatively easy to negotiate a purchase. But if you have premium pricing, things may be more difficult. A purchasing department may like the features your product offers, but say it can’t afford it.
‘If you have a new innovative device, often a manufacturer will try to achieve a premium price,’ Seeger adds. ‘But if the targeted price is very different to that offered by other vendors, then you have got it wrong.’
If your device is more expensive than others in the same category, being able to demonstrate cost savings in another area over time may help. It therefore makes sense to include a budget impact model in proposals to hospitals.
The outpatient segment is different again. Doctors working in this sector are often entrepreneurs, with financial interests to think of as well as medical ones, and they are likely to be involved in decision-making. An outpatient doctor may also want to negotiate on price.
If we look at things from a health fund perspective, they are usually interested in keeping costs down. It’s worthwhile mentioning that payers are not interested in what device a hospital or doctor uses and how much it costs them, nor are they always interested in the long-term cost savings of a device in the way a hospital might be. Payers tend to pay per episode of treatment (which includes material costs) rather than directly for a device itself.
For public payers (statutory health funds), this is certainly the case. Patients with statutory health insurance can move from one insurer to another very easily. So, for the payer, a long-term cost saving over time for a particular patient is less important.
For the private insurance sector, long-term savings make more sense. Around 95 per cent of those with private health insurance in Germany stay with the same insurer for their whole life, so cost savings made by a particular device over an extended period are more important than with public payers.
In conclusion, the medtech industry tends to view cost savings as a very important financial motivation. However, it may be surprising to realise that not all of your stakeholders – direct and indirect – will necessarily agree. While it’s still important to demonstrate any cost-saving models, keep in mind that this might not be of interest to all stakeholders when drawing up your stakeholder management plan.
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