Don’t shoot from the hip

Volume 16 Letter 9

Sometimes we get so locked into our traditional selling model we forget to step back and develop a “real” strategy. This is all the truer when launching a new product and you’re asking your customer to change the way they do business in order to derive the value. Take the case of a medical implant provider.

Through some very creative thinking and partnering with a surgical navigation company, a medical implant company came up with a very unique way of doing hip replacement operations. At the time traditional hip replacement surgery meant a post-surgery hospital stay of approximately seven days of rehab learning how to walk again. Coming home meant needing help with everything from getting dressed in the morning to getting on and off the toilet.

The revolutionary new product wasn’t actually a new product at all but rather a unique operating procedure. Using surgical navigation equipment, the surgery was done through two small incisions which didn’t disrupt any of the major musculature. This was important because now a patient could arrive for hip replacement surgery at 8:00am and walk out the door unassisted to resume their life that same afternoon.

Classifying the surgery as revolutionary was an understatement. The disruption to patients’ lives was at most a few days versus a few months. The savings to hospitals due to the elimination of patient stays was between $10,000 to $15,000 per patient resulting in potentially millions of dollars in savings per hospital each year. Additionally, because patients were not admitted, the risk of post-operative infection from super bugs was all but eliminated. The product / procedure ultimately failed – here’s why.

The benefits to the patient and the financial benefits to the hospital were abundantly clear. The benefits to the third customer – the doctors, needed some work. The new hip operation using the navigation equipment was technically more challenging and thus doctors needed an additional 20 minutes to perform. Here in lies the rub; surgeons are charged for operating room time but are paid by procedure and this 20 minutes was significant! Without an increase to the operating budget surgeons who performed this new procedure would be penalized economically because the overall number of surgeries they could perform each year would be reduced.

The country CEO recognized the issue and tried to secure funding from corporate headquarters to hire two qualified reps to pitch the economic argument to hospital administrators. HQ denied the funding, leaving it up to the medical reps to convince the hospital administrators. While these reps were very tight with and well respected by the surgeons, they were ill equipped to make the economic argument to hospital administrators. Even though hospitals would potentially save millions no one figured out how to channel some of those savings to the surgeons and give them more operating room time. What can we learn from this one-day hip surgery failure?

  1. Great products won’t sell themselves: they need a strategy!
  2. Communicate the benefits to the right channels. It was naïve of headquarters to expect technical sales people to develop the economic arguments and sell to hospital administrators.
  3. Ensure everyone wins: For surgeons improved patient outcomes is “real value” but it shouldn’t have come at a financial cost to them.
  4. When launching a new product, segment the market and determine how each customer group will be impacted by it.

After fifteen years, patients still stay in the hospital on average of four to five days after a hip replacement operation. The economic impact on our healthcare system is staggering! Don’t hope customers will recognize the value your product delivers. Develop a strategy, ensure it’s properly funded and give your new product launch a chance to succeed. Don’t shoot from the hip!!

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