Tray Chamberlin: Hello, I’m Tray Chamberlin, a principal at the Alexander Group, and I’m joined by my colleague Mike White, a leader of our healthcare practice, to talk about our recent provider research. So, Mike, as we’ve gone through this research and conducted it over a series of years, what we always like to start off with is as we go out and gather these data points, what are healthcare providers’ top priorities and challenges in the current environment?
Mike White: Yeah. So top priorities remain improving patient outcomes. So that’s number one. And that’s consistent. That comes back in all these surveys. Of course I think what’s interesting in 2024 is the next tranche of priorities in terms of how they responded are all related to retaining quality personnel and reducing costs. So, as hospital expenses have continued to rise that certainly remains a priority. On the positive side, increasing patient volumes and supply chain issues have fallen pretty low on the list of priorities and prior years. Those have been priorities or challenges and and those fall out pretty low on the list this year. So, that’s a positive sign for the for the healthcare market in the U.S.
Tray Chamberlin: Okay. Interesting. And as I guess as you mentioned, supply chain issues have fallen by the wayside. What else could you maybe tell us about the financial conditions compared to, say, prior years when we went out and surveyed a similar population?
Mike White: Yeah. So, there’s a number of metrics you can look at that give the an indication of financial health of hospitals in the US. One of the ones that we look at is our capital budgets. And so we ask through our research on a regular basis how our capital budgets, you know, compared to the prior year, the positive sign on this, on that metric specifically this year is the number of participants who said they’re increasing capital budgets is double what it was when we asked the same question last year. So, that’s a sign that we take that financial conditions, and it’s only one metric, but it’s a relevant metric to suggest that financial conditions have improved for hospitals in 2024 compared to 2023.
Tray Chamberlin: I know one of the big focuses in our recent research was product innovation. I guess give us the punchline, what’s the current MedTech product innovation trends that you’ve seen or even the data shared?
Mike White: So, there are a number of different innovation categories we see within MedTech. The biggest three trends or categories that we see currently are robotics, AI and connected products. So, within robotics, including soft tissue and hard tissue, orthopedic, robotics, robotics, different players in those spaces and having different levels of success, quite frankly. The AI component is for procedures is primarily related to radiology. There are cardiovascular and neurology products. The FDA came out with a report at the end of last year showing the number of AI products that have been approved in over 90% were in radiology. So, that’s a core area that we see AI being implemented or utilized for procedures or patient care within MedTech. And then the third is connected products. So this is any sort of software component that’s added to a traditional kind of hardware product. So, things as simple as, as pulse ox sensors and instead of having to go room to room to check on patient status, there’s centralized location through different software that allows providers to do that. So, there are a number of different categories. Majority of MedTech leaders have some sort of a connected product at this point that utilizes a software component to drive more efficiency and improve patient care within the provider space.
Tray Chamberlin: What are these providers telling us, or even what are you seeing in terms of what will happen in the future with AI, robotics and connected products?
Mike White: While we’ve seen a significant increase in robotics, specifically in the last five years, providers still project that a number of procedures utilizing robotics will increase by about 50% in the next five years. So, there’s a continued shift there as products will advance and indications will expand and physicians and surgeons will continue to become more comfortable adopting robotics. Similar on AI. So, one stat that we referenced from our our recent research is today, 60% of providers say that they use AI for less than 10% of procedures. So, minimal use of AI today, according to 60% of the participants. That number changes to only 16%. So in five years, only 16% of providers suggest that they’d be using AI for procedures, and that minimal category of 10% or less. So, we expect to see a continued shift as we get more positive results in clinical data related to AI, robotics and connected products will continue to see a significant shift in investment or increase in investment in these areas.
Tray Chamberlin: My guess is MedTech companies already have and certainly need to evolve to capture this new reality in the hospital. What have you seen in terms of MedTech commercial models changing or evolving to meet this?
Mike White: MedTech commercial models have to adapt and leading MedTech companies have realized this. We bucketed into five different categories in terms of what they do from a go-to-market standpoint. First, they have in-depth go to market product launch execution plan. It’s not just launch the new product and rely on the clinical data from the trials and expect that it will take off. What leading companies do is they put an in-depth targeting strategy in place. They provide very clear, differentiated messaging for sales reps to use. They have delineation of role responsibility between clinicals and field marketing and reps. They have incentive plans that reflect the appropriate motivation. So, the first piece is a clear go to market product launch execution plan.
The second is buyer segmentation. So not just at the account level or hospital level or hospitals above 500 beds or below 100 beds and treating those different. Getting down to what leading MedTech companies do is they get down to buyer level segmentation, meaning physician or other clinician, in terms of their total case volume, as well as how many of those cases they’re using with us versus competitors, and putting buyers into multiple different categories, five or 6 or 7 different categories and then taking that information and helping their sales reps be more productive with their time according to how they should be prioritizing buyers specific buyers for these newer products.
Third area is elevated clinical support. So the research also showed in no surprise that physicians and just overall providers are looking for more clinical support for these technology advancements. So, what leading MedTech companies are doing is putting in more advanced clinical support teams, more dedicated teams with a higher level of clinician-backed individuals who support physicians. They’re deploying customer success teams to help with the recurring revenue component that wasn’t there 5 or 10 years ago. There’s overall elevated support and elevated clinical support that’s being deployed for the technology advancements.
The fourth area is sales rep buy-in. Any MedTech company launching new products will tell you about how there is a sales rep buy-in component to getting the new product, the right focus on the new product. And what leading MedTech companies do in that area is they make it really clear on what the value is, not only for the customer, for the provider and the patient, but also for them, for the individual rep to kind of sell the product that maybe they’re not comfortable selling and it’s a different product and a different way of doing a procedure. So, they help with them with the buyer segmentation value propositions and putting the incentive plans in place.
And then the last element is physician education. So you’re asking physicians to operate differently than how they were trained in medical school. And within that you need to put in place more in-depth KOL strategies and education programs and field marketing roles. So, those are really the five areas: go-to-market launch, execution, buyer segmentation, elevated clinical support, sales rep buy-in and physician education are the main areas that we see MedTech companies are adapting their go-to-market models.
Tray Chamberlin: Excellent. Well, all really, really insightful stuff. To learn more about our Provider research series, go to AlexanderGroup.com to schedule a briefing. You can also download our mobile app. Mike, thanks so much. I appreciate it and look forward to learning more.
Mike White: All right. Thanks, Tray.
