Thursday, February 15, 2018 | Joe Sasson
We all have some incredible vendor relationships, and then we have those that we simply tolerate until a better option comes to market. A typical vendor relationship is often based on three things:
On the surface that sounds pretty logical. All three are important and have a place in logical decision-making (hopefully the first two are carrying the most weight). With each passing day, and each new wave of change that is coming at an ever-increasing pace, I believe that the healthcare environment now necessitates a more stringent evaluation of vendor relationships.
The truth is that for most organizations, today’s change is coming faster than they can digest and respond to. As companies compete for your time, attention, and business, their value propositions must become stronger. In light of that, you as a consumer should become stronger in your vendor selections.
In building stronger vendor relationships, what is it that you should be seeking, and how do you choose partners that will help you succeed in an unknown future? Below are a few suggestions of high-level questions that you could be asking your vendors to help find the partnership that is right for you.
What are our co-development opportunities?
Co-development is the process of vendors and customers working together to provide the next iteration of a product using feedback and expertise from a front-line-focused strategy or existing implementation. Co-development makes both partners stronger, and is a great way to get your needs met in future iterations of a product. You might want to ask questions relating to the vendor’s forethought in how they co-develop and partner with their clients to understand what their processes for customer feedback and co-development are (e.g., solicitation of feedback, response to feedback, how feedback is selected for further R&D work, how development opportunities are presented back to the client, and so on). Does the vendor have true co-development partner sites? How do you become one of those sites and what are benefits to your organization for participating? The more complete the answers and the more foresight put into the responses lets you know that you are dealing with a customer-focused learning organization.
What’s coming down the pike?
To make a good decision you need to understand what else is in the company’s development pipeline, what their vision of product evolution will be in terms of new products or product enhancement, and what those potential release dates might be. Underneath the logical information provided is an indication of how much the organization is educating their sales force, and the extent to which R&D is talking to marketing and sales. It goes without saying that a learning organization is going to have a high frequency of discussion from the front lines back to R&D, and from R&D to the front lines. Asking questions regarding the pipeline of features, where the suggestions are coming from, and how quickly they progress through R&D will give more insight into how dynamic the vendor will be and how quickly they will be able to learn and respond to the rapidly changing healthcare environment.
How will the healthcare landscape change, and how will that affect our relationship?
This is a critical question. When partnering with an organization, you want them to have some understanding of where healthcare is headed, but you don’t want to necessarily take the time to do the educating. Most organizations have more on their plate than they can handle, so educating vendors about what they need is a great disadvantage in terms of time and resources spent. What is more desirable is a company that knows what’s happening, is constantly educating themselves and their sales team on their customers’ challenges, is staying on top of reimbursement changes, and making sure their product and processes remain compliant and optimized within the current regulatory environment. Satisfactory answers on these questions are the ultimate test of a learning organization, and create a level of trust and confidence that the vendor and client (i.e., partners) can speak the same language as they work together on solutions. This is worth its weight in gold to an organization selecting a vendor/partner.
Examples of questions I would ask in this area are: How will the changing healthcare landscape affect my ability to provide the particular product or service? How will it change our pro forma in the coming year or two? How will it affect product specifications or delivery model? How will you be changing your price point or pricing model (e.g., risk sharing models) to adapt? How will you be providing services/solutions that help us to adapt?
Truthfully, I could write pages on each of these questions, but simply presenting them here will spur your own thoughts in the context of your organization and culture. In short, it’s not about buying anymore, it’s about partnering. It’s about co-development. It’s about risk-sharing. It’s about becoming a team and having each other’s back. Each critical relationship must be symbiotic or it will eventually fail.
Final Thoughts
If you are beginning a new line of business, or thinking about changing from one vendor to another, do yourself a favor and don’t make price the most important aspect of the decision. Yes, it’s a real aspect of the purchase, and an important one, but the lowest cost vendors don’t always keep their fingers on the pulse of what’s ahead. If you don’t partner wisely, you might find yourself in another vendor selection process or, even worse, in the midst of a legal concern sooner than you’d ever imagine. Disperse the learning across you and your partner, and be an active player in that exchange. It has to be a two-way street, and it requires engagement and open-mindedness.
In future blog posts I will provide examples of successful relationships and their components. Those examples will pave the way for discussions with your vendors on how your organization can more effectively look beyond the cost per widget, and begin systematically evaluating the overarching value of a true symbiotic and bi-directional educational partnership.
Joseph Sasson, Ph.D. is Executive Vice President of MedAxiom Ventures. Joe’s work includes helping MedAxiom members to access the technologies and solutions they need most to effectively run their organizations and prepare themselves for the future of value-based care. Simultaneously, Joe works with dozens of companies in med-tech, device, pharma, imaging, cath labs/ASCs, and health IT to deliver economic value propositions and strategies to help companies accelerate commercial growth.
Contact Joe at [email protected].
Illustration: Lee Sauer
MedAxiom Consulting is the nation’s leading cardiovascular-specific consulting group, working with a range of private practices, hospitals and health systems across the country to improve the delivery of CV health care. To learn more about our team, please visit our website.
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