The Catalyst … accelerating business growth in healthcare
MICHAEL BOMSTAD JOINS ESSENTIAL HEALTHCARE MANAGEMENT
NOVEMBER 12, 2012 - Essential Healthcare Management (EHM) has announced that healthcare industry veteran Michael Bomstad has joined the EHM Team. Mike is a highly recognized innovator and leader with 20 years of healthcare industry experience. His areas of expertise include GPO and IDN relationship development, complex contract negotiations, business and sales planning and implementation, innovative partnering and business start-ups. As an industry consultant, Mike initiated and completed a first-of-its-kind partnership between a pharmaceutical company and a large hospital group, saving the hospital group $30 million while helping grow revenues for the pharmaceutical partner. He has also developed an innovative and highly successful business model to introduce generic drugs to the US market.
Mike served as Senior Vice President for the $2B group purchasing program at Child Health Corporation of America (CHCA) where his team increased hospital savings in three years by more than 500%. His team grew revenue by 20% annually for a ten-year period, and he personally negotiated more than $1B of group purchasing agreements during his tenure. His demonstrated expertise includes working with senior level and operational management in the medical device, pharmaceutical, distribution and hospital industries, and he has been a member of the Association of Healthcare Materials and Resource Management (AHRMM), the Health Industry Group Purchasing Association (HIGPA), the Healthcare Industry Group Purchasing Industry Initiative (HGPII) and served on the Strategic Advisory Committee of CHCA’s GPO partner, Premier Purchasing Partners, Inc.
Prior to CHCA, Mike was a professional associate at the Center for Business Innovation, a business incubator, where he was responsible for business plan development, strategic partnering, and equity and debt financing assistance for start-up and early-stage technology companies. Mike also served as a Member of the Kansas City Board of Trade where he traded commodities and stock-index futures for institutional clients.
Mike holds an MBA from the University of Kansas where he was a Graduate Business Scholar, and a BS in Agricultural Economics from the University of Missouri
The Supreme Court on Thursday largely upheld the constitutionality of the Patient Protection and Affordable Care Act, including the individual health-insurance mandate, ruling it is permissible under Congress's taxing authority. The court did find one part of the law unconstitutional, according to the Wall Street Journal, saying its expansion of the federal-state Medicaid program threatened states' existing funding. The court ruled that the federal government can't put sanctions on states' existing Medicaid funding if the states decline to go along with the Medicaid expansion, the Journal reported.
What this means for the industry:
• Hospitals will continue to chase cost savings. For buyers, the stakes are higher than ever for understanding the supply chain and where those dollars go. The Association for Healthcare Resource & Materials Management (AHRMM) (Chicago, IL) reports that, on a per-case basis, as much as 31 cents of every dollar spent by providers is for supplies associated with care. In other words, these costs are second only to the cost of labor for hospitals. With such a huge proportion of provider expenditures going toward supplies and services, the opportunities for cost-savings are enormous (Excerpt fromMuddy Waters - Making Sense of the Healthcare Supply Chain in the Era of Reform)
• Quality will be an ever important measurement that affects reimbursement rates. IDNs, hospitals and physicians will have to demonstrate how they are providing quality care for reimbursement in general and also the potential of shared savings. Benchmarks and performance will be compared, and the difference between the two will be the amount of money that is the potential for shared savings.
• Patient experience will become critical in the value equation. Fee for service is being replaced by a holistic approach to care. Quality care will boil down to outcomes-based medicine.From MDSI
The Patient Protection and Affordable Care Act (ACA) includes a new 2.3% tax on the U.S. sale of medical devices beginning in 2013. The tax was included to raise $20 billion in revenue to partially offset the cost of the new, $1 trillion health program. The 2.3 percent tax is imposed on revenue, not profits, so that the tax applies to devices regardless if they are sold at a loss.
This particular financing measure is now the target for repeal by a growing number of Members in Congress because of its impact on patient access to life-saving therapies, American jobs, and medical innovation in the United States.
Regardless of how the Supreme Court rules on the ACA, there are many claims about the tax that are inaccurate and do not reflect existing realities about its impact.
Jobs and investment will suffer
Claim: The new tax will not shift employment offshore because the tax does not create an incentive to move production overseas.
Reality: Even without going into effect until 2013, the device excise tax has already caused companies to lay-off workers, grow device manufacturing jobs outside the U.S., reduce investment in research and development, and eliminate capital investment in new U.S. facilities. The device excise tax applies to the sale of medical devices in the U.S.
This is on top of our federal tax rate at 35 percent and state and local taxes. Combining these U.S. taxes with a slow and cumbersome approval process, the excise tax adds tremendous disincentive to companies wanting to stay in the U.S. and compete in the global marketplace. Compare Ireland’s tax of 12.5 percent of profit and Canada’s national tax of about 15 percent of profit for most companies to the existing U.S. tax rate of 35 percent that many companies face.
Tack on the new federal tax of 2.3 percent of sales, which equals about a tax of 15 percent on profit for most companies, and U.S. manufacturers in 2013 will pay a tax of about 50 percent for every dollar earned. Companies operating outside the United States will be at a distinct competitive advantage as those taxes start from a significantly lower base.
It’s disingenuous to say that that level of taxation will not lead companies to locate new factories and research and development arms outside of the U.S. Foreign manufactures have a clear price advantage by paying a tax bill that can be half what a comparable U.S. firm will pay. Academic claims that the tax will not have an impact on U.S. jobs is naive and does not match reality. Medical device companies have signaled a warning for several months now.
Here are just a few examples:
-Stryker Corporation announced a layoff of 1,000 workers due to the tax
-Boston Scientific built a $35+ million research and development center in Ireland instead of North America
-Boston-Scientific is also girding for a $100+ million charge to earnings in 2013
-Zimmer plans to lay off 450 and take a $50 million charge against earnings
-Cook Medical has shelved plans to build a medical device factory annually in the U.S.
No windfall for the device industry
Claim: The ACA will insure millions of people and therefore device companies will benefit from new business through the sale of more devices.
Reality: Reducing the number of uninsured will not increase the number of patients seeking medical devices. Most of our medical technologies are either used today by patients in emergency situations or by elderly patients who are already insured by Medicare. There will be no windfall for our industry just because more, non-elderly patients have access to insurance.
Here’s why: In the emergency room today, patients receive our technologies regardless of whether they have health insurance or not. These devices that are used in this setting include drainage catheters, tracheostomy tubes, intubation devices and myriad of other devices to maintain life. Federal law requires that all patients in need of emergency services be treated regardless of their ability to pay or whether they have health coverage. The ACA does not change this paradigm.
Further, the administration has stated that the demographic group that will most benefit under the ACA are the non-elderly. Young people tend not to be in need of stenting or other vascular or organ repairs for aging related conditions. Most of the patients that use our products are elderly and today they are either treated in the emergency room without regard to health insurance or covered by Medicare that already reimburses hospitals for medical devices.
This analysis is borne out in Massachusetts, which has a similar universal health care approach. Internal analysis shows that medical device sales did not increase beyond the increase expected prior to enactment of the Massachusetts new health law.
Devastating impact on medical innovation
Claim: Tax will have little effect on medical innovation.
Reality: The device excise tax will have a real and serious impact on medical innovation in the United States as research, development and manufacturing move overseas as a result of the existing tax and regulatory systems in this country. While the medical technology industry has helped to fuel the U.S. economy in recent years, its position as a global leader may erode over the next decade.
This will no doubt affect: 1) the ability of Americans to access future break-through medical advancements; and, 2) the growth of U.S. jobs. In the future, China, India and Brazil will experience the strongest gains in developing next-generation products. Without changes to U.S. policies, gains may lead to an exodus of capital, jobs and research away from the U.S. toward these growing markets. (Source: ’Medical Technology Innovation Scorecard: The Race for Global Leadership,’ PwC, January 2011.)
The economics of this highly competitive sector are not static and several policies have driven American medical device companies to seek clinical data and launch new products outside of the United States. The new, 2.3 percent excise tax on the selling price of a device will leave companies no choice but to reduce research and development and capital investment in the U.S. It will lead companies to migrate to lower cost tax jurisdictions and tax start-up companies, whether those firms have profits or not.
The new tax will force companies to limit research budgets to test new products and ideas – the lifeblood of growing device companies. When these resources are curtailed, patients pay the price with more limited medical treatment and a reduced chance of survival.
In addition, the tax will limit capital investment in new facilities. Boston-Scientific projects a $100+ million annual hit to earnings from the tax. Cook estimates it will cost $20 million a year ’ about what we had planned to invest annually in new factories across the Midwest, factories such as the plant that opened 1n 2010 in Canton, Ill., or the expanded plants opened in 2009 in Spencer, IN.
Wages from those jobs ripple through and strengthen the local community. This new device excise tax will deny patients access to life-saving medical technologies because companies will be forced to move jobs and research facilities overseas. It is fool-hardy to believe that U.S. companies will be able to compete globally when their competitors do not face the tax and regulatory burdens here in the United States. We are already seeing the impact of the medical device tax and this is just the beginning if this tax is not repealed. Americans deserve access to these break-through technologies.
MEDCITY – Devices
April 16, 2012
By Kem Hawkins (President and CEO of Cook, Inc.)
Tags: hospitals, healthcare suppliers, IDNs, integrated delivery networks, medical devices, market research, Center for Medicare and Medicaid Services, Affordable Care Act, ACA, market forecasting, sales
In my 20 years of medical sales experience, one of the most common mistakes I see sales professionals make is having follow-up calls that are not what they should be. If you are calling someone who has done business with your organization in the past but you don't know them well - or it is your first time personally calling them, make sure you are well prepared.
And do yourself a favor - put as much pre-call planning into your phone calls as you do your personal visits for the best results. There really should be no such thing as a "cold call" any more with key people in an organization since you can do so much research before you call. If they have any authority - they expect that you have done your homework.
Here is an outline I might use to call on someone I don't know well....
Good morning _____, this is Rob Bahna with Resuscitation International.
I have been working with other ________ departments (or title you are talking to), discussing some ideas that have helped them deal with some of the unique challenges they are facing today with SCA victims. We have seen some outstanding customer satisfaction and positively affected patient outcomes.
I would like to ask you a few questions to see if some of our solutions might make sense for your department.
I would like verify some of the information I have been able to learn about your facility and
make sure I understand them from your perspective as the ____________(title)?
Ask about them…..
I understand you have been a _________ for 5 years. What are the biggest changes you have seen in that time as it relates to how your responsibilities have evolved? Where do you find yourself spending a lot of time where you didn’t use to?
Besides yourself, who else do you involve in the important process of purchasing medical supplies and equipment?
Sell Your Company
Jane, we know it is important for you to know who you are doing business with. Resuscitation International has been servicing the emergency medical supply and equipment needs of pre-hospital professionals for 10 years. We have a proven track record of being an industry leader. We are proud to have more than 100,000 agencies and professionals rely on RI.
______, as you are well aware, over the last 10 years we have seen a shift in acuity levels. You are being asked to do higher levels of care in many situations with less resources, especially in today’s economy. RI has been in business for over 10 years – and we can help you deal with these challenging times.
Determine Your Customer’s Objectives
Make them stop and think – ask high gain questions that differentiate you and are not only situational.
1) What Criteria do you use to evaluate your potential suppliers (business partners)?
2) How do you prefer to place your orders?
3) Which company do you currently order your supplies from today?
Do you order from more than one company?
4) Could you please share with me what your experience has been with Resuscitation International?
If they do not volunteer it – ask them
5) It looks like you have not ordered from us in the last ______, could you share with me some of the reasons?
Engineer Agreement to Demonstrate Product-Program
________, I appreciate you taking the time to share this information with me. Based on your feedback, and some recent changes we have made it (whatever areas kept them from ordering from us – or things they like about others) we believe we can make your job of ordering easier and be very competitive from a price perspective.
When do you normally place your supply orders? What do we need to do to earn a shot at your next order?
If my pricing is competitive, would there be any other reason that would prevent us from doing business together?
Best of Luck. Be proud to put your signature on everything you do. Or don't do it.
Vice President of Sales
Tags: selling, Essential Healthcare Management, hospitals, healthcare suppliers, teamwork, medical devices, brand management, market research, priorities, sales, business growth, Management, strategic thinking, business development
Boy, have things changed for Critical Access Hospital Radiology & Imaging Services in the last few years. There was a time when mobile routes were really the only way for rural and Critical Access Hospitals (CAH) to gain access to modern technology within the larger imaging modalities. With limited patient volumes, the cost to mobilize, transport equipment and technologist from site to site just made more sense than carving out a space, purchasing a system and staffing an in-house technologist.
Fast forward to today… 3.5 game changers that flipped this rural hospital strategy on its head:
1) Deficit Reduction Act
Ouch. A segment known as free standing imaging centers is nearly wiped away. The reimbursement gap forced hundreds to sell or close, leaving only the largest and most well connected centers. The immediate impact is of course increased volume for CAHs, leading to increased revenue for those facilities able to shift gears and service the expanded marketplace.
2) Refurbished Imaging Equipment
A 25%-50% change in capital outlay on the front end changes everything. Bringing MRI and CT “in-house” became far more compelling with this reduction and the elimination of shoe string costs (trucking, technologist travel, etc.). It’s a win-win both in terms of the financial upside and higher level of patient care.
If you are considering refurbished equipment for the first time, be sure to check out Block Imaging’s “6 Questions to Ask Before Buying Refurbished Medical Equipment”.
3) Third Party Service Options
Engineers are now located around the country who are fully capable to provide top notch imaging equipment service. Equipment that was once deemed “end of life” has years of quality imaging that remains. Whether time and materials coverage, parts only, shared risk or even full service coverage, beyond simply having more options, it’s also had a significant impact on OEM service pricing.
3.5) Quality Replacement Parts
Don’t forget quality medical equipment parts. Whether coils, injectors, boards or other components, parts accessibility no longer makes “list” price the only option. No pressure to sign the full service coverage or even a parts only plan so you’re not over a barrel with a part.
As you can see, much has changed. Block Imaging exists to serve you as you navigate the ever changing waters of Imaging. Whether buying, selling, looking for a FMV or even want to discuss strategic ways to balance your economic and clinical needs, we are here to help
Author – Josh Block
If you are fortunate enough to sell in the medical field, particularly in the acute care setting, one of the things you deal with are committee meetings.
Whether it is a new products committee, value analysis committee, code committee - sometimes they seem endless. However, you know you need to deal with them and attempt to stack the deck in your favor so the outcome is what you want it to be.
Having been in the medical field for over 20 years (I remember when HMO and PPO and GPO were just letters.....) I have seen many successful sales people handle committee meetings well.
As you know, the key is to have a strong internal champion who is sold and on your side. And of course you need to understand why they are going to be your champion (they do things for their reasons – not ours).
It might be that they are true patient advocates that are always looking for the best sources to elevate standards of care. But, there is probably a secondary reason as well – like they are trying to impress their boss, or they are looking to be promoted in the future, or they know that improving patient satisfaction is a key initiative for the quarter. The most successful sales people will understand those reasons most of the time.
The first rule is to be in the meeting whenever possible. You will most likely hear that they don’t allow sales people in the meeting. Have they ever? And if you can’t be there – then you need to turn your champion into the best sales person you can in your place.
Here are some questions to make sure you ask your champion:
I understand this is an important decision. How can I help?
What can we do to convince the rest of the committee?
What will you do if your supervisor or someone else on the committee objects to our proposal?
How do you think the product will benefit your specific environment?
I have helped bring this in at other facilities. Would you like to know what they did to ensure success?
Has there ever been a situation in which a sales consultant was allowed into the meeting?
Have you ever had a chance to drive a new solution like this through the committee?
A few other thoughts:
1) Find out who is on the committee and attempt to see them before the official meeting. It is always better to stack the deck in your favor and know the votes going in (like a political vote). People always act differently if they have ownership in the idea.
2) If it is a big enough decision to warrant it, let them know that you will be in the area if they have any questions during the meeting. Hang out in the cafeteria or clear your schedule and be available by phone. Many of you have been brought in when a technical question comes up if they know you are available (and you have set it up correctly).
3) Make sure you know the next steps after the meeting and have that set up assuming a positive outcome. Get the next steps going as quickly as possible.
4) Think of the committees as a way to keep other salespeople out. Most won’t do the work necessary or put in the time appropriately to do all these things. They rely on a champion and go from there.
I had an infection control nurse champion tell me one time that I needed to find someone else to bring the product through committee because she had sponsored my last 2 products successfully and they would “vote it down” just because it was her again. I wish I could tell you I was good enough to have figured that out myself – but I certainly learned to look at each account as an individual puzzle.
"Do not let what you cannot do interfere with what you can do."
Vice President of Sales
Tags: medical, hospitals, healthcare suppliers, Healthcare Service Provider, Quality, CMS, Center for Medicare and Medicaid Services, Value-Based Purchasing, Medicare, VBP, patient satisfaction, business growth
Tags: healthcare, medical, hospitals, Healthcare Service Provider, Quality, Center for Medicare and Medicaid Services, Value-Based Purchasing, Medicare, Affordable Care Act, VBP, patient satisfaction, business growth
In January, the Centers for Medicare and Medicaid Services (CMS) proposed policies for implementing a value-based purchasing (VBP) program for Medicare hospitals in accordance with the Affordable Care Act passed by Congress in 2010. Last month, the CMS solidified the VBP program by releasing a final rule that requires performance metrics. The VPB program will go into effect beginning in fiscal year 2013.
Value-based purchasing is a new concept that focuses on increasing the value that comes from purchasing medical supplies in a tangible way that can be assessed through metrics. CMS has helped identify certain aspects of hospital service that can be measured and improved, including everything from product costs and payment expediency to improving patient outcomes and customer service scores.
If the metrics indicate that a Medicare hospital has been demonstrating high levels of performance in these areas by purchasing these products, then the hospital becomes eligible to receive higher reimbursement levels, which translates directly into more money for purchasing. Payments made for hospital performance and quality measures will begin in fiscal year 2013.
So what does the implementation of value-based purchasing mean for hospitals and healthcare service providers? How will it affect healthcare suppliers? As an industry leader in connecting healthcare service providers with purchasers in hospitals, we will be examining the effects of value-based purchasing in respect to quality and cost in the coming weeks.
Next week: How Value-Based Purchasing Will Affect Hospitals and Healthcare Service Providers
Following week: How Value-Based Purchasing Will Affect Healthcare Suppliers
Tags: Essential Healthcare Management, EHM, healthcare, medical, hospitals, healthcare suppliers, Healthcare Service Provider, Quality, CMS, Center for Medicare and Medicaid Services, Value-Based Purchasing, Medicare, Affordable Care Act, VBP, business growth