Preparing to Service the Medical/Healthcare Market:
Meeting the Challenges of the 90's And Beyond
(Originally published in the October 1993 issue of AFSMI's The Professional Journal.)
By William K. Pollock
The healthcare industry continues to undergo significant change, and along with this change comes changing needs and requirements for customer service and support. The entire structure of the medical/healthcare market is in a phase of constant realignment, and no two experts can agree on where it will end, and what it will ultimately look like. Still, customers expect, and demand, high levels of service and support so that they can deal more effectively with their own growing economic costs, shifting patient demographics, new technologies and changing patterns of growth.
Following several years of substantial growth and consolidation, there are now fewer, but far more powerful, hospital equipment and service purchasers. However, the market is no longer comprised exclusively of the traditional hospital base, nor is it merely an aggregate market of similar users, requiring similar products and services. It has evolved into a market of individual users, purchasers and decision-makers, each with its own set of unique characteristics, needs and requirements, perceptions and buying patterns. This evolutionary market now includes Group Purchasing Organizations (GPOs); private labs, clinics and medical centers; life care facilities; and other types of private medical/healthcare centers, in addition to the historical hospital base.
As a result of these changes in the structure of the market, individual users now tend to be more centralized, more demanding, more cost-conscious and a "tougher sell" for the service organization. However, once "sold", they also tend to be "better customers". Users are also more sophisticated today in terms of the "range" of services and support that fall under their collective responsibility. Gone are the days where "equipment service" was synonymous with "hardware service". Now, service includes a wide array of customer support and assistance ranging from:
The emerging trends for service and support in the medical/healthcare market in the 1990s are also vastly different from the historical trends of the 1980s for a number of reasons including:
- Hardware maintenance and repair service, including re-engineering, retrofitting and refurbishing;
- Software support, for both customized and off-the-shelf programs;
- Applications support for both medical and business applications;
- Consumables support, including chemicals, reagents, and supplies;
- Systems integration consulting and implementation support; and
- Consulting support, including facilities planning, facilities/site management; inventory management and control, quality program implementation and others.
However, to fully understand the needs and requirements of the medical/healthcare market, and to be adequately prepared to meet those needs in the marketplace, it remains imperative for the service organization to also understand:
- Larger, more centralized users now have increased leverage in contract negotiations;
- Users generally have more flexibility in choosing among the growing number of service providers;
- Integrated service capabilities allow for increased economies of scale in the delivery of services; and
- Individual users now have increased buying power through the existence of GPOs and other types of purchasing groups.
Only by understanding, and acting upon, these key characteristics and patterns within the medical/healthcare market can a service organization hope to eventually succeed in growing its base of customers and revenues. It is not only a matter of learning a new language of "buzz words" and terminology; for many organizations, it is more akin to learning a new culture. There are, however, some easy guidelines for getting started on the path to being better prepared to service this market. A good place to start is to first gain a good working knowledge of the full array of systems, equipment and instrumentation that is used by a typical hospital, laboratory or clinic.
- The full range and types of systems and equipment presently being utilized;
- The principal applications which are most critical to day-to-day operations; and
- The key needs and requirements, demands and expectations of the purchasers and users (i.e., operators, technicians, department managers, et cetera) themselves.
II. Systems and Equipment Utilized
There are essentially eight (8) categories of medical/healthcare systems and equipment that are commonly used within this market. They include:
Data Processing Systems and Equipment
- Utilized by virtually all hospitals and medical/research labs
- Hospital Information Systems (HIS) may be either proprietary or shared
- Crucial to ongoing patient database maintenance and use
- Often linked to multiple user areas via PC networks
Surgical Suite Systems
- Typically a PBX network with nurse call and/or paging
- Linked via modem, fax and/or network capabilities
- Electronic mail or messaging
- Internal and external applications
- Supports both voice and data communications
- Wide range of medical instrumentation, consumables and supplies
- Includes patient monitoring and patient care systems
- Generally on-line system operation
- Critical service and back-up systems requirements
- Downtime severely impacts patient care
Medical/Clinical Diagnostic Systems
- Includes MRI, CT scanner, nuclear medicine, ultrasound and x-ray
- Multiple brands may be installed at a single site
- High ticket product and service costs
- Very high response time requirements
- Downtime impacts revenue stream
Building Systems and Controls
- Broad array of diagnostic systems and instrumentation
- Includes blood gas/chemistry analyzers
- Heavy use of chemicals, reagents and consumables
- Requires full software and consumables support
- Includes Heating, Ventilation and Air Conditioning (HVAC), power and distribution, emergency generator, elevator and security/CCTV systems
- Electro-mechanical equipment is becoming more computerized
- Ongoing systems maintenance and support required
- Generally involves many service providers
Other Electronic and Electro-Mechanical Equipment
- Broad range of systems and equipment
- Includes PCs, word processors, reprographics, printers and peripherals
- Multiple units and brands installed
- Generally less demanding service requirements
- More service options are available
Overall, these are the principal types of systems and equipment that hospital/healthcare establishments rely on to conduct their day-to-day operations. All of these categories of systems and equipment are important to users, but often to varying degrees, and for varying reasons. For example, data processing, telecommunications, surgical suite and diagnostic imaging equipment typically reflect the most demanding service requirements in terms of response and repair time. When the mainframe, PC-network or MRI unit go down, there are generally no substitute systems that can quickly be accessed. However, other categories, such as medical/clinical diagnostics, building systems, office automation and other electronic/electro-mechanical equipment, while still important, are often configured in an environment where back-up units or systems can be easily substituted without risk to either patient care or revenue stream.
- Miscellaneous equipment and instrumentation
- Includes both high-tech and low-tech equipment
- May include food processing (patient and staff), television/VCR, R & D instrumentation, et cetera
- May also include mobile facilities (x-ray, MRI, blood lab, et cetera)
III. Understanding the Needs of the Medical/Healthcare Market
Knowing the service business and all of its associated terminology, "buzz words" and acronyms is an admirable goal, but a "given" in order to participate in the service field. A full understanding of terms like TAC centers, MTTRs, MTBFs and TPM/ISOs are standard requirements for functioning in the service market. However, each market segment has its own set of terms and acronyms, as well as its own structure and organization, patterns of purchasing and decision-making, and means for evaluating the requirements of service. This is the level of understanding that is ultimately required in order to succeed in meeting the needs of any specific market, and the medical/healthcare market is even more demanding than most other segments.
While there are many guidelines that can be used to facilitate an understanding of the specific needs and requirements of the medical/healthcare market, there are essentially eight (8) which provide a sound foundation. They are:
IV. Organizing for Service Delivery
- "If you don't speak their language, they won't think you understand their business"
All of your organization's sales, service and marketing personnel that have any contact, either direct or indirect, with customers must be familiar with the terminology, technology and "buzz words" of the marketplace. They will be required to communicate articulately with hospital or clinic administrators, department heads, purchasing managers and individual equipment operators and technicians. As a result, they will need to be trained to understand key customer issues in their own words, names and examples.
- "If you know who to sell to, you can shorten the overall sales cycle"
Knowing who to sell to within the user organization is critical to the success of the sales effort. The fewer referrals you get within the organization before you reach the right decision-maker, the less likely you will be in getting "brushed off" along the way. However, in order to be in a position where you can effectively differentiate between the decision-influencers and the decision-makers, you will first need to understand the segment's organizational structure and hierarchy. This will require an enlightened understanding of the various titles, responsibilities and roles of key segment decision-makers in general, as well as the specific names relating to each within the prospect organization.
- "If you know who is involved in making the decision, you can ensure that they have everything they need from you"
The decision-making process, and ultimately the service sales cycle, can be both expedited and facilitated if your sales and marketing personnel have a prior understanding of who is involved in the decision-making process, how many individuals get involved, who calls the shots, how long the process takes, what they need to know and when they need it. Any incomplete information provided will simply extend the overall length of the process, and any extraneous information will create "noise". Information given to the "wrong" individual may be worse than not providing it at all.
- "If you understand their cost constraints, you can package your services more attractively"
All prospects are likely to inform you of their various cost constraints right from the outset. However, your service sales personnel should be trained to distinguish "real" from "perceived" costs as a result of the initial prospect meeting and needs assessment. They should be able to establish prospect thresholds for cost vs. value and build into the equation the best timing for spreading out the total program costs. Sometimes total cost is the principal determinant; sometimes cash outlays are more important. In either case, the most appropriate "package" of services must be developed for each prospect and customer, and your service sales personnel must be equipped to do so.
- "If you know how your customers run their business, you can better understand their service needs"
This requires a full understanding of how the systems and equipment are being used, in addition to what specific types, and how many units, of equipment are installed. Service personnel should know when the equipment is typically used, by whom, for what purpose and at what rate. A PC used in a hospital or lab setting may have substantially different service requirements than one used in a retail or manufacturing environment. Equipment used in three shift cycles in a life-critical application requires very different service than the same equipment used in a nine to five office shift. The impact of downtime, both scheduled and unscheduled, on patient care (or revenue stream) is an important consideration, and is evaluated primarily on the basis of the unit's application.
- "If you understand your customer's priorities, you can ensure that critical parts and service are always readily available"
The full impact of system downtime relies more on the application of the system than on the equipment itself. For example, a PC used in patient admissions would typically not require the same level of immediate support as a PC used in patient diagnostics. The service organization should be aware of the potential ramifications of downtime on the customer's principal systems and applications. Further, it should have an appreciation of the "urgency" for service on these critical units, and a set of contingency plans to handle all major problems. Provisions should also be made for arranging loaner or replacement units for the most critical applications, as well as any other appropriate emergency back-up plans.
- "If you understand how your customers are growing, you can grow along with them in meeting their changing needs"
If you are aware of your customer's plans for growth, you will be better able to "tailor" your services specifically to that customer's needs. By understanding your customers' plans for growth, along with their anticipated timetables for change, you will be better prepared to gauge the expected impact of those changes on your customers' service requirements. As a result of any growth or change, your customer's service needs will also change, and if you can anticipate these changing needs, you will find yourself in a much better position to meet their changing expectations.
- "If you understand the importance of service value-in-use, you will better understand your customers' needs and requirements"
The only true way to measure the actual value of service to an individual customer is to relate its service requirements to the overall costs of operations. In other words, the value of service can be measured in two separate and distinct ways; first in terms of the costs required to keep key systems and equipment in working order and with minimal downtime and, second, with respect to the costs that would be incurred through an unexpected or extended period of downtime. By understanding the impact of downtime on business operations, and the means by which this downtime is measured by the customer, you will also understand how the customer defines its service value-in-use in its own terms.
If your service organization understands the needs and requirements of the medical/healthcare market as described above, it will be halfway to the point where it can effectively deal with decision-makers within the segment. However, the remaining requirements are of even greater importance in terms of being able to deliver the required levels of service to the customers.
The six (6) rules for ensuring that your organization is sufficiently prepared to service the medical/ healthcare market are as follows:
V. Summary and Conclusions
- "Design your service portfolio to reflect a full and focused commitment to the market rather than one which is perceived as being too general in scope"
While your service organization may have the talent and resources required to successfully service equipment in the medical/healthcare market, the user's perception of these capabilities may be significantly lower if they are not sufficiently promoted or packaged. Key organizational characteristics that can promote your commitment to this segment's specific needs and requirements are (1) an organizational structure that is designed to support individual product lines, or groups, of industry-specific applications (e.g., diagnostic imaging, clinical diagnostics, et cetera); (2) a dedicated service force targeted specifically to the medical/healthcare market; and (3) promotional literature focusing specifically on the medical/healthcare field. A portfolio that is described and presented solely in global or generic terms (e.g., "We service PCs" or "We service networks") will not convey an understanding of the specific needs, requirements or applications of the market.
- "If you can provide a full array of desired services to your customers, you will become much more important to them"
Past studies have shown the importance of being able to provide customers with a full range of integrated services for the various systems, equipment and applications used at the customer site. Service providers that have only narrowly focused service capabilities (e.g., CT scanners, chemistry analyzers) play an important role, but are positioned as only one of many necessary vendors. The ability to also service related data processing, office automation, telecommunications, network or other equipment in addition to the specific area of expertise will serve to make your organization even more important to its customers. Most customers do not care whether these related areas of service are provided directly, or through the use of other qualified subcontractors or partners.
- "If you do not have a full understanding of your customers' applications, you cannot be fully responsive to their needs"
It is not only good enough to understand your customers' specific needs and requirements; you must also understand the principal reasons behind them (e.g., response/repair time for a certain unit may be especially critical due to patient care requirements or the "shelf life" of a specific test culture, et cetera). In these cases, the customer will want you to fully appreciate the severity of its service need, in terms of its own perceived speed and time requirements, and with the foresight of alternative contingency plans should a patient crisis evolve. Overall, your customers will be more prepared to believe you are able to deliver their required levels of responsiveness, under both foreseen and unforeseen circumstances, if they also believe that you understand the reasons for why they are important.
- "If you already have the capabilities to service additional types of equipment today, you can ensure that you will grow along with your customers' needs for tomorrow"
Service providers that already have the capabilities to service additional types of systems and equipment at the customer site will more likely be able to continue to support their customers as they expand, or acquire new types or brands of equipment over time. The best way to ensure a long-term relationship with your customers is to show that you can grow along with their needs as their installed bases of equipment continue to expand. It is also important to be able to continue meeting their needs as they add new sites and facilities through merger and acquisition, or other forms of affiliation.
- "If you do not provide all of these levels of service today, your customers may look elsewhere for a total provider in the future"
Increasingly, medical/healthcare customers are looking for service providers that can provide a full range of related software and applications support in addition to traditional hardware maintenance and repair. Many now also require reagents and consumables support, where applicable. The most successful service providers will be those that can provide customers with "enhanced" levels of service including systems design and engineering; installation and implementation; network systems services; software maintenance and support; and a wide array of other related services and support, as desired. Not all users need a full range of support today, but, over time, many of these additional service options may become more attractive to them. The fact that your organization already has them included in its portfolio will give some of your customers an extra measure of "comfort" in knowing that you will also be prepared to meet their needs in the future.
- "If your service contract offers everything your customers want today, it will be easier to hold onto them tomorrow"
Customers in this highly demanding segment are constantly looking for credible providers that can act as a single point of service contact, either as a direct provider, or a prime contractor. Most would benefit from finding a single organization that could serve as the catalyst that provides them with the full level of service and support they require. The ability of your organization to offer an integrated service contract that assures your customers that "everything they need is under control at all times" represents the ultimate "value-in-use" service and support package.
Service providers in the medical/healthcare market must understand both how to service the equipment as well as how to service the customer. Users in this market, in particular, know they are attractive to service providers, and they know they have many vendors from which to choose. It is essentially a "buyers' market" for service. However, by developing an operational infrastructure designed to focus on the specific needs of the market, designing a portfolio of specific services that meet those needs, and promoting the organization's capabilities in a focused and targeted manner, a committed service organization can rise above the traditional competition and be recognized for its understanding of the market and its special needs.
In summary, the most successful service providers in the 1990s will be those which:
The successful service provider will be positioned as the primary source of service to its principal customers by either performing the required services and support directly, or managing other providers as part of a total service package. It must also provide a full array of services including software, training and applications support, as well as reagents and consumables support, wherever possible. Finally, it must provide a full service capability, both today and in the future, with a commitment to the total understanding of, and responsiveness to, the unique needs and requirements of its customers.
- Understand both the current and emerging needs of the medical/healthcare marketplace;
- Understand changing user requirements based on the concept of service value-in-use;
- Are organized and structured to address the specific needs of the industry;
- Are prepared to grow ahead of, or along with, the overall growth of the market;
- Are prepared to offer more than just traditional hardware service and support; and
- Are prepared to "partner" with their customers in order to ensure that all of their service goals and objectives are being met.
William K. Pollock is President of Strategies For GrowthSM, a Westtown, Pennsylvania USA-based consulting firm specializing in business planning, customer service and customer satisfaction research. He may be reached at 610-399-9717 or via e-mail at firstname.lastname@example.org.