This month's headlines
 

Opportunity amidst crisis. The economy has tanked, healthcare spending and insurance premiums keep climbing, consumers have lost their buying power, investments have dried up, joblessness is climbing. Yet in the midst of all the talk, successful businesses are searching for – and finding -- opportunity. IMDA members who want to be among them should consider coming to Charleston, S.C., for the 2009 Annual Conference. Spectros looks to IMDA members to target NICU. IMDA’s newest allied member, Spectros, makes a system to measure the oxygen content of hemoglobin at a microvascular level. Called the T-Stat®, the system uses a non-invasive technology called visible light spectroscopy. And the company is looking to IMDA members to bring the product to hospitals, specifically, neonatal intensive care units. Agency agreement posted on Website. IMDA members looking for help drawing up an agency agreement with manufacturers now have a resource to turn to. The specimen agency agreement, crafted by IMDA legal counsel Mitchell Kramer, provides a model to guide them through the process. Will medical-device makers be subject to lawsuits? A recent Supreme Court ruling that patients can sue drug companies in state courts for harm caused by medicines cleared for marketing by the Food and Drug Administration begs the question: What about devices? Lawmakers believe they have the answer. Making healthcare cheaper. . .by making it better. IMDA keynote speaker Joe Flower has ideas about how consumers and providers can improve healthcare while reducing its cost. In this article, he offers three of them. You want the sale? You gotta ask for it! You pay your reps to carry the ball downfield and into the end zone, that is, to close sales. Sales trainer Gerry Layo offers a few suggestions on how you can help them do just that.

2009 IMDA Annual Conference June 14-16, 2009 Francis Marion Hotel Charleston, SC

Annual Conference Opportunity amidst crisis

Everyone’s talking crisis: The economy has tanked, healthcare spending and insurance premiums keep climbing, consumers have lost their buying power, investments have dried up, joblessness is climbing. Yet in the midst of all the talk, successful businesses are searching for – and finding -- opportunity. IMDA members who want to be among them should consider coming to Charleston, SC, for the 2009 Annual Conference. Scheduled for June 14-16, the Conference will feature educational sessions, the Manufacturers Forum, and, of course, networking.

“Successful business owners know that even in the best of times, they can always get better by listening to and learning from others,” says IMDA President Shawn Walker. “That’s what the Annual Conference is all about, now more than ever.” What’s more, the Manufacturers Forum is the only event of its kind, allowing specialty sales and marketing companies to meet with and strike up relationships with manufacturers of innovative medical technologies. “It’s a tremendous business opportunity, unlike any other in the industry,” she says.

The Conference kicks with the IMDA Golf Tournament at 10:30 a.m. on Sunday, June 14. Then at 3 p.m., new members and first-time attendees will be welcomed in a special session for them. The general opening session begins at 4 p.m., followed by the Manufacturers Forum and Welcome Reception at 5.

Keynote

Following a continental breakfast on Monday, noted speaker, writer and healthcare consultant Joe Flower will deliver the keynote address, geared especially to companies that are determined to find opportunity in time of crisis. Flower has explored the future of healthcare with clients ranging from the American Hospital Association to Cardinal Health to the National Health Service of the United Kingdom. He has worked closely with hospital executives and knows the challenges they face – and the opportunities IMDA members have to help providers meet those challenges.

Yes, hospitals are experiencing a decline in the number of patients seeking elective procedures and a significant drop in overall admissions, says Flower. They’re looking to cut costs. What’s more, the nation as a whole is facing a healthcare crisis; spending is accelerating beyond sustainable levels, and the quality of care in this country doesn’t even equal that of many other countries. Caught in this spend-more-for-less quandary, leaders are seeking solutions that will spell value for providers and consumers. IMDA members who provide true value can be part of the solution.

Hospital financial officer’s perspective

In addition to Flower, IMDA has invited a hospital financial executive to give a financial officer’s perspective of the situation in which hospitals find themselves today. It has been reported that layoffs are widespread and hospital spending has slowed. How long will these trends continue? What kind of demands will providers place on their suppliers? How should IMDA members respond? And when will the economic picture change? Expect answers to these questions -- and some spirited dialogue -- in this presentation.

Breakout sessions

An integral part of the IMDA Annual Conference are the breakout sessions. In these sessions, small groups of members meet to bat around ideas, maybe argue a little, and always, to learn. This year will offer four such sessions.

Code of ethics. The first breakout will deal with the proposed Code of Ethics for IMDA members. Every week, it seems, news comes out about improper relationships between physicians, researchers and vendors. Such conflicts of interest and unethical behavior are drawing the attention -- and ire -- of lawmakers, providers and the public at large. Indeed, the word this year is “transparency.” It means divulging the back-and-forth, inside-and-out of trading relationships, such as that between physicians and vendors. Many trade associations (including AdvaMed and the Pharmaceutical Research and Manufacturers of America) and healthcare vendors have climbed onboard the “above board” train with their own Codes of Ethics. IMDA legal counsel Mitchell Kramer has written a proposed Code of Ethics for IMDA members, who are encouraged to take some time out during this breakout session to offer their input on the proposed Code. After all, it’s a document they will be asked to live up to.

Sales rep compensation. The second breakout session will deal with sales rep compensation. “Conference committee members noted that last year’s session on compensation had to be cut short due to time,” says Walker. “It’s obviously a topic that is a huge concern for all of us. That’s why we decided to offer everyone an opportunity to talk about it again at this year’s Conference.” The session is designed to help members find out what their colleagues are doing and to share their own experiences about what seems to work and what doesn’t.

IMDA Announcement Refer a member and get $50 Every time IMDA gains a member, our collective voice grows louder, our collective wisdom becomes greater, and our collective influence in the market grows. It's good for everyone. And there's no better source for new members than current ones. After all, you know the market, you know the people. That's why IMDA is offering members $50 for every new member who joins as a result of your referral. So when you're walking the floor at your next trade show, or taking a break at your next sales meeting, keep an eye out for companies that might benefit by joining IMDA. Collect business cards and send them to headquarters. Fifty bucks is nice. But the added wisdom, knowledge and camaraderie that a new member brings are even greater payoffs.

Vendor credentialing. Much has transpired since the discussion at last year’s Annual Conference on vendor credentialing. Shawn Walker has been working closely with the heads of other provider and supplier organizations -- including AdvaMed, Medical Device Manufacturers Association, Healthcare Manufacturers Management Council, Association of periOperative Registered Nurses and the Association for Healthcare Resource & Materials Management -- to prepare a consensus document to submit to the Joint Commission. But each IMDA member must pick up the ball and talk about the issue with their customers, she says. In this breakout session, IMDA members can share their experiences with vendor credentialing, learn from Walker what IMDA has accomplished over the past year, and prepare their own strategy for the future.

Virtual sales prospecting. Today’s world of specialty sales is much different than that of just a few years ago,” says Dave Campbell of Vital/Med Systems. “Your sales techniques have to change if you are going to continue to bring value to the marketplace. Unproductive cold calls cost a lot in terms of time and money. What’s more, most hospitals have thrown up an additional, costly barrier in the form of vendor credentialing. For that reason, IMDA members must adopt new ways of reaching out to current and prospective customers.” Using the Internet, or what Campbell refers to as “virtual sales prospecting,” Vital/Med Systems has almost totally replaced traditional cold calling. “The costs are less; the results are more impressive; and there are no vendor credentialing requirements to comply with,” he says. Pick up some ideas on how to approach your customers in this informative session.

To learn more about the IMDA Annual Conference, visit the Website at www.imda.org, or call headquarters at (866) 463-2937.

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IMDA’s newest allied member, Spectros (Portola Valley, Calif.), makes a system to measure the oxygen content of hemoglobin at a microvascular (that is, capillary) level. Called the T-Stat®, the system uses a non-invasive technology called visible light spectroscopy. And the company is looking to IMDA members to bring the product to hospitals, specifically, neonatal intensive care units.

When oxygen fails to reach any part of the body, the result is organ failure and often, death. Insufficient delivery of oxygen is called ischemia, and it can be caused by a number of things, such as hypotension or shock, blood clots, irregular heartbeat or atherosclerosis. It can also occur due to a change in the need of the tissue for oxygen, such as during fever or certain drug reactions. The heart, kidneys and brain are among the organs most sensitive to inadequate blood supply. T-Stat® can help clinicians detect oxygen deficiency and intervene.

IMDA Announcement Door Opener If your reps call on the OR, you know the drill: They have to demonstrate their knowledge of OR protocol, HIPAA, bloodborne-pathogen regulations and more. Today, with vendor credentialing in the mix, the barriers to entry into the OR are higher than ever. Help your reps pass through those barriers by enrolling them in online OR training courses from HealthStream. As an IMDA member, you'll receive a discount. Upon completing them, your reps will receive a wallet-sized card provided by AORN and HealthStream. That card is a door-opener. To learn more about the program, visit this URL today: www.healthstream.com/products/sts.htm.  To take advantage of the special IMDA discount, go to the "Members Only" portion of the IMDA Website (www.imda.org) and scroll to the box on "Surgical Environment Training."

Spectros was founded in 2000 by David Benaron, M.D., a former attending neonatologist at the Lucile Packard Children’s Hospital at Stanford University Medical Center; and a partner, Ilian Parachikov, Ph.D. Dr. Benaron has enjoyed a successful career as a physician, researcher, inventor, innovator and entrepreneur, says Robert Kum, national business director of Spectros. In fact, Benaron founded the biomedical optics laboratory at Stanford in 1990, as well as several companies prior to Spectros.

Visible light spectroscopy, or VLS, uses a white light source to illuminate the tissue being studied, explains Kum. A fiberoptic bundle then transmits the results back to a monitor. The system actually measures the oxygen content of capillary blood (which Spectros has correlated to venous blood), that is, blood from which oxygen has already been extracted, he says. (Contrast that with a pulse oximeter, which analyzes arterial blood.)

Like the pulse oximeter, the T-Stat® determines oxygen levels by noninvasively reading the color of the blood. But the device offers some advantages. For example, pulse oximetry cannot detect cardiac output issues, in other words, blood flow from the heart. So, even if oxygen saturation of blood appears normal to the pulse oximeter, there could, in fact, be inadequate blood flow to the tissue. A tissue oximeter, such as the T-Stat®, would pick that up. (All that said, however, the device is designed to complement, not replace, the pulse oximeter, says Kum.)

“A lower reading from the T-Stat® could mean that the tissues are extracting more oxygen than it normally would, which could indicate a cardiac output issue, shock, or something else,” says Kum. With that information, the clinician can intervene, either with more fluids, drugs or other action.

T-Stat® has been cleared by the FDA for use in infants, children and adults. Spectros’ first market penetration was, in fact, the vascular surgery market, specifically, to monitor potential colon ischemia in patients undergoing surgery for abdominal aortic aneurysms. But the company subsequently decided to direct its efforts toward the NICU. “We felt this was a market that needed to be served, given the number of Level 3 NICUs in the country, and the critical care and instability of pre-term babies,” says Kum. Further, company founder Dr. Benaron has experience in the NICU.

Spectros has a small internal direct sales force. However, that sales force and the company’s clinical specialists cover all markets across the country, says Kum. “We’re trying to be more focused and give our No. 1 priority – the NICU market – more dedicated representation.

“The large national distributors would not fit our model, because we’re very targeted and specific,” he continues. “There is an education process of communicating to clinicians why the Spectros technology works more accurately and effectively than current technologies on the market. We’ve laid a foundation with the interest and acceptance of the T-Stat® in NICUs. We want to find the right partnerships to take this to the next level.”

In addition to the monitor, T-Stat® has a consumable component, namely, single-use probes, each of which contains a visible white light source for illuminating the tissue and a fiberoptic bundle to transmit results to the monitor.

For more information on Spectros, visit www.spectros.com, or call Robert Kum at (650) 529-2874, or e-mail him at rkum@spectros.com. 

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IMDA members looking for help drawing up an agency agreement with manufacturers now have a resource to turn to. The specimen agency agreement, crafted by IMDA legal counsel Mitchell Kramer, provides a model to guide them through the process. The agreement, which can be found in the “Forms Archive” of the IMDA Website (www.imda.org), complements the specimen distribution agreement already on the Website.

IMDA Announcement Looking for lines? View a list of all medical devices receiving FDA marketing clearance in February by visiting the FDA Website. You might find a company in need of your expertise.

While the agreement provides a useful model for agency agreements, IMDA members should still enlist the services of an attorney when drawing up such contracts, says Kramer. “Each agreement should be tailored to the individual agency situation and state law.” What’s more, IMDA members might need help understanding the impact of any changes that a manufacturer might make to a proposed agreement, he adds. “One or two words can radically change the whole thing.”

In an agency relationship, the manufacturer assumes the shipping, credit and billing functions, and handles accounts receivable and bad debts, points out Kramer. And while many issues involving sales and marketing are identical for the distributor and the rep or agent, there are some key differences, which are reflected in the specimen agency agreement.

Commissions

The sales agency contract, for example, provides that the IMDA member be compensated by commissions. “It is important that the IMDA member study the commission schedule, since some manufacturers request a sliding commission, depending on the amount of discount-off-hospital-list given in each sale,” says Kramer. “But this is unacceptable, because the agent works just as hard for each sale regardless of discounting, and discounts are determined by the manufacturer, not the agent.”

What’s more, IMDA members should resist manufacturers’ attempts to lower the commission rate as sales increase in the territory, he says. “As a practical matter, this acts as a disincentive for the sales force to maximize their efforts. The fact is, it would be more appropriate for the manufacturer to pay percentage bonuses as sales increase.”

Territory

It is important that the agency agreement state that the agent’s territory is exclusive and that the agent receives commissions on all sales in its territory, says Kramer. “There is a tendency for agency agreements to use language that could be interpreted as paying agents commissions only on sales generated by the agent, or such other limiting language. Since customers often submit orders directly to the manufacturer when there is an agency relationship, such limiting language can lead to problems if there is a dispute over payment of commissions.”

Inventory

Because distributors purchase product from the manufacturer, a sticking point in some distributor contracts is, “How is inventory handled in the event the distribution relationship ends?” The agent typically has no such concerns, points out Kramer. “On the other hand, the agent may have consigned inventory, which it warehouses. How the inventory is dealt with in the event the relationship ends could be extremely significant.”

Other concerns

Two other concerns, which are addressed in the specimen agency agreement, are:

• Length of agreement. As Kramer has been wont to say at IMDA annual conferences over the years, the length of the agreement is a key part of any contract, be it a distribution or agency agreement. “If it is a five-year agreement that can be terminated without cause on 30 days’ notice, it is a 30-day contract,” he says.

• Indemnification. “Indemnification provisions are crucial, as some of our clients have discovered when they were brought in as defendants to third-party claims for product liability and patent infringement claims.”

While almost all IMDA members have distribution agreements with many of their manufacturers, a good number have agency agreements with others. And that’s not such a bad deal, provided a sound agreement is in place. “One of the interesting advantages of an agency agreement is that most states in the United States have rep acts. Those acts provide that if an agent is not paid its commissions after termination, the agent may be entitled to multiple damages and counsel fees. Since the rep acts of each state vary greatly, and the case law interpreting the acts is complex, failure to pay commissions must be analyzed by an attorney knowledgeable in this area of the law.”

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A recent Supreme Court ruling that patients can sue drug companies in state courts for harm caused by medicines cleared for marketing by the Food and Drug Administration begs the question: What about devices? Lawmakers believe they have the answer.

IMDA members may recall that in February 2008, in Riegel v. Medtronic Inc., the Court ruled that once a medical device had premarket approval by the FDA, federal law bars many types of claims by users of that device from challenging its safety or effectiveness, design or label. (See May 2008 IMDA Update.) In that case, claims brought about by Charles Riegel, who suffered permanent injury when a Medtronic balloon catheter burst during an angioplasty, were thrown out on the basis that they were “preempted” by the FDA’s approval of the device.

In the most recent ruling, the Court found no such pre-emptive language in the statutes governing drug regulation. As a result, the Court upheld Vermont state rulings that awarded damages to a woman who developed gangrene and had part of her arm amputated after being treated with an anti-nausea drug, according to The New York Times. The question is, will that right to collect damages be extended to patients following an injury caused by a medical device?

It should, according to a March 16 editorial in the same newspaper. And Democratic lawmakers apparently agree. On March 5, lawmakers in the House and Senate introduced bills (S.540 and H.R.1346) that would allow damage suits against medical device makers in state courts.

“Opponents argue that the FDA should be the sole authority because it has the expertise to balance risks and benefits,” says the Times editorial piece. “State juries, they warn, often make inconsistent decisions or may be influenced more by emotion than science.” But, the paper adds, “State trials have played an invaluable role in backstopping an all-too-fallible FDA: ferreting out corporate documents, compensating injured patients, and giving manufacturers an incentive to exercise extreme care in production and labeling.”

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Editor’s Note: The first salvos of the debate about healthcare reform have already been sounded. How will you, your customers and your manufacturers be affected by it? IMDA keynote speaker Joe Flower has spent a lot of time studying the landscape. And he’s got some answers. He will deliver his keynote presentation, “Selling Into a Value-Based Healthcare System: Three Hard Steps,” on Monday, June 15, at the IMDA Annual Conference in Charleston, SC.

Flower has ideas about how consumers and providers can improve healthcare while reducing its cost. Three of them are: 1) Change our expectations and standards of appropriate care at the end of life; 2) put pricing for healthcare services on the table for all to see; and 3) bundle healthcare into comprehensive packages or services, rather than offering piecemeal procedures. Following are Flower’s thoughts on the subject.

End-of-life care

The first idea is about a difficult reality: We spend vast sums on heroic measures trying to save frail elderly people who are very near death, people that everyone involved knows are clearly dying -- big operations and invasive procedures that often not only do not help them, but actually hurt them, make them suffer more, prolong their agony, often against the patient's true wishes. We need to change our expectations and our standards of appropriate care at the end of life.

Transparency in pricing

Second, it may surprise you to hear that we could save money by banning discounts on medical care. How would that save money? Hospitals have a price for everything -- and then they quietly negotiate deals with every insurance company, giving them huge discounts. If you walk in without insurance, you will likely pay two, three, even ten times as much as the insurance company for the same procedure. For railroads and other "common carriers," that has been illegal for over a century. If you are going to give discounts, give them to everyone. We need to get all the prices out on the table, which means making them real, and the same for everyone. No one can ever save money on anything if they don't know how much they are paying for it.

No more piecemeal procedures

Finally, instead of offering common procedures piecemeal, leaving the patient with a long menu of extra costs, providers should bundle them into products, the way other industries do. “You need help managing your diabetes? That's a subscription, it costs this much, and it covers anything needed.” “Need your knee fixed? That costs this amount, including everything from MRI to rehab.” “Going to have a baby in our hospital? Costs this much, everything included. And - here's our warranty - if we do something wrong, if we have to do something over, if you get a hospital-caused infection, we'll fix it at our expense.” People in healthcare are already doing this, and it's working. You can't guarantee that the patient will get well, but you can guarantee that you use the very best known practices every single time. This brings down costs, as doctors and hospitals compete, just like other businesses, to bring to their patients the best product and service at the lowest price.

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Part 2 You want the sale! You gotta ask for it! Help your reps get to the 'selling end zone' by sharpening their skills By Gerry Layo

Editor’s Note: Last month, Gerry Layo explored why some sales reps get close to a sale, then back off at the last minute. This month, he offers a few suggestions to help reps take it into the end zone.

It is not the responsibility of customers to close themselves. It is the job of the salesperson to get that done! The rep isn’t paid to be a professional educator, a professional presenter, a hesitant visitor, or a walking, talking brochure/Website. He or she is paid to move the ball down the field and to score. That's it!!

The Website, the brochures, the advertising and other marketing pieces often have very little to do with the Call to Action. . .but the sales rep does! Her territory, products, prices, and competition are what they are, and they do not control the rep’s success. He or she does! The prospective customer knows that the rep is there for a reason, and that reason is to make the sale. Often, the only thing that stands in the way is the rep! Are you willing to help your reps make the changes necessary to stay in the game? If so, take a look at a few suggestions and make sure your reps get the message.

Learn how to ask better, more focused questions to pull out the prospect’s true motivations (pains-fears-desires). Get to the WHY behind their answers! Ask questions to gauge the prospect’s level of interest, understanding and continued engagement in the process. Some examples: “So far, so good?” “Up to this point, what questions do you have?” “Does that make sense?”

Have a clear purpose for each and every call that you make on the prospect. If the sales rep doesn’t understand what needs to be discovered, uncovered and agreed upon in the sales process, how can the customer understand it? Going on a call without a clearly defined purpose and a clearly prepared Call to Action wastes both the rep’s time and that of the prospect.

Learn to “set the pace” of the transaction in the early stages of the sales process. Be in control by constantly and relentlessly moving the deal forward a step at a time. The rep needs to get in the habit of thinking, and asking, “So what’s our next step?”

Do your homework and be prepared to address any objection or concern that stands in the way when attempting to close the sale. Write down the most common objections (there are fewer than you think) and practice the best way to clarify, validate, isolate, and address them with the customer. Your rep’s confidence in addressing these objections plays a MAJOR role in overcoming customers’ concerns and bringing a sale to completion. That confidence is a direct result of the rep’s preparation and practice.

Be prepared to hear “No.” The best salespeople would rather hear a “no” today than a “maybe” forever. And remember, often time a “no” is only the beginning of the sale.

Make sure you’re dealing with the true decision makers. A rep should never try to create closure with someone who cannot say yes! Anyone can say “no” and derail progress. Make sure your reps are dealing with “the Juice” before they ask for the business.

Have a very, very strong conviction in yourself, your company, your product or service, and the benefits that they provide to your customers, such that NOBODY who truly understands the value of ownership could ever say “no!” If your rep doesn’t have this conviction, make sure they get it or get out! Remember, customers don’t buy because they are passionate about what you sell. They buy because YOU are passionate about what you sell!

Fill your pipeline! If every sale lost or won dictates your success or failure for the week, the month, the quarter, or the year, you simply do not have enough action going on. It is amazing how readily reps will ask for the business when they don’t live or die by the answer they get in return.

Today’s economy has brought about a lot of uncertainty and fear. These two things cause hesitation and lack of action on the part of consumers. It is NOW that a true salesperson must emerge and help the customer make that purchase. Selling is tough if the rep is focused ONLY on his or her need to sell. They must refocus their efforts on their personal attitudes, skills and activities that need to be sharpened to HELP THE CUSTOMER BUY! Now get out there and ask for the business!

Gerry Layo is CEO of Sales Coach International, Granite Bay, Calif., which -- through speaking engagements, workshops and extended coaching/consulting engagements -- is dedicated to helping companies in the areas of sales, sales leadership and customer service. He conducted two IMDA training seminars in 2008. He may be reached at www.gerrylayo.com.

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IMDA Update Published by IMDA 5204 Fairmount Ave., Downers Grove, IL 60515 Phone:  (630) 655-9280 (866) IMDA-YES (866-463-2937) Fax: (630) 493-0798 Website:  www.imda.org E-mail:  imda@imda.org   Staff Katie Swartz: Executive Director Judy Keel: Executive Vice President Patti Perillo:  Senior Administrator Mary Moran:  Chief Financial Officer Mark Thill, Editor & Communications Director (847) 255-0716 Mitchell Kramer, Legal Counsel (800) 451-7466 Barbara Kramer, Legal Counsel (734) 930-5452 George Ayd, Jr., Insurance Administrator (703) 652-1309         2009-2010 Directors President Kevin Trout, Grandview Medical Resources, Inc. (412) 914-0950 President-Elect Anthony Marmo, Martab Medical (201) 512-1100 Secretary/Treasurer Hal Freehling, Jr., O.E. Meyer Company (419) 609-1633 Chairman of the Board Dave Campbell, PhD, Vital/Med Systems Corporation (303) 660-0888 Directors-at-Large Tom Birmingham, Bay State Anesthesia, Inc. (978) 682-6321 George Howe, Mercury Medical (727) 573-0088 Philip M. Reilly, KOL Bio-Medical Instruments, Inc. (703) 378-8600 Don Reiter, Specialty Respiratory Care, Inc. (818) 717-8807 x19 Bill Schultz, IPV Medical, LLC (760) 212-2769 Past-President Shawn Walker, Bay State Anesthesia, Inc. (978) 682-6321 Manufacturer Representative to Board Tim Beevers, Beevers Manufacturing & Supply (503) 472-9055 The ideas presented in this newsletter may or may not be applicable to your particular situation.  Always consult your tax advisor, attorney or CPA before putting them into effect.