2003 Annual Conference: Your destiny at 8,000 feet

  
 
  UPPER DEER VALLEY, UT--Up in the Wasatch Mountains, high above Salt Lake City, minutes from Park City, UT (site of the 2002 Winter Olympics), in an elegant, quiet ski lodge, IMDA members took time out from their schedules to get the big picture of their industry and their businesses.
   They gathered to network with colleagues, meet manufacturers seeking specialty sales and marketing organizations, and interact with a powerful lineup of speakers carefully selected by Conference Chairman Stan Tangalakis of Mercury Medical.
   The Conference, titled “Your Destiny: A Matter of Choice, Not Chance,” challenged IMDA members to look beyond today and into their futures. From Tangalakis’s opening remarks on Thursday morning, May 29, until the closing dialogue among members on Saturday, May 31, that is exactly what they did.   
   Long-time members were joined by a number of newcomers, including IMDA’s first allied member – Bruce Brierley from the manufacturing company Maxtec Inc., Salt Lake City. Other new members included:

   Ten manufacturers exhibited at the Manufacturers Forum. Their products ranged from autotransfusion systems to vein imaging technologies, and wound healing systems to ambulatory infusion pumps. Staged next to a broad, covered veranda, the Forum provided a comfortable environment for interaction. Traffic was heavy throughout the two-hour Forum.
   In addition, IMDA’s support service vendors were on hand to introduce members to their services. They were:

   And for the third year, the Conference featured 90 minutes of subspecialty breakouts, during which members in selected specialties brainstormed with their peers about new product opportunities, marketing opportunities and human relations issues. This year, three groups sat on a sun-drenched deck overlooking the Wasatch Mountains to talk about their businesses. They were: respiratory/anesthesia, OR/surgery center, and critical care/EMS.
   Here’s a recap of some of the Conference sessions.

   Heart findings will change medical landscape: Peter Salgo, M.D.:

   America is on the verge of something so dramatic, it will change the nature of health care and our lives. It will add an extra generation to the average American’s lifespan. And it will open up tremendous opportunities to specialty suppliers.
   “We are now in a position to end death due to premature heart disease,” said Peter Salgo, M.D., an anesthesiologist and medical correspondent for CBS and CNBC, speaking at the IMDA Annual Conference. “We finally understand something about heart disease which we never did before – what it is, why it happens and, most important, how to turn it off.
   “We’re where dentists were just before the fluoridation of the water supply, or where medicine was just before the discovery of penicillin,” he said.
   We find ourselves at this point because of the discovery that heart attacks are caused by an infectious agent.
   Conventional wisdom has it that heart attacks are caused by cholesterol, said Salgo. If you eat fatty foods, neglect to exercise, or smoke, your coronary arteries become blocked with boulders of calcium and plaque, according to the theory. Eventually, they block the blood flow, starve the heart muscles and kill the patient.
   Although the theory explains the nature of angina (chest pain), it does not describe heart attacks, said Salgo.
   Evidence has emerged in the literature over the past eight to 10 years that people who have suffered heart attacks have a much higher incidence of chronic infection, especially chlamydia pneumoniae, than others, said Salgo. This chlamydia is not the sexually transmitted type, but rather, a respiratory-related bug often found in the lungs.
   Bacteria initiates an inflammatory response in the body, causing heat, redness and pain, said Salgo. Researchers know that this happens in soft plaque, because the temperature is higher than in surrounding areas, and inflammation occurs.
   But studies suggest that chlamydia is resistant to the inflammatory response, Salgo said. Further, the body’s response appears to be disproportionate to the threat represented by the bacteria. Ultimately, the wall of the coronary artery begins to dissolve, resulting in ulcerated plaque. This debris triggers a blood clot, which is the body’s response to anything out of the ordinary. The result? A heart attack.
   “If I were standing here 20 years ago and telling you that ulcers were an infectious disease, you’d say I was crazy,” said Salgo. “But now we know that if you eliminate h pylori, you can still be a Type A CEO and not get an ulcer.”
   “Everyone in this room has an amazing opportunity,” Salgo told those at the IMDA Conference. “Because if people stop dying from heart attacks, we’re going to have a generation of people living into their 80s and 90s.” What products will they need?

   “We’ve seen this happen in medicine before,” he said, referring to the findings about chlamydia and heart attacks. “Think about what life was like for people with pneumonia before penicillin. Think about dental work before fluoride.”
   “We will have to find a new and different way to pay for all this,” he continued, adding, “I refuse to keel over in order to balance the federal budget.

   Advances in medicine opening doors for specialty suppliers: Jeffery Bauer, Ph.D:

   Get set for a future unlike anything you have imagined.
   In this future, success will depend on your ability to quickly accommodate new technologies and methods of health care delivery.
   “We will see explosive progress in science and technology, which will cause diversity to become the key characteristic of health care in the United States,” said Jeffery Bauer, senior vice president of Superior Consultant Company Inc., Southfield, MI, and a senior fellow at the Center for the New West in Denver, where he participates in studies of advances in medical science and technology.
   “Diversity” need not be understood in the narrow sense of racial diversity, though that indeed will be part of health care in the future. Rather, “diversity” in Bauer’s lexicon implies that no single delivery system, business model or payment mechanism will emerge as the solution for more, better or cheaper health care.
   No doubt health care will be more efficient than it is today. And it will be based on “best practices,” because as a country we will have accumulated enough outcomes data to tell us what indeed are the best ways to provide care, he said.
   Profound changes in medical science are already changing the environment in which IMDA members and their customers operate, said Bauer. For example, today, patients with cancerous tumors are treated with specific, customized chemotherapy delivered directly to the tumor, he said. And we’re in the midst of a race to understand genetics and genome information.
   Just two years ago, a map of the human genome was published in its entirely. Shortly thereafter, scientists used this knowledge to begin identifying proteins responsible for various diseases, such as fungal motor disease.
   The climate has changed so quickly that some people believe that all science is computer science, because so much research is done using the computer. Rather than “in vivo” research, scientists will be practicing “in silica” research, said Bauer. One offshoot of this is that the academic community may no longer control research.
   Some ramifications:

   Because so many Americans today are either first- or second-generation immigrants, providers are encountering a real shift in the diseases they encounter, said Bauer. And that will continue.
   What’s more, Americans’ attitudes and expectations of the health care system are rapidly changing, he said. For example, people are living longer and dying of less expensive diseases. They are retiring later in life and enjoying health later in life. They are expecting a “kindler, gentler death.”
   We already are seeing shifts in diseases, said Bauer. For example, no one had heard of West Nile Virus three years ago. Yet within the next few years, the virus could cause huge problems with blood donations.
   How can specialty suppliers capitalize on all these changes? By thinking differently than they have in the past. Radically so.

 How will these developments affect specialty suppliers’ businesses? asked Bauer.

   Extreme cooperation can drive sales
   Everybody knows the things that manufacturers and distributors do that impede sales. But what can they do together to drive sales?
   That was the question posed to a panel of manufacturers and IMDA members at the Annual Management Conference. The panel, titled “Driving Sales Through Extreme Cooperation,” was moderated by IMDA legal counsel Mitchell Kramer, and comprised Kevin Mosher, president, Masimo Corp., manufacturer of pulse oximeters; Don Southard, executive vice president, Datascope, manufacturer of monitors, anesthesia machines, cardiac assist devices, etc; Tim McInerney, Kol Bio-Medical; and Tony Marmo, Martab Medical.
   Following is a synopsis of the session.

   What can distributors do better to help drive sales?
   Mosher: Much of it has to do with how distributors compensate their salespeople. If you compensate them on [straight commission], the only way they can achieve their goal is on a group of products with a sales cycle of only a few weeks. That makes it hard for us, because the sales cycle on our technology is typically six to nine months.
   Our business represents a long-term investment on the part of our dealers, and they have to recognize that the upfront work on our products will create downstream revenue on our sensors. They should structure compensation that will give their reps the proper incentive.

   Southard: We have made a corporate decision to be a player in the anesthesia delivery system market. It is our intent to continue to go forward for the next five to seven years, and into the future, with our distributors.
   My experience with distributors is that they believe our attitude is, “Use you and lose you.” Manufacturers, on the other hand, believe that they have to ride their distributors, or else their distributors will choose the path of least resistance. But we are committed to distribution.

   What can manufacturers and distributors do together to increase sales?
   Marmo: We represent 15 manufacturers. Last year, we selected our top six and created a compensation plan around them. We created a bin for each, and said that each rep had to achieve a quota of 90 percent or more for each of them. We simply took the manufacturer’s quota and broke it out among our reps. The manufacturers love it. Sales have skyrocketed. All of these products take several months to close.
   At the same time, we went to quarterly commissions, because we felt that capital equipment offered too many ups and downs. And we increased our reps’ salaries to cushion them.

   McInerney: We focus on seven to eight products. We build product mix into our compensation program.
   What manufacturers should be concerned about is this: How much time will your distributors spend on your product line. It’s easy for the sales force to say, “We’ll bang it home on this one product.” But that doesn’t help the other manufacturers. So we build it into our reps’ compensation package that they have to sell all the product lines we represent.

   What are manufacturers willing to do in terms of pre-sales marketing?
   Southard: We are trying to convince prospective customers – including those who for years have bought equipment from our two entrenched competitors -- to spend thousands of dollars on our product in multiple ORs. We have a marketing person, a national sales manager and salespeople to support the independent distributors. We provide brochures, trade show participation and other things.
   From a marketing perspective, we have spec sheets, and are developing a brochure on the two products that we are distributing through specialty dealers. It is our plan to give our dealers as many demos as we can afford.

   Mosher: We have shared the expense of local trade shows with some of our dealers. We also make available lots of literature.

   Would you (as manufacturers) be willing to sit down with your distributors for a half a day to develop a marketing program?
   Southard: We would have to be crazy not to take advantage of that offer.

   How can dealers work with manufacturers to drive sales?
   Marmo: We match our competencies with those of our manufacturers. We also want to make sure we’re comfortable with the margins before we sign anything.
   Last year we hired a full-time clinical specialist, so we could pursue manufacturers who require that type of sales assistance. That’s been very successful.
   So it comes down to this: Way before we get involved with a manufacturer, we establish what its expectations are and whether we can meet them. If not, maybe their product is not for us.

   McInerney: Before we start out with a manufacturer, we encourage the manufacturer to come out in the field with us. We ask our customers what they think of the technology. Often times, we get mixed reviews. But we get a sense after doing our due diligence whether the technology will fly or not.
   We desperately need training. Many manufacturers don’t have a clue as to how to present their products to our people. So we let them know what we want and need to learn. We’ll critique them before they make their presentation, so the program will be meaningful to our people.
   If a manufacturer doesn’t want to see my people and what we can do, prior to coming to any agreement, I’m suspect.
   Finally, I urge manufacturers not to lie to us. We need to enter into a program where we have complete honesty. Many times we have embarked on a relationship based on false information.

   Southard: I agree a thousand percent. Don’t lie to us, we won’t lie to you. If the relationship and strategy are sound and embraced by all, the relationship will succeed.

   From the distributor’s perspective, what things can you do or not do to help drive sales after the relationship has begun?
   McInerney: Communicate. We give our manufacturers lots of information from the get-go. The half day session is the first thing we do. “Here’s where we are. You need to come back and give us more training. Here’s what we’re finding, and so on.”
   I let our manufacturers know where I’m selling products, even who the customers are. Let’s face it: If they want to get that information, they can. But communication strengthens the relationship.
   Meanwhile, we want to know how the manufacturer is doing across the nation. We want to know how we stack up against the rest of the world.
   Again, I’ll say that training is key. When a principal from the manufacturer comes with us into a major account, that’s a big deal. Our hospitals know our company, but they may not know the competitor. They’re asking, “Why should we dump our current supplier to buy from this upstart” The manufacturer can help answer that question for them.

   Marmo: Some manufacturers have put together CEU courses. Our clinical specialists go to hospitals, invite the nurses and respiratory techs to attend, and allow them to earn credits. And we extend CEU credits to our reps.

   From the manufacturers’ perspective, what can distributors do better to drive sales, either with the manufacturer or by themselves?
   Southard: What customers value most is this: When they need something, you’re there to help them. That’s the way the distributor shows that he’s interested in their business. And that’s important to us.

   Mosher: Communication is a two-way responsibility. Our dealer reps are successful when they reach out to our sales reps, make joint calls, alert them to opportunities. Communication is important, but it has to be two way.

   McInerney: That’s why I suggest that manufacturers set up dealer advisory panels. They can establish a bond between the two companies. Relationships are important to us. It’s all about performance, and about us feeling good about ourselves.

 

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