Total Cost of Ownership – Implications for the Medical Device Marketer

Medical Device MarketingThink total cost of ownership.

A few years ago, our team was working for a supply chain management company that specialized in delivering fasteners and related components to their industrial clients. During a brainstorming session, my witty creative director came up with a unique tagline for a new direct mail campaign:

“If you’re not thinking total cost of ownership…you’re just getting screws.”

Needless to say, that copy never made it to our final presentation, but the truth and humor in those words always stuck with me.

In today’s price sensitive medical device climate it is essential that product innovation be matched with that product’s ability to fit firmly into the hospital’s value chain. As the physician’s influence on purchasing decisions begins to wane, forward-thinking device manufacturers must partially move their marketing efforts out of the OR and into the conference room, in turn, changing their core messaging from procedure based marketing to a more holistic value based proposition.

In most cases, the “supply chain” represents over 40% of a health system’s operating costs. It is no surprise that hospitals will look to vendors that can provide new ways of creating efficiencies and the concept of “total cost of ownership” will have many new implications for the medical device marketer.

Just as product innovation is no longer the only determining factor in the purchasing decision, so too is the fact that price is no longer simply the cost of buying the device. Product support, clinical education, efficacy rates, readmission data, disposal costs, flexibility, storage costs, failure rates and more – will all play a vital role in the new hospital purchasing paradigm.

Going forward, the device manufacturers that can truly partner with their customers by providing end-to-end support and data on all their product lines will emerge as winners. And for those sales reps that can think like economists or accountants, probably a hefty raise as well.

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