Key Account Sales Strategy by hcj

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									Healthcare Financial Management
Association



  Premier Health Partners & Scorpion Data Security
                     May 17, 2011
    Supply Chain Division
    Who are we?

 Purchase for all five hospitals
 Sourcing Managers
     Negotiate with the > 4,100 suppliers
   Procurement – Buying the product to Truck Delivery
     Coordinate the:         ~335 orders per day
                              ~$540 M per year
     Control the ~ 84,000 supply items
     Laundry plant - >900 bags per day
   Capital Acquisition –
     Purchase capital equipment
     Minor construction
   Supply Management Information – Contract, rebates
     Control the > 1,500 contracts
         Supply Chain Division
         PHP Cost Breakdown

 Salary and Benefits            52%
 Supplies+ Purchased Services   35%
 Depreciation                    7%
 Bad Debt, Interest Exp, Tax     6%
TOTAL                            $1.7 Billion

2011 PHP Budget
Supply Chain Division
PHP
 Sourcing purpose / business foundation:
   SAVINGS
     The reduction of cost from the prior average 12 month spend that result in a net
      expense decrease to the P&L statement.
     Cash savings.


   COST AVOIDANCE
     Actions taken by Sourcing personnel that prevent increased expense from hitting
      the P&L for PHP.
                                                                 Premier Health Partners
                                                             Sourcing Savings Since Inception
                          $16,000,000                                                                                                 $140,000,000




                                                                                                                            119,474,261
                          $14,000,000
                                                                                                                                      $120,000,000




                          $12,000,000

                                                                                                                                      $100,000,000




                          $10,000,000
Annual Sourcing Savings




                                                                                                                                      $80,000,000




                                                                                                                                                     Cumulative Savings
                           $8,000,000



                                                                                                                                      $60,000,000


                           $6,000,000




                                                                                                                                      $40,000,000

                           $4,000,000




                                                                                                                                      $20,000,000
                           $2,000,000




                                  $0                                                                                                  $0
                                        2000   2001   2002   2003   2004   2005          2006   2007   2008   2009   2010     2011
                                                                                  Year


                                                                      Annual             Cumulative
    Supply Chain Division
    PHP

Premier Health Partners Pricing Strategy


         PHP strives to be in the lower quartile (<25%) on all
                  supply costs and vendor contracts.
 Supply Chain Division
 PHP

How we achieve our goal:
      PHP supply commitment.
         Standardization – Achieve <10Th Percentile.

       OR

      PHP supply global pricing.
         All suppliers can work with PHP but at a global (ceiling) price – Achieve
          10th-25th Percentile.
    Supply Chain Division
    PHP
 Strategic Intelligence
   Price Lynx Data Base
   VHA Group Purchasing Affiliation
 Local Coalition
   Midwest Purchasing Coalition with Ohio Health and Community
    Health
 Operational Efficiency
   Supply Chain Organizational Assessment - Infrastructure
Supply Chain Division
PHP Supply Metrics System Scorecard
                     (Last 4 Qtrs.)
                                      Total Supply Cost / case mix adjusted   Total Drug Cost / case mix adjusted   Total Supply Cost -Drug / case mix
  System                              discharge                               discharge                             adjusted discharge

  William Beaumont                    $          1,199                        $          364                        $            834

  Sentara                             $          1,370                        $          304                        $          1,066

  PHP                                 $          1,371                        $          312                        $          1,059

  Advocate                            $          1,451                        $          387                        $          1,064

  Ohio Health                         $          1,456                        $          282                        $          1,173

  Providence                          $          1,508                        $          340                        $          1,163

  Spectrum                            $          1,657                        $          370                        $          1,287

  Baylor Health                       $          1,725                        $          720                        $          1,004

  MedStar                             $          1,739                        $          469                        $          1,270

  Yale                                $          1,756                        $          523                        $          1,233

  Indiana U Health                    $          1,777                        $          526                        $          1,271

  Partners                            $          1,784                        $          617                        $          1,166

  OSU                                 $          1,909                        $          442                        $          1,467

  Northwestern                        $          1,921                        $          447                        $          1,473

  Mayo                                $          1,958                        $          519                        $          1,439

  U of Michigan                       $          2,646                        $          988                        $          1,657
       Supply Chain Division
       PHP

         PHP Minority Supplier Inclusion                        PHP Local Spend Summary
                   Program
                                                 $140,000,000
$35,000,000                                      $120,000,000
$30,000,000                                      $100,000,000
$25,000,000                                       $80,000,000
$20,000,000
                                                  $60,000,000
$15,000,000                        W/MBE Spend                                          9 County Area
$10,000,000
                                                  $40,000,000
 $5,000,000                                       $20,000,000
         $0                                                $0
              2008   2009   2010                                   2009          2010
                     Year                                                 Year
Supply Chain Division
PHP
 What we need to do better……
   Physician Preference items (~15% of PHP supply cost)
   Standardization
     Clinical supplies
     Non Clinical
     Equipment
   Implementation process
      Follow up / Feedback on products
   Communication – no surprises.
Supply Chain Division
Challenges – Today and Tomorrow
 Vendor industry
    Staying ahead of the vendors sales strategy
    Internal staff
       Cultivate highly trained / skilled sourcing personnel
       Need to possess greater specialized skills
 Technology – higher cost of healthcare
    Surgery – Skeletal hardware (spine, joint, etc.), neuro,
    Equipment – DiVinci robot, Cardiology cath labs, 3-D, 4-D, patient beds.
    Supplies – MRI compatible stents, Silver coated catheters
 Healthcare Reform
    Medical Device Tax (2.3% of Revenues)
    Drug Shortages – 200 scarce meds (2010) vs. 56 (2006)
    Price Point and Utilization - ‘Total cost per discharge.’ It will determine a large part of
      the hospitals margin.
Scorpion Data Security

  The Future of Information
 Management and Document
        Destruction
Our core competency:

 Scanning/imaging - “Digital conversion of Medical Records”
 Physical / electronic storage
 Destruction of confidential documents and material.

Our competitive advantage and value proposition model
embraces lean methodologies and six-sigma strategies to create
a high quality, cost effective value stream for our customers. In
addition, Scorpion Data Security offers executive level account
management and involvement with quantitative and qualitative
analysis of your document’s total life cycle.
    Strategic Relationship Management
        The Vendor’s Perspective…
 Defining and identifying strategic accounts
 Why is this ‘strategic’? Does “BIG” make it ‘strategic’?
 Buying Influences
 “The Approach”
 Research
 BATNA
 Buying Motives
 Positioning “uniqueness's” as requirements
 Strategic Relationship Behavior
        Defining a Strategic Account
 A strategic account is “game changing” for you and the
  CUSTOMER.
 A strategic account is a significantly large prospect and “win-able”
  enough to demand your time, effort and attention.
 A target account should be a stable company without obvious
  signs of financial distress (big lay-offs, revolving door Mgmt.).
       Identifying Strategic Accounts
 Database
 Periodicals and Publications
 Network
 Referrals from Customers
 Referrals from Advocates
 The Internet
                          Strategic?
 A better word may be “complex”
 A strategic account requires research and multiple sales calls
 Multiple buying influences / decisions makers
 Decision makers with different wants, needs and biases
 Senior Executives are involved in the decision making process.
  Procurement collaborating with end users.
 Awareness of current spend/budget
   BUYING INFLUENCES
Economic Buyer    User Buyer




Technical Buyer     Coach
                The Economic Buyer
 This person can say “YES” when all others say “NO”
 This person can say “NO” when all others say “YES”
 Normally the top officer of the Company
   CEO
   Owner
   COO
   General Manager
 Has full P/L responsibility for the Company or location
                 The User Buyer
 Often mistaken as THE decision maker
 This is the vendor, supplier’s “day to day” contact
 This person is the most “in touch” with the vendor, supplier’s
  product or service
 This person will derive the most benefits from the vendor,
  supplier’s product and/or service
 VALUE is more important than PRICE
                  The Technical Buyer
 Most sales professionals make the mistake of spending all their time
    with this buyer
   Purchasing agent or finance professional (CFO)
   Seeks to “apples to apples” comparisons for the vendor, supplier’s
    product or service
   Inclination is to “bid” the proposal to assure competition (lower
    pricing, better terms etc…)
   PRICE more important than VALUE
   Having “savings targets” in their comp plans
   The best buyers have taken courses in sales and strategic selling
                       The Coach(es)
 The vendor, supplier must have at least one! And they must …
   Be tenured
   Report “high”
   Be influential
   Want you to win!
   Must derive a benefit from you winning
   Have the “ear” of the Economic Buyer
   Great coaches love to coach
Understand Competitive Advantage
 Points of Differentiation??
   What do you do better than all of our competitors?
   Why should companies do business with you?
                  The Approach
 Identify the “Coach” first if possible
   Managers/Directors/Champions
 Site surveys
 After much research
 Start a folder/binder
 Craft an “interest creating” statement that is customized to
  the target prospect
 Procurement should not be the first call
                   BATNA
Best Alternative To a Negotiated Agreement
    This is the vendor, supplier’s “real” competition
    Every Company and every Buyer has one
    What will they do if they don’t choose YOU?
    And, what would their BATNA cost?
                  Buying Motives
 Companies and people move very quickly to alleviate “pain”
 Everyone has a buying motive (or motives)
     Better product
     Better service
     Lower overall cost
     Fulfill a “business connection” (Green, Safety etc…)
     Faster
     Diverse supplier initiatives
     More features
     Less hassle – more convenience
     Image
     Motives and Requirements
 Buying motives leads into conversations about
  REQUIREMENTS
 When your UNIQUENESSES become
  REQUIREMENTS – YOU WIN!
             The Definition of Winning
 A win in a buy-sell encounter is one in which the vendor, supplier
  perceive the encounter as having served the vendor, supplier
  personal self-interest.
 Sales that leave you feeling satisfied are those that you felt you have
  won because some aspect of your self-interest, be it financial,
  personal or social, has been served by the transaction.
 The same is true of the vendor, supplier’s buying influences. They
  enter the buying-selling encounter hoping to win too and they leave
  the encounter satisfied when and only when they feel it has served
  their personal self-interest.
Outcomes to Buy/Sell Encounters
1. Win-Win
 The vendor / supplier Company, buyer and Buyer’s company
   all profit from the transaction
   All parties feel positive
   All needs are satisfied
Outcomes to Buy/Sell Encounters
2. Win-Lose
 The vendor wins at the buyer’s expense
 We feel good about the transaction but the buyer does not
 Tough to get renewals or repeat business in this scenario
 Do not “oversell” or “misrepresent” yourself or your company
   to any prospect
Outcomes to Buy/Sell Encounters
3. Lose-Win
 We lose at their expense
 “Low-ball” pricing
 They lose in the long run
 Service has to be cut or “nickel and dime” tactics are utilized
  in order to make a profit
 False expectations are established on performance, low
  renewal opportunities
Outcomes to Buy/Sell Encounters
4. Lose-Lose
 Everybody loses– the vendor / supplier, the buyer, and their
  company
 Nobody feels good about the sale
 Must manage sales process to prevent this from happing
 Every prospect is a long term partner
Manage the Sale into a Win-Win by using
            Win/Results
  An objective business result that gives all buying influences a
   personal win as well as satisfying organizational needs
  Personal wins and business results
  Show how our products and services will satisfy
   organizational needs and allow personal wins for all buying
   influences
Manage Sale into a Win-Win by using
          Win/Results
 The vendor’s is to show each one of your buyers how their
  product or service serves both his or her personal self-
  interest and his or her business objective




                                      Remember, there is a big
                                   difference between a personal
                                      win and a business result
       Determining Buyers’ Wins
Remember:
 It is never enough to sell results alone, to manage a Target
  Prospect Sale into a win-win proposition, you have to
  determine how each of your buying influences will win.
                         Sample “Results”
                  Economic Buyer                            User Buyer
•   Low cost of ownership                 •   Reliability
•   Good budget fit                       •   Increased efficiency
•   ROI                                   •   Upgrade skills
•   Financial responsibility              •   Fulfill performance requirements
•   Increased productivity                •   Best problem solution
•   Profitability                         •   Do job better/faster/easier
•   Smooth out cash flow                  •   Versatility
•   Flexibility                           •   Super-service
•   Corporate Citizenship, Green etc. …   •   Easy to learn & Use

                 Technical Buyer                           Coach (Wins)
•   Specs best and product meets them     •   Recognition
•   Delivery timely                       •   Visibility
•   Best technical solution               •   Get strokes
•   Discounts/low bids/price              •   Make contribution
•   Reliability                           •   Be seen as problem solver
                     Sample “Results”
            Economic Buyer                         User Buyer
• Reduce cost from:                •   Hassle Free
    • Loss/Replacement Charges     •   Maintenance
    • Phantom inventory levels     •   Customer Service Representative
• Better Images due to:            •   Quality of Products
    • Product Performance          •   Inventory
    • Supply Chain                 •   No shortages
• Improved Productivity/Teamwork



               Technical Buyer                   Coach (Wins)
•   Better quality                 • Sees you succeed
•   Inventory Control system       • Favor to prospect
•   Service guarantee
•   Consistent fit and look
•   Cost to use vs. cost to get
 Relationship Behavior : Relationship
 Basic …
   Product or service as commodity
 Strategic …
   Unique advantage is valued




 Example …
Relationship Behavior : Operation Mode
 Basic …
   Competitive bid
 Strategic …
   Flexible, agile, collaborative




 Example …
    Relationship Behavior : Capability
 Basic …
   Fulfill to requirements
 Strategic …
   Ability to assist with market changes/demands




 Example …
Relationship Behavior : Information Sharing

    Basic …
      Limited – electronic
    Strategic …
      Direct linkage access to parts of company database




    Example …
Relationship Behavior : Risk Management

  Basic …
    Contract penalties
  Strategic …
    Process management, shared risk/reward




  Example …
Relationship Behavior : Planning horizon
    Basic …
      Current deal
    Strategic …
      No end point, joint strategic planning




    Example …
Relationship Behavior : Nature of trust
 Basic …
   Confident in ability to fulfill contract
 Strategic …
   Shared vision, ownership of intellectual capital




 Example …
 Relationship Behavior : Metrics
 Basic …
   Compliance tracking
 Strategic …
   Business results; shared incentives




 Example …
Relationship Behavior : Customer Interaction
  Basic …
    None to limited
  Strategic …
    Impacts major number of customers




  Example …
Thank You
       Contact Info
              Eric T. Joiner
            President/CEO
             800-482-7473
    eric@scorpiondatasecurity.com
    www.scorpiondatasecurity.com
                Nick Lair
Vice President, Chief Purchasing Officer
                499-8427
            jnlair@mvh.org

								
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