Recently, we have seen an increase in the number of companies who are adding senior consultative sales executives in the National Accounts, Corporate Accounts, IDN, GPO and Government spaces.  These types of sales positions are mostly found in the healthcare arena because of the unique value chain which has led to a continued growth of GPOs and a recent expansion of IDNs and hospital systems.  Of course it makes sense to create a contract with a whole hospital system or IDN rather than the individual entities.  Just as it can to leverage the relationships the GPOs have already built to get your product in the door on a massive scale.  So why are some of these sales teams growing while others are shrinking?

Part of the reason can be found in the relationship between the direct sales force and these divisional or corporate focused teams.  Successful implementations of these sales structures are built on strong relationships between the two sales forces.  Account intelligence is shared, opportunities are maximized, and a coordinated, clearly communicated, sales strategy is apparent.  Everyone knows what to do and is playing their part in the team to achieve the end goal.  When these two teams drift apart, the core leverage value points of joint selling, strategic pricing, and customer relationship development erode and companies spend more time in the coordination, control and internal contract negotiation stages. The synergies that made them successful in the first place disappear and it becomes more about the politics of power.

The other part is a function of their overall strategy.  I have heard more VP of Sales and General Managers this year tell me that they were not renewing their GPO contracts than I have ever heard before.  Yes, you heard me correctly, they are walking away from the likes of Broadlane and MedAssets, letting their contracts expire.  Some feel they can get better leverage by taking those dollars and putting them directly into their teams.  Others are increasing their teams and re-organizing specifically around GPOs.  They are assessing the true value for both the company and the customer and considering whether a GPO strategy really makes sense. A key question is whether there is enough of a value to balance out the margin that is being given away.  Would a more IDN focused approach make a difference?  Another structure to consider is whether a team focused at the IDN level is needed or whether your Direct Sales team can step into that role.

If you haven’t evaluated this area recently, now might be the time.  First of all, do you have a rigorous strategy? Is what you have in place based on a strategic decision or the way things evolved?  Is your strategy aligned with your product categories, where they rank in terms of physician preference and your distribution methods?  Have you recently assessed the health of the relationship between your direct sales team and your corporate team?  Does your compensation plan promote cooperation and the achievement of your overall strategy company goals?  And of course, are your pricing decisions being made at the right level in the organization to truly maximize both short-term opportunities and long-term value?

Strategies in this area are changing at a rapid pace as hospitals and hospital systems increase their buying sophistication.  The pressure to cut costs from the healthcare system is pervasive and is affecting every area.   What has this meant for your organization?  I would be interested in hearing your approach.  Please email me at ckraft@jacobsmgt.com.