Healthcare Industry: Overcoming Procurement Barriers In A Highly Complex Environment
By ROB BAHNA
Consultant
[Feb 20 , 2025] – In sales, getting to the gate isn’t the same as getting through the gate. And getting through the gate doesn’t necessarily mean you’ll succeed. Especially at a time when procurement guidelines and expectations – and even mere access – are more stringent than ever.
Nowhere is this more prevalent than in the world of healthcare where just getting an audience to present your product is no easy task.
Healthcare procurement these days is a maze of Value Analysis Committees [VAC], Group Purchasing Organization [GPO] contracts, shifting Integrated Delivery Networks [IDN] and group affiliations, increasingly rigid budget constraints, and the above-all need to stand out in a crowded marketplace.
Success requires a strategic approach, one that balances relationship-building, effective sales and marketing strategies, value analysis/health economics, and contracting expertise.
Recent challenges such as supply chain disruptions, inflation, and labor shortages have made the selling maze even more complex. A new and legitimate focus on Artificial Intelligence [AI] is causing both buyers and sellers to rethink their approach to contracting. Understanding how to navigate these challenges is often the difference in winning contracts, avoiding stalled deals, and building strong relationships for long-term success.
THE COMPLEX HEALTHCARE PROCUREMENT LANDSCAPE
Hospitals and health systems take a methodical approach to product vetting and purchasing, with multiple stakeholders weighing in on decisions. The number and types of players involved often depends on the scope and complexity of your healthcare solution:
Value Analysis Committees – These are teams of administrators, physicians and other clinicians, and supply chain managers who evaluate products based on cost, clinical efficacy, and operational fit. Specifically, VACs want to see quality, compelling data regarding:
Clinical Effectiveness - Does the product improve patient outcomes?
Cost-Effectiveness - Is it worth the price compared to alternatives?
Operational Impact - How does it affect provider workflow and efficiency?
Regulatory Compliance - Does it meet all safety and quality standards?
Group Purchasing Organizations – GPOs negotiate contracts on behalf of health systems to drive down costs. A survey conducted by The Wharton School at the University of Pennsylvania for the American Hospital Association [AHA] and Advancing Health Care Through Supply Chain Excellence [AHRMM], found:
More than 90% of hospitals use national GPOs
The average tenure of a GPO membership is 11 years
Health systems route the majority [some say as much as 72%] of product purchases through their primary GPO
Skillfully negotiated GPO contracts can be a gateway to large sales volumes … but potentially a roadblock if you’re not aligned with the right GPOs.
Integrated Delivery Networks – According to Definitive Healthcare, an industry data gathering and analysis organization, there are more than 1,100 active IDNs. These are large health systems that consolidate purchasing across multiple hospitals and facilities. IDNs often have the ability to set procurement standards and control vendor relationships. Hospital system and IDN ownership, as well as group affiliations, change regularly and gaining access is arguably more difficult than ever.
BUSTIN’ DOWN BARRIERS: GAINING ACCESS TO INFLUENCERS, DECISION-MAKERS
With layers of bureaucracy and strict vendor credentialing, landing a seat at the table can be one of the toughest challenges in healthcare sales. Existing, trusted relationships and networks have never been more important. To make that happen, you must:
Identify Internal Champions — Physicians and other clinicians, radiologists, department heads, and/or administrators who can advocate for you and your solution. You must also determine if a top-down, bottom-up or combination of approaches is needed at a given facility and/or IDN.
Impress VACs — Show how and why your solution helps balance cost, quality and performance — specifically in clinical benefits, patient outcomes, and staff needs — and delivers a greater overall efficiency than what currently exists. Most importantly, you must have compelling and relevant data!
Leverage GPO/IDN Contacts — Lean on your trusted relationships and contacts whenever and wherever possible to streamline and accelerate access to VACs and gain a comprehensive understanding of their priorities.
GOING TO CONTRACT WITH A GPO
Securing a GPO contract can open doors to additional hospitals and other facilities within their network. Winning contracts is the first step followed by a well-defined go-to-market strategy that’s carefully executed. Specifically, that means:
It is imperative to know how each GPO operates. Some offer national contracts while others negotiate regionally or by modality/specialty.
If you are not yet on contract, focus on your points-of-differentiation, cost efficiencies, new technology initiatives, and/or diversity to justify an exception.
Check the GPO bid calendar to understand when the category’s next Request for Information [RFI] is due and establish a timeline for your RFI/RFP [Request for Proposal] submission. Prepare your submissions to include all required information. Info omissions will likely sink your chances of success. It’s also important to leverage internal stakeholders who can help you.
Engage supply chain leaders early to understand their strategy for the contracting category, process and expectations. Better yet, build a champion who can help you win!
OVERCOMING BUDGET CONSTRAINTS
As you know, health systems these days operate under tighter-than-ever financial pressures and slimmer margins, and new purchases are best justified with a detailed cost-benefit analysis. You can clear these hurdles by:
Presenting data-supported proof of ROI. You must demonstrate how your solution improves patient outcomes, reduces costs, and/or increases efficiency.
Offering flexible purchasing models such as allowable volume discounts, financing options, or disposable amortization programs where appropriate.
Aligning with Value-Based Purchasing [VBP] initiatives that prioritize improved patient outcomes, provider ease-of-use, and total cost-of-care over upfront costs.
STANDING OUT IN A CROWDED MARKET
With multiple vendors vying for limited contracts and budgets, differentiation is key, if not an all-out, make-or-break factor. Even if there is currently no competitor for your specific category of product, you are still competing with every vendor from all product categories who are vying for their limited resources. To stand out, be sure to:
Provide the latest real-world clinical studies and valid data to back up your claims.
Offer peer endorsements from respected clinicians and other healthcare Key Opinion Leaders [KOL].
Understand your competitors and their unique value proposition and be sure your unique value prop outshines theirs.
Offer and deliver exceptional support and training to make implementation seamless.
HOW EXCELERANT CAN HELP
At Excelerant, we specialize in helping medical device and healthcare companies navigate the complex healthcare purchasing matrix. Whether you’re trying to establish relationships and go to contract with a new hospital system; optimize your GPO strategy; or ensure compliance with complex rebate structures, we provide necessary insights and strategies to help you get results.
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ABOUT ROB BAHNA
Rob has spent his entire 35-year career in the healthcare industry, leading sales organizations and launching more than 15 products. He is highly respected for his ability to identify a product’s unique value proposition then crafting appropriate go-to-market sales strategies.
With experience in sales, manufacturing and distribution, Rob keenly understands the various pitfalls and barriers-to-market that many small to mid-sized healthcare organizations encounter when launching a product. These include funding, aligning with the right distributors, understanding the competitive landscape, securing contracts, identifying proper price points, sales training, and developing go-to-market strategies that accelerate an organization’s journey to growth and meaningful profitability.
Rob is a proven sales and leadership trainer, coach, author and motivational speaker. His first book, “Bahna Pyramid of Selling Effectiveness”, was released in 2024. He is currently finishing his second book, entitled “Bahna Pyramid of Leadership Effectiveness”.