Investing in a quoting system sounds like it should be a no-brainer for medical device companies. Between a complex product set, multiple overlapping rulesets around how products can be sold, and numerous regulatory and reimbursement considerations, medical device companies manage some of the most difficult pricing models in any industry.
Many medical device companies make the decision to systemize their overall quoting processes, for reasons we discussed in our previous article, but not all are ready. If your company is considering making this shift, how do you decide when you’re prepared, and what work needs to be completed before you begin? There are three key questions to ask yourself:
Within the medical device space, group purchasing organizations (GPOs) and independent delivery networks (IDNs) create a variety of avenues through which end customers will buy your product. Some geographies will have locally negotiated pricing to consider on top of that. How do you ensure your reps are selecting the right products, at the right time, from the right contract? Can this pricing be effectively documented and systematized? Additionally, how are products discounted? Often, this knowledge is distributed across your organization, in the heads of top representatives or documented piecemeal in several locations.
While improved pricing control & governance is a major benefit to a quoting system, you can’t systematize a pricing model that you don’t fully understand. Implementing a quoting system will mean knowing when a product can be discounted and how that discount is approved well enough to write an accurate ruleset for your pricing engine. Before you embark on building the system, make sure you’re ready to systemize.
A quoting solution can provide pricing governance and systemize the rules that are behind your GTM motion, but it’s just one part of your quote-to-cash cycle. Many device companies that set out on a quote-to-cash transformation aim to improve billing practices along the way—something made possible by integrating your quoting solution with your ERP and billing platform.
That said, your billing platform has to be ready to receive this information and use it to facilitate their accounting processes. If your business case for a quote-to-cash transformation includes billing accuracy or speed, don’t forget to account for the changes needed to your ERP & billing platforms and involve the relevant teams in planning for the transition.
In the medical device space, product lists are often long and complicated. Because of how specialized each order is, there’s a tendency for companies to make nearly everything they sell an individual product on the list. As a result, the actual products can often be very similar or even duplicative, leading to challenges for accurately pricing and quoting the right products for the right customers.
Companies that adopt overgrown product lists into their quoting tool inevitably find that these same challenges will follow them to their new system. By rationalizing product lists and removing duplicates, you can make your product list fundamentally easier to navigate, getting to the root of the problem before you build your new system. Companies with recent or frequent M&A activity will need to be especially careful here: As you add a new company’s offerings to your product list, you may add very similar or identical entries along with the new ones.
While beginning a quote to cash transformation effort can take your device company’s profit and efficiency to the next level, you need to be ready for the transformation to succeed. The above are three common roadblocks organizations face in the early days of implementing an optimized quoting solution, but by no means the only ones. Building a strong project plan and project preparation plan are critical to hitting the ground running.
If any of the above challenges resonate with you, we’d like to hear about it. Spaulding Ridge has helped over 25 different medical device companies and over 50 healthcare organizations better manage their quote-to-cash process. Contact us today or meet us at the 2023 MedTech Conference to set yourself up for a successful transformation.
