How can companies determine where to focus as they develop their pipelines and determine new growth opportunities? Kx Advisors’ 2020 Hot Indications List can help. In our 6th annual analysis of global R&D investment, our experts identified the top indications for industry focus.
Six Considerations to Evolve Your Capital Equipment Pricing Strategy
Capital Equipment Pricing Models
As the world of capital equipment changes rapidly, manufacturers must find innovative ways to stay competitive. With new technology and enhancements, such as software upgrades and digital and connectivity solutions, as a crucial part of the value proposition of capital equipment, manufacturers can offer alternative pricing solutions to provide greater customer customization. Flexible pricing is especially pertinent for higher–value equipment on the market, such as AI-assistedimaging equipment, robotically–assistedsurgical equipment, and advanced monitoring equipment. With the shift in procedures from hospitals to smaller office-based labs and ambulatory surgical centers, manufacturers can also capture new business opportunities with these alternative models.
New Pricing Models for Capital Equipment
The traditional pricing models offered three options: an upfront purchase with each component sold separately, a consumable upcharge model, or a leasing model. A combination of new technology and more customized pricing improves a manufacturer’s value proposition. With new pricing models, manufacturers can boost revenues, increase penetration, and build long-term relationships with clients by offering greater flexibility.
These new models include:
Risk-based or outcomes-based model: Risk-sharing pricing strategies factor in a cost savings component from any operational efficiencies gained and clinical outcomes achieved in this model
Recurring revenue stream model:Instead of the traditional transfer of ownership model, manufacturers offer a subscription with a recurring fee. The purchaser or user is granted access to a set number of capital equipment devices for the subscription period. This fee may or may not include unlimited usage in the number of consumables
Patient usage pricing model: Based on patient usage, manufacturers can offer a per-patient fee for the equipment over a period of time with this model
Enterprise–level model:This model bundles thecustomer‘s capital equipment needs across entire care units and multiple hospitals within the network. The bundle would normally include both equipment and services components. Payment schedules could be yearly or bi-yearly
Six Considerations for Identifying the Right Pricing Model
With so many pricing models emerging, it can be challenging to identify the right one for your product offerings. As your organization moves towards a new pricing model, like the ones above, there are six key considerations to keep in mind to identify the most effective model for your team:
Set clear objectives: With an identified goal, your organization can better evaluate the potential models. Objectives can include increasing revenue, expanding the adoption rate, smoothing revenue, maximizing profit, and expanding account use of a suite of products and services. For example, if a manufacturer’s goal is to increase the use of a full suite of products, the recurring revenue stream model may be a better fit for their goal
Identify the value drivers of your product: Drivers, such as clinical efficacy, payment model, ROI, and the strength of existing relationships, impact pricing and the manufacturer’s ability to customize the pricing model
Determine the decision-maker: Sometimes the end-user who makes the purchase decision is different from the purchaser who chooses the pricing model. Broadly, there are three types of capital equipment buyers: economic, clinical, and operational. The economic buyer’s sole focus is to improve their organization’s profit. In contrast, the clinical buyer is more focused on the clinical value of the product offerings, like patient outcomes or improved patient experience. Operational buyers typically focus on other factors such as department workflow, device integration with key clinical systems, or maintenance and uptime.Knowing the levels of influence and priorities for each buyer type will help determines which pricing model to offer. If the buying decision is more committee-based, the pricing model will need to considerall stakeholder needs
Consider the impact on clients’ budgets: Pricing structure might impact where a client categorizes a purchase (i.e., capital expenses or operational expenses). Often capital expenses will fall under the hospital’s capital budget while operational expenses fall under the department’s budget, which may sway some clinicians towards a capital expense model
Understand clients’ financial health: Innovative recurring pricing models might be a better fit for clients working under capital restraints. This consideration is crucial overseas, especially in countries where COVID-19 has ravaged hospitals, which would seek to reduce the upfront cost of purchasing capital equipment
Establish benchmarking metrics: This consideration is the most important for risk-based or outcomes-based pricing, as identifying the equipment’s impact on patient outcomes or operational efficiencies dictates price. These metrics could include hospital readmission rates or the number of adverse events related to the equipment. When determining these benchmarks manufacturers must ensure they are measurable and that clients have the right infrastructure system in place to measure them
How Kx Can Help You
With our expertise in pricing strategy, Kx Advisors can guide your team through developing an optimized capital equipment business model. Our team of healthcare experts will help you evaluate your base, identify your customer segments, effectively appeal to your ideal customer, and position your organization for long-term success.
How Understanding Cognitive Bias Can Drive Patient Volumes
Understanding Patient and Healthcare Provider Behavior
We all strive to make rational choices. But as humans, we are prone to bias and misjudgment. In the medical field, cognitive biases can have a profound impact on both patients and healthcare providers. Kx frequently conducts studies to uncover cognitive biases in referral pathways, including specialist referrals for more advanced therapies or interventions.
By pinpointing these biases, our team helps specialty drug and medical device clients focus their marketing and education efforts and increase market penetration within their eligible patient population.
Often specialists do not refer patients for treatment quickly enough or at all. These delays in or lack of treatment not only allow the patient’s condition to deteriorate, but also prevent the drug and device companies from fully reaching their addressable patient population. In our recent studies, Kx found that cognitive biases exist at each stage of the referral process.
The Kx Solution
When guiding healthcare organizations by improving their specialist referral pathway, the Kx team runs an in-depth qualitative analysis speaking with specialists to understand critical attitudes, behaviors, and beliefs across the population of relevant doctors. Key differences within demographic segments (e.g., age, specialty, practice type) and behavioral segments (e.g., willingness to refer, referral choice) help identify drivers of attitudes and potential solutions for changing these behaviors.
Uncovering Cognitive Bias to Reach the Addressable Patient Population
Kx developed the following key findings to drive the patients through the specialist referral pathway:
Awareness that symptom recognition is often the most significant barrier in the referral process and education to combat the issue. Early in the referral process, during the diagnosis phase, cognitive biases result in the specialist not probing consistently, missing symptoms by not asking the right questions, or simply not asking enough clarifying questions. Incorrectly identifying patients’ health status based on outward appearance or insufficiently probing symptoms can result in critical underdiagnoses or undertreatment.
A clear path to referral, particularly one with a singular point of contact, can help referring physicians feel more at ease. Successful drug and device companies reduce friction in referral pathways by helping referring physicians establish clear points of contact across hospitals, specialists, and surgical teams. Elucidating a single point of contact cuts down on ambiguity and removes an obstacle for referring providers.
Direct relationships between the referring specialists and the treatment teams (surgery team) build comfort and encourage referrals.
When creating tools for doctors, simplicity and ease of use are key factors. Biases exist among doctors to simplify complex thought processes. Though tools, like decision guides for complex cases, can be extremely beneficial, they must be simple and easy to understand and use to overcome biases and help physicians better identify which patients need further treatment.
How Kx Can Help
Our healthcare experts can guide you by adjusting various aspects of our corporate strategy, including your referral pathway, with insights from market research. Cognitive bias is built into our research methodology, enabling your team to overcome any we find and fulfill more referrals. As data-driven decision-makers, we design research using both traditional factors and behavioral science to pinpoint process improvement and qualitative analysis opportunities.
How To Level Up Your Customer Segmentation Strategy: Behavioral Segmentation
Kx‘s customer segmentation delves deeper than any traditional segmentation by looking at underlying behavioral and attitudinal factors that can replace the standard identifiers. Your team can improve your process by expanding on the factors you include in your segmentation beyond demographics and traditional commercial indicators. Below are some of the behavioral segmentation variables your team can include:
Attitudes: These variables influence customers’ perception of products and their receptiveness to trying out a new product
Roles and level of influence: Customers’ roles can impact drivers of purchase or use, and prioritizations of these drivers, based on different roles/responsibilities and experiences of the user/purchasers
Experience and situational context: Analyzing these factors can showcase different unmet needs based on the type of user and provide context into what healthcare companies can do to drive increased adoption/purchase
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Developing Customer Segments With Sales Teams In Mind
While customer segments are a vital marketing tool, focusing on behavioral segmentation allows your sales team to provide a more personalized experience.Throughout this process, marketing teams must ensure that each segment is:
Specific: the segments are mutually exclusive and collectively exhaustive, and each customer can only fit in one segment
Meaningful: apparent differences exist among segments, and these differences are significant drivers of behavior and preferences
Actionable: markers for different segments support easy identification and targeting for therapy development teams
Creating digestible segments specifically for the sales funnel empowers the sales team to better secure business.
Kx‘s Four–Step Approach For Segment Profiles
Our experts uniquely leverage these variables to identify accounts that give the biggest share of wallet. Kx conductsthe segmentation through three steps:
Determine segmentation goals: Kx works with organizations on clarifying their goals and mapping their segments to match these goals, including identifying the segments that are most likely to drive profit and have the most significant lifetime value
Identify the markers for distinct segments : Defining key demographics is critical for the success of the segmentation process as it dictates the approach of anygo-to-market strategy. Our experts start with traditional indicators and slowly work through the in-depth behavioral indicators, identifying the deep and nuanced permutations within the target base
Develop and quantify segment profiles or archetypes: When Kx works with organizations on customer segmentation, our team builds out the different segment profiles, or “archetypes“ of customers. Our team performs in-depthqualitative research to understand the drivers of high product affinity within each segment, giving your sales team insights they need to message to their targets effectively.After setting the boundaries, quantifying each segment’s size allows your team to gauge which segments are the highest value for your team, and provide the most significant growth opportunities. To do so, we conduct quant research and K-clustering to identify combinations of variables that statistically show segments
Implementation: Perhaps the most challenging aspect of the implementation processis where the tie between marketing and sales matters most. The cardinal implementation rule for marketing teams is that all archetypesrolled out must be unique. With that in mind, the fewer archetypes, the better the sales team’s result as they can customize their approach and connect more effectively with their targets. Our team is skilled at designing tailored strategies for implementation and can support your team through the procedure
How Kx Can Help
Withproduct planning and launch strategyexpertise, Kx Advisors can guide your team through customer segmentation and targeting. Our team of healthcare experts will help you evaluate your base, identify your customer segments,effectively appeal to your ideal customer, and position your organization for long-term success.
What Product Managers Must Do To Launch Successfully In This Pandemic
Launching Healthcare Products In Uncertain Times
For many pharmaceuticals and medical device companies, the spread of COVID-19 has no doubt disrupted upcoming product launches. As prescribers treat and patients seek care in this highly variable environment, the landscape for a product launch looks different than just a few weeks ago. This crisis hampers months to years of planning, and we see a unique set of questions posed to product management leaders.
What You Can Do Today – A Launch Planning Framework
As the COVID-19 virus continues to spread, many companies must adjust different components of their upcoming launches. How do product managers decide what to adjust in their launch, how it impacts them, and where to go from here? Our experts created this framework to guide you through three critical questions for agile launch planning during this pandemic.
Moving Forward During COVID-19
The uncertainty triggered by COVID-19 highlights the healthcare industry’s need for adaptability in pharmaceutical and medical device launches. Leveraging this framework, product managers can anticipate and meet any future challenges to launches due to COVID-19 or other rapidly-evolving events. Acting now can diminish any negative impact on your launch.
Kx Advisors, Experts In Launching
Are you planning a product launch that could be impacted by COVID-19? Kx Advisors can help. With launch planning expertise, our team of healthcare specialists will guide your team in identifying issues quickly and adapting your plans for whatever comes next. Our rapid assessments will build on this framework, examine market data, and evaluate your options to guide you through the crisis. Our tailored approach will empower your team to launch your product effectively.