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Inside the healthcare market

December 1st, 2010 / By: / Advanced Textiles, Feature, Markets

The key to selling to the healthcare industry is patience—and lots of it.

Companies that have successfully penetrated the medical market have done so either by having a highly focused, slow-growth strategy or by falling into it with the right product. In either case, companies must meet the demands for quality, service and cost in this highly regulated industry.

The medical market is broken down into segments ranging from big chain hospitals to home health care. While hospitals represent the largest volume market, there is a lot of business with physician clinics and small specialty practitioners as well. Selling direct to these markets requires the right sales staff with industry knowledge.

Companies can either subcontract or sell to the OEM market, but most sell through prime distributors, such as Patterson Medical, Henry Schein Inc., AliMed, Medline Industries Inc. or Cardinal Health Inc. Some hospitals also align themselves with group purchasing organizations (GPO), which develop contracts with the suppliers through which members may buy at a volume discount. MediGroup, with more than 12,000 members and $12 billion in annual sales volume, is the largest non-acute care GPO in the United States. Others include Premier Products Co., MedAssets, The Broadlane Group, Amerinet Inc., HealthTrust Purchasing Group, Provista, Novation LLC and Innovatix LLC.

Selling direct to the market

Hospitals that align with a GPO will then also align with a prime distributor that will carry the products it purchases and deliver them overnight from their regional warehouses. This helps the hospital cut down on paperwork, space and shipping costs. To sell products into the hospitals, it is imperative that a company be aligned with both the distributor and GPO, says Bryan Metts, national sales manager at Carolina Narrow Fabrics (CNF) in Winston Salem, N.C. It is then up to the company’s sales force to actively promote its products to the end user, which is the hospital.

“We have had success selling into the acute care market by showing the hospital the benefits of our products over our competitors and getting around the GPOs. There are some hospitals that buy direct from us, but more do so through prime distribution,” adds Metts.

CNF supplies knitted and woven products to the orthopedic market. After many years supplying the OEM market, the company developed its own label three years ago and started selling directly to the medical market. The process is all about building relationships and is a lot of work, says Metts, but by staying focused on its core business segment and educating that market on its product, the company’s efforts finally paid off. CNF is now emerging as the fourth biggest supplier of fiberglass casting in the United States.

“Our first year, we were scratching our heads and saying we’re putting a lot of money behind this and not getting a return. We’re starting to get a return now, but you have to build your sales staff, build your brand and go out and sell it,” says Metts.

If you’re developing new products, Metts suggests getting into a study at a teaching hospital. CNF worked with several teaching hospitals just by calling and asking who’s in charge of that process. You have to pay for the studies to be done and their time to assess the product’s effectiveness during a procedure, he says, but sometimes the physician will have suggestions for how to improve it and might even purchase it.

“Be very persistent and realize it may take several years,” says Metts. “You may have the next best thing to peanut butter and jelly, and it just explodes in the market and people are calling you.”

Selling from the ground up

Fabrifoam Products in Exton, Pa., has been selling to the health care market since 1992 and has built a solid relationship with more than 30 distributors in the U.S., Canada and overseas. The company has had double-digit growth in four of the past five years as a manufacturer of compression and support therapy devices used by physicians, physical therapists and athletic trainers, among others. The process to achieve that level of success with the distributors was “pathetically slow” the first eight years, says president and CEO Harry Sherman.

“It’s hard to get in with the big guys. It’s a very slow building process. You’ve got to be capitalized properly to withstand that slow growth that you’re going to experience,” says Sherman.

Fabrifoam Products started out driving sales from the bottom up by educating physicians and clinicians about its product at medical trade shows. It’s where the company can find out what the end users are looking for, and where new product development occurs. Fabrifoam® is a fabric that can be used directly as an exoskeletal device to reposition muscle groups and address specific biomechanical problems. It is more cost effective than devices made with rigid components and provides much greater comfort and enhanced compliance on the part of the patient.

“In the beginning it was a hard sell because products can be revolutionary and people don’t readily accept them. That’s why we went to the trade shows. If a therapist tries your product and loves it, they’ll go to the distributor and say they want to buy it. That can be your entry point,” Sherman says.

The company started out working with smaller distributors, and put a lot of effort into educating them on the product so they could be successful with it. They gained an enormous volume through the distribution network, and word of mouth is now driving sales. Sherman stresses the importance of having a good quality product that is priced right and is delivered on time.

“You’ve got to educate the customer as to why your product is different and why it will work. The decision to go with a product or not is based on their confidence in your product really helping alleviate the discomfort their patient is experiencing,” he says.

Subcontracting with the medical market

Genesis Plastics Welding, Fortville, Ind., has provided radio frequency (RF) heat sealing of custom thermoplastic products for more than 20 years. It started proactively pursuing the medical market six years ago as a contract manufacturer for the OEM market, supplying a proprietary RF welding technology used on such medical devices as inflatable bladders, blood pressure cuffs, deep vein thrombosis sleeves, instrument covers and cooling therapy products.

The company obtained FDA-registered status and installed an ISO Class 7 clean room as part of a strategy to expand its product offering. It placed advertising in medical device trade magazines and on websites like ThomasNet and Q-med, and started attending the Medical Device & Manufacturing trade show and other shows in the biomed industry, where they can meet and educate product engineers on its RF welding technology and ability to work with different composites.

“After we secured a few customers within the medical industry, it really has been our attention to quality and customer satisfaction that has helped expand awareness for us in the industry,” says CEO and President Tom Ryder.

Two things are aiding its growth. As baby boomers age, the medical market is growing beyond hospital care and into nursing homes and home health care where treatment can be administered, expanding the need for medical devices. The other part is the demand for different materials. Engineers are looking for a replacement to PVC, but a lower-cost alternative to polyurethane. Genesis is able to use its RF welding technology on materials such as polyethylene and polypropylene and other low-loss polymers.

“The health care market is becoming more knowledgeable about what goes into the products and is no longer saying, ‘Oh, it’s plastic.’ Now they’re saying, ‘What type of plastic is going into it?’” explains Ryder. “It’s a market-driven situation. In California they’re trying to reduce products made from PVC. In the European market, you’re not allowed to make products with PVC, and the bigger U.S. companies are looking for solutions to make that transition before they’re required to do it. With our RF welding technology, we’re able to aid them in that PVC replacement.”

Ryder said they take customer service and quality control seriously to meet the expectations of its customers and the end users. The health care industry requires more service and attention to detail because of its highly regulated status and focus on patient care. The long lead time from product development to actual sale is a challenge, and FDA approvals can take four or five years.

“Regardless of whether the product is for the medical industry or not, we know that quality control is imperative,” he says. “Even though we’re providing the contract manufacturing it’s still our product, so if something was wrong with it, we know we’d hear about it.”

Concord Awning and Canvas Inc., Bow, N.H., has carved out a unique market in the health care field by providing large, customized awning structures for mobile MRI trailers that come to hospitals several times a week to conduct MRIs for patients at a greatly reduced cost. The structures have to withstand considerable weather and, in some cases, include a covered walkway access between the hospital building and the trailer, notes prior owner Gary Greene. He was asked to create a customized awning structure for a contractor working with Southern New Hampshire Medical Center. It so impressed the hospital’s chief engineer that Concord Awning started getting referrals to other hospitals.

“All you need is one good positive review from someone of influence and you get more business,” Greene says. Concord Awning’s reputation for quality workmanship has earned it about 90 percent of the orders for these structures. The company has created 15 of them in the New England area.

“The business evolved because of our willingness to take on something new and novel,” he says. “We got lucky.”

Barb Ernster is a freelance writer based in Fridley, Minn.

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