Every medical device company in some ways wants to move from a product-centric model to a customer & value-centric model.
Customers are looking for partners, namely companies that can bring value with their products and beyond.
However, value is a central concept in medical devices marketing, and sometimes it can be difficult to be defined.
Today I will share some useful elements to help you understand value in medical device marketing.
What Is Value In Medical Device Marketing?
When I do salesforce training, I love asking questions that require “it depends” as an answer. One of these questions is; what is value in the medical device industry?
There are a couple of definitions of value that are worth considering.
According to Cutler and McClellan, this is the definition of value in medical technology:
“The net value of medical technology change is the difference between the benefits and costs. A positive net value implies that the technological change is worth it in total”.
According to Kotler and Keller, this is a definition of value from a fundamental marketing book:
“Value, a central marketing concept, is primarily a combination of quality, service, and price (qsp), called the customer value triad. Value perceptions increase with quality and service but decrease with price”.
Common Elements Of Value
There are few common elements when talking about value in the medical device sector, and here we will consider them.
- The “customer” chooses the product delivering the most value according to his or her perception.
- The value is the sum of the tangible and intangible benefits (utility) and the price paid.
- The price/cost concept also includes considerations of the time, effort, and search involved in the overall cost or sacrifice made by the “customer”.
- The value is more than the product’s features and benefits; actually, the value is the translation of the features and benefits into outcomes for the “customer”.
- Value is strictly related to the single “customer” perception.
In the medical device sector, different “customers” (stakeholders) can have contrasting perspectives on value.
For example, a patient, physician, caregiver, hospital, and payer can have divergent perceptions of the value of a medical device.
Value Of Medical Devices: 3 Facets
The value of a medical device can be defined as the combination of 3 different values.
1. Clinical Value
Clinical value was the most important value in the past and still plays a key role in value generation.
Although the economic value is increasing in importance, the clinical value is related to better clinical outcomes such as better safety, effectiveness, quality of life, and diagnosis.
The clinical value of a device can be based on evidence (evidence-based medicine) or can be anecdotal and sometimes evident.
Due to cost containment strategies in several countries, medical devices need to show proven clinical value through clinical evidence.
2. Economic Value
Economic value is the value generated by the device in terms of savings compared to the alternatives.
3. Emotional Or Psychological Value
In contrast to clinical and economic value, the emotional/psychological value is based on intangible elements and is not easily quantifiable.
The drivers of emotional-psychological value are the brand, the relationship, the ease to acquire the device, and customer service in general.
The emotional-psychological value is the value gained from customers’ feelings or emotional states when using or buying a medical device or a service.
Different Perspectives On Value Of Medical Devices
There is a particular challenge in our industry, which is related to the different perspectives of the stakeholder toward a new product.
For instance, in some situations, single-use surgical products can have a positive value for the patient and the surgeon, reducing infection risks; Yet, have a negative value for the hospital administrator, increasing surgical cost.
When thinking about the value created by a new product, it is important to carefully analyze where the value is created in the value chain and who benefits from the value.
In the medical device international market, the reimbursement system, and the healthcare structure are significantly different across the globe bringing a high level of complexity.
This means that the value created in one country for a specific stakeholder could be very different from the value created in another country.
Value Assessment
Any medical device should go through an assessment of the value created by each distinct feature and related benefit.
The sources of value for a medical device could be multiple; for example, better safety, ease to use, addressing an unmet clinical need, maintenance, improved effectiveness, etc.
Moreover, one single source of value can generate value in all three dimensions: clinical, economic, and emotional/psychological value.
Furthermore, a product that allows a significantly shorter surgery time will generate economic value thanks to the shorter surgery. But it could also generate a clinical value due to less surgical effort.
This could have an impact on the emotional/psychological value since the end-user could benefit from the reduced surgical time.
Segmentation And Value
Another challenge of value creation in the medical device sector is considering how the value generated changes for the different segments of the several stakeholders.
Below are a few examples but keep in mind that many others are possible.
Patient Population: Some medical devices can have more value for specific patient subgroups due to patient characteristics (e.g. obese, diabetic, smoker, young, old, etc)
Hospital Type: Some devices can better satisfy the needs of large teaching hospitals where complex cases are performed regularly compared to other institutions.
End-User Segment: The end-user level of experience can have an impact on the value generated by a device. Experienced surgeons are less inclined to change their surgical approach; therefore, the value generated by a new technology must compensate for the inertia.
Payers’ Segment: Reimbursement from public or private institutions could follow different paths and have significantly different levels; therefore, a medical device could generate a value that will be considered differently according to the payer segment.
Conclusion
The task of a medical device company is to deliver value to a “customer” at a profit.
Understanding the different dimensions of value in Medtech and the different customer perspectives is the foundation of value creation in medical device marketing.
While emotional/psychological value is important and should be taken into consideration, economic and clinical value play a predominant role in value generation in our industry.
Hence, the numerous stakeholders involved in medical devices assessment are more and more careful in the value generated by new technology and in the evidence supporting it.
Do you agree with me on the value of medical devices? Let me know your thoughts in the comments below. And subscribe for more medical device sales and marketing insights.