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Six key challenges and roadblocks for health IT sales growth

How health IT sales models impact revenue growth

 

In our three-part health IT sales model series, we talk about market trends and challenges for growth, shortcomings that many health IT commercial leaders face with their current commercial models, and how updates to your sales model can impact results.

Seeing consistent success in the rapidly expanding health IT market has always been challenging. Leaders are faced with new entrants, new products, and raised patient and provider expectations. COVID-19 only increased pressure to maintain revenue growth and margins while offering new services to engage providers virtually and digitally.

As patient expectations continued to evolve, the situation became more complex and challenging across the entire front office (e.g., sales, marketing, service). Commercial leaders need to re-examine their sales models to ensure they are keeping up with new market standards while maintaining profit margins.

The “big rocks” blocking market success

There are six key changes in healthcare that health IT sales leaders must adapt to if they want to differentiate themselves within the competitive health IT marketplace.

1

1. Increased patient and provider expectations of an excellent digital-enabled customer experience

  • Personalized patient and provider experience has become a differentiator in a competitive but regulated marketplace
  • Artificial intelligence (AI) is being used to make personalized treatment possible, with 84% of medical device industry leaders saying that AI will soon transform personalization in healthcare1
  • Electronic health records (EHRs) can help providers make more effective and efficient decisions with an aggregated portal for patient information, bolstering the customer experience
  • Patients want and expect on-demand healthcare. In 2021, 77% of patients went online to book medical appointments1. Additionally, a plethora of digital service apps are helping providers expand personalized experiences, engagement, and connection between patients, payers, and providers
    • Implications: Health IT sales leaders need to prepare their sellers to understand and sell new technology that meets these increased expectations and fits the patient-focused ecosystem

2

2. Shift toward economic buyer

  • Hospital margins continue to erode because of increased pressure from private and public payers. Private payers are narrowing their networks and increasing access to less expensive digital/virtual offerings and public payers grudgingly increase reimbursement rates                                                  
  • The increased strain on healthcare providers has brought in new buyers, decreasing the importance of clinical value propositions, and increasing the need for financial justification in the account decision making process
    • Implication: Health IT sales leaders need to ensure they have the talent to balance the needs of both clinical and economic buyers

3

3. While government healthcare spending is going up, managing the business is becoming more complex 

  • Healthcare spending is expected to be nearly $6T by 2027, accounting for 20% of GDP1
  • Medicare and Medicaid programs are trying to control costs using vehicles like Accountable Care Organizations (ACOs), price transparency, and recently passed legislation (e.g., Health Care PRICE Transparency Act, Inflation Reduction Act)
    • Implication: Health IT sales leaders will need to help their teams navigate and thrive amidst changing rules with large payers and providers of all types

4

4. Recent healthcare and technology M&A has created incohesive patient experiences

  • Over the past two years the digital health space has seen an average of 15+ M&A deals per quarter2
  • Many organizations are pushing for disruptive innovation to jumpstart their digital health services or differentiate themselves in the market2
  • The focus for these mergers targets late-stage healthcare companies with deep vertical knowledge and technology companies with expertise in scalability which can increase the complexity of a joint sales model
    • Implication: Health IT sales leaders need to assist newly merged organizations bridge the knowledge gap between the health and technology industries

5

5. Rising acceptance of telehealth by providers and patients

  • COVID-19 accelerated the use of virtual technology, such as telehealth, changing provider behavior and their expectations of health IT vendors
  • Centers for Medicare & Medicaid Services (CMS) changes in 2020 and 2021 opened doors for comprehensive telehealth coverage and virtual clinic models, cementing these changes
  • In 2021, less than 25% of clinicians said they will go back to "business as usual," and expect to make telehealth and virtual vendor interactions a normal part of how their practice operates3
  • Many providers are now allowing remote and hybrid work, both for themselves and their staff, making digital and virtual technologies and interactions crucial for health IT sales success
    • Implication: Health IT sales leaders need to help their teams adapt to hybrid sales models and more flexible account management approaches

6

6. Government regulations around interoperability increase investment in compliant health IT solutions 

  • Standards set in the CMS interoperability and patient access final rule around APIs enable sharing and increased transparency of healthcare data
  • Companies continue to invest more in interoperability products and services compared to the previous year, to meet government standards1
  • Regulations enabled new market opportunities for technology companies; VC funding reached $2.2 billion after 2021 for interoperability and health data infrastructure startups1
    • Implication: Health IT sales leaders will need to focus on understanding interoperability for their products and for providers existing systems

To face these challenges, health IT sales leaders must adapt their sales models to compete:

  1. To fend off margin erosion and grow revenue, economic benefit value props are becoming almost as important as clinical efficacy
  2. Smaller health IT companies need to act more nimbly to counteract full suite offerings and revenue portfolios
  3. Larger health IT companies need to coordinate across disparate offerings and teams to provide an attractive and high-value patient and provider offering
  4. While health IT selling teams may have relatively high margins, maintaining productivity over time requires strategic forethought in how to invest their winnings
  5. New market entrants are competing for sales talent, willing to pay for it, and are carving off profitable niches of customers that were once well-protected
  6. It’s critical to refresh value messages, coverage models, goals, and incentives to account for model and market changes

 

See the next blog in our series on the biggest “inside out” challenges in many health IT organization’s commercial models.

Author

  1. Alex Tolmasoff, Director, KPMG Sales Transformation and HCLS Lead

Footnotes

  1. Source: “KPMG Pulse Survey” (Summer 2022)

How can KPMG help? 

KPMG can help you improve the ROI on your sales investments. We can help with your winning sales strategies, processes, and talent with connected insights.

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Meet our team

Image of Walt Becker
Walt Becker
Principal, Customer Advisory, Sales Transformation Lead, KPMG US
Image of Alex Tolmasoff
Alex Tolmasoff
Director, Customer Advisory, Sales Transformation, KPMG US

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