GPO – A Matter of Brand?

Depending on your point of view, GPOs can either be conceived as friend or foe to both MedTech vendors and hospitals. They can alternatively reward participation or punish those who in some way fall outside of their carefully prescribed boundaries. Vendors not only have to meet a number of challenging qualifications, but also must be willing to make price concessions in order to enjoy the market access and promised volume increases. Only dominant brands in the market can defend their desired price point. Vendors who have traditionally relied upon technological innovation as a differentiator are being competitively edged-out as the emphasis shifts strongly to brand equity.

Pricing, of course, is always an important issue in GPO contract negotiations, but hospitals cannot compromise on quality. This is why they prefer to rely on companies with a trusted brand, which from their perspective and often, in fact, equates to superior quality. Hospitals avoid the scenario where they have only one choice, particularly if it is not one of their “preferred” brands.

This issue examines the role of branding as it pertains to GPOs from the perspective of GPOs, hospitals and vendors.

COUNTRY SNAPSHOT: Healthcare in BrazilHealthcare Spending

Portion of GDP: 8%, or USD $121 billion. GDP per capita: $9,500. Healthcare spending per capita: $212.Payers: Those who can afford it opt for the private sector. By 2009, more than a fifth of the population (32 million citizens) had purchased private health insurance. The Government is the largest buyer of healthcare goods and services, with a budget of approximately $5.2B.

Market StructureTotal Hospitals: 7,700 of which 2,600 are HMO, 2,500 are public, 1,800 philanthropic, 600 private and 200 university. Total Bed Capacity: 810,000.Physicians: 198,153 or 1.9/1,000 inhabitants.Population: 9% of the Brazilians are currently over the age of 60. Fertility rates continue to drop as life expectancy is rising.

Key AttributesStrong Government Involvement: • Brazil is one of the few countries in the Western Hemisphere with universal health care. • Government-funded services are allocated through the decentralized Unified Health System, known as SUS.Principal Types of Medical Plans: private health insurance, prepaid group practice, medical cooperatives and company health plans.Limited Scope: Brazil does not have the capacity to offer high-quality care to all. Hospitals lack basic infrastructure to continue meeting the increasing healthcare need.

Trends in HealthcareConsolidation is the current trend in private healthcare.Telemedicine and home healthcare are emerging sectors.Brazil is leading Latin America by computerizing patient records and securing online health care information.Multinational companies are emerging due to privatization, deregulation and the removal of barriers to competition.

To find out what The MarkeTech Group consultants can do for you, visit our Web site at www.themarketechgroup.com

CASE STUDY:The Latin American Market The Client: a leading international EMR, HIS, RIS, PACs and radiology

vendor that has been present in the Latin American market for several years through local distributors only.

The Challenge: capture high-level market characteristics: segments, readiness, value-drivers and brand perception.

Our Solution: TMTG’s two step approach: qualitative in-depth interviews with radiology and IT decision makers to understand their perception of each national and international vendor, and the strengths and weaknesses of distributors versus original vendors. A subsequent web-based survey quantified the installed base by brand and age, and the expected rate of replacement in the current system, or adoption of the first system. Findings from each phase were calibrated with available secondary data to allow directional forecasting of the region’s market potential.

The Impact: the Client gained a comprehensive understanding of the Latin American market for the IT systems researched, and was presented with a clearer roadmap for developing its medical IT system. The Client was also able to better understand discrepancies in information received from local distributors, to forecast the expected adoption rate and market potential and to receive key information for strategically navigating the Latin American market.

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Spring 2010VOLUME 10, ISSUE 2

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