There’s a lot of buzz these days about so-called "repless" sales models, in which hospitals buy generic medical devices without the benefit – or cost – of a traditional sales force.
Earlier this year, Smith & Nephew (NYSE:SNN) CEO Olivier Bohoun touted his company’s Syncera program as "disruptive of the commercial model," noting that the British orthopedic device maker is seeing profit margins "equivalent with the classic old-style [hip and knee] business."
Syncera is in its pilot phase in limited hospitals in the U.S., Bohuon said, claiming that hospitals performing 700 procedures a year will save an average of about $4 million in cash over 3 years.
Repless services provider Royal Oak Medical Devices claims it can save its hospital customers more than $100,000 a year on their orthopedic implant spends using its generic sales model.
But the repless model faces many doubters, and not just among the medtech sales reps it threatens.
"I look at a generic model very skeptically, regardless of which company is offering it," Stryker CEO Kevin Lobo said in January. "Until these procedures are de-skilled it’s very hard to imagine [not having] the sales force and the services that we provide in the hospitals. If you don’t have that, the operating rooms just don’t flow effectively and efficiently. I don’t know when they launched their initially but we are not seeing it in any meaningful way in the market."
There are doubters in hospitals, too, including a pair of high-volume orthopedists who specialize in hip and knee replacement surgeries, and Charles Micelli, vice president, network chief supply chain officer at the University of Vermont Health Network
"You have to have somebody that can detail the efficacy of the product, then also be a conduit into the subject matter expertise, and maybe not necessarily tied to just how the product works, but how does that affect patient outcomes with fact-based effects? Infection prevention? How does it tie into patient safety?" Micelli told MassDevice.com recently. "When you have a multinational manufacturing company or a service company, say like a GE Healthcare (NYSE:GE) or a Medtronic (NYSE:MDT), they have legions of the best and the brightest that you can, in an hour-long conversation, share a problem that you can micro-fix or get done real quick just by talking on best practices. That’s a whole component of supplier relationship management.
"That’s where I see, not necessarily a repless model, but more of an ‘advisory model,’" Micelli said. "As a provider, or as a buyer of services, every dollar I’m spending, I’d like to have it be beyond what the widget is if the widget is a commodity, and at the same time, help the provider of that product lower their cost. We don’t do enough activity-based costing."
Lars Thording, vice president of marketing for repless provider Intralign, said going to a generic model isn’t as simple as it seems.
"It’s tempting to jump on the repless bandwagon very, very quickly, but we caution our partners that it’s a journey. Going repless is not as easy as it sounds, because once you get rid of the sales rep, you lack skills in the OR. So what do you do to replace that knowledge?" Thording told MassDevice.com.
Intralign’s answer is its roster of surgical 1st assistants, who are trained across a variety of medical specialties to give surgeons the knowledge about procedures and devices the sales rep once provided. But hospitals looking to go generic must also consider supply chain challenges and the analytics necessary to "have real tranprency as to how you’re doing, and how you’re doing better," Thording said.
"You have to have these pieces in place to gain from it," he explained.
Thording sees increasing interest in repless sales from physicians who own a stake in their practices and are looking for ways to cut costs without compromising quality of care. There’s also increased interest from medical device makers looking for an edge against falling prices, he said.
"What they’re saying to us is, ‘We can no longer stay price-competitive given the downward price spiral if we keep this sales force that costs us so much money. If we can get rid of our sales force, or reduce it, we can be that much more competitive,’" Thording said. "It’s not just a few times. We’ve heard it a lot."