Influenced by heightened competition in tried-and-true verticals like retail and apush from industry experts who promote it as a hotbed of opportunity, increasing numbers of VARs are considering venturing into the healthcare vertical. There’s much to be said for such a move: A recent report by RNCOS (www.rncos.com), a global market research and information analysis firm, indicates that the U.S. health IT market will experience a compound annual growth rate (CAGR) of approximately 24 percent from 2012 to 2014 and will surge to $40 billion by the end of 2011. But this potential notwithstanding, channel players must take a strategic approach to charting healthcare waters, adopting and refining best practices that reflect the unique “character” of the segment.
“Getting in, and staying in, can be a very positive experience, but the approach must be built on the idea that healthcare is a very different animal than any other vertical,” says VAR Kathy Stamatelos, CEO of Nashville, Tenn.-based Medigrations, Inc., a VAR partner of CabinetNG (www.cabinetng.com). Stamatelos should know: Before forming her 16-year-old company, she was involved in several different unrelated industries.
The healthcare market is indeed complex; in addition to being fraught with regulatory and compliance requirements, it differs from other verticals in that it encompasses an extremely wide swath of sub-sectors. These include inpatient, ambulatory, and extended care facilities, as well as home health and myriad other unique components—all with different needs and requirements, from RFID, to a medical-grade network for secure data exchange, to electronic medical records (EMRs). Given such complexity and variety, it is best for VARs seeking to open healthcare doors to focus on one or two key areas of expertise and develop the knowledge and support structure to add value, in turn facilitating entrée into the vertical and bolstering future profit potential, states Michael Humke, senior director, vertical markets, Ingram Micro U.S. (www.ingrammicro.com).
“No (reseller) can truly deliver 100 percent of the solutions across healthcare,” Humke purports.
Knowledge and support can come from tapping into vendor and distributor resources; for instance, Ingram Micro is currently assembling a suite of best-of-breed vendor solutions Humke deems purpose-built for healthcare, along with a team of healthcare-focused IT solutions providers. The latter will serve as part of the Ingram Micro Services Network (IMSN) and can be tapped by other Ingram Micro channel partners looking for guidance into healthcare opportunities.
Terry Cruikshank, senior manager, industry marketing, OKI Data (www.okidata.com), notes that involvement in healthcare industry organizations like the Healthcare Information and Management Systems Society (HIMSS) and the Medical Group Management Association (MGMA), to name a few, also bodes well for learning about and breaking into the healthcare space. “Reading about the various processes, jargon, etc. is a good starting point, but involvement in a local chapter of an organization such as HIMSS can be invaluable not just from an educational standpoint and for learning about the regulations that affect the sector, but for becoming acquainted with possible partners and customers.”
Another best practice for getting one’s foot in the door: reaching for the so-called “low-hanging fruit”—i.e., simpler solutions that are a relatively easy sell. For physicians’ offices, healthcare-specific accounting, billing, document management, and human resources applications are a good bet. In hospitals, specialized bar code printing and scanning applications, for example, patient admissions, pharmacy, specimen, and patient labeling solutions top the list. Managed print services are a viable option as well.
“It is easier to start with operations, and then get into the clinical side—for example, auto ID-based medicine administration systems and mobile physician order entry systems—once you have earned clients’ trust and demonstrated an ability to deliver value,” notes Abe Niedzwiecki, VP, technology, CabinetNG.
Many of OKI Data’s VAR partners have been successful with such an approach. Moreover, rather than successfully selling printer applications to healthcare customers and automatically migrating to more complex solutions, some have taken what Cruikshank calls a horizontal approach, asking clients whether affiliated operations—for example, ambulatory surgical centers connected to a hospital they have already served—require identical technology. “Once that is done, it’s easier to move on to other kinds of solutions,” the executive asserts.
In fact, sources propose, resellers may want to think about getting their feet wet in healthcare not by first targeting larger hospitals and physicians’ offices, but instead by investigating smaller, easier-to-crack prospects, such as clinical laboratories and long-term care/assisted living facilities. “Secondary hospitals in rural locations have been very fruitful outlets for our VAR partners,” observes Brenda McCurry, sales manager, ScanSource POS & Barcoding (www.scansource.com). The distributor has launched the Healthcare VAR Source Program, intended to provide its reseller partners a single location for up-to-date information on healthcare products and solutions, success stories, industry links, and more, as well as to aid in the formation of VAR partnerships with vendors, ISVs, and service providers and function as a resource for active healthcare sales leads.
TALKING THE TALK
Understanding how to handle the sales process is just as important as honing a base of healthcare knowledge.
Taking a consultative stance, rather than a sales-oriented one, is key. According to Humke, few VARs that do not specialize in healthcare are great at ratcheting it up and telling potential clients that they are “not here to sell hardware, but to help improve business, address the need to share information and provide tools to physicians, and enhance patient care.”
In working with physicians’ offices, Stamaelos and her staff spend six to eight hours observing patient flow, from check-in to check-out; as well as the manner in which everything from x-ray to specimen collection is handled. They sit behind the front desk and observe procedures and shadow physicians’ assistants.
She adds that resisting the temptation to “ram solutions down healthcare providers’ throats” has proven to be fruitful for Medigrations. “Different physicians do things differently—for example, a practice that sees a high number of patients per day is not necessarily going to need the same solution as one that sees a lower number, and the knee specialist is not going to need all the same solutions as, say, the spine specialist,” she explains. VARs “also need to accept that sometimes all that is required is a smaller fix; for instance, we handled 90 percent of the problems being experienced by one plastic surgeon’s office with two pieces of software. Had we pushed for a bigger solution,” that customer may have gone elsewhere for its IT needs.
Harry B. Lerner, CEO, Janam Technologies (www.janam.com) corroborates Stamatelos’ comments, noting that it is indeed critical to position solutions being proposed to “constituents” as satisfying their particular requirements and addressing their specific concerns. He cites applications in which hardware comes into contact with patients as an example; there, anti-microbial properties are essential. Similarly, physicians and nurses demand handhelds that are lightweight, rather than a burden to carry around; quickly pick up signals in patients’ rooms; and feature displays that enable easy visibility of information.
“Hospitals aren’t looking for glossy shiny, flashy mass consumer solutions,” Lerner asserts. “They crave functionality—and a lifespan that exceeds that of mass consumer devices.”
Bruce Shaw, executive director, Think Products and SMB North America, Lenovo (www.lenovo.com), agrees. “Take tablet computers,” he proposes. “The ruggedness and similar bells and whistles may appeal to caregivers, but that’s not what’s going to sell them. The fact that they can be used for a far wider range of applications, such as accessing EHRs, reviewing medical reference libraries and quickly recalling lab results as well as showing them to patients, will.”
A few final caveats VARs must remember when promoting technology to anyone in the healthcare market, whether an executive, administrator, physician, nurse, or pharmacy director: Avoid using jargon or acronyms of any kind; rather, as one source says, “stick to plain English.” Similarly, steer clear of condescending verbiage during any presentation to prospects; for example, such phrases as, “The scanner will read and decipher the bar codes on patients’ wristbands so the medication and dosage are clear” should be substituted for phrases like, “Let me show you how this scanner works.”
PREPARING FOR PITFALLS
While the healthcare market offers ample opportunities to VARs, it also presents its share of challenges.
Channel players should anticipate a longer sales cycle than is customary for other verticals. The actual amount of time needed to finalize a given healthcare IT deal depends primarily on its scope and the number of decision-maker channels through which it must pass. However, few if any deals close in less than six months, and a two-year interval from first client contact to signing on the dotted line is far from unusual.
However, as frustrating as an extended wait may be, it’s best for VARs to resist any temptation to try to speed up the sales process with repeated follow-up calls to clients, and instead devote their energies to remaining abreast of new healthcare regulations that may affect the future needs of hospitals, physicians, and similar providers.
“In healthcare, the more resellers push, the more prospects will push back,” says Glenn Aspenns, senior media applications analyst, Intermec Technologies (www.intermec.com). Even more so than retailers, these potential customers dislike being pressured to commit themselves to deploying technology, especially if that technology will somehow impact patient care, as in the case of auto ID applications for wristbands and specimen labeling.
Healthcare providers are extremely risk-adverse and very conservative, rendering them late adopters of even the most seemingly mainstream technology. To jump this hurdle as much as possible, VARs will likely need to supply several references and prove the value of the technology, as well as be willing to run pilot implementations in order to procure larger pieces of business, advises Vivian J. Funkhouser, healthcare vertical lead, Motorola Solutions (www.motorolasolutions.com).
Unlike many of their non-healthcare counterparts, a majority of hospitals, outpatient facilities, and individual physicians’ offices alike also insist on working with VARs that have a local presence and can dispatch technicians or other personnel to a site when problems occur, as well as provide assistance through change management and the adoption of new technologies. Remote support, as one source puts it, is not on their radar screen.
Topping it all off are compatibility and certification issues. Solutions specified by VARs must be able to communicate with hospitals’ other IT systems, including not just EMR, but computerized physician order entry (CPOE), financial, and the like.
In short, delving into the healthcare vertical is not a rapid, cut-and-dried process, but it can pay off handsomely for VARs. “If you have the patience, you can win big when the orders start coming,” Funkhouser concludes. “Healthcare in general is loyal. Once you start selling, you can expect to keep selling, so long as you add value, set realistic expectations, and follow through in a timely manner.”