Alexander Group’s Healthcare practice has been hosting weekly virtual roundtables for commercial leaders on strategies to manage through the pandemic. In total, nearly 300 executives have gathered to exchange ideas and experiences.
As the discussion continues each week, one thing is clear, COVID-19 is proving to be a watershed moment for healthcare as leaders respond to unprecedented economic shifts. For an industry that has been reluctant to change in recent years, roundtable participants agree that all aspects of the healthcare delivery system are now challenged to instantly transform to a virtual-based model while their revenue base is challenged by lack of utilization.
Most companies have revised their recovery plans from a 1- to 2-month timeline to a longer, more fluid period that reflects a gradual recovery. Unlike the originally anticipated “V” curve, it may prove to be a longer timeline, similar to the 2009 recession and recovery. Because of this change, discussion from our recent roundtable sessions has centered on how companies are focusing on the following new realities as they develop their future strategies that include:
- Reassessing their business models
- Focusing on economic buyers as hospital utilization drops
- Leveraging digital selling approaches
- Revising sales compensation plans to retain top talent
Reassess Your Business Model
Current business models may not reflect emerging realities. Companies are reassessing their business models, product portfolios and future customer needs as healthcare demand falls.
- Rethink your focus. Healthcare has been reticent to change, but the COVID-19 storm is forcing many companies to shift their focus to key accounts and future spending.
- Original pipelines remain healthy but companies seek additional flow. Companies remain confident about existing work in the pipeline but are staying close to customers for future opportunities as sales commitments are delayed.
- Use multiple planning periods to respond to events. Due to the fluid nature of recent events, companies should use multiple planning periods to reassess revenue. Roundtable participants indicated they are using the “old normal” as a baseline to project new realities for 2021.
- Use existing operations for future demand. Over 50% of survey respondents foresee no changes in their commercial operations despite anticipated increased demand.
Economic Buyers Are Critical As Utilization Drops
Dramatic declines in healthcare utilization and purchasing patterns have emerged, making it critical to stay close to economic buyers.
- Individuals are reluctant to seek healthcare. Given the fear of COVID-19 transmission, health insurance cancellation and job loss, individuals are unable to pay for necessary or elective care. Low to medium risk patients are not seeking treatment but are using lower cost telehealth services as an alternative to in-person care.
- Hospital utilization drops. Elective surgeries, cancer treatment and non-critical procedures are delayed, resulting in less revenue for health systems and providers. Physicians are taking 20% to 100% pay cuts while other specialties and practices (ex: 25% of orthopedic doctors) may be eliminated.
- Clinical trials delayed. Due to hospital restrictions, clinical trials are delayed or performed virtually, which may present a future opportunity.
- Payment terms extended. Approximately half of Alexander Group survey respondents are making changes to payment terms while others are working with customers on a case-by-case basis.
- Economic buyers remain as key players. Economic buyers within health systems sit at the heart of purchasing decisions while face-to-face access to them remains restricted.
Leverage a Digital Selling Approach
Digital communications and remote relationships are the new norm. Companies must equip their sales staff with the required digital communication and selling tools. Field reps should be integrated with Inside Sales to align customer service and support for key accounts. Digital selling will continue post-COVID-19, but won’t entirely replace face-to-face, personal selling for the long term.
- Virtual selling is a new skill base. Some roundtable participants are concerned that existing sales staff may not have the new skills to effectively sell in a virtual environment. In an uncertain environment, sales leaders find that natural athletes and reps with a high EQ thrive as they readily adapt to changes and respond to customer pain points.
- Digital tools are critical. Virtual communication tools are increasingly valuable, outweighing even a CRM. Leaders also see that virtual selling both pre- and post-sale are growing.
- Key account management remains a focus. In both pre- and post-COVID-19, key account management is vital to securing and retaining customers as is showing the value of partnership through a critical time.
- HIPAA rules will expand. Participants anticipate that regulations will take time to catch up with recent shifts, but they expect that federal government will issue new rules regarding privacy for virtual selling.
Sales Compensation Plans Change, But Focus on Retaining Top Talent
Companies are re-evaluating their sales compensation plans and work schedules as they balance sales incentives, budget, workload and new purchasing realities. Although cash flow is a priority, retaining top talent is more critical for the revenue base.
- Companies choose alternate work schedules in lieu of furloughs. Companies are choosing salary reductions or mandatory vacation time instead of using furloughs or layoffs.
- Sales compensation guarantees continue through Q2. Many companies are offering sales compensation guarantees through Q2 to both sales reps and some managers.
- Sales compensation plan change. Approximately 80% of survey respondents are changing their sales compensation plans to some degree, with one-third expecting to revise their entire sales compensation approach.
- Retaining top talent remains a priority. Nurturing existing customers is critical to the revenue base for the long-term, and top performers will be retained to support key accounts. It is expected that employees may stay loyal during the economic downturn, being averse to job changes during uncertain times.
For More Covid-19 Insights
We encourage you to register for our upcoming virtual events. If you are unable to attend, or would simply prefer to speak with someone directly, please contact us. You can also visit our COVID-19 Response Resources, where we will continue to share insights and practices.
Please stay safe and healthy. The Alexander Group recognizes the challenges facing businesses during these uncertain times. We are available to answer any questions or provide additional insight on how organizations are managing through and eventually, out of this crisis.