Doors open wide for independent distributors probing this industry.
To say that there have been a few changes within the independent channel in relation to the health-care industry would be a bit of an understatement.
It is now well-known that in October of last year, American Solutions for Business, Glenwood, Minn., and International Business Solutions Alliance (IBSA), Bowling Green, Ky., pulled off a major coup by snagging Novation—the largest-volume group purchasing organization (GPO) in the health-care field. (Novation formerly contracted with major direct Moore Wallace, owned by RR Donnelley, Chicago, Ill.)
This spells opportunity for manufacturers and independents affiliated with American Solutions for Business and IBSA who are getting in on much sought-after—and hard-to-penetrate—accounts at hospitals and other medical facilities.
Manufacturer Data Label, Terre Haute, Ind., is throwing its hat into the ring. For starters, it will offer several hundred stock pressure-sensitive label products that are most commonly used by labs and pharmacies, as well as radiology, central services and nursing departments.
"Many of our customers are involved or are becoming involved with the health-care industry. And, because of the Novation contract, we decided to roll out our stock medical label offering in the first quarter of 2005," said John Strecker, vice president of sales and marketing for Data Label. "We want to help our customers by providing a competitive, trade- only source for a broad selection of stock health-care labels."
Strecker noted that the labels—such as those adhered to bags and bottles—that Data Label will manufacture match up with widely used computer software systems put in place by software vendors catering to health-care, such as SunQuest, Cerner and Meditech.
While Data Label is somewhat new to the medical arena, one of its distributors—Celtic Marketing, Centerville, Ohio—has been selling to the market for 20 years. Celtic President Mark McKinney, who is also executive vice president of IBSA, is thrilled with the Novation contract, forecasting that independents can reap many rewards as a result. "For instance, we're beginning to sell a lot of specialized laser wristband products for identification purposes," said McKinney. "In time, most hospitals will require this type of bar-coded ID for its patients as standard procedure. It's another new product to look for since so many doors are opening to independents."
Gain Strength
In addition to acquiring new business promised through the new GPO contract, distributors can seek out means through which to build stronger relationships in the health-care market. TFP Data Systems, Oxnard, Calif., has begun to do so by offering alternative products that are bound to appeal to an end-user's environmentally friendly side. The company now manufactures forms and envelopes from recycled paper. "These products are printed on paper that contains 30 percent post-consumer fiber," said Jim Magdaleno, account manager for TFP. "We are the only manufacturer to do this. Since we offer our products on recycled paper, our customers have an opportunity to express environmental choices, as well as differentiate themselves in the marketplace."
TFP Data Systems is a leading manufacturer of health-care products with 30 years of experience. Its end-users run the gamut from medical groups, private practices, clinics, labs and ambulance services to skilled nursing and home health-care facilities, and hospitals. The company is well-known for providing compliance forms, such as the CMS-1500 claim form, and the UB-92 and CMS-1500 forms.
Magdaleno said that another way distributors can stand out in this market is by being well-informed on its issues. TFP Data Systems, he explained, has always taken a proactive approach in building alliances with specific governing bodies within the health-care industry that provide the company with the latest news and information on issues affecting forms revisions and Health Insurance Portability and Accountability Act regulations. "We've developed an information center for our customers on related compliance issues," said Magdaleno. "This provides our partners with up-to-date information so that they'll always be well-informed."
McKinney agreed, adding that, realistically, distributors need to have expansive knowledge of the market to succeed within it. "It is something that has to be learned over time, though," he said. "For instance, if end-users ask you to redesign their MAR, you need to know what they're talking about."
To develop such knowledge, McKinney recommended exchanging ideas with others servicing the medical industry. He touted IBSA as a venue through which colleagues can share their experiences. "We have members who deal with small hospitals, others who deal with outpatient clients, and those who do business with large hospitals," said McKinney. "Gaining access to these different perspectives is very helpful. Business will be good as long as distributors know what to look for and what new solutions to suggest."
Future Diagnosis
As to the future, Magdaleno said that while the implementation of technology has enhanced product offerings, "My experience has been that there will always be a need for hard-copy forms in case of a lost transaction and for the use of services reimbursement."
McKinney agreed that hard-copy forms will continue to be in demand for some time. He said that Celtic has dealt with one hospital for more than 20 years that completely switched to electronic forms. "But, every week, we are still creating new forms for them," he said. "I don't know if they will every totally get away from forms." He added that one of the best ways to ensure success within health-care is to be a full-service provider. "If you're looking at a 150-bed hospital that might use up to 400 forms, that hospital cannot afford to hit up different distributors for different forms," he said. "They want a supplier who offers it all."
In the end, Magdaleno, McKinney and Strecker concurred that health-care products provide a profitable business right now, based on the new Novation contract, new software systems, upgraded ID practices and a lean toward environmentally friendly products.
By Sharon Cole