In addition to this hurdle, distributors selling to physicians face other challenges. Cutbacks in Medicare reimbursements and pressure from insurance companies to reduce costs have contributed to increased pricing pressures. Health care systems and hospitals routinely buy and sell medical groups. One East Coast distributor who sells exclusively to physicians says he loses business to hospitals when they acquire independent practices.
In some states, the high cost of liability insurance has led doctors to close their practices. Physicians and dentists' offices have little or no storage and expect suppliers to store items for them and take inventory frequently. Depending on the size of the practice, orders can be small (500 to 1,000 appointment cards, for example), which doesn't interest every salesperson. Physicians generally pay in the same timeframe as other businesses, distributors say. But offices that rely heavily on Medicare reimbursements pay more slowly than others do.
Helping Docs Educate and Promote
Doctors and clinics have a 2-pronged marketing approach. Obviously, they need to educate the public about their services and credentials. For a specialist, this means ordering sharp-looking brochures or booklets that describe the practice's services. Often, these include sketches of a particular condition, such as a type of skin cancer, or a surgical procedure, Nelson says. He receives simple sketches from doctors, then hires a graphic designer to fine-tune the drawings.
Nelson has sold several promotional booklets, many of which are 6 x 9 inches. Many of them are 4-color process pieces that include a pocket folder in the back for inserting physician biographies. "The bios are very critical," Nelson says. "People want to know where [the physicians] got their training." Physicians also buy inexpensive promotional products to give out at health fairs, seminars and community events. Nelson has provided key chains in the shape of various body parts, such as a foot and a hand, for such occasions
At the same time, specialists need to promote to and thank the doctors who refer patients to them. That's because "the only way you can see a specialist under most insurance plans is through a referral," says the East Coast distributor. To thank colleagues, physicians buy high-end promotional products that must be different every year. Nelson once sold Cross pens that had the initials of each referring doctor on them. Every summer, when Nelson is researching year-end gifts, he seeks inspiration by visiting top-level department stores.
Tradition and Technology
"The days of the multipart superbill are long gone," says the East Coast distributor. Demand for traditional statements is down, too, as doctors work with software companies--and some distributors--to offer variable imaged statements, he says. As practices increasingly submit claims electronically, the demand for HCFA forms is declining. Distributors interviewed for this article say hype about the Health Insurance Portability and Accountability Act (HIPAA) led to limited interest in posters and other products explaining law changes, but hasn't affected business significantly.
So where should distributors targeting the medical market look for opportunities? That depends. Nelson has made up for lost forms volume by using his creative talents to develop post cards and other marketing pieces for doctors. DeBloom, whose company is headquartered in an area saturated with commercial printers, offers a high-tech solution that has helped MedForms keep traditional business.
About four years ago, DeBloom hired graduate students from the Rochester Institute of Technology (RIT) to develop an e-commerce system for physicians and small hospitals. Clients can view documents, modify documents, check inventory, place orders and pay online. MedForms sells appointment cards, prescription pads, X-ray envelopes and statement mailers, among other products.
RIT students also were instrumental in helping MedForms acquire a significant contract. The company provides HCFA-1500 forms to Empire Blue Cross Blue Shield for use in the New York City area. Even though DeBloom estimates that 97 percent of such forms are filed electronically today, the other 3 percent remains nice business. Orders for the forms are small--less than 5,000--but MedForms' online ordering system allows it to process orders efficiently.
MedForms won the contract for the HCFA forms nearly 10 years ago, when it learned the insurer was buying forms from one supplier, then having each health care provider's name imprinted on a certain number of forms. DeBloom hired students to develop software that images all the necessary variable information, allowing Empire Blue Cross Blue Shield to save money. "We got in at the right time," says DeBloom, whose distributorship also sells all of the worker's compensation claim forms used in New York state.
Don Levine, president of PBHS, Pomona, N.Y., has used technology to take his firm in a different direction. The distributorship, which specializes in selling to dentists, including oral surgeons, orthodontists and endodontists, offers web site hosting, design, maintenance and integration with practice management software. PBHS has developed web sites for clients for more than eight years. Doing so seemed like a natural outgrowth of the firm's graphic design work, Levine says. Today, web-related services account for half of the company's business.
Sales and production cycles are longer, and Levine says he has made a significant investment in high-tech employees and marketing via dental industry trade shows. The web design business means PBHS has to be "very innovative," he says. At the same time, the distributorship must design sites that enhance the productivity of a dentist's practice. This means designing interactive sites that allow patients to request an appointment or reschedule one, preregister to save time, take a virtual tour and learn about care such as flossing one's teeth while wearing braces.
Taking the Market's Pulse
Former hospital patients can attest that a hospital bed is the last place to go for rest. For some distributors focusing on the medical market, the last place to look for business is a hospital. After all, hospitals nationwide are in poor financial health. One distributor quipped that he considers all sales to hospitals deferred billing sales because these clients take so long to pay. Small community hospitals continue to be swallowed by larger health systems, and large systems are turning into ever-growing conglomerates.
Adding to the challenge is the tendency of materials managers to roll their eyes with disdain when it comes to buying forms. Perhaps many have had the same experience as the head of supply-chain management for several hospitals in Florida. In a meeting attended by Mike Reboulet, president of distributorship Integrated Business Forms, Miramar, Fla., the man responsible for buying $300 million in products for the hospitals once declared that forms accounted for 1 percent of his purchasing volume and 50 percent of his time.
GPO contracts continue to provide obstacles for smaller players in the medical market. In some cases, distributors succeed by selling items not included in the contract or stepping in when the contract supplier drops the ball. This occurs regularly at smaller, rural hospitals, as the majors have decided to concentrate on large facilities in metropolitan areas.
Reboulet describes the hospital market as "a fun market if you enjoy hassles and headaches." Approximately 75 percent of his sales are to hospitals, and he has carved out an unusual niche during the past few years. Even though Dayton, Ohio-based manufacturer Standard Register has a contract to supply forms to HCA hospitals, Reboulet handles forms design work for some of them. In fact, he even sends PDF files directly to Standard Register and Xerox facilities for printing. (Xerox had a contract with HCA until recently, he says.) Integrated Business Forms typically bills hospitals for typesetting/design services, although in the past Standard Register has paid the distributorship directly for some work.
This unusual relationship suits Reboulet, a self-described old-fashioned forms designer, just fine. He prides himself on his ability to take five pieces of paper and consolidate them into a 1-page form, front and back. Reboulet says selling commercial printing and promotional products to hospital marketing departments can be lucrative--if you can break in. In late March, he hired a graphic artist who has completed work for HCA hospitals to help his company expand in this arena.
Paul Keith also knows that the GPO landscape is changing and believes it will continue to do so. "All of the hospital buying groups have a need that's going unfulfilled," particularly when it comes to commercial printing and ad specialties, Keith says. He's president and CEO of Bowling Green, Ky.-based International Business Solutions Alliance (IBSA), an organization composed of more than 100 distributors nationwide. Its mission is to target large national accounts by working together, as well as with IBSA-approved vendors. (Read the story "Independent But Not Alone," beginning on page 28.)
IBSA is one of about 40 vendors that submitted bids recently for the contract of group purchasing organization Novation. The contract will be awarded later this year. Novation hired a former Reynolds executive to spearhead the bid process, and IBSA distributors spent more than 5,000 hours preparing a proposal that filled an overstuffed, 4-inch ring binder, Keith says. He says he "looks for at least two independent organizations to be part of the Novation contract," which required potential vendors to submit bids in one of three major categories. (For details, see box on page 54.)
In Charlotte, N.C., Daniel Siadak, CDC, also is optimistic about the hospital market. Hospitals finally are investing in technology on the business side, rather than the clinical side only, says Siadak, CEO of Source4 and DMIA's 2000-2001 president. This new emphasis allows distributors to help clients focus on improving business processes by implementing electronic forms and distributed output management software that may route data to forms, faxes, cell phones or even PDAs, he says.
The U.S. Food and Drug Administration's recent mandate to bar code drugs used in hospitals is a positive step, too, Siadak says. With that ruling comes the need for bar coded patient ID products, such as wrist bands, so hospitals can confirm a patient's identification before administering medicine. Source4 is a reseller of LaserBand® laser-generated identification systems.
Katherine House, a freelance writer in Iowa City, Iowa, is
a frequent contributor to Print Solutions. Email us your comments at bholt@printsolutionsmag.com.
