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The Boston Globe

Business

Medical device sales model hit

Report says sector’s current ways outdated

The medical device industry’s existing business model is unsustainable, according to a report released Tuesday by a leading strategy consulting firm.

As purchasing decisions for medical devices shift from clinicians at individual hospitals to “value analysis committees” at larger hospital systems and at integrated health care organizations, medical device companies will have to reinvent the way they market products, the Boston Consulting Group report said.

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“Every industry goes through times when they have to change dramatically,” said Colm G. Foley, the Chicago-based medical technology team leader for the consulting firm. “For the medical device industry, this is one of those times.”

Boston Consulting issued its report at AdvaMed 2012, the annual convention of the Advanced Medical Technology Association, which drew more than 2,400 people to the Boston Convention & Exhibition Center this week.

Foley, in a press briefing, said many medical gear companies are saddled with an outdated sales approach aimed at doctors who have been willing to pay more for products with incremental improvements. But under the “accountable care organizations” being encouraged by federal and state governments and commercial payers, he said, doctors will serve with financial and procurement executives on purchasing committees and will be given incentives to buy products that not only meet clinical standards but are also less costly.

With more uninsured patients getting health insurance under the US health care overhaul and strong growth in developing countries, the successful model in the future will involve higher-volume sales to fewer but larger buyers, Foley said. Companies also will have to stress value rather than slight improvements, he said.

“People will be saying all these products are pretty darn good,” Foley said. “So they’re going to make an economic decision.”

Robert Weisman can be reached at weisman@globe.com.

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