Can Suppliers Deliver True Value?

National accounts consultant helps manufacturers meet providers’ need for more than good prices

Who doesn’t love everyday low prices on their medical supplies and equipment? No contracting executive worth his or her salt would pass them up.

But today’s contracting executives are looking for more than discounts from their suppliers. They want – and need – broader cost-savings and revenue-enhancing solutions. National accounts executives and their GPO partners who fail to take notice may find themselves with little more than shrinking profits. Gary Gustafson doesn’t believe that benefits anyone.

Gustafson is the founder of Preferred Marketing Programs, which provides consulting to healthcare suppliers to help them improve their contracting with GPOs and IDNs. For eight years prior to founding PMP in 2013, he was president (and founder) of the Association of National Account Executives. (Gustafson sold ANAE to MDSI, publisher of the Journal of Healthcare Contracting, last year.) His mission at ANAE was to provide networking and education for corporate national accounts executives calling on GPOs, regional purchasing organizations, IDNs and other providers.

He brought to ANAE, and now, PMP, years of on-the-street training, including more than 35 years on the supplier side. In 1968, he graduated from the U.S. Army Officer Candidate School as a combat engineer, and built roads along the Demilitarized Zone in Korea. After his discharge in 1970, he became marketing manager and sales rep for American Hospital Supply (now Cardinal Health) and then Deseret. He was a sales rep for Propper Manufacturing from 1983 to 1987, and then joined Stryker Corp., for whom he worked for 20 years in sales management and national accounts.

Scope of GPOs’ offerings
“The most significant development in national accounts over the years is in the scope of GPOs’ offerings,” says Gustafson. “In my early days, pricing discounts dominated the scene. Providers relied on GPOs to get the best prices from suppliers, and suppliers vied for contracts based on price, if they could wrap up volume and commitment promises. It certainly wasn’t a perfect world, but it was worked hard by all parties.”

Competition between GPOs continued to build, and as discounts were maximized, GPOs sought – and found – new ways to provide savings and/or improve revenues for providers, he says. “That is the name of the game today. To be successful, national accounts executives now must show what ‘true value’ their products and services give the provider. It needs to be evident in their GPO contracts.” And given their knowledge of their members’ needs, GPOs can help. (Preferred Marketing Program offers suppliers a “True Value Proposal System,” designed to ensure access to IDN supply chain executives.)

But the work of the national accounts executive doesn’t end with the signing of a contract, he says. They must work with the GPOs after a contract is finalized. That means they need to be familiar with GPOs’ sales tools, including sales representation, marketing opportunities, data sharing and most important, their relationships with their members.

The successful national accounts executive also taps into her own company’s sales force, he continues. “Become friends with your vice president of sales,” Gustafson advises national accounts executives. “He can take your strategies to the field.”

“It’s a new day for national account executives, and the talent level necessary to do the job has elevated,” he says. Today’s supply chain executives have upped their game as well, and are more adept at extracting all the value from their GPO contracts, not just price discounts.

“I believe supply chain executives will have the most impact when they share their needs with their supplier national account executives and their GPO representatives in a collective environment,” says Gustafson.

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Gary Gustafson can be reached at 949.331.4626, or ggus@preferredmarketingprograms.net.