Targeting the private sector in the European healthcare market
London - 20th July 2006
Many medical device and diagnostic
manufacturers may be focusing largely on the public healthcare providers in
Europe and missing out on the fast-growing opportunities in private sector
markets. The latest strategy review from HBS Consulting shows the private
sector is rapidly catching up in spending terms, it is also more ready to
adopt certain innovative devices than public healthcare providers.
Research by HBS has revealed the increasing importance of the private
sector in the provision of healthcare services. However, many companies are
structured to place major emphasis on selling largely into the public sector
and failing to adopt specific private-sector sales and marketing strategies.
The HBS Strategy Review analyses the trends throughout Europe and draws some
significant conclusions. The main developments are identified as: the public
sector outsourcing more surgical procedures; elective surgery moving over
into the private sector and many well-off patients choosing private
These trends represent a golden opportunity for manufacturers
who have the know-how and systems in place to take advantage of them.
Evidence, from both the EU and the USA, shows that the adoption of
innovative devices is more rapid in the private sector. Clinicians in
private practice are also more interested in collaborating to bring
innovation to the market and into their clinics. These clinicians can be
both a source of innovative technologies and valuable opinion leaders in the
While experience in the US cannot always be relied upon to
indicate future trends in Europe, HBS Consulting has identified some key
features that show important parallels. Purchasing consortia of provider
organisations have enormous purchasing power in the US with just two
companies managing over half of the budget.
A similar situation shows signs of developing in countries such as
Germany. In some ways, both the UK and Germany can be seen to be following
the US model for the adoption of managed care. Even new EU member states,
which the HBS team have researched, are embracing the managed care concept
on a small scale. For example, Polish employers, providers and insurers are
forming alliances to promote managed care packages.
Companies wishing to become more heavily involved in marketing to the
private sector need to become aware of the different purchasing policies,
which dictate a very different approach. There are less constraints, faster
reaction times and greater focus on return on investment, rather than
adherence to budgets.
Price is still a major factor but private healthcare providers ranked it
as of secondary in importance to quality. To the delight of finance
departments, research also shows that private sector organisations are
faster payers than their public sector counterparts.
Of course the pace of
change, as well as the direction, varies from country to country within
Europe. It is here that the HBS Strategy Review triumphs, with a detailed
country by country analysis of the public and private sectors as well as the
insurance providers and the specific dynamics of each individual market.
A free Executive Summary of the Strategic Review, The Role of Private
Sector in the European Market, is available from HBS Consulting (www.hbs-consulting.com)