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 treatment.

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 market.

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 (

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