Developing a hospital contracting strategy

Client Issue

Our client’s flagship biosurgical product was losing growth momentum and experiencing price resistance. The current hospital contracting strategy was not consistent with account-specific objectives and there was a need to overhaul the contracting strategy and develop segment-specific tactics.

CRA Approach

We developed a hospital segmentation scheme that grouped accounts by current performance and future potential. This revealed that the overall market remained under-penetrated and the majority of sales were concentrated among few accounts. Modeling techniques helped us estimate rebating costs and calculate financial upsides and breakeven points.

Client Impact

The new contracting strategy with tactics (i.e. volume minimums, growth hurdles, etc.) for each segment of the market helped stem the losses at top accounts. It protected top decile accounts that were highly penetrated, yielding more consistent performance. Under-penetrated medium-sized accounts were also targeted and achieved significant growth.

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