MedTech Executives Report Consequences of Poor Contract Management
Impacts of Ineffective Contract Management in the MedTech Sector
The MedTech industry is facing significant challenges due to poor contract management practices. Recently, AcuityMD, a leading technology provider for the commercial medical technology sector, conducted a comprehensive survey that revealed startling insights into how contract mismanagement leaves revenue untapped. All respondents reported that their organizations could significantly benefit from better utilization of negotiated contracts, indicating a crucial area for growth.
Survey Highlights from Medical Device Companies
In the survey, which gathered responses from over 150 MedTech professionals in director-level roles or higher, it was found that a substantial two-thirds of these companies earn at least 70% of their annual revenue through contractual agreements with health systems and various purchasing networks. Alarmingly, all participants believed they were missing out on revenue due to difficulties in managing these contracts. This sentiment underscores the necessity for enhanced strategies and tools.
Key Statistics on Contract Utilization
The survey results presented several critical statistics. For instance, a significant 73% of industry leaders from businesses with over $1 billion in annual revenue expect that within three years, a staggering 90% or more of their income will be reliant on contractual agreements. This projection illustrates the increasing importance of contracts in driving revenue in the MedTech space.
The Speed of Closing Contracts
Moreover, the data highlighted how quickly on-contract opportunities can be closed compared to off-contract ones. Respondents indicated that on-contract opportunities could close around 40% faster. This quicker turnaround showcases the efficiency gained when contracts are managed effectively.
Communication and Management Practices
Current practices in communication regarding contract information reveal a heavy reliance on traditional methods. Nearly all respondents utilize email as a means of sharing contract details, with 99% reporting this practice. Additionally, 90% engage in face-to-face meetings, while a significant 73% rely on calls and texts. These findings highlight an ongoing dependency on conventional channels, which can be both time-consuming and inefficient.
Technology in Contract Management
Interestingly, 96% of companies reported using spreadsheets for contract management, while 73% opt for Enterprise Resource Planning (ERP) systems. While these tools are common, they may not be sufficient to address the complexity of modern contract landscapes. Looking forward, 97% of participants expressed intentions to hire additional staff dedicated to contract management, indicating an awareness of the need for specialization in this crucial area.
Insights from Industry Leaders
Insights provided by industry leaders shed light on the root causes of these challenges. Alex McLachlan, a key figure at Intellijoint Surgical, explained that the ongoing consolidation in the U.S. healthcare system complicates negotiations. With many orthopedic surgeons now employed by hospitals, the decision-making process often shifts to corporate or administrative levels, making it more challenging to secure contracts effectively.
Tom Middleton, Vice President of Strategic Growth at AcuityMD, also emphasized the inefficiencies in current contract management practices. He noted that merely increasing headcount to handle these issues is not a sustainable solution. Instead, he advocates for leveraging innovative technology that provides contract intelligence, enabling sales teams to identify and close on-contract opportunities more efficiently.
Conclusion and Future Steps for AcuityMD
AcuityMD's recent advancements in contract management technology show promise in addressing these issues. By providing tools designed to streamline the contract management process, they aim to decrease the number of losses due to poor contract oversight. This is not just about improving efficiency; it's a critical step towards maximizing the potential revenue streams available in the MedTech sector.
Frequently Asked Questions
What is the key finding of the AcuityMD survey?
The survey found that all respondents believe their companies leave additional revenue on the table due to difficulties in managing contracts.
How much revenue do medical device companies earn through contracts?
Two-thirds of the surveyed companies earn at least 70% of their revenue through contracts with health systems, IDNs, or purchasing networks.
What communication methods do companies use for contract management?
Companies primarily use email, meetings, and individual contacts like calls and texts to communicate contract information.
How quickly can on-contract opportunities be closed?
On-contract opportunities can close approximately 40% faster than those off-contract, according to the survey results.
What innovations are being introduced by AcuityMD?
AcuityMD is launching contract management technology solutions to enhance contract handling processes and reduce lost opportunities.
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