How to Achieve Long-term National Account Success
Bob Beck is one of the pioneers in national accounts and has helped shape how industry manages our most important customers. In this episode Bob describes what a national account is, how to work with group purchasing organizations, integrated health delivery networks and other strategic accounts. He also shares how to best work internally with the sales and marketing team and management to achieve company objectives. Bob talks extensively about the importance of communication, personal relationships and contract structure and how each affects the short and long-term success of the relationship between the company and customer. Bob had a sales and sales management background before transitioning to national accounts at Abbott, and has worked in corporate accounts at Stryker Orthopedics, RTI Surgical, SiNTX, and Instrumentation Laboratory. He currently consults with companies on strategies and tactics in National Accounts as the Founder of Capstone Consulting.
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Episode Transcript
This transcript was generated using an automated transcription service and is minimally edited. Please forgive the mistakes contained within it.
Patrick Kothe 00:31
Welcome. Well, we've really got another good one today. To make sure that you don't miss any of these episodes, make sure that you like or subscribe to the podcast so that each of these episodes gets downloaded directly to your phone automatically. Today we're going to discuss national or corporate accounts with our guest, Bob Beck. Bob is truly one of the pioneers in national accounts and has helped shape how our industry manages our most important customers. Bob has has a sales and sales management background, before he transitioned to national accounts. While he was at Abbott and Abbott, they really wrote the unofficial textbook on how to work with the largest and most important customers and Bob's going to describe that in a little bit. Since then, Bob's devoted his career to corporate accounts at Stryker, Orthopedics, RTI Surgical SiNTx, and Instrumentation Laboratory. He currently consults with companies on strategies and tactics in national accounts. As a founder of Capstone Consulting. In this episode, Bob does a great job describing what a national account actually is, how to work with group purchasing organizations, integrated health delivery networks, and other strategic accounts. He also shares how to best work internally with the sales and marketing team, and with management to achieve company objectives. Bob also talks extensively about the importance of communication, personal relationships, and contracts, structure, and how each of these affects the short and long term long term success of the relationship between the customer and the company. Here's our conversation. Bob, to orient us, we're going to be talking about corporate or national accounts. And that can mean a lot of different things to different people. So what what do you think of when you think of corporate or national accounts.
Bob Beck 02:39
So what I think of is different, as you said, from what a lot of people might perceive and what they think. You can call them national accounts, you can call them strategic accounts, you can call them corporate accounts, you can call them integrated health systems, you could call them in enterprise accounts. I think all of those mean similar things, the same things. When you're talking about national accounts to me, Pat, you've got group purchasing organizations, and you have integrated health systems, at least from a device perspective, I think that those would qualify as any form of strategic accounts, national accounts, etc. So again, group purchasing organizations, and integrated health systems, or ID ns integrated delivery networks. Great. So
Patrick Kothe 03:28
let's go back in your career a little bit because you started in sales and, and national accounts or corporate accounts, or however, however one refer to them today, are a sales function as well. But it's a different sales function. Let's go back to your early, early days in sales. Who were you selling to what type of products were you selling?
Bob Beck 03:50
Early sales days, I was fortunate enough to have had a wonderful career with Abbott Laboratories at the time. Abbott diagnostics, was two times the size of its next competitor in the diagnostic arena. So in vitro diagnostics, things that analyze your blood, things for hepatitis, HIV, cancer markers, clinical chemistry test for cholesterol, glucose and those types of things. Almost every two weeks, during about a 10 year period, Abbott came out with a brand new test. It was an incredible, incredible time for growth with that. From a sales perspective. I work very closely with pathologists, medical directors in the laboratory, and clinical chemists, PhDs. But that doesn't mean that we didn't work with technologists in the laboratory. It doesn't mean that we didn't spend time with Vice Presidents of ancillary services, and directors materials management or purchasing. Those latter three groups of people were the ones that we began to deal with, the higher we rose in the sales organization, if that makes sense. Those are the people that we work with.
Patrick Kothe 05:02
So what was the basis of sales was it features benefits? I mean, what what types of attributes of your offering were, you know, how you competed?
Bob Beck 05:14
I think early on you, when you when I first met each other, we talked at the time about that. We had SPIN Selling at the time, we had ABS from Xerox, face to face selling from form and things like that. Those sales skills courses, taught features and benefits. I think avid was known for great sales training. And so we did a great deal of features and benefits selling. In turn, what's the advantage to the customer. And remember, at that time, Abbott was coming out with about two hour a test, a brand new diagnostic test every two weeks or so. And so we always had something new to sell, it was always exciting to come out with something out of your bag that was brand new. And so we sold a lot on excitement. And we showed a lot of features and benefits and products that worked extremely well. It wasn't a price sell. I can promise you that.
Patrick Kothe 06:10
So most of your sales, it sounds like was more clinically based. Were you also dealing with the financial buyers at that point?
Bob Beck 06:19
Great question. I'll never forget, remember I said that I think that Abbott has a reputation of being one of the great sales training organizations in the industry. We were school and taught very early on about the financial sale of average products, the importance of talking about more than just price, one of the costs one of the value ads, but we also were taught and given lessons on how to do pencil cells in front of the customer right in front of the customer. So yes, we had to do financial sales. Once the laboratory made a decision, sometimes purchasing would step in and say you know what, we've got two or three other companies here that say that they have the same type of a widget, we need to get into some negotiations. So that began early on what happened.
Patrick Kothe 07:15
So you stayed within a hospital, the sales process kind of stayed stayed within that particular hospital, it hadn't grown to it ends or purchasing organizations or hospital groups at that point.
Bob Beck 07:29
That's right, your our listeners can go back and go to the Google machine. And they can find out that during this time, there were somewhere between 6007 1000 brick and mortar hospital sites in the United States. That's where we focused. And when we were in the car, we look for the blue eight signs on the interstates and the county roads. And that's where our customer base was.
Patrick Kothe 07:53
So over time, things have evolved and buying groups became more important IDs became more important. chains of hospitals became more important. And that's when your company started to focus on national accounts. At that point, were you still in sales? Or did you start to transition over into national accounts?
Bob Beck 08:15
Still in sales at that time, and I can remember there was a group that was beginning to form down in Birmingham, Alabama, it was a Baptist system. There are Baptist systems all over the country now. But they began to look at their buying power and economies of scale, and go into suppliers and saying, Listen, we think that we can double or triple your business, but we need price concessions and things like that. It was a very rudimentary way of negotiating back in the day. But I was still in a sales organization at that time. And group purchasing organizations were still or were fairly big. But I began this integrated health systems had not yet really hit the map, and true for as what we know them to be today.
Patrick Kothe 09:02
So Bob, at what point did you move out of sales, international accounts,
Bob Beck 09:08
habit, as many of the large companies have had and have wonderful succession planning. They also have wonderful career paths. And so in order to move up into working with large health systems are a couple things that you had to do. You had to you're a frontline sales representative, then you covered larger accounts, maybe some blood banks, then you wander to marketing or became a trainer. Then you would qualify to interview for beginner positions where you would start to manage people. Once you manage people successfully, then there were opportunities to work with the largest customers in the country at the time known as national accounts. Could have been the VA. It could have been you he could have been American at places like that that existed back in the early to mid My knees. And so that's how that happened. And so when I had moved to Michigan, I was a manager. And we had a lot of fun. We think we were very successful with leading people and promoting as many people as we did, I was asked to become a part of Abbott's very first Integrated Health System, national account team. There were four people originally, and after the first year, we had a team of nine, we got to write the cookbook, Pat, that was a blast. That was a lot of fun. So that's how I got into the work into the national accounts.
Patrick Kothe 10:35
Great, and you've been in it ever since. So I'm sure you've seen quite a bit of change from the early days to where it is today.
Bob Beck 10:43
A tremendous amount of change. I'm a, I'm a big history guy. So bear with me for just a second. But I can remember one of my very dear friends who has since retired from Abbott, got a phone call from a medical director at Henry Ford and said, john, we just had a meeting with our executives across our 100 or so sites in Southeast Michigan clinics, hospitals, labs, all ours. And on any given day, we found out that between 40 or 50, people from Abbott are calling on us in any given day. I'd like you to fix that, and reduce the number of call points that we have. So that goes back to the early 90s. That is part of the reason that it started, we had these ideas that were percolating, and popping up to the top, not just GPOs, we had a national accounts group. And then we had this Integrated Health Systems Group, these IHH began to grow. And they began to ask things of manufacturers and suppliers about reducing the points of contact, then, of course, they hit suppliers and manufacturers for standardization, reduce costs will be able to deliver this if you deliver that. And I think at that time, if history and memory serves me correctly, Johnson and Johnson, three M. Baxter and Abbott were for the first large diversified healthcare companies that put together sales teams to cover these integrated health systems.
Patrick Kothe 12:18
When you moved over into that, what type of training Did you get, because it's different than sales training, because you're dealing with different people. So what what kind of training was available?
Bob Beck 12:30
Remember I said early on, we got we got to write the cookbook for the for that, I think we had a very strategic and someone with foresight, who ran that department. And Jean Marie Bowen, at the time, I began to structure training for her team of nine. And that training meant several things. We had what I would call a university type program. Tom McNulty, for example, at the time, was the CFO of the Henry Ford health system, she brought Tom into Chicago to sit down with us and explain the financial piece of what we would look at when we would see an annual report and how to read the balance sheet of a health system. And, you know, this was this was back in in 96, or 97. So this was something that wasn't typically done. So we got training from some of the best health care leaders in the country at the time. I remember when three of us were put on, not an internship. But it was an exchange with a health system down in Dallas, Texas, where we spent time with them over a week or two, to follow their executives around, sit in meetings with them to hear the things that they were having to deal with. And then we in turn would share some of the things that we were dealing with, when they would come up to Abbott in Chicago to do the same thing. So we created our own training. And it was a lot of fun to do that. We were very intentional, I think we were very intentional about putting ourselves in front of the people that were going to be the decision makers in these new things called ideas. And we had them do the same for our leadership at the corporate office.
Patrick Kothe 14:13
Bob, let's let's fast forward in the rest of this discussion. Let's bring it up to today. Your typical situation now where somebody from the company is going to interface with somebody at a national account level, who is that who, who's, who's, who's there from the company standpoint, and who's there from the IDN, or national account standpoint
Bob Beck 14:34
that we've probably heard too often, once you've seen one ID and you've seen one IDN they're all very different. And I would say the same thing about our side of the table once you've seen one organization as to how they interact with an ID n. You've seen one. I think everybody goes about doing that a little bit differently. For my experience, the most successful models from the suppliers perspective is that you have Have a leader who was the point person for the IDN. Just like what Dr. Greenwald asked us to do at the Henry Ford health system, you have 1.1 person who's the point person, they then coordinate the entire strategy for that health system, externally. And internally, more often than not most of the IDN, people, directors, managers, whatever their titles are, are surrounded by dotted lines, they have to manage by influence, that's typically how I think the most successful ones are done. Now, having said that, that doesn't mean that if you have IDM people underneath you, you're not going to be successful with just two different models. So let's just let's look at it either or it doesn't matter. You have to have coordinated team initiatives to make sure that the people and the feet on the street who are interacting with the surgeons at the scrub sink, understand exactly what the surgeons are, are dealing with what they need at this point. And you as the IDN person, either work with their manager, or you are the person that meets with the people on the D suites and the C suites to understand what that health system strategy is, if you don't understand what that health system strategy is, and you're not talking with them in their terms, not your terms. But their terms, the chance of successfully negotiating things on a short term basis are greatly limited. Today, things take much longer than you did in the past, because IDs have grown to the point that you have multiple decision makers. So not only do you have to coordinate as the ID and director or vice president or manager, not only do you have to coordinate those people, in an individual site, beside an individual sync with a doctor scrubbing, preparing for surgery, you'd have to do that at multiple sites. Some of those surgeons may use something because you love they love what you've got, they work with this representative forever. Some of them may not. So you, as a director have to coordinate all of that, to begin to put together a strategy for that health system that takes into account all the different desires of the system, leadership research,
Patrick Kothe 17:22
that company person that's doing the management of the IDN, they're not necessarily going to be at the at the scrub sink, talking to the physician, that's going to be the salesperson that's responsible for that.
Bob Beck 17:35
Yes, sir. That's correct.
Patrick Kothe 17:36
So who would you be interfacing with? Who would you be having conversations
Bob Beck 17:40
with? What depends on the product, and it depends on the company. But typically, you're because financial matters continue to draw the ship, in large part, you're having discussions with the Vice President of supply chain, and her or his team, making sure that you're doing the right things from a financial perspective and a contractual perspective you're meeting with depends on how they're structured, perhaps the director of ancillary services, or the Vice President of ancillary services, to make sure they understand what you're attempting to accomplish, and that it meets their goals. I am having meetings with those people. To explain to them, here's what we're doing, to make sure that it's alright with them. And if they want us to change or alter something, it's up to me to communicate that back. If I don't, I'm going to be in trouble with those people. So I have to be the mouthpiece not just for the company, but for the health system to the company. So there, there are multiple people that I meet with, outside of the operating room and outside the surgery, the surgeries that are taking place, I think as you know, now one real quick comment. A lot of surgeons now due to the integrated health systems and accountable care organizations have turned in their keys, their office keys to name badges, they are now part of the health system. Some health systems like Kaiser, Cleveland Clinic and the Henry Ford health system for years have had their own medical groups, those are becoming more and more important. And so if you don't have a strategy home for the holistic approach, have an idea and including the positions, including the financial pieces, including the outcomes people, including risk management, it's going to be very difficult to succeed with what you plan on doing in the future.
Patrick Kothe 19:39
As you mentioned, it ends come in all different shapes and sizes. But let's let's try and get kind of a an average type of idea about how many facilities are we talking about about how many states do they cover, just get give me a just a typical IDN
Bob Beck 19:58
there are a lot of different things. To go for data and one of the things I would encourage for your listeners, start making sure if you don't have modern healthcare and you don't subscribe to daily updates from Becker, healthcare, I think you need to do that. But another one is the American Hospital Association database. But also definitive healthcare. Those are the four that I'd suggest that people really take a strong look at having their daily morning cup of coffee with the 10 largest health systems in the country. According to definitive health care was just published average over 20 and a half a billion dollars of patient revenue a year, those are the top 10. People say that, within the next five years, the 500 or so organized health systems IDs are going to be pared down to about 100. I don't know if I'd necessarily agree with that. I certainly don't know if I disagree with that. But we do know that that number is going to pare down significantly. The Definitive healthcare numbers also show that over the last 12 months, the number of hospitals brick and mortar sites associated with a given ID n has risen from eight to nine. So the average is nine. But when you look at a monstrous group, like common spirit, which is the combination of the OCA Chai group, and dignity, they've got hundreds of hospitals, the Henry Ford health system has nine they had been and will continue to be one of the most modern organized delivery systems in the country. Guys, niggers also the same thing they don't have nearly the number is like the Cleveland Clinic, or University Hospital health systems in Cleveland do. So I just gave you a couple of different numbers of well known health systems. But the average according to the recent data from definitive healthcare is nine hospitals in the system,
Patrick Kothe 22:01
you've got your nine hospitals, 100, hospitals, whatever that number is, you're probably going to have a number of different sales representatives in your organization or sales managers in your organization that that cover that IDN. So it's not just you know, one, one rep is cover all nine of those, you may end up with three or four that kind of cross that as well. Is that is that correct?
Bob Beck 22:26
That is very correct. And that causes can lead to some consternation from the customers perspective, and also the internal perspective of the company. I'll be glad to share with you a couple of situations as to what I mean, when I say it that way.
Patrick Kothe 22:42
Let's do that.
Bob Beck 22:44
So these health systems will continue to grow. It's not It's no secret, they're going to continue to expand. And we as a as a company, we go to great places like ZS and Associates to help us carve out and carve up the most equitable way to cover the United States of America. How many reps do we need? What's the opportunity going to look like? How much existing business do they have now, and we do our best to carve that up? When any given year when you start things on January 1, and you ended in December 31? Let's just make it simple. There could be three or four different mergers throughout that year that throw everything out of whack. Who's the rep, what's the rep doing here? Over in, in New Orleans to work with somebody down there and one down in Baton Rouge, they've got another initiative going on. So customers want that to be quickly fleshed out, if at all possible. That's not the easiest thing to do internally, because goals have already been established. So how do you split that up? From an ID and director or vice president perspective, you work on that stuff the following year, I believe you work on that the following year, what you have to do to take care of the customer now is constant communication, and setting the appropriate direction for that health system. It's up to you to do that. And that might be in a little bit of opposition to what a certain sales representative is doing. And another part of the system that was just acquired, or hospital that was just acquired. But your that's your responsibility. And I think the company in the organization should support that 100% and most of the good ones do, the ones I've been involved with, they will make sure that you've been given the keys to the cell system, you're driving the car and you're the one that sets the people in the seats that where they're supposed to be seated.
Patrick Kothe 24:39
Sometimes we have differing objectives, different goals. I mean, a sales rep is is responsible for sales they're responsible for for the revenue revenue number, not necessarily the profitability number. The person as you said that the IDN VP is responsible I believe, for both is But would that be an accurate statement?
Bob Beck 25:03
In the best run organizations? Yes. When you're not allowed to see margins, and you're up and you're supposed to be the leader in that group, you can't make the best possible decision, it's impossible to do that for yourself, for the company, for the reps, or the hospital, or the health system, it's impossible, this can't be done, you're just forcing a company is forcing its narrative on that customer, you want to continue to grow in the minimal single digits, that's a way to continue to do it. But if you want to, if you want to grow exponentially, double digits or more, you've got to let the people that you put in those jobs, do what they're supposed to do.
Patrick Kothe 25:43
So from a comp model standpoint, the reps are either going to be compensated with salary, bonus salary commission, sometimes it's small salary, Great Commission, sometimes it's straight commission, but there's a combination of, of some type of generally base salary and some some type of variable comp compensation based on how much they sell, is that the same for the VP of IDN national accounts? Or do they have a different comp model?
Bob Beck 26:16
Most places, they have a little bit different comp model. And if you are making, if you have been put in a position, you've earned a position where you are overseeing the largest and best customer base in the United States, you're entrusted to make sure that things are done with fiscal responsibility. Because of that, for the most part, you're incented on an annual basis, you can call them embryos, or however well the company does, you will get a piece of that pie, whatever that pie looks like, whatever that piece looks like. That's the best way to get people to do the best long term look and what you're trying to accomplish. So that's the way I've seen it. Now, I've been compensated both ways and doing things in corporate accounts, an annual compensation, compensation, or more of a short term tactical, every quarter, something like that. If these positions are supposed to be establishing and building long term relationships, there is no question from a company's perspective. From an IBM perspective, the longer term approach to strategic approach, paying based upon the company's growth is the best way to do that.
Patrick Kothe 27:37
What's interesting about that is there's a little bit of a mismatch between sales and corporate accounts, because corporate accounts in the best interest of the company, at some point may walk away from a contract. And when they walk away from business, you're pulling compensation directly out of the reps out of the reps pocket. So there's a little bit of difference between that and as we said, you know, you've got multiple sales reps who are involved in there and your decision or you know, as as the company representative, your decision could have drastic impact on your sales counterparts.
Bob Beck 28:18
It can absolutely cause some consternation, Pat, you're exactly right. I can remember, in one of my roles, the very first meeting I had, with an incredibly talented group of regional sales directors, and I was there appear in corporate accounts, we began to look at scatter plots on their price points and their specific areas. And we started talking about how we began to pull pricing together and how we began to do this and how we began to do that. It was my long term thought process for the first time I ever met these guys. One of them is still remained a dear friend of mine, and we still laugh about that meeting, because he stood up and he said, Who are you to be messing with my business right off the bat? Who are you to be taking money out of j Whitaker's pocket? So it can, it can definitely be that way. However, if things are structured in the company, where the relationship with the customer is the most important thing. As long as you continue to meet your financial objectives, from a corporate perspective, there are ways that the rep can be made whole. Does that make sense?
29:27
Yeah, absolutely. I'm
Bob Beck 29:27
confident you've seen that happen. I know that I've seen that happen with reps that that through no fault of their own, or at a level in the organization where they were not able to convince a surgeon. But the health system made a decision completely out of that was completely out of the they're above their pay grade. As the saying goes.
Patrick Kothe 29:50
I want to talk about pricing strategy for a second and how that how that plays plays in and I'll, I'll tell you a little story that I have In my past, we launched a new product and into the US marketplace, it was what we consider to be a high feature product, better clinical results, and what would then what was out there. And we hit the marketplace with it. And we're pretty, pretty much a sales lead organization. So when sales came and said, Hey, I can get the business, if I get this price, or I can get the business, if I if I get this price, we're doing pricing kind of like that, all throughout the US. And about two years into this, we went out to the marketplace and asked for kind of some branding information on what they thought of different companies. And internally, as I said, we thought that we were, you know, the quality product. But what the market told us is we were the low price leader, not a real good position to be sitting in. And it was basically your your pricing based on exception means you have no pricing policy. So when in your experience, and you're dealing with people who are making these decisions at at a much higher level, I'm assuming that pricing policy really has to be discussed, and decided on in order to have a coherent strategy throughout the company.
Bob Beck 31:24
Sure, of course, Pat, I think that the pricing strategy is very, very important. I think part of that pricing strategy needs to be being able to understand the margins, if you're the leader of integrated health system. I've been in situations before where we have existing business, and let's say a health system with eight hospitals, and they have 20 pieces of our equipment. I know what that pricing is because it's my business is the company's business. But we're bidding on something to try to get business we don't have that won't be as big. So do they deserve a lower price? If it's only going to be six pieces of equipment instead of? I don't think so. But I'm being told internally, what do you really want the business because we're gonna we know what the going rate is we're gonna have to do, let us do our job in the field and sell. Let me meet with the people internally that I'm supposed to meet with. Let us come back to you with what we're hearing what we've been told. And then let's formulate a pricing strategy. Instead of saying no, you know, we've seen this in such a such a place around the country, well, that's an a different part of the country, they have different factors that drive things there, we're pretty confident we win the business at a higher price here. And as a matter of fact, if the business customer that we have now finds out and they acquire this company, they acquire this health system, and they find out that it's a lower price for smaller volume. Do you want me to sit down and have that conversation with the customer, you're going to come with me. So communication is so critical for all of that.
Patrick Kothe 33:03
And that's that was kind of the point that I'm making earlier is if everything is by exception, you have no policy, and you have nothing that you can stand up against. Because if it truly is volume based, and you're giving the best pricing to the people with the highest volume, that that works, I mean that that is that is a logical conversation to have with with your customer. But as you said, if somebody has lower volume, they're getting better pricing. Well, why? Why would you do that just because you want it to get the business at that point? Well, you could get that business and you can lose a whole lot more when it's discovered that way. So some type of volume, volume base rationale, is really necessary to have a coherent policy.
Bob Beck 33:50
I agree but and that's in what I'm doing. Now, with my consulting practice. When I work with companies, one of the first things that we do is we spend a significant amount of time pulling all the customers together, let's take a look at every all the volumes, all the pricing, what the contract links are. And let's let's begin to look a little bit more granularly, at how things are set up, where we've got some issues that are going to come up in the next couple of years. And what I can help you do and what what I can recommend to you from your sales perspective as to how they ought to interact with these customers. So that's very, very important. That's very, very important.
Patrick Kothe 34:29
And I think it's also interesting, whether you're entering in with a new product, and you're coming in virgin with with with pricing versus trying to make sense of a system that had gotten out of control in the past and trying to retrofit a pricing policy. I'm sure that that's that's a completely different challenge for you as an IDN. Manager to
Bob Beck 34:51
Yes, no question. No question. Absolutely.
Patrick Kothe 34:55
And so so let's let's take a typical situation. Then where you're, you're in an IDN. And let's say you've got background and orthopedic devices, let's say there's a, somebody at an ID and says, hey, yeah, we want to take a look at at our hip prosthesis, and we want to do a proposal or get proposals for people using using different hips. How does that work? What is what who, how does that occur? From the IDN? standpoint? What do they do? How do they start the process of getting bids from different people?
Bob Beck 35:34
Depending on the size system, depending on the amount of business that they're talking about? many instances, they'll send out a request for information and RFI, before they do an RFP. Are you interested? Would you be interested? If so, this is the type of business that we're talking about bidding on, tell me a little bit about who you are. And it's, it's, it's not an easy process to go through? These are things that you typically hand off to people inside who pulled together? What are your ISO numbers? How many kids do you manufacture? How many names Do you sell a month? What's your manufacturing capability, if you were able to get all this business, that type of thing. And if you want to if you want to, if you want to do that, then you respond, you get an n by their deadline. And you do the best you can to tell them we really want to compete for this business. Now, if it's existing business, they'll know most of the things that you already do, you will remind them and part of that response of who you are, what you've been able to do for them and what they've been able to do for you how you work together, then you began to see it in person, you start putting those people in the field in place to begin to make sure that their clinicians, their contacts, their surgeons, no, this is about ready to hit the street, we're going to bet on it, we really need your help, and we need your support. The health system in the meantime, will narrow down those RFI results as to who they want to submit an RFP to, then a request for proposal goes out. The request for proposal was much more detailed than the RFI was, it can be they can be many, many pages long, hundreds of pages long. Now, some of the things that are very, very important, are not just the skew numbers, but also how are you going to take care of protecting data through our portals through our, our intranet through our API s those kinds of things. But when the RFP comes out, they'll give you two, or sometimes up to a month, maybe two months, depending on the scope. If it's if it's a large hip and knee RFP, they may give me a couple of months. If it's just a nificant spine RFP, about the same thing for the corn ag business about the same thing. They want to get quality responses. But because they're looking to standardize, they're going to look to drive price out of the system that has been and will continue to be a main goal, not just a GP OHS, but of the IDs and the IDM is probably today, from a regional perspective, can drive a little bit more price out of the system than a GPO on a national basis. That's a holistic comment. But I I've seen that to be the case GPOs even now, I have custom contracting groups that will help write contracts for some of their IDs that are members of the GPO.
Patrick Kothe 38:42
So you get an RFP, and let's assume that you are the incumbent, you've you've got a majority of the business within that system. How do you how do you gather the information not only for what's asked for, but we all we also know that there are some some things that the IDN is trying to discount, and you're trying to make sure that they understand that there are true benefits to your you're offering not just the product, that you've got value added stuff in there as well. And they're trying to discount all the value added stuff. So how do you build that relationship? Before the RFP goes out? And then after the RFP, how do you make sure that they recognize the value that you brought to their system so far,
Bob Beck 39:31
if an agreement is a five year agreement, or a seven year agreement, or however long the agreement is three years, in some cases, you win the business. It's just like Nick Saban, when he won the national championship at Alabama again this year, you made a comment and pressure. Yeah, we're going to give the guys a day or two off and then we're going to get right back at it. If you win the business and you're the incumbent for the last 357 years, however long it's been part of your responsibility is to ensure that you're doing everything that you promised that you would do. And you're having sit down reviews, with the clinicians and the key internal players, whether should the D suite or the C suite, to make sure that they know, here's what we promised, here's what we agreed upon. Here's what we've done. Here's what we've done, we've done above and beyond, if you've done things above and beyond it, typically you AV, she that is something that's been a constant since you won the agreement. As far as your IP goes, I made a comment a minute ago that once you are a bike comes out, you begin going back and being intentional to make sure everybody knows this is going to hit the street, we want to maintain the business or we want to compete for the business if you don't have it. But if you're the incumbent, you have to cover all your bases with everybody. And if you don't hear something from somebody, that's sort of a red flag. In terms of Miller Heiman strategic selling, that's an enlarged account management, that's a red flag. If someone's gone radio silent, that's a red flag. And you have got to do everything in your power to figure out what's going on. I won't say it sales world one. But because these ideas now are so complex and large, Pat, you have to be much more sophisticated in the way you go about working with your customer base team meetings, led by the point person, the ID and manager, director or vice president, whomever they have that has to be constant, they have to have constant updates. And my hope is, in my belief is I've gotten much more organized during this pandemic over the last year, we've been forced to do zooms and team calls, and WebEx is it should have made us all much more organized, and better able to communicate, not just cleaning the screen and making it look better. But making sure everybody understands, here's what we agreed to last month, then we do that. Okay, great. Now, what do we do next month? And if we didn't do something, how do we do that this month.
Patrick Kothe 41:57
So we train for national accounts, and we train ourselves and our teams in negotiating tactics. But the idea is do the same thing. They're trained on negotiations as well. So as you get a get a contract, does the tenor of the conversation change does the relationship change, and then, and then does it change? Again, when you get closer to the RFP,
Bob Beck 42:23
it depends on the relationship that you have with a given customer. I know that over the last two decades or so, I picked up the phone, when I've been with different companies to call a former customer, tell them what I'm doing. And they'll immediately open the door for me, they'll immediately open the door for my team, they'll immediately open the door for something that we're trying to accomplish, so that those kind of relationships haven't changed. And that's what we've tried to build. When we've done national accounts for as long as we've done them to get those relationships that way. That doesn't mean that that's that way all the time. I can tell you in some of this, some of the major health systems around the country that have people that come and go on both sides of the table, they that the strength of that relationship can be frayed, it can be fractured. And maybe it's not existing. Sometimes you have to rebuild that, you have to go back to what you were trained to do years ago. And you can't just take advantage of that relationship that you developed with Bob Beck years ago.
Patrick Kothe 43:34
So Bob, sometimes you're walking in, you're the incumbent, sometimes you're walking in and you're not you're the new kid on the block, and you've got a new product that you're trying trying to bring in or a new groups of products that you're trying to bring in, what's the difference in strategy in how you approach an IDN. When you're the new kid,
Bob Beck 43:56
there's a there's always a roll up from the company's marketing and sales organization, you're always going to have a roll out on the product. So you learn that as best you can. And then I have tried to take those new products, what's been rolled out by marketing and sales, and had a team meeting to talk about where we think this would work at? at Duke, for example, how could we make this work at Duke? given what we know, given what we don't have? What's the catch? What's the hook, that would would allow the surgeons here at Duke, to say, I want you guys in the O r? No Matter of fact, I like this so much. I'll give you the next month's worth of cases or whatever it would be. You know, that's a really great example of somebody you know, giving giving us an opportunity. But I think you have to take the national strategy and then you have to know the system well enough Pat, whatever system it is that you You're responsible for, to help put your team in the right position to go run with that product.
Patrick Kothe 45:09
typical situation is you've got, you've got an RFP, and someone is awarded the business. And it could be sole source could be a dual source could be more than that. So let's, let's say that you're awarded the largest percentage and a duel in a dual source. And then somebody else comes out with a new product, and they go to Duke, and they start peeling off part of your business. And all of a sudden, where you were expecting 5 million in sales out of out of that group, and now it's down to three and a half million. They're not standing up for their commitment in that RFP, what do you do?
Bob Beck 45:52
First of all, you're happy to have the $3.5 million. But you're one and a half short. I said earlier, that part of what we work hard to do, and some companies do it better than others. Some places I've never done it before. And so we've we brought that to contracts. As part of the contract that we signed part of the business that were awarded, we sit down with the customers at least twice a year to have a business review. Here's what we said we were going to do remember I talked about, here's what we said we're going to do, here's what we partnered to do together, here's how we've over achieved what we should do. So if something like that happens, the reps should know about that problem before anybody and they would alert me or they would alert their manager. And then we sit down and we talk about do we know this for sure. If it is, then at the highest level possible, I then sit down and go meet with the appropriate customer and have a discussion with them as to what's going on. We would hope that we have contractually obligated them to do what they said they were going to do. And if not, there are penalties. I've been involved with customers and IDs and GP O's. We have to weigh penalties. If we don't live up to what we said we're going to do. Here's the potential penalty and vice versa. You try not to get an adversarial position as far in advance as possible. And part of the way to do that is contractually, yes, I can tell you this, we come out with better mousetraps. I want to go where I don't have business. There's no question we want to do that. What's the appropriate way of doing that? Hopefully, the customer will sit down with the incumbent and say, here's what we're looking to do. Here's what it would mean to you. How can we figure out a better way to do that. So I try to I try to promote an atmosphere with the customer and the internal customer. We need to be proactive, and be prepared for all of this. Be prepared for everything. You can't be prepared for everything. But you can sure try to do that you can put down everything on paper you think is going to be an obstacle, unless you plan for that as part of a good strategy. And sometimes
Patrick Kothe 48:10
you cut you've got a contract, and sometimes that contract is adhered to and sometimes it isn't. And as you said, if there are, if there are repercussions that are built into a contract, you can do that. Or the customer always has the ability to say you know what? I'm walking away.
Bob Beck 48:26
And that's, that's an unfortunate thing. But the hope is that you have built you as a supplier, a high quality medical device manufacturer, have developed a relationship with the key players, where you can have discussions with them hard discussions, and say this is what's going to happen. We talked about this. Listen, I see that happen.
Patrick Kothe 48:49
What are most of the contracts written today? Are they dual source? Are they more than dual source? What What do they look like?
Bob Beck 48:57
Everything goes in cycles. I remember my dad telling me years ago, straight leg jeans are gonna come back, Bob, keep those ties you got they're gonna come back those skinny ties. Sure enough they did. I think we've you want to have both seen things in the past. It's a free for all, everybody gets a shot. Well, let's let's this GPO has got three contractors, suppliers. Let's go with the GPO and we're going to go with three. Well, I'm a regional IDN. I think that I can get a better price than two of those. So I'm going to use one of them. And we're going to do two more three more here. Or I'm just going to put together this one page formulary and your hip, your five components of the hip are going to cost this if you're going to do a two level spine procedure. Here's where it's going to cost and pad if you don't want to do it. And Bob, you don't want to do it. I got 20 other people on a waiting room that will do that. So I don't think there are many sole source agreements to speak of today. And with what we saw unfold this past year in the pandemic, when so much manufacturing was done in different places. And they had issues and problems, I think that we will stay away from sole source agreements. For a while, I just think a lot of people were going to be gun shy. So multi source agreements with fixed price points are what I see. But if you've got if you do have a hook, and you can legitimately sell that, with a white paper, of health trust and hpG, for example, don't talk to anybody without white papers, and legitimate proof sources with their products. I know there are a couple of the large GPOs that are doing that with certain other segments of their product have buckets that they've sent out to bid in the last 12 months. So that's very, that's going to be very important to to have white papers to make an entree into these group purchasing organizations that in turn will filter from the ideas as well.
Patrick Kothe 50:52
So if you were sitting across from somebody at an IDN, what do you wish that they knew about what you do that they probably don't know?
Bob Beck 51:04
That it is truly an insult with me, it's always been truly developing a long term relationship that is mutually beneficial. Yes, we want to do the best we can on price, they in turn, want to do the best they can do on price, we want to provide you the best services possible. And we want to make sure today that you're getting the outcomes that will maximize what you get on a revenue and reimbursement basis. Because now, you know, with the Affordable Care Act, and some of the some of the components should have been put in place. outcomes, and patient satisfaction is a real critical component. That was nowhere thought about nor thought about until 10 years ago. And now that's a part of what they're what they're compensated on. And so how can we help them maximize revenue, even though for all intents and purposes, 80% of the country still are not for profit. their bottom line is very important to them. Their reputations are very important to them. Well, we are for public companies for them. In many cases I've worked for for for for public companies, and they're responsible to shareholders. Our reputations are important too. That's where we agree. And so I continue to think that we have discussions about what we agree upon more than what the differences are. And more often than not, history has shown that we find a way to make something work and work well for a long time. That's what I hope they will know about me.
Patrick Kothe 52:42
So you've worked in large corporations and small corporations. How is how is it different being in a large group versus a small group and dealing with national accounts?
Bob Beck 52:54
I think we've used those to our advantage at least four times, to large companies and to medium sized or small private companies. We use the size and portfolio as leverage, we can maximize your savings by this entire product portfolio with large groups. It gives us incredible it gives you incredible buying power gives us incredible power to internally look at different margins and what we might be able to play with here and there on the other side with the smaller companies. But most of these contracts say that you've got a 10 20% out. I've got a great product right here. As a matter of fact, two of the key surgeons that you have on your product advisory board, use nothing but these products, just give me a Carvel. That's all I'm asking me a three year carve out, and we'll make it private, I know what the price needs to be at. So we've been able to use both of those to our advantage. But none of that has been able to happen unless we had the relationships in the first place.
Patrick Kothe 53:54
small companies have smaller resources, do they need a separate team to deal with national accounts?
Bob Beck 54:02
Wanting and needing, as you know, are two different terms. Some want them, some might need them. depending on the complexity of what you're trying to accomplish, you might need them doesn't have to be full time. It could be on a retainer basis, the better understanding and more sophistication that your organization supplier has about a given system or a given group, the better chances for success are going to have. So I think that having someone with with that kind of experience would be important. Again, it doesn't have to be a full time thing.
Patrick Kothe 54:42
Or there's some things inside a company that they don't recognize what national accounts is doing.
Bob Beck 54:49
Oh, for sure. We all get together when we go to these big national meetings when we've worked together before and we all compete with each other against each other. We've worked together before we all laugh some of the similar things that come up their national accounts, they give the farm away. It's all about pricing, they keep talking about pricing. When we've run analysis in a couple of different companies, guess where the most profitable deals are with the IDs, if we're allowed to understand what the margins are, and look at the different horizons and things like that, from a financial perspective, we can help make a greater impact on the company's bottom line. But it also helps the I CH, n because we've been able to demonstrate to them the downstream cost savings. So internally, they think that idea that the corporate cash people give good products away, if they sent from the customers, I'll tell you, the customers wouldn't tell them that that's not what they do, and people do with the corporate accounts guys do. I think sometimes they, they underestimate the value that we have brought to help organize field based teams that we don't have remember responsibility for in some instances, I've had both of indirect responsibility been surrounded by dotted lines, sitting with either a manager or a rep in a car, and you don't have a system that they're really struggling with. It's not on your target list. I can't tell you the number of times that I've had reps, call me email or even send me letters. Thank you for helping me with x system. I know that wasn't yours. But listen to what we've been able to accomplish. It's not all about your list of 10, or your list of three or your list of eight. How can we help the entire company in the field? Do things? hopefully better? But in many cases, different.
Patrick Kothe 56:42
Bob, you've devoted your career to the medical device industry. Why has it been your passion? And what have you personally gotten out of being in the industry for this amount of time.
Bob Beck 56:57
I've learned an unbelievable amount of strategic planning for my days at Abbott. If you've ever read Jim Collins text from good to great, he says that of the 11 companies. Number one in each of the industries you focused on and profile Abbott, you teach the other 10 How to strategically plan I learned a great deal about how to negotiate physicians preface products with Stryker and RTI surgical. It's helped me professionally a tremendous amount, I have worked with unbelievably talented individuals. I've made lifelong friends. Friendships are have been important to me since I was growing up in Lexington. So those friends that I can pick up the phone or I get a text from, they don't know that the day might have been a rough day, just to get a text amendment to laugh, and to pick up the phone on the weekend and catch up. Those are the those are the things I take away from the career personally. Professionally, it's been a great thing for me to understand the workings of our healthcare system. It's been a great thing for me to put my daughters through college, it's helped me do that. And to do some of the things that we've been able to do, those may sound pollyannish. But to me, the the personal piece of my professional career has been what's been most rewarding for me. I've always taken away laughter and great friendships with what I've done.
Patrick Kothe 58:36
Bob, is there anything else that you'd like to cover?
Bob Beck 58:42
These large health systems started 20 2025 years ago, they have grown exponentially, and they will demand the brightest and the best to cover in the future for our medical device business to thrive as it has.
Patrick Kothe 59:00
Bob really has a firm grasp on the history and development and current state of national account management. If you have questions or need help with your national account strategy or or implementation, you can contact him through the links in the show notes. So a few of my takeaways first relationships matter. This is kind of a no brainer. But it really bears repeating again, they matter internally. Bob discussed some conversations that he had with people early on and there and they saying Hey, what are you doing, you're coming in here, and you're taking money out of my pocket. So those internal relationships really need to be developed. And you need to make them know that you have their best interest in mind. And you must also communicate routinely with them not just when a contract is is up. Also relationships with your customers. Obviously, the work starts the day after you're awarded the contract, that's really the best way to look at it. It's not disappear between you know, when contracts come up relationships, start the day that you get that award. Secondly, write a solid contract. We talk about, you know what expectations are, but those expectations need to be clear. And you also have to be realistic with your with your contracts, too. If you expect over a period of time, that's people are going to have new products that come in, and maybe even your can be one with new new product, well, that's a pretty solid expectation. So build that into that build those contingencies in there to make sure that there's a little bit of space, that's just just good business. And also, if that occurs, to what level because if it occurs to a to grade level, well, then obviously, we're gonna have to have some penalties in place on both sides of this. So make sure that you're writing a solid contract. And the last thing is, just because you don't have a contract doesn't mean you can't sell product. So Bob talked about carve outs, and that is a work coming in here. We want to carve out a little bit of space for our new product that does this. So just because you don't have a contract doesn't mean that you can't talk to anybody within that, that organization. So you need to need to have that clinical sale. But do not forget about that relationship with the financial buyer, because that's going to be necessary too. Thank you for listening. Please spread the word and tell a friend or to to listen to the mastering medical device podcast, as interviews like today's can help you become a more effective medical device leader. Work hard. Be kind
