Google + Twitter + search for collaborative solutions + frustration as sales rep = break-through business model innovation.
Writing on July 4th, I applaud a nation that produced a Rashaun P. Sourles, a compelling young man on a mission to improve health care and disrupt inefficient sales channels.
Sourles grew up in a working class neighborhood and achieved top selling ranks at Johnson & Johnson, a Fortune 500 company. Sourles grew frustrated as one of J&J’s pharmaceutical representatives, with the considerable wasted time (up to 80% a week) spent trying to find, contact and set up meaningful exchanges with clinical and administrative decision makers.
Had he been in the industry decades earlier, the hurdles would have been much lower. But an increasingly consolidated provider community now severely limits access of pharmaceutical representatives to clinicians to drive more volume over fewer drugs, thereby lowering costs. The barriers also reduce “hard-selling” – selling based on factors other than patient outcomes. In fact one-quarter of physicians, according to the NYT, flat out refuse to meet with drug sellers today.
Sourles’ frustration with provider-imposed hurdles concerned not just his own commissions. He was equally troubled by obstacles to providing important information, helpful services and other value-added solutions – beyond J&J drugs – that could help providers improve patient care. Rather than throw in the towel, Sourles seized an innovative business opportunity.
Drawn by Google’s success in providing information through keyword searches, Twitter’s success as a personal publishing platform and graduate work in Northwestern’s strategic change management program, Sourles’ went after the problem. His company, Qualtrx, is building a social network that connects healthcare providers to their vendors in a new marketplace. With Qualtrx, the provider controls the connection via real-time publishing of needs and goals that vendors like J&J will subscribe to, for a fee. Sales representatives respond to published needs and goals with targeted proposals. (Disclosure: I am on Qualtrx’s advisory board.)
Providers, not the vendors, control the pace of the engagement and respond only to proposals of interest. Their choice is aided by a three-step proprietary algorithmic ranking of vendor proposals based on:
- Providers’ ranking of representatives’ prior proposals
- Keyword match
- IR, or Implied Relevance (Qualtrx’s secret sauce)
Qualtrx’s young team recently won a coveted place in a Minneapolis technology start-up accelerator and was selected by the Minnesota Cup business plan competition for innovative and breakthrough business ideas. The company is just starting to raise money. The first test site is underway.
Let’s hope the Qualtrx business model works, as the idea is huge, on two levels.
First, Qualtrx’s new marketplace for ideas could prove disruptive to the pharmaceutical industry and possibly others. Unable to scale drug development, giant pharmaceutical companies now buy or partner with small biotech companies to fill their pipeline. With a new marketplace, start-up drug companies will have an alternative to get to market. The same applies for other medical product start-ups.
Second, the business model is a great example of enhancing value through innovation – for pharmaceutical companies, lower selling costs; for providers, more efficient and effective use of clinicians’ and administrators’ time spent with sales representatives; and for payers and patients, better outcomes from our health care system. The Qualtrx exchange, based on transparency, efficiency and effectiveness, is a much better way to transfer information than a purchasing agent acting as a strict gatekeeper.
Qualtrx exemplifies how a new technology evolves. Most new technologies (in Sourles’ case Search) start in a specific market, then grow horizontally into other markets. But needs from a technology are not uniform, so once the technology starts to mature, niche companies like Qualtrx design highly tailored applications of the technology. Eventually, larger companies with strategic interest in a market segment purchase the niche companies with winning segment applications.
My prediction, therefore, is that VHA – the leading group purchasing organization for healthcare providers – will likely set their sites on buying Qualtrx after its proven the business model. Alternatively, Google and Microsoft, both with a healthy appetite for acquisition in the health vertical, may look to a company like Qualtrx as an example of a scalable healthcare IT innovation that avoids the thorny regulations around the management of personal health records and personal health information.
Should Sourles want instead an ongoing business without a corporate parent, approaching strategy as a continuous design process will serve him well. Medical equipment and supplies are obvious adjacencies. Beyond this there are other sales channels to transform via intelligent social networks.
Rashaun, set your sights high. Win or lose, you’re an American hero in a century in which the innovative spirit will drive our economic success.
So happy to read about Qualtrx and especially Rashaun Sourles. I supervised Rashaun when he was a high school student volunteer in Sacramento, CA hospital. Rashaun stood out among a field of outstanding youth for his dedication, people skills, work ethic, and passion for helping others. It is no surprise to me to learn about this new venture Rashaun is providing the health care field.
Rashaun was blessed with a dad who made many sacrifices for him, had high expections for him, and referred to Shaun as “my hero.”
Where does price fit into selection criteria? is that in the secret sauce? Reverse auctions come to mind. Once the proposal is made by the vendor, does the client then, ‘go out to bid’? I’d like to get more detail. It sounds very interesting for non-commodity type products and services.
Donna, As far as I know, price does not enter into the ranking criteria, but you’d best contact the company. But you raise a good point – once any buyer finds qualified companies, might they then use price to select between them as it’s in the buyer’s interests to do so. This type of price competition – among the best suppliers – demands that we each create a business model in which we are lowest cost or efficiently offer unique benefit(s) competitors cannot easily match.
Gail, I am not surprised by your information about Rashaun. Thanks for sharing it,
Kay… love your writings and work & now have subscribed to your blog
IMHO the QualityRx site appears to be more set up like a Rx store front vs the application/service you described. Instead of revolutionizing the doctor to Pharmaceutical rep selling process QualityRx is focused on leveraging a shopping cart for buying Rx(from QualityRx)along with toothpaste etc. If you need a drug not on the menu you can fill out a basic question form. They are vying for the intermediary low cost provider role versus something much more valuable.
Given the innovative idea here, I suggest (IMHO) that Mr Souries would do well to rethink the execution and modify the site to be more professional / doctor friendly plus they need to be Pharma company neutral. (not just what QRx represents or stocks)
I think the idea of removing the intermediary is right on the money and I participated in a similar idea Trading Partner Network with GE Information Services. The process of putting providers in competition on a real time auction platform put tremendous pressure on the web application and company behind it to make sure it delivers an apples to apples comparison.
Interested to see where this goes once it launched & is live commercially.
I have the feeling that you went to a different website Eric. The actual exchange that Qualtrx (note spelling)is using is in Beta and will only be available to subscribers and hospitals using the service. It is a data base of proposals linked to key words that link to clinician goals – it is not where the actual sale will occur.
From the entrepreneur (whom I informally advise)
Donna –
I appreciate your question about the Qualtrx model of engagement from Kay Plantes’ blog post. I owe both you and Kay a detailed response, so I hope you can bear with me. I relish the chance to clarify!
You are 100% right, Qualtrx aims to help elevate the service offerings of medical products vendors to a “high value add” in the eyes of their healthcare provider customers. Whereas the “products” in many cases have indeed become commoditized, we believe it’s the service and solutions in support of those products that has the potential to yield enormous value for our healthcare system–providers, vendors, and patients. The value exchange we are evangelizing is not transactional, but transformational in its potential to serve our healthcare system. An exchange of ideas and knowledge and best-practices, not to mention the transfer of valuable, industry-provided resources ranging from tools and product demos, to educational literature and other tangible resources–this exchange requires an novel engagement platform designed for this kind of collaboration. A platform that is, simply put, leaner and more scalable than today’s *analog* face-to-face interactions which require salespeople on the ground in geographically defined territories before any exchange can take place.
Qualtrx is a private social network that connects healthcare providers to vendors in a new marketplace. One could say that Qualtrx manifests itself as a sales communications channel, albeit one designed with the healthcare provider customer in mind. So let’s first look at the traditional healthcare sales model:
If there were a spectrum that denoted the traditional sales relationship in healthcare, it would begin with
1) The healthcare provider’s awareness of a drug/device (and the vendor rep);
2) The provider’s education (face-to-face) on proper use of the drug/device;
3) The provider’s use of the drug/device in a patient, which represents the *purchase*; and
4) The vendor rep providing product support, continuing education, and other forms of customer service (still, most often face-to-face).
The Qualtrx platform serves all of the above points except #3, the *purchase* of a drug/device. On that, every healthcare institution has a process for procuring drugs/device and other medical supplies, with over 90% of institutions leveraging the buying power and strategic sourcing capabilities of group purchasing organizations (GPOs). By extension, most institutions, when possible, have commoditized products that come through the GPO channel.
Qualtrx seeks to transform the traditional face-to-face selling relationship in healthcare by bringing the interaction to a digital platform where healthcare providers control the dialogue (by publishing their unique needs and responding only to the proposals that best serve their need). But at the same time the Qualtrx platform empowers healthcare providers, it also gives medical products vendors a platform to showcase their highest order value propositions–to build their brand equity and customer goodwill by transferring their company’s knowledge, insights on best-practices, and providing tangible and valuable tools and resources to the clinicians who have unequivocally expressed a desire for this type of exchange.
At our beta test site, Hennepin County Medical Center, a regional teaching hospital in Minneapolis, we’re finding that healthcare providers desperately want a channel to communicate with vendors that doesn’t involve trading off their precious time with patients. Qualtrx enables the healthcare provider to efficiently interact with vendors based on the providers’ needs; on the providers’ own time and own terms; and with the provider in control of the pacing of the engagement. And Qualtrx, as a publishing platform, offers vendors the most accurate, local, and up-to-date business intelligence on their customers’ needs–as well as a pathway to productive engagement through making targeted proposals that delight their customers (and their sales managers). Qualtrx is designed with the healthcare provider customer in mind, but Qualtrx is equally rooted and informed by my 7 years experience as an industry rep who just wanted to make impact that mattered–to help improve patient care quality and outcomes by serving my customers’ needs effectively and efficiently. On the Qualtrx platform, the healthcare provider-defined need is front and center–no guesswork required.
Best Regards – @Rashaunps