Survey Reveals 100% of MedTech Executives Say Poor Contract Management Causes Revenue to Be Left on the Table
September 23, 2024
80% of respondents believe that contracts are a “significant” revenue driver, and two-thirds report that at least 70% of company revenue now comes through contracts
BOSTON – September 24, 2024 – AcuityMD, a leading technology provider to the commercial medical technology (MedTech) industry, today announced results of a new survey quantifying the value of contracts and the severity of poor contract management in MedTech. Two-thirds of respondents report that at least 70% of company revenue is earned through contracts and that percentage is anticipated to grow to 80% by 2027. All respondents say their companies could unlock additional revenue if they could fully leverage negotiated contracts.
Notably, the importance of contracts was anticipated to be even greater among the biggest companies. According to the survey, 73% of those with more than $1 billion in annual revenue estimate that 90% or more of their revenues will come through contracts within three years.
The 2024 survey titled “How Medical Device Companies are Managing Complex Contracts” was designed to understand the importance of contracts and contract management with health systems – especially independent delivery networks (IDNs) and group purchasing organizations (GPOs) – in MedTech. The survey included responses from more than 150 MedTech professionals director-level or higher from companies with a wide range of annual revenue.
Key findings include:
- Two-thirds (68%) of medical device companies get 70% or more of their annual revenues through contracts with health systems, IDNs, or purchasing networks.
- All (100%) believe they leave additional revenue on the table because of difficulty managing contracts.
- All (100%) respondents also agreed that on-contract opportunities close much faster than off-contract opportunities.
- The difference in average estimated time to close was about 40%; that is, on-contract opportunities were estimated to close 40% faster than off-contract opportunities.
- 99% of respondents use email as a means of communicating contract info to other teams; 90% use meetings; and 73% rely on individual contact (calls/texts). (Answers are non-exclusive).
- 96% reported using spreadsheets to manage contracts; ERP systems were the next most popular at 73%. (Answers are non-exclusive).
- 97% say they will likely hire more staff to manage contracts; and 80% are planning to investigate software to address the issue. (Answers are non-exclusive).
"The U.S. healthcare system is very stressed with a lot of consolidation, and it's challenging to keep a pulse on all of the different changes so you don't always understand who you are negotiating with any given week," explained Alex McLachlan, Intellijoint Surgical’s Director of Commercial. “Today, about 80% of our orthopedic surgeons are employed by a hospital. The byproduct of that is decisions are happening at a corporate or administrative level, so you might win over a surgeon, but the final decision maker is someone else."
AcuityMD Vice President of Strategic Growth Tom Middleton concluded: “The de facto response to contract management issues has been to hire more people, but that is expensive and doesn’t solve the root of the problem. MedTech companies that leverage innovative technology can harness contract intelligence to help salespeople find and close more on-contract opportunities faster to drive revenue and growth, and maximize the value of their hard-won contracts.”
In other news today, AcuityMD launched the first contract management technology solution to help reduce missed opportunities due to poorly managed contracts and speed close rates.
About AcuityMD
AcuityMD is a leading technology partner to the commercial medical technology (MedTech) industry. Thousands of sales and marketing professionals use AcuityMD’s intelligence platform to identify target markets, surface top opportunities, and grow their business. With customers ranging from pre-commercial to enterprise, AcuityMD is committed to delivering rich, high-quality insights in actionable ways to accelerate the adoption of medical technology. Its platform is currently used by six of the top 10 MedTech companies and has resulted in more than 25% sales growth for top active sales reps and over $13 billion in opportunity pipeline.
Media Contact:
Lisa Barbadora, Barbadora INK for AcuityMD
+1 (610) 420-3413
lbarbadora@barbadoraink.com
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