A New Solution to the Ortho Distributor Dilemma
By Drue De Angelis
The greatest satisfaction we get is when we are able to help our clients overcome challenges and meet or exceed their growth goals. We accomplish this primarily through our search services by bringing leadership talent on board, but recently, we have been working on an idea to help our clients with one of the most challenging areas of their business, distribution. The competition for good distributors is at an all time high.
The single greatest challenge facing ortho start ups seems to be building a reliable and effective sales channel. It has gotten more difficult in recent years as many companies have segmented their businesses into smaller dedicated sales forces. Even with more consolidation, there has never been more sales people in our industry. Some are obviously pursuing a direct model, but start ups lack the funding to go direct and are left with only the distribution option at this time. It is likely we will see more partnerships with the likes of Medline style channels, but the front lines of the fight is still with the independent Distribution model. More and more, the composition of distributors is becoming less predictable. In the past, a distributor principal had an organization of some sort including an office, support staff and several dedicated sales reps who worked under them to represent the companies that the distributor had exclusive contracts to sell for. We are seeing exclusivity become more the exception though rather than the rule as it once was. Today, distributors run the gamut from the kind I just described to a simple rep who has two or three solid surgeon relationships and that is the full extent of their intent or ability to penetrate a market.
In recent years, many manufacturers have begun to segment territories by surgeon rather than by geography which was the norm in prior years. Some companies have over 200 “distributors” in the U.S. alone. They have resorted to this because of the unmet promises by small distributors that took on exclusive territories only to fail to sell beyond their limited sphere of influence. Unmet promises by distributors without any significant infrastructure has left many companies jaded and frustrated as they have failed to drive adoption of products. With many of these companies burning through VC cash and leadership teams failing to execute, it has come to the point of doing whatever it takes not to tie the hands of the company through exclusive distributor contracts.
Having seen so many of our start up clients struggle, we wanted to help. Beginning in January, my partner Josh and I decided to take on a new approach to helping our clients navigate these challenging times. We launched OrthoSpineDistributors.com to give our clients access to over 2,000 independent orthopedic distributors in the U.S. This has already helped many new distributors that were off their radar. We were very happy with the response from the marketplace. Our clients have posted over 250 distribution opportunities on our site. What we have found is that many of these distributors are lacking some of the elements that would make them an attractive partner to manufacturers. We have seen that far too many small distributors fail to make the necessary investments into their business to demonstrate to the manufacturers that they are a solid partner worthy of a company’s time, effort and resources.
We saw the opportunity to do more to help our clients indirectly by helping these distributors. So last week at NASS, we launched the Distributor Toolkit which is a bundle of products and services that will help these smaller distributors establish themselves through improved infrastructure that will show companies that they are committed to excellence and willing to invest in the necessary tools to make their distributorship a worthy partner.
The products in the Toolkit were selected to bring significant operational value to distributors and make them more attractive to executives in start ups. Below are the products and services included in the Distributor Toolkit.
- Surg.io – A cloud-based surgery scheduling software that gives full team visibility to when, where and with whom surgeries are scheduled. It tracks the surgeon preferences for cases and the stages of preparedness of the equipment. It also notifies the appropriate team member when a status changes.
- LegalShield – We have prepaid for a local attorney to consult with each distributor on all matters requiring legal advice. Whether it is a contract with a manufacturer or hospital, the attorney will be in your corner at no additional cost to you. (within defined limits)
- Sales Rep Training & Mentoring– Sales rep turnover is a major problem for most small distributors. One of the best ways to reduce turnover is to invest in training and development. In partnership with DaLoren Group, all your sales reps will have access to online sales training to “sharpen their axe” and help them be more successful. Studies have shown that sales people who are being developed do better and are less likely to leave for another opportunity. (dalorengroup.com)
- Distributor Website & email – Many smaller distributors don’t have a company website and send emails from their personal yahoo or gmail. This sends a very weak message to companies and shows that you don’t make the minimal investments into your business. OrthospineDistributors will build and host a semi-custom website for your group and each of your employees will have a company email.
- HR Consulting – We have prepaid Trellis HR so each distributor has free monthly access to an HR expert to help with matter relating to building your company’s policies and procedures, offer letters, compensation plans and terminations to protect you from liabilities.
- Accounting & Payroll – We have partnered with Summit Advisors for a discounted service structure from accounting and payroll to setting up a Simple IRA or another insurance offering for your team. Whatever your need, Summit will be there to provide guidance in starting your business or taking it to the next level.
- VenOps – Part of any honorable business is taking care to protect your clients from unnecessary risks. VenOps has built backend office platform to protect your surgeons from HIPPA violations and associated fines. A simple to use process will ensure you are doing what is best for your surgeons. The cost of VenOps is covered 100% by OrthoSpineDistributors.
- OrthoEthics – Online orthopedic community exists to encourage ethical conduct and best practices in our industry. The purpose of OrthoEthics is to spur one another toward doing the “Best thing” for your surgeon customers, hospital clients and patients. All costs associated with OrthoEthics are covered 100% by OrthoSpineDistributors.
All of these products and services were put together to enhance the distributors’ business and help them be better partners for our clients. We believe that in building this “business in a box” concept, we have made a small step to helping our clients find more capable distributor partners to engage with and grow with.
For more information on the Distributor Toolkit, visit www.orthospinedistributors.com/toolkit.
Over the years, I have always admired your vision of this amazing industry, but this article has “Hit it Out of the Park!” You have nailed it! This program will revolutionize the way small medical distribution organizations are built and will grow within our industry moving forward. Structure and strong work ethics, BRAVO!
Thanks David! I appreciate your kind words of encouragement. This is still going to take a lot of work from a lot of people to make this effective. Best, Drue
Please let me know if I can be of assistance to you in your endeavor.