Two crucial questions I’ve tackled in numerous projects for new life science products designed for hospitals are: who are the decision-makers, and what criteria do they consider when purchasing a product for a hospital? Understanding these factors is key to making informed decisions in your product development journey.
The answers to these questions vary depending on the geography, the healthcare system, the product, and the individuals who will use and maintain it.
Although you may get a rough idea of the pathway to purchase from your research on a similar product or from a syndicated report, taking time to update it for the specifics of your product is essential.
One of the most interesting projects addressing these questions was for a pharma company assessing the benefit of creating a piece of software that doctors would use in the hospital to support their drug portfolio. This case study exemplifies a forward-looking company executing research early in a design/conceptual phase. This contrasts with my previous case study, which showed the perils of conducting market research “too late” for a new drug (Link to project history).
It sounds simple, but when you conduct external research early, you avoid committing lots of money to developing a product before finding that it doesn’t have an excellent fit for the market and then continuing anyway due to sunk cost (HBR article: https://hbr.org/2021/07/how-susceptible-are-you-to-the-sunk-cost-fallacy). When this example company commissioned this research, they were in the position, if needed, to make significant adjustments on how the software would work and who it was aimed at, or stop the project entirely and reallocate the resources to better opportunities.
Having shared the background situation, we’ll move on to the project methodology and how these factors impacted it.
Methodology – Developing an appropriate approach for this stage of development
Given the early stage of development, the plan was to do a small number of interviews, targeting department heads in the Therapy Area the product was aimed at, as well as several ex-payers in the Geography of interest. The low level of investment at this stage was appropriate given the team’s budget, and should the product progress in development; they were positioned to conduct follow-up research with more interviews and address any unanswered questions.
There was no formal desk/secondary research for this project, so we went straight into conducting primary interviews (although I did take a few hours to read several literature reviews on the type of software, an essential behind-the-scenes phase that I do now for all “primary only” projects).
As I had completed several similar projects around the same time, and the client had written a detailed briefing document, we had a good idea for an initial set of questions in the discussion guide. Following an additional discovery call with the broader client team, we created the guide, which they reviewed and signed off.
It was critical to understand who would be willing to pay for this software and how it would be paid for and assessed for value and benefits. The client briefing document also requested us to determine what “digital” budgets in hospitals were being spent on and what would be considered a reasonable cost to charge. With it finalized a little less than a week from project kick-off and the expert network having shortlisted department heads and payers, we moved on to the interviews.
Before this project, I had conducted numerous expert, KOL, and prescriber interviews, but this was one of the first times a client wanted to join the calls live. Their active involvement came from being new to this type of research and wanting to see how it was conducted. It was beneficial for them to listen as silent participants, messaging follow-up questions through a separate chat while maintaining anonymity from potential future customers.
After a few calls, we had an internal discussion. For all primary research projects, I like to do this ~ 1/3 of the way through the interviews, whether the client is joining live or not, to discuss how the discussions went, any initial interesting topics or ideas forming, and whether anything needs changing. At this point, we added several follow-up questions to the discussion guide, but otherwise, were happy with the progress and completed the interviews over the following few weeks.
Analysis and Reporting – A magician should never reveal his secrets, a consultant should be willing to explain their’s
One of the purposes of these project histories is to help those who “have never made the sausage” understand what goes on behind the scenes and teach those new to it how it can be done. Those who have read my other articles or viewed my website will see that I talk openly about how I/Sivan Consulting does the work and the fact that there is nothing magical about what most consultants and market researchers are doing, but through repeated projects and learned experience can execute this work more quickly and to a higher standard.
My standard process for a project like this one involves the creation of a Miro board with each research question in a frame. As a first step, I will use different colored sticky notes for each expert/KOL and organize their answers by the research questions. This allows similar responses to be put close together and contrary answers to be separated immediately.
Regarding timing, for this project, the spacing of interviews allowed me to review notes and transcripts after each call. As is generally the case in this situation, I added headings and shifted groupings of information throughout the interviews as recurring topics and different points cropped up.
The “secret” part of my methodology over the last few years has been heavily influenced by Cal Newport’s philosophies on deep work. By organizing my schedule to protect large blocks of time (~2h) for deep, uninterrupted focus work (notifications off and phone in another room), interspersed with breaks away from the computer (generally walking the dog or exercising), I’m able to work through the analysis and reporting process efficiently and effectively.
Once all the interviews were completed, I went into a deep work phase over a few days. During this time, I was able to establish a story from the findings and sketch how everything would be presented. Given the “low number” of interviews and lack of desk research the main deliverable, a PowerPoint report, would always be relatively light compared to previous reports I had created solo or as part of a team.
From the start of the project, I knew a key component would be a “map” or infographic containing a step-by-step path to purchase the software. If you read this and are running a similar project, whether using secondary research, conducting interviews in-house, or outsourcing the research, having a visual buying process is a critical output to include in the scope. Once completed, it can guide the whole team in making decisions during product development. I’d also like to think this would ideally be printed out and stuck on a wall in the office and/or virtually displayed on a prominent SharePoint or Team Channel team members will regularly view.
In this project, I created an initial sketch based on previous experience and updated it, adding product-specific details throughout the interviews to create a six-step process. Key stakeholders were identified at each stage, along with their needs, and what the client could do to address them. We also understood where hospitals in this Geography were spending money digitally, what they assessed financially, metrics that would need to be addressed in marketing materials and sales conversations, and how a solution would be installed and implemented.
One of the critical points from the calls was the need for an additive novel solution like this to show a clear return on investment (ROI), given hospitals’ many cost pressures that could be put forward to “more essential” equipment or software. This piece of triangulated knowledge created an explicit requirement in the development plan, which the company could generate a workstream to establish how the software would demonstrate an ROI. Contrast this with a hypothetical situation in which a company has spent years developing a working solution ready for adoption but can’t give a value for this metric to budget holders in a hospital or other setting!
Other essential pieces of information included a high-level outline of how a tool like this could be reimbursed, several possible payment models that could be employed, and pricing for a few analogous bits of software the respondents were familiar with. These were helpful for the client, who took them away to discuss internally as part of ongoing product development.
The report was finished and presented, and along with the answers and topics discussed above, a series of logical and clear next steps were given, including recommendations on questions for future research. The client was extremely satisfied with the project and found the findings and report useful. When I followed up later, they continued to develop and prepare prototypes, referring back to the research to help.
Wrap Up
This article has hopefully given you a good understanding of how conducting research early can be valuable to guide development and understanding of product market fit.
If you’re developing a novel piece of technology or drug but haven’t thought about how to get it to those who need it, you should take a step back to address it. Even if you’re looking to execute a transaction with a big med tech or pharma company, you’ll stand a better chance of licensing your product or being acquired if you have established a clear path to market that they can review as part of due diligence.
If you’re a smaller start-up, you might be concerned that you do not have the expertise to complete a project like this or that it may be too expensive to bring in external help. I’m available for advisory discussions with start-ups to help find an appropriate solution. This project wasn’t costly and would undoubtedly be something an early-stage biotech or med tech could afford following a seed/early-stage funding round or grant.
If this is a topic you’d like to discuss in more detail and get advice on, get in touch at sv@sivan-consulting.com or contact me here on LinkedIn.