What happened?

The latest wound care development is the new Healogics iSupply program, announced this week

Highlights of the initiative include:

  • Special pricing on many/most categories of wound care and related regenerative medicine products.
  • Leverage of outcomes and utilization management data.
  • Quarterly product/supply reporting initiatives.
  • Potential for future evolution based on the Healogics database and economies of scale.
  • Participating brands (not all products from each brand were included): Integra LifeSciences (NASDAQ:IART, up about 5% as of 48 hours since the announcement), BSN Medical, Solsys Medical (TheraSkin), Hydrofera, and a new advanced dressing private label line launched as part of the initiative: Healogics by DermaRite.

Three types of wound care executives

This development caught many in the industry off guard. This is unfortunate, as deepening collaboration with product firms has been openly discussed by Healogics leadership for quite some time now. In fact, it was shared as a corporate strategic initiative for 2018. We have always encouraged product firms to keep a finger on the pulse of wound care management and services trends, not to simply look to what other product firms are doing.

The good news is that for many of our scenario planning and business war gaming strategy clients, the ability to participate in the iSupply selection process–or choose not to–was a conscious one. Executives reading the iSupply press release this week can be grouped into three categories:

Wound Care Product Executive Type 1: Prepared and Active Participants

Those participating went in with confidence about the unique needs of wound care management firms and their healthcare facility partners, more effectively conveying their portfolio’s proposition.

Wound Care Product Executive Type 2: Confident Decliners

On the other hand, strategy, sales, and marketing executives who decided to not participate (or to only explore at the early stages before pulling back), did so with confidence that the costs–both direct and indirect–of such a partnership perhaps would not have best served their stakeholders. Such clients then were able to develop and stress test plans and contingencies from product pipeline, to international expansion, to sales call points, to digital health strategies and of course partnerships with other wound care services providers that they believed would be the best focus for their firms.

Most importantly, both of the above groups who adequately planned and prepared for the iSupply reality are not losing any sleep over the announcement–they either navigated the process and joined the initiative, or moved on with confidence and a clear path forward.

Wound Care Product Executive Type 3: Caught off Guard and Scrambling

Unfortunately, there exists a third group: Executives who neither anticipated nor prepared for the iSupply scenario. This includes those who did not consider the option of a Healogics-branded private label competitor emerging from the process (which is precisely what happened). Such individuals do indeed have cause for concern of how to answer the inevitable grilling that will come from senior leadership and the board of directors (if not already). At least one major US wound care firm has already laid off a significant chunk of its strategy and marketing managers. More casualties may be on the horizon…

 

The stakes were high and on the table…

About ten months ago, as the new Healogics CEO stepped into the role, I published an article entitled, What the Recent Healogics Developments Can Teach Us About the Future of Wound Care. After briefly summarizing the history of Healogics and US wound care overall, I posed a series of questions–from the hypothetical perspective of their management team–including (quoted from the original article):

  • What value can we [Healogics] extract from our wound outcomes data, and to what extent might we share / sell that to others (product firms, payers, regulators, hospitals, SNFs)?

  • To what extent should we be open to partnering with product firms (the product firms are extremely open to that idea), and if so, should that be an R&D/clinical outcomes partnership, a monetization one (they currently monetize just one product: HBOT), or another model?

  • Should we focus on other management firms…product companies, payers, other specialty service companies…mHealth/telemedicine firms, wound care provider firms, or other partners and structures?

  • Would our interests be better served by proactively renegotiating our contracts…or do we focus on driving operational and other efficiencies to better compete within the existing model?

  • Can and should we provide more product selection and formulary streamlining advisory to our hospital partners to potentially offset the expense incurred by us managing their wound center (and if so, should we contract with specific product companies, or keep such an initiative to within the hospital’s decision making system)?

Both before–and especially after–the article was published, there was tremendous interest from several well-known wound care product companies about the merits and drawbacks of participation in specialized group purchasing organization (GPO)s, clinical data/outcomes registries, and how to maneuver the changing wound care landscape to capitalize on opportunities, without placing too many chips on a single bet.

The above questions I floated nearly one year ago are as relevant as ever. They are indeed playing out, not only this week with Healogics and the iSupply brands, but throughout the advanced wound care space. As wound care business models evolve, the dynamics will cascade to other companies and alliances.

 

Be confident in your wound care business decisions

Were you or your colleagues caught off guard from the announcement, or did you have the proper plans and contingencies in place to capitalize on it (regardless of whether you were part of the partnership)?

Are you…

…a product executive tasked with exploring collaboration with services or other product firms?

…a services firm interested in providing a product or technology suite to your stakeholders?

…an investor trying to sort this all out?

Don’t get burned by your next wound care business decision. Tell us your unique wound care business or investment situation. We’ll give you confidence in your path forward.

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