The Cistek Group Newsletter 200602

The Cistek Report

Healthcare IT Value Seller/Value Proposition Checkup
Increasingly, healthcare institutions are scrutinizing the return on investment of IT solutions. Healthcare IT Sales people who are solely expert at describing and differentiating features and functions are no longer as effective as they used to be. In some cases, when asked to list the benefits of their solution, some salespeople respond with a list of features. This does not help a customer that needs to justify the purchase of a solution internally. Some have internal purchasing processes that include justification criteria in specific formats. Others depend on the healthcare IT vendor to provide a justification suitable for internal use. Financial metrics vary widely from as simple as a list of quantified benefits for physician practices and small clinics, to cost-benefit analysis for large clinics to cash flow analysis and net present value for healthcare enterprises. But numbers are not credible unless they are put in the context of a solution that solves a problem and advances the customer's strategy. To begin the new year, conduct a Healthcare IT Value Selling Checkup by seeing how your organization's practices compare to those of best-in-class. <more>

Healthcare IT Value Pricing Checkup
Based on Cistek's experience working with healthcare IT solution providers, value-based pricing practices are rare. Even new products are frequently priced without solid market research. The most frequently used price setting criteria is competitve-based pricing, i.e. setting the price in close proximity to the competition. Lack of understanding of the value received by the customer and the value provided relative to the competition leads to money being left on the table in some instances and the closing off of some market segments in others. The ability to protect price is limited without a quantified understanding of what is important and valued by the customer. Many shy away from attempting to quantify the value of improved patient care. To begin the new year, conduct a Healthcare IT Value Pricing Checkup by seeing how your organization's practices compare to those of best-in-class. <more>

CISTEK Q&A
Question: What does "KPI" mean and how does it apply to value proposition development?
Answer: A KPI (Key Performance Indicator) is a quantifiable metric reflecting the performance of an organization relative to its goals and objectives. In assisting clients with developing value propositions, The Cistek Group looks at both absolute and relative measures of business performance. For example an absolute measure may be "December 2006 Average Report Turnaround Time: 3 days". A relative measure is with respect to a goal, e.g. "December 2006 Average Report Turnaround Time: 87% of goal". It is important for a healthcare IT supplier to understand both. Otherwise a value proposition might be based on improving KPI's that are already meeting or exceeding goals while the real problem areas might be missed.

KPI's are central to Cistek's value proposition development methodology's benefit identification phase. KPI hierarchies are created and the correct level of KPI's are chosen based upon the appropriate customer perspective. Benefits related to the KPI's are described and quantified. If the customer is taking the time to measure something, then it must be important to them. So, KPI's are key to value proposition development.

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Editor: Amy Boland