Growing influence of procurement officers over purchasing decisions in management-led healthcare organizations leaves physicians increasingly dissatisfied; less than one-third would recommend their organization to others


New report from Bain & Company finds that winning in this environment requires medtech and pharma companies to be category leaders that can successfully address both clinical and economic goals

New York – June 5, 2015 – U.S. healthcare delivery is fundamentally changing as physicians increasingly move to management-led organizations – a shift that is at once accelerating the adoption of clinical and management tools (e.g., standard treatment protocols, electronic medical records and performance metrics), giving procurement officers growing influence over purchasing decisions, and providing physicians the increased sustainability they seek.  However, as detailed in a new report, Frontline of Healthcare, Bain & Company found that physicians in these management-led organizations are less satisfied and less aligned with their employers.  The report, which includes results from a survey of more than 600 U.S. physicians across specialties and 100 hospital procurement administrators, finds that about one-quarter of physicians working in management-led organizations are likely to recommend their organization to someone else as a place to work or receive care, compared to more than 40 percent in physician-led organizations.  Bain's research suggests that these growing management-led organizations must create better alignment in their organizations, especially between physicians and procurement departments that must learn to balance between clinical and economic priorities. Medtech and pharma companies that can successfully address these dual objectives are best positioned when it comes to customer loyalty and advocacy.

Management-led healthcare organizations are struggling with how to best balance administrative and physician input on decision-making about devices, tools and drugs that should be used in patient care, rather than exclusively on treatment and outcomes:    

  • The Net Promoter Scoresm (NPS©), a ratio that precisely measures customer loyalty by comparing a company's promoters to its detractors, for physicians who feel engaged in decision-making is 70 points higher than for those who do not.
  • The percentage of physicians reporting a personal responsibility to control costs has more than doubled from a decade ago (38 percent to more than 80 percent)
  • Just 20 percent of surgeons said they strongly agree or agree that they have complete discretion over decisions about purchases of medical devices
  • Physicians feel their discretion over drug prescriptions is diminishing:  65 percent say formularies limit their prescribing decisions; slightly more than half feel formularies limit their ability to provide quality care
  • Surgeons and procurement officers overwhelmingly agree that quality and clinical evidence are the most importance purchasing criteria, but they differ on the importance of price:  Just slightly more than half of surgeons believe lowest price should be an important criterion, compared with nearly three-quarters of procurement officers.

"It's important to acknowledge that many management-led organizations are leading the charge in transforming the care model when it comes to use of treatment teams, electronic medical records and treatment protocols.   Doctors often join these organizations for career stability, but those benefits can come at the expense of their autonomy," said Tim van Biesen, who leads Bain's Healthcare Practice in the Americas and co-authored the report.  "The trade-off is that physicians have more stakeholders influencing care protocols, compared to physician-led environments."

Macro trends – increased cost pressure, increasing government oversight, rapid technological innovation – are driving further changes in healthcare delivery.  One critical outcome has been the systemization of care, with individual practices ceding to institutional delivery mechanisms that promote collective decision-making about the right course of action for a patient.  Bain's report quantifies some of the changes in physician practice, and observes regional differences across the country, with a focus on the distinct market characteristics of Massachusetts compared to Mississippi and Alabama.  As expected, the pace of change is faster in Massachusetts because of more competition among payers and provider organizations, a regulatory environment that promotes change, and an increasing presence and influence of clinical and financial performance metrics:

  • Payers are putting more pressure on physicians and their organizations to implement risk-based payment models, such as bundled payments, shared savings and models that put providers fully at risk for cost of care.  Bain found that 69 percent of physicians in management-led organizations report using at least one form of risk-based payment, compared to only 55 percent in physician-led organizations. In Mississippi and Alabama, physicians are 20 percent less likely than those in Massachusetts to report that their organization uses risk-based payment models.
  • Physicians report that, in the last two years, their use of electronic medical records has nearly tripled and use of treatment protocols has more than doubled.  Regionally, the use of electronic records and protocols is higher by 28 percent and 11 percent, respectively, in Massachusetts than in Mississippi and Alabama. 

This shift in decision-making power has implications for where and how physicians and surgeons obtain information about new products.  While sales representatives have traditionally been a highly valued source of information, Bain finds their role is diminishing in a number of specialties.  Only 41 percent of physicians surveyed identify sales reps as one of their top three sources of information about a new drug, compared with 56 percent three years ago.  Instead, they increasingly rely on manufacturer websites, academic journals, and conferences. Surgeons' utilization of sales reps as a primary source of information for medical devices and tools also decreased 25 percent.  There are regional variations in this trend.  Of surgeons in Alabama and Mississippi, 69 percent still rate sales reps as one of their top sources of information, compared with only 31 percent in Massachusetts.

As systemized care spreads, procurement-driven consolidation of preferred vendors will increase and squeeze out niche players.  Winning in this environment requires pharma and medtech players to build a category leader position. Bain defines category leadership as "companies with clear depth in the largest categories in which they operate rather than breadth across multiple categories without clear leadership positions."

"It's getting harder to succeed as a ‘me too' player in healthcare," said Josh Weisbrod, a partner in Bain's Healthcare Practice and the report's co-author.  "The winners will be the pharma and medtech companies that have a deep understanding of the competitive landscape and can develop flexible models that solve for the different ways that physicians and procurement officers approach purchasing decisions."

To arrange an interview with the authors contact:  Dan Pinkney at or +1 646 562 8102

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