Medical Sales Moneyball?
Source: Wikimedia Commons and Victor Grigas This game of medical product sales is not fair and the deck, in terms of hospital access or reimbursement rules, is often stacked against the individual rep.
Moneyball: The Art of Winning an Unfair Game is the book by Michael Lewis published in 2003, which described a style of managing a pennant winning Major League team in spite of having to play in a very small market and with the league deck stacked against it.
Could Moneyball’s lessons apply to the art and practice of selling medical products? This current era of medical product sales is characterized by PODS, rising hospital restrictions, new reimbursement schedules and shrinking budgets. How can a sales organization adapt to such a resource limited world?
Moneyball used the example of the small market team—the money-poor 2002 Oakland A’s—to illustrate how an analytical, evidence-based, metric approach could create a pennant winning team despite such limitations. The film based on the book starring Brad Pitt was released in 2011.
The central premise of the book was that the collected wisdom of baseball’s insiders (players, managers, coaches, and scouts) was subjective and often more wrong than right. Statistics such as stolen bases, runs batted in and batting average were outdated measurements of a player’s value to his team.
So Bill James and other data obsessed fans created an entire new set of statistics—such as on-base percentage and slugging percentage—to measure offensive output or defensive success. In the case of the 2002 Oakland A’s baseball team, these new metrics uncovered some overlooked players and exposed the weaknesses of traditionally valued player qualities like speed or contact.
The book also touched on the politics of baseball including: insiders vs. outsiders (traditionalists vs. upstart geek proponents of sabremetrics); the democratization of data which in turn caused the flattening of hierarchies; and the “ruthless drive for efficiency that capitalism demands.”
From SABREmetrics to SOSPRmetrics
Sabremetrics is the acronym which stands for Society for American Baseball Research. SOSPRmetrics is the acronym which stands for Society for Orthopedic Sales Professional Research. There is no SOSPR, but if it did exist, what metrics would it track? Here are some of our ideas which mirror the types of statistics developed by one of the pioneers of SABREmetrics, Bill James.
SOSPR STAT | Meaning | SABRE STAT | Meaning |
PrS | Product sales is an estimate of the number of units a sales team “should” have placed in the OR given their component sales call statistics as well as the number of total products (implants, instruments, adjunct biologics) they or a competing sales person has available to place/allow in the OR | BsR | Base runs is an estimate of the number of runs a team “should” have scored given their component offensive statistics as well as the number of runs a hitter/pitcher creates/allows. |
OASC | Order average on sales calls (OASC) is how many existing products are ordered by existing customers, or how many competitor product try outs are ordered by existing customers, excluding contractual purchase obligations. | BABIP | Batting average on balls in play (BABIP) is how many batter’s balls in play go for hits, or how many balls in play against a pitcher go for hits, excluding homeruns. |
DACP | Defense against competitor’s products measures a sales person’s effectiveness at keeping a competitor’s products out of the OR. One of the most important skills a sales person possesses is knowledge of the competitor’s products. | DIPS | Defense-independent pitching statistics measure a pitcher’s effectiveness based only on plays that do not involve fielders: home runs allowed, strikeouts, hit batters, walks and fly ball percentage. |
LQPS | Late quarter pressure situations (LQPS) is any sales in the last two weeks of a quarter when the quota for that quarter is off by 10% or more | LIPS | Late-inning pressure situations (LIPS) is “any at-bat in the seventh inning or later, with the batter’s team trailing by three runs or less (or four runs if the bases were loaded).” |
PE | PE estimates how many orders a sales team “should” have won based on the number of sales calls, emails, training sessions and other quality contacts. | PE | Pythagorean expectations (PE) estimate how many games a baseball team “should” have won based on the number of runs they scored and allowed. |
NERD | Narration, Exposition, Responsiveness, Description (NERD). This is a quantitative measure of the expected effectiveness of a sales person’s pitching skills. It measures the standard deviation from the mean of a sales person’s DACP statistic, try-out percentage, overall sales call order percentage and the differential between a sales person’s earned order average and PrS. | NERD | Narration, Exposition, Reflection, Description (NERD) is a quantitative measure of the expected attractiveness of a pitcher or a team’s pitching. It measures the standard deviation from the mean of a pitcher’s DIPS statistics, swinging strike percentage, overall strike percentage and the differential between a pitchers ERA and xFIP. |
DF | Defense Factor (DF) is calculated by dividing the number of incrementally new procedures in a given territory by the number of competitor’s products used in those new procedures. This is also a measure of incremental market share. DF also measures the competition’s new technology in-roads in any territory. | RF | Range Factor (RF) is calculated by dividing putouts and assists by the number of innings or games played at a given defense position. |
SC | Sales Created (SC) is a measure of how many sales resulted from all aspects of the sales process. So, for example, a sales person may have an “average” NERD rating but due to a high repeat order rates and long-term customer loyalty may be the most important sales creator in a company. | RC | Runs Created (RC) is a measure of how many runs a player contributed to the team’s overall number. So, for example, a .270 hitter may seem “average” but due to a combination of walks, base running and extra-base hits may in fact be the most important run contributor on a team. |
VORP/VORSP
Finally, Value Over Replacement Player/Sales Person (VORP/VORSP). In the baseball world this refers to how much a player contributes to his team’s success as compared to a fictitious “replacement player” who is an average fielder and a below average hitter. In the orthopedic sales world this refers to a how much a sales person contributes to his company’s success as compared to a fictitious “replacement sales person” who is an average sales person in terms of activity and has a below average NERD rating.
VORP/VORSP’s usefulness is the fact that it measure contribution at the margin—marginal utility. Other stats tend to compare job performance to an overall average, which is fine. But such company or industry-average comparisons break down when considering a sales person’s total, composite contribution to sales.
Orthopedic product sales is a zero-sum game; in other words, in any given surgical procedure your company’s product is used only if another company’s product is not. Your company wins by doing this more often than your competitors.
It follows, then, that a contribution of any sales helps a company to win market share, no matter how small the contribution. Orthopedic product sales are growing ever more competitive and external factors are becoming greater and greater determinants of sales success or failure. In such an environment, even the “average” sales person is a valued commodity.
Medical Moneyball
The rules of the medical game are changing—in part from legislative action, in part from payer decisions and in part from market developments such as PODS or medical tourism. Is it time for a new framework of rigorous statistical analysis, a new set of metrics that better describe value and contribution of people and products in orthopedics? Is it time to acknowledge that orthopedics is also subject to the “ruthless drive for efficiency that capitalism demands.”?
Probably so and Medical Moneyball just might have some fresh ideas for sales people and sales teams to use in this changing medical product sales world.
