7 Reasons New Medical Device Companies Should Outsource Field Service

Posted by Clark Love on Mar 13, 2019 1:57:25 PM

outsourcing medical device field serviceBringing a new medical device to the market is a Herculean task. It requires all of the standard start up work such as determining product market fit, product design, manufacturing and production, marketing message, and much more. In addition to these, since it is a medical device it requires layers and layers of FDA approval, which is akin to hiking up a mountain carrying an 800-pound backpack.

Once a startup medical device company gets beyond its FDA approval, it must determine how to best sell and deploy its medical device into the field. This requires much more than just hiring sales reps. Such companies have to figure out how to get their device installed, have customer staff members trained on how to use it, and service it once it is in place. All of this equates to complicated logistics and scaling difficulties.

Most founders and startup leaders think they have to vertically integrate and hire field service staff directly. However, this can be a huge strain on capital, resources, and focus. Founders also often think that they will simply have their sales reps do the field service and in-service work. However, this is typically a major mistake because sales reps need to be selling rather than doing field service and education work. The last thing a startup needs to do is sacrifice an important client sales pitch because a sales rep is installing a device and trying to train users. Furthermore, sales reps are often not good at such things as training and field service support, and this can lead to a poor customer experience.

One viable option is to outsource some or all of the field service and in-service work to a third-party vendor. My company, Brighter Health Network (BHN) provides such a solution to start up medical device companies. We have a national team of skilled nurses that are able to perform in-service in field service work and also perform nurse educator functions and train staff on how to use medical devices of any type.

If you are a founder or part of senior management at a start-up medical device company, below are a few reasons you might want to consider outsourcing your field service and in-service work to a third-party.   


  1. Speed to Scale Up– For any start-up, speed is critical. Speed means getting to profitability and sales quicker. It also equates to beating the competition to market.    When you compare the two alternatives of staffing up your own field service team versus outsourcing field service, outsourcing is almost always much quicker. The process of interviewing and hiring quality staff can take many months. In addition, if you are trying to hire and train staff all across the country this can take even longer. However, with a third-party in-service support firm, you can get access to quality people at a national scale in just a few weeks. This can drastically speed your time-to-market and revenue recognition.


  1. Variable Cost Structure– Leaders of a startup company are often faced with the critical decision between incurring additional fixed costs or variable costs in order to scale. I have personally founded and run several startups, and fixed costs are always the most difficult to manage.Fixed costs place a much higher burden on the company’s cash position, and once the money is spent on fixed costs, management is largely locked into the decision and commitment, which reduces your options down the road.  If you consider the topic of field service and staffing up for field service support, agreeing to staff up your own field service team is equivalent to adding a significant fixed cost. Some academics might argue personnel is a variable cost. However, in reality and in the time frame of a startup, it is a fixed cost because it takes so long to staff up and train.  With a third-party vendor providing field service, it is entirely a variable cost because you only pay for the onsite time that you actually use, which is ideal for a startup looking to conserve cash.


  1. Better Customer Service due to Speed and Lower Wait Times- Startup medical device companies typically have two options for field service. They can staff up their own field service team, or they can outsource their field service to. a third-party. If they choose to do it all internally then they usually start with a small team of a few people. Inevitably this team cannot service the entire nation and wait times can become very problematic.  For example, if 40 orders from 30 different locations come through in the first month after product launch, a small team is going to be hard pressed to get these all serviced. Conversely, a third-party field service provider with the national team already in place could service them with no problems at all and with minimal wait times. The reduced wait times can drastically improve the customer experience and enhance referrals for new business.


  1. Conserving Cash– We all know the old adage “cash is king.” However, this is incredibly critical for all startups. Hiring a field service or nurse educator team directly can be extremely costly and use a tremendous amount of cash. I have personally witnessed a medical device startup hire a team of field service staff, train them, and have them sit there doing nothing while they waited on product delays. This cost the company well over $1 million. Conversely, if you were to outsource field service you really don’t have any significant cost until staff is deployed to customer locations. This is a huge advantage.  At BHN we don’t charge any type of retainer or other fees unless we are actually on-site. We do this because we know how important cash is to startups. We have walked in your shoes.


  1. Maintain Control Over Customer Experience– When you first read “maintain control over customer experience” you might think this is contradictory. You’re probably thinking you would need to hire your own field service staff and nurse educators to be able to do this. However, what I see in the market is startups will tend to sell and service directly through distributors, and distributors typically don’t give the company much control over the field service encounters. They also don’t provide much feedback either. However, with a third-party field service vendor you have significant control over the field service encounters, and you can contractually mandate that feedback from the encounters comes directly to you in the form of surveys and in-service write-ups.


  1. More Responsive to Market Changes- Medical device markets are not immune to drastic and quick changes. I have personally witnessed drastic changes come about because of competition and new product offerings, changes in reimbursement rates, changes in FDA rulings, and product liability lawsuits.  A recent example that comes to mind is a group of CPT codes that were cut by 50% by CMS in one year. This change caught many companies off guard.  In this example, everyone’s headcount had to be adjusted quickly to compensate for this change. If you’re using a third-party vendor for your field service, you should only be paying for the days or hours staff is on site, so you are shielded from such drastic changes. Said a different way, if you need to scale up or scale back quickly, you have this flexibility.     


  1. Improved Focus– Focus is a core principle for most successful startups. If founders and management are distracted trying to do too many things, they won’t get the critical things done. Trying to do everything in-house is an example of trying to do too much, which will lead to being unfocused. A startup has to rely on good service providers to accomplish certain things. I would argue that attaining product market fit, generating sales leads, closing sales leads, increasing market awareness, and raising capital should be the core focus of any startup medical device company. In the beginning, almost everything else should be outsourced in order to maintain focus on these items. Performing installations, training customers, providing after sale support are great items to outsource in order to increase focus on the critical list above.   In the famous words of Bruce Lee, “The successful warrior is the average man, with laser-like focus.”  As the quote indicates, laser-like focus on the most important things is the path to success. 

I hope this short list of reasons to think about out sourcing field service was beneficial to you.  If you would like to talk to us about our field service options or get more information on our field service options, please click the button below. 

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