Novation, a leading healthcare supply chain company, provided contracting services to lower cost of supplies and goods used by hospitals. The company offered two levels of service, standard pre-negotiated contracts and custom contracting which was a consulting service where they negotiated on behalf of individual organizations. With their custom contracting services, they found that in approximately 75% of cases, they could get significant savings of between 25%-40%. For the other 25% of the time, the savings was between 10% and 20%, leading to client dissatisfaction.   PDIConsultants was hired to segment the market and understand what drove the difference in savings and client satisfaction. By segmenting the market based on Physician engagement and leadership within the hospital, we were able to develop a second “low touch” custom option that provided the 25% of clients the same 10%-25% cost reduction but at a much lower cost to the client.

Results: Client satisfaction went up across the board, and sales of the portfolio grew by 10%.