Serving the New LTC Marketplace

Afew months ago a familiar old name in long-term care products returned to the marketplace after a 10-year absence. Joerns, a Wisconsin-based family firm that had been a nursing home “household name” since the turn of the 20th century, was back after having been subsumed by the clinical product firm Sunrise Medical. At the announcement ceremony, company President/CEO Mark Ludwig said the company aimed to resume the mantle of “hardworking, market-sensitive, and customer-responsive” worn all those years by Joerns. Except that this isn't your grandfather's, or even your father's, long-term care marketplace anymore. Profound changes in reimbursement and the growth of nursing home alternatives are working their way through the system and creating a much more diverse, demanding set of customers. Moreover, technological progress is occurring in many product lines—Joerns Healthcare is involved in beds, furnishings, resident lifts/repositioning equipment, and wound care products—but product improvement is often confounded by providers' worries over ever-tightening margins. Finally, the new market is being shaped by an unprecedented openness by American business to global involvement, long-term care manufacturing being no exception. Because the information surrounding the Joerns announcement seemed to have such broad implications for the long-term care industry's product and services sector, Nursing Homes/Long Term Care Management Editor-in-Chief Richard L. Peck asked Ludwig to discuss his business strategy and philosophy in a recent interview.

Peck: First of all, what sort of background do you bring to the long-term care market?

Ludwig: I spent 16 years with Sunrise Medical, most of them focused on the home care channel, so I'm relatively new to long-term care and I am continuing to learn. But, I think my work with Sunrise and the 10 years I spent with EDS focusing on significant process improvement will help me bring some new ideas to this industry.

Peck: Before we get into that would you comment on your company's name change? What was the thinking behind that?

Ludwig: The name Joerns, of course, has a strong heritage in this market, and that heritage captures who we are today as a company: family-oriented and hard-working, with a solid tradition of caring. In the post-acute care market, it establishes us as a company that provides not only products, but services and, above all, solutions.

Peck: How do you define your market today?

Ludwig: The post-acute market is expanding. There is a great deal of pressure these days to reduce costs in the higher-acuity setting and move patients along as quickly as clinically possible, and this leads us into an entire continuum of services at the post-acute level, including bed systems, no-lift policies, fall prevention, and wound management.

Peck: You did note, at the name-change announcement, that you are moving Joerns to a more complete service delivery model. Is this what you were alluding to?

Ludwig: There are two primary dimensions to our business strategy. One is a focus on achieving product superiority, and we can discuss that in a moment, and the other is on providing unparalleled service aimed at giving customers the solutions they need. That could involve staff education, clinical consultation, on-site training, and even immediate solutions to specific operational problems. For example, if a provider needs bariatric services for a month, we can help with that. If there is an issue with a chronic wound, we want to be able to be there with product for immediate assistance. Our company has representatives located near almost all the major Metropolitan Statistical Areas, and they are geared to respond with very short lead times.

Peck: That sort of deep involvement with customers is a new approach to medical product marketing, isn't it?

Ludwig: I would say that companies like Hill-Rom and KCI do an outstanding job at this in the acute care market, but I'm not sure this is done much in the post-acute market as yet. We are trying to emerge as the clear leader in this, helping people reduce costs not only of products but of operations. We're prepared to help providers address such issues as managing staff shortages, workers' compensation costs, and professional liability.

Peck: One problem this market faces is trying to afford product upgrades with some very tight margins. How are you addressing that?

Ludwig: It can be a struggle when the focus is on immediate product cost rather than long-term process cost. It's tough to develop the kinds of products the industry needs with this short-term emphasis. I think our challenge is to develop enough speed to get out ahead of the product cost argument and talk about value. In fact, speed is one of our core values. It will allow us to move ahead in product innovation.

Peck: Would you give an example of the approach you're talking about?

Ludwig: One would be to develop bed systems and patient handling as an integrated system, so that providers can efficiently develop an individualized resident care program that can be readily monitored and measured, letting them know how well their program is working and giving families peace of mind. Once the provider can see and demonstrate how well these products work together to achieve high-quality, cost-effective care, the “immediate cost” argument starts to weaken.

Peck: Shifting gears a bit, another new component to post-acute marketing that you brought up at the session was the global market. You mentioned that Joerns Healthcare is or will be involved in several other countries' healthcare systems. Would you discuss that?

Ludwig: When you're dealing with different healthcare systems, you're dealing with a different set of rules in each system and a different cultural norm for each. We work with specific organizations. We have specific commercial organizations—“Sales, Marketing, etc.”—in each market that focus on specific regulations and compliance. We also make specific iterations of a particular product to accommodate local market priorities. For example, the German market emphasizes product recycling in a big way, and that affects product design and pricing for that market. In the Netherlands, insurance companies provide medical equipment and services directly, so that significantly affects your going-to-market strategies versus other markets. In Great Britain, all oxygen-related services were awarded through a competitive bidding process that, in effect, collapsed the market. Rather than being provided by various pharmacies, almost all oxygen is provided by a single oxygen-producing gas company. That's a big change for all the prior participants in that market.

Peck: What do you view as your most important overall challenge?

Ludwig: A challenge that we all face together in this industry is that we have an escalating population that needs care and has increasing expectations of the quality of that care. At the same time, there is tremendous pressure on funding at all levels. Those dynamics can create a lot of chaos and we need to figure out how to manage that conflict. If we do, we will be a highly successful company; if we don't, someone else will.

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