2019 medical ancillary outlook…the end of the middleman!

Economists have been warning about the negative effects that “rent-seeking” has on an economy. Rent-seeking describes any activity in a system that extracts resources without adding any value.

If you work in the medical ancillary sector, you are probably very familiar with this activity.

The medical ancillary sector is loaded with rent-seekers, aka “brokers”, “distributor groups”, “rep groups”, or the more apt title of “middleman”.

What rent-seekers have in common is that they do not adding any value to the transaction, but instead take a healthy portion of the commission, while slowing down communication and introducing unneeded risk to the medical sales rep. Often, the only currency these rent-seekers have is that they are able to find a vendor before the actual sales rep.

This has created a climate of distrust and inefficiencies. To say this is a common practice is an understatement. I have spoken with hundreds of medical sales professionals who possess the talent, drive, and connections to make them successful who end up leaving this sector disillusioned after contracting under a rent-seeker.

I’ve also spoken with countless rent-seekers. Few of them possess any experience, expertise, or resources to make the sales rep successful. In fact, many of the rent-seekers that I’ve come across could not make a sale to a doctor if their life depended on it. They are usually aware of this fact, so they shift their focus into finding other people to do the work for them and extract some of the commissions for themselves.

While the free flow of information through technology has put an end to rent-seeking activities in other sectors, it still proliferates in the medical ancillary sector. However, this will soon come to an end.

2019 will see a vertical integration, with many of these rent-seekers finding it harder and harder to syphon off the producers.

Here are 3 reasons why

1 – Laboratory is the most profitable sector within the ancillary space. The new EKRA legislation has already forced many labs to change their compensation models. Many labs are going to shy away from paying a middleman who then pay their downstream. There is too much liability for laboratory owners to not have complete control of the agent who is bringing in business.

2- Reps are fed up! Increasingly, medical sales professionals that I speak with have expressed their frustrations working with middlemen and are refusing to continue to do so. This seems to be reaching critical mass.

3 – Much like Uber and Lyft have made it easy to avoid the taxi companies by connecting drivers and riders, new technologies are making it possible for professionals in this sector to contract directly with vendors and get the resources they need to be successful, avoiding these rent-seekers all together.

If you are tired of working with rent-seekers, visit everyancillary.com. There you will have the ability to add a full suite of medical ancillaries to your sales portfolio, in a format that allows you to present multiple ancillary options in a single catalog….with DIRECT CONTRACTS to vendors, cutting out the useless middlemen.