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Rapid technology advances and an uncertain regulatory environment are challenging healthcare supply chain leaders to be more innovative. For buyers and sellers of healthcare equipment, the introduction of new online marketplaces like the OpenMarkets Exchange gives innovators the ability to deploy best practices in new ways.
In this 7-part series, OpenMarkets is pleased to share key negotiation strategies that are directly applicable for stakeholders in the healthcare supply chain. Successfully deploying these best practices with modern technology is an efficient way for both suppliers and providers to improve the way healthcare equipment is bought and sold.
Topic 1: Anchoring Effect
Anchoring is a negotiation strategy based on the psychological phenomenon whereby initial exposure to a number serves as a starting reference point1. Subsequent judgements on price and terms are then influenced by the initial anchor. For example, the price of the first house shown to us by a real estate agent may serve as an anchor and influence perceptions of houses subsequently presented to us (as relatively cheap or expensive).
Research studies show that aggressive ‘low-anchor’ first-offers could floor the final price and thus guarantee better pricing outcomes in various industries2, including healthcare. This can be applied to various aspects of a product: price, features, and even speed of a purchase order.
In the healthcare equipment market, providers should be cognizant of aggressive anchoring by incumbent suppliers. If you are considering the purchase of high-end imaging equipment, suppliers may anchor a high price with the clinical stakeholder before the supply chain team gets involved. To counter this, supply chain teams need a simple, transparent way to get multiple quotes for the clinical stakeholders early in the evaluation process.
In discussions and quantitative surveys with over 300 healthcare supply chain leaders and suppliers, we found that most capital equipment purchasing is between providers and responsive, trusted suppliers3. Less than half of the total equipment spend was deployed after a Supply Chain review of quotes from multiple suppliers4. In these instances, buyers are vulnerable to adverse impacts of anchoring.
Understanding anchoring techniques is a best practice for sellers as well. Healthcare equipment suppliers need to be cognizant of the fact that innovative providers will be more likely to consider multiple suppliers early in an evaluation period. For non-incumbent suppliers, the ability to anchor a low-price or great terms can be your way into a formerly non-competitive opportunity. Even if this does not create an immediate sale, follow up on lost deals can built trust and reveal buyer preferences that may help with future negotiations.
If anchoring is a strategy your team does not fully employ, try the OpenMarkets Exchange to get your next transaction. The ability to receive multiple quotes for equipment needs and connect with multiple supply chain buyers at the touch of a button will streamline your anchoring practices and empower you to get the best value for your dollars.
2 Program on Negotiation at Harvard Law School: PON
3 OpenMarkets Capital Equipment Purchasing Trends, June 21, 2017
4 OpenMarkets Proprietary Data & Analysis