Intuitive Surgical: Selling $2m da Vinci Robots

Disclaimer: This interview is for informational purposes only and should not be relied upon as a basis for investment decisions. In Practise is an independent publisher and all opinions expressed by guests are solely their own opinions and do not reflect the opinion of In Practise.

Joahn, can you please start with a brief introduction to your background and role at Intuitive?

I’m Joahn Ginsburg and I started as a sales person at Intuitive Surgical. Before that, my background was in sales at another medical device company. I started out as an area sales manager and within that role, you have a geographic terrain and you are responsible for getting robots into hospitals, however you need to do it. A number of people worked for me and with me, but I was in charge of making sure we sold those robots. I did that for a number of years, had great success and it was a lot of fun. Then I got promoted up the chain and, eventually, was the sales director of the West Coast, where I had sales managers working for me.

How does the team split between the capital sales team and the clinical sales team?

You can definitely delineate between the two sales forces. The capital sales team, area sales managers and then the clinical sales team, clinical sales managers, clinical sales reps. The capital sales team, called the area sales managers, are responsible for selling capital equipment. They go to hospitals and sell the actual surgical robots and they are also responsible for upgrading the current systems. They start new programs and then they upgrade systems at current programs. They work very closely with the clinical sales team because, once a robot is installed, the clinical sales team are responsible for making sure that that robot gets utilized. Their job is to get the surgeons, in the hospital, and teach them how to use it, get them on the system, visit their offices. They may say, hey, I see you have a patient coming up Friday; let’s try that on the robot. They are also responsible for introducing new surgical disposable equipment. They are really the boots on the ground, once the system is installed.

So clinical salespeople are actually working at the hospital and you are managing the territory?

Yes. Usually, the area sales manager has a couple of hundred miles of geographic terrain and then the clinical sales managers, the clinical sales reps, have a smaller area; maybe four or five hospitals and sometimes 10, depending on the rep. They are responsible for that smaller area and making sure they utilize the robot. They are also support in case there is a doctor that says, I have a big case coming up Friday and would love you in the room to show me your thoughts on a certain technology. Sometimes they are just supporting cases, as well. But really, their role is to grow that current system and to utilize that current robot as much as possible.

Don’t other companies have similar roles and sales people on the ground in the hospital, almost directly competing to use their equipment for certain procedures?

The answer is yes. The best way to look at it is to think that there are many people trying to get a surgeon to utilize their equipment. The clinical sales reps for Intuitive are trying to get them to do it on the robot and they are trying to remind them, hey, when you do your cases on the robot, it’s a shorter hospital stay, you can see better, you can visualize better. This patient on Friday looks like a tough case so let’s try the new, single-port trocar, for example. At the same time, there are other reps, such as Stryker, who do minimally invasive surgery, such as laparoscopic surgery. They might be in the surgeon’s ear saying, we have single port now. You don’t have to use a robot. You can use our single-port technology because it is minimally invasive, as well. You’ve been doing laparoscopic surgery for 20 years; let’s just keep it simple and do this laparoscopic case on my equipment.

Sometimes, you even have two or three reps in the room, for different equipment. For example, the surgeon might say, I want to use the robot, but I want to try the Infravision technology from Stryker. I’m going to do it on the robot, but both of you come into the room. You, Stryker rep, show me how to use your Infravision in here, as well. There is always competition in that room and there is always competition in the territory which is why, for Intuitive, it’s so important to put clinical sales reps in those accounts, so they always have their finger on the pulse and they are keeping the surgeon interested in their technology, as well as getting new surgeons to use the technology.

Becoming best friends with the surgeons is important?

It really is. It’s so interesting to see, even since I’ve been in the industry, how it’s changed over time. When I first started, as a Stryker rep, I played so much golf and I went to dinners. It used to be a lot more about pal, buds. In a very good way and, in some ways, a challenging way – it depends on what kind of rep you are – it’s become a little bit less of that because of regulation and you can’t gift surgeons anything anymore. It’s really more about the clinical value and saying, I’m going to be in this case because I’m going to provide you clinical value, not because we’re buds and we play golf on Sunday and let’s keep chatting about what we did last week. It has shifted, even in the last 10 years, from one sales method to another. If you’re a good sales rep, you can shift with it, but it’s a little bit more clinical than it was before.

Just before we dive into the sales process, how segment the customer between the IDNs or direct to hospital?

If you are a sales person, trying to sell a robot in a geographic area, in terms of the difference between a large IDN, like a Kaiser or a Sutter and the hospitals in that chain, and a small community hospital, there is some difference, but the way you sell a robot is very similar.

If I had to boil it down, I would say how you sell a robot is that you get a surgeon in the hospital to believe they cannot do any sort of technology other than the robot, to treat their patients well and you do that with a surgeon that is very important to that hospital. If you do that one thing, get a really important surgeon, where the hospital cannot afford to lose them and you convince them that they need this technology, that’s how you sell a robot. If you look at the second part of that where the hospital says, shoot, we’ve got to buy this because we don’t want to lose this surgeon, if you are working with an IDN or a larger facility, what that means is that you have a longer process. Even if the local hospital says, let’s buy it, but now we have to go through our IDN process, it takes a lot longer than if you’ve got a community hospital that says, okay, we need it for the surgeon; let’s do it now.

So it always starts at the surgeon and the actual buying process requires the institution?

Yes. Really, the difference is, for a larger network IDN, it just takes longer and there is more process. But if you do the fundamental thing and convince a surgeon that the hospital cannot afford to lose, that they have to use the technology then you’ve got a deal; it’s just a matter of how long it takes. Very rarely, at the top level of an IDN, a Sutter or Kaiser, do they say, we’ve decided we’re going to negotiate 20 robots and pay. Then hospital X, over in Modesto, we’re going to give you one next month. It doesn’t happen very often; it usually has to come from the hospital.

Effectively, for the IDN, it always starts at the surgeon and maybe you are dealing with the CEO of the community hospital that actually makes the buying decision but for the IDN, it’s more the C-suite of the IDN?

Yes. Wherever they are headquartered, that is where they are, ultimately, signing the deal. But if you’ve sold that surgeon, at that local hospital enough, then they will sign the deal and it’s just a matter of time. Sometimes you have to wait a little bit and they will do a bulk purchase. But if you’ve got that local surgeon that matters to that hospital saying, I need a robot and you can either do it here or I go to another hospital, then you’ve got yourself a deal.

Can we walk through the sales pitch, from start to finish? Let’s say you’re the sales rep and you’re pitching to this new hospital you want to get into, how do you get into that surgeon? What is the process?