Ambassadors wanted.
If you’ve got some mileage in Experience sells.
Greg Altfest founded his company – Direct Medical
Equipment – with years of experience behind him. He
began his medical sales career selling laparoscopic
instruments and equipment for a Blink…and lose your company. You run a successful medical distribution business. But in one day, you could lose one of your major lines and with it, your entire business. Don’t fall victim to that trap. Rubber hits the road in Akron. Forget the Rubber City. Now Akron, Ohio – once the tire capital of the world – wants to be a mecca for medical products innovation. Golf-carting picks up speed. Now, for the first time, golf carts and off-road racing – together. A recent article in The Wall Street Journal takes the covers off the wild world of souped-up golf carts. Your customers are changing. How about you? Don’t you wonder what your customers are going to look like, talk like and act like 10 years from now? Perhaps you should, because your new customers might not “get” the sales pitch that you’ve been accustomed to using for years.
If you’ve got some mileage in the business, some successes as well as scars, you have a lot to offer newcomers to IMDA. So sign up to be an IMDA Ambassador to newcomers at the upcoming Annual Conference in Coeur d’Alene, Idaho. Being an Ambassador is actually pretty light duty, says Conference Chairman Tom Birmingham of Bay State Anesthesia. Volunteers will be assigned to a newcomer prior to the Conference, and will be asked to touch base with that person throughout the Conference, beginning with the Sunday evening cocktail reception. “This is a way to get new people engaged,” says Birmingham. Ambassadors will also be asked to follow up with the newcomer after the Conference, to find out what value he or she derived from it, and to explore how IMDA can benefit him or her on an ongoing basis. You can sign up to be an Ambassador when you receive your Conference registration materials, which will arrive at your desk shortly. Sessions shaping up
Watch your e-mail for the complete Conference brochure and registration form. Or call headquarters at (866) IMDA-YES (866-463-2937).
Greg Altfest founded his company – Direct Medical Equipment – with years of experience behind him. He began his medical sales career selling laparoscopic instruments and equipment for a distributor. Then he worked as a sales rep and regional sales manager for a manufacturer of pneumatic compression products, specialty support surfaces and other products. In 1996, he figured he would leverage that experience and start a company of his own. In fact, he continues to leverage that experience – and more – today. “Our advantage in the market are the four sales reps in my group with a combined 50 years experience selling to major specialties,” says Altfest. “Relationships are paramount to the continued success of any rep organization.” Located in Deer Park, N.Y., on Long Island, Direct Medical is just about 30 miles from Manhattan. “It’s a strategic location,” says Altfest. The company focuses on OR sales and service, equipment rental, wound care and med/surg. Direct Medical conducts most of its business as a rep firm, and the remaining half as a distributor and as a provider of rental and repair services. The company will distribute on a national or local level if the fit is correct. “We’re flexible,” says Altfest. “We will work with manufacturers to determine what the best fit is for any defined geography.” In addition to rental and repair, Direct Medical provides a variety of other services, including national consulting and debt recovery for the hospital market. It has a national accounts department, which focuses on selling products to integrated delivery networks and group purchasing organizations in several areas of the country, including Florida and California. Altfest adds that Direct Medical also does national accounts for the foremost online website company dealing with sales of medical equipment and overstocked supplies. Altfest joined IMDA for the learning and networking opportunities, and for assistance finding more opportunities in the industry. He hopes that by being an IMDA member, he can weather some of the storms the industry is facing, especially declining reimbursement for healthcare providers, and continuing consolidation among medical products manufacturers and distributors. Welcome Greg Altfest to IMDA by calling him at (800) 303-2521 or e-mailing him at gregdme@msn.com.
You run a successful medical distribution business. The early years were difficult, as you worried where money for your rent and the interest on your bank loan were coming from. But you fought through it. You learned the business and how to be an entrepreneur. By providing the type of service that larger companies dream of, you developed a loyal following among physicians in your specialty and among hospital decision-makers in your territory. You are successful in your chosen profession. But in one day, you could lose one of your major lines and with it, your entire business. The problem is not that you can’t get comparable products to sell. You can. The problem is not that the line was so profitable that without it, your company cannot exist. You carefully diversified, and the loss of one or two principals cannot pull you down. Instead, the problem is that you blinked when you should have read paragraph 14(d) of your distribution agreement with the manufacturer that just terminated you. That subparagraph, part of an 18-page agreement in small type written in unpronounceable words, stated that for one year after the agreement ends, you may not sell medical devices to any physician or hospital with whom you had dealings while the contract was in existence. Those physicians and hospitals are your entire business. Stay away from customers The company that terminated you -- let’s call it Megamed -- has decided to go direct. Since it first engaged you to be its distributor, it has acquired a dozen medical device manufacturers that compete with lines that you have represented for years. Your company is a dominant factor in the sale of medical devices in your territory. Therefore, to eliminate you as a competitor, Megamed sues you, asking a court to enjoin you from contacting any customers you contacted while you were selling Megamed’s products. The case is going to be expensive to you. It will take a great deal of time away from you and your employees, and it will raise questions in the minds of some of your customers. If a court grants Megamed’s motion for a temporary restraining order and stops you from contacting your customers, your company is out of business for one year. That may be the end of your company. Even if the court does not stop you from contacting your customers about everything, it may well keep you from contacting them regarding products that Megamed manufactures or, if you are lucky, only those products that you sold for Megamed. In any case, you are out substantial amounts of money, both in legal fees and lost sales. The reality is that when a medical distribution company is sued by a manufacturer due to a post-termination non-competition agreement, that manufacturer’s competitors will not sign you on. They are afraid -- and rightly so -- that they could be sued for interfering with your contract with Megamed. So even if a court will not, in the end, enforce a non-competition agreement, you will almost certainly be out of the market for the products that you were selling for that manufacturer for some or all of the period of the non-competition provision. As we all know, the medical distribution business relies on superb service and instant response to the needs of physicians and hospitals. If you are out of the marketplace for any period of time, you will inevitably lose customers to a manufacturer that has gone direct or a distribution company that has a competing line. Non-competes are enforceable There is an unwarranted belief that non-compete provisions are not enforceable. That simply is not true in most states. California is the only state, as of now, that has a law prohibiting the enforcement of non-competition agreements in most cases. Some states have policies that disfavor non-competition agreements, while others have policies that favor them. Either way, such agreements are either usually or sometimes enforced. One danger in non-competition agreements is that if the distributor does compete and a court decides to enforce the non-competition agreement, the length of the agreement may be extended for the time that the distributor continued to compete. A second problem is that although the courts are supposed to hear injunction cases quickly, these cases tend to be dragged out. Therefore, even if you are right and the non-competition agreement is not enforceable, you might not find that out until you are well into the non-compete period or even at the end of it. There is a saying that justice delayed is justice denied; in the case of injunction cases, this is particularly true. Protect yourself How do you protect yourself? First of all, you must read every word of every distribution contract offered to you. You must know whether the contract includes a post-termination non-competition provision. If you can’t stay awake long enough to read an eighteen page document written in legalese, have your attorney do it for you -- and make sure that he or she knows what to look for. You should be aware that non-competition provisions differ from trade-secret provisions, which, while not quite so dangerous, also must be examined carefully. Even so, non-disclosure or trade secret provisions -- which are probably included in almost every agreement you sign -- must also be looked at carefully; they may prevent you from continuing in business after you lose or give up the line. If your agreement has a post-termination non-competition provision, you must decide whether to 1) sign it at all, 2) sign it only if the length of the non-compete is reduced, or 3) try to negotiate the circumstances under which the non-compete comes into effect. It seems to me that a manufacturer would have to offer an extraordinarily strong long-term contract producing enormous profits for the distributor to justify the distributor signing any non-competition provision that begins at the end of the relationship or -- if it is a particularly valuable principal -- for more than two or three months. Our firm has successfully negotiated provisions that if the distribution contract is not renewed, is terminated without cause, or if the principal is bought out, the post-termination non-compete will not come into effect. We have also been able to negotiate provisions that call for the manufacturer to pay the distributor substantial sums of money if it wishes to enforce the non-competition agreement. I am not generally in favor of agreeing to accept money for post-termination non-competition, since it will keep you out of the marketplace. The long-term effects of the inability to sell a type of product are incalculable. A distribution agreement with a key principal may be the most valuable document you will ever sign. It amazes me that many distributors will spend less time focusing on such agreements than they do negotiating the purchase of their automobile. When you are dealing with a potential business partner, I strongly urge you not to blink. Mitchell Kramer is IMDA’s general counsel.
Forget the Rubber City. Now Akron, Ohio – once the tire capital of the world – wants to be a mecca for medical products innovation. Akron General Medical Center recently launched a Technology Transfer, Commercialization and Innovation Office, a venture that will allow the hospital to partner with start-up companies hoping to bring new medical products to market, according to an article in the Akron Beacon Journal (“Innovation at Akron General,” Jan. 25, 2007). The medical center plans to provide entrepreneurs with office space, advice from practicing doctors, and access to research facilities and equipment. In return, Akron General will either collect fees for these services or receive an equity stake in the ventures being developed. “Our intent is to create new partnerships that complement the on-going research at Akron General’s Kenneth Calhoun Research Lab and together develop new products or devices that improve patient’s lives,” said Robert E. Anthony, who is heading the Office. Already, progress is being made in two areas: testing algorithms for pathogen identification, and developing wound-healing products. Bandwagon Akron General is not the only entity in the northeastern Ohio city to promote biotechnology and medical development. In January, the city established a biomedical corridor to encourage investments in medical developments near Downtown hospitals. Five years ago, Summa Health System, a large, Akron-based healthcare system, created a center for innovation called the Summa Enterprise Group. The enterprise has formed several companies, including Cornerstone Medical Services, a business specializing in durable medical equipment. In November 2004, Summa Enterprise Group joined the BioEnterprise Initiative, a Cleveland entity designed to provide management counsel and support services to bioscience companies. Since July 2002, the BioEnterprise Initiative has achieved the following results:
Now, for the first time, golf carts and off-road racing – together. A recent article in The Wall Street Journal takes the covers off the wild world of souped-up golf carts. (“Wanna Drag? Now Golf Carts Are in the Race,” March 6, 2007.)
Golf-cart drag racing is attracting quite a
following, with events being Used golf carts cost about $2,000, or about a fourth
the cost of an all-terrain vehicle, according to the
newspaper account. Upgrades can The most popular golf carts for extreme makeovers are said to be manufactured by Club Car and E-Z-GO. These companies typically lease carts to golf course for three to five years, then sell them into the aftermarket. Retirement communities are big buyers of the used carts. But that could be changing, as golf-carting picks up speed. A magazine for golf carters, CartWheelin’, grew from 48 to 96 pages last year. (Visit www.cartwheelin.com.) It offers articles on golf cart events and tips on how to toughen up your cart, as well as ads for companies with retrofit kits, according to the newspaper account. For further reading, visit www.cartaholics.com or www.buggiesunlimited.com.
If it’s true that…
…then don’t you wonder what your customers are going to look like, talk like and act like 10 years from now? Perhaps you should, because your new customers might not “get” the sales pitch that you’ve been accustomed to using for years. That’s the advice of the authors of Selling Outside Your Culture Zone: A Guide for Sales Success in Today’s Cross-Cultural Marketplace” by Earl Honeycutt, professor of business administration at Elon University, N.C.; and Lew Kurtzman, president of Growth Resource Associates. Click here to read a review of the book in the March 2007 issue of Repertoire Magazine.
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