Scott Carson, Founder and CEO of MRP.io04.20.22
The creation of digital marketplaces for medical equipment has proven to be a far more complicated undertaking than most observers predicted.
But the long, sometimes-frustrating, process is beginning to pay dividends. Digital marketplaces — the online exchanges where clinicians, manufacturers and distributors buy and sell both new and pre-owned equipment — now are posting rapid growth and winning larger market share.
MRP.io, the online marketplace that I founded seven years ago to specialize in new and pre-owned devices for aesthetics practices, has realized 100 percent annual revenue growth for several years, profitable and cash flow positive. We’ve invoiced more than 20,000 transactions for items ranging in price from hundreds of thousands of dollars to as little as $5.
MRP.io certainly is not alone in the move to digitally connecting to customers in healthcare pharma and med surg as the best players in other niches of the sector are moving to less sales reps and more digital spend.
First, the effects of generational change: It’s no secret that purchasing decisions by medical practices have long tended to be conservative. Purchasers have leaned toward the safe choice, even if they knew in their hearts that the safe choice wasn’t necessarily the optimal choice. That careful, conservative approach has been reflected, too, in the relatively slow adoption of online-purchasing tools in the medical-equipment sector.
That’s changing rapidly, however, as a new generation of executives moves into key decision-making positions. The new generation of now digital natives (grew up with smartphones and tablets versus adopting the tech) is highly comfortable with digital marketplaces. In fact, digital natives fully expect the efficiencies, both in time and money, that online marketplaces provide.
Even more important than generational change has been the development of the complex network of infrastructure that enables buyers and sellers to confidently undertake transactions on digital marketplaces. Users need more than just a meeting place and a mechanism for payment.
Digital marketplaces in the medical sector need to support the de-installation of equipment, inspection and refurbishment, specialized transportation across the nation or around the world, reinstallation of equipment at its new location, training services, certification…the list goes on and on. The development of a full suite of trust-enablers, services provided by digital marketplaces themselves and those provided by skilled contractors, has been necessary to create a solid foundation for growth.
The future course of rulemaking, however, may depend on how regulators continue to think about the role of digital marketplaces. If, for instance, they see online marketplaces simply as places where buyers and sellers make connections, the likelihood of more regulation is small. Back when most transactions could be characterized as “Spray and Pray” — spray some glass cleaner on the used equipment and pray that it worked when it arrived at the buyer — that made sense. But regulators’ interest may perk up if they believe that the increasingly sophisticated services provided by marketplaces means that they are in fact distributors of medical equipment.
Complicating matters for regulators has been the advent of peer-to-peer reviews on online marketplaces and elsewhere. Drawing on the capabilities of Web 3.0 technologies, they provide transparency that’s lacking in the traditional environment in which most of the information that a clinician receives about medical equipment comes from a sales rep. The new environment also opens the door for all sorts of direct communication between clinicians and individual patients about medical products. Only time will tell how this plays out.
In the meantime, the combination of growth in the medical marketplaces sector and the highly fragmented nature of the business is beginning to stir some mergers and acquisitions talk. For instance, my company, MRP.io, so far has focused entirely on the aesthetics segment of the business, which we’ve found attractive because it’s largely recession-proof, relies on cash rather than insurance payments and is driven by the emotional buying patterns. Our tight focus on a narrowly defined niche is common across marketplaces.
Although we’ve met the heavy need for investment from our own resources since the inception of MRP.io, we decided a few months ago to strengthen our balance sheet through revenue-based financing from Decathlon Capital Partners. We’ll repay the financing through future revenues, and we weren’t required to give up any equity or ownership in exchange for growth capital. Importantly, our stronger balance sheet improves our negotiating position if we someday decide to bring in additional equity partners to finance our accelerating growth.
Other creators of digital marketplaces for medical providers are facing similar questions. The sector already demands substantial investment to ensure that users have trust and confidence in marketplace platforms. Those demands are increasing many-fold as the sector’s growth builds momentum, and some executives are taking a pencil to the possible efficiencies that might be available through mergers, acquisitions, or other business combinations.
Scott Carson, a leader in healthcare marketing and business development for more than three decades, is founder and chief executive officer of MRP.io.
But the long, sometimes-frustrating, process is beginning to pay dividends. Digital marketplaces — the online exchanges where clinicians, manufacturers and distributors buy and sell both new and pre-owned equipment — now are posting rapid growth and winning larger market share.
MRP.io, the online marketplace that I founded seven years ago to specialize in new and pre-owned devices for aesthetics practices, has realized 100 percent annual revenue growth for several years, profitable and cash flow positive. We’ve invoiced more than 20,000 transactions for items ranging in price from hundreds of thousands of dollars to as little as $5.
MRP.io certainly is not alone in the move to digitally connecting to customers in healthcare pharma and med surg as the best players in other niches of the sector are moving to less sales reps and more digital spend.
Key Factors in the Growth of Digital Marketplaces
Two elements — the generational transition underway in the medical industry and the development of a “trust-enabling” infrastructure — have proven key to the growth of marketplaces.First, the effects of generational change: It’s no secret that purchasing decisions by medical practices have long tended to be conservative. Purchasers have leaned toward the safe choice, even if they knew in their hearts that the safe choice wasn’t necessarily the optimal choice. That careful, conservative approach has been reflected, too, in the relatively slow adoption of online-purchasing tools in the medical-equipment sector.
That’s changing rapidly, however, as a new generation of executives moves into key decision-making positions. The new generation of now digital natives (grew up with smartphones and tablets versus adopting the tech) is highly comfortable with digital marketplaces. In fact, digital natives fully expect the efficiencies, both in time and money, that online marketplaces provide.
Even more important than generational change has been the development of the complex network of infrastructure that enables buyers and sellers to confidently undertake transactions on digital marketplaces. Users need more than just a meeting place and a mechanism for payment.
Digital marketplaces in the medical sector need to support the de-installation of equipment, inspection and refurbishment, specialized transportation across the nation or around the world, reinstallation of equipment at its new location, training services, certification…the list goes on and on. The development of a full suite of trust-enablers, services provided by digital marketplaces themselves and those provided by skilled contractors, has been necessary to create a solid foundation for growth.
Regulations
Digital marketplaces have had the freedom to find their own way as federal regulators have generally taken a hands-off approach to their development. The industry recognizes that sales and marketing costs often account for 25 to 50 percent of the final selling price of medical equipment that’s distributed through traditional sales channels. Elimination of those expenses allows manufacturers to invest more in engineering and the development of innovative new products. Regulators see, too, that the efficiencies of digital marketplaces create significant opportunities for medical cost-control.The future course of rulemaking, however, may depend on how regulators continue to think about the role of digital marketplaces. If, for instance, they see online marketplaces simply as places where buyers and sellers make connections, the likelihood of more regulation is small. Back when most transactions could be characterized as “Spray and Pray” — spray some glass cleaner on the used equipment and pray that it worked when it arrived at the buyer — that made sense. But regulators’ interest may perk up if they believe that the increasingly sophisticated services provided by marketplaces means that they are in fact distributors of medical equipment.
Complicating matters for regulators has been the advent of peer-to-peer reviews on online marketplaces and elsewhere. Drawing on the capabilities of Web 3.0 technologies, they provide transparency that’s lacking in the traditional environment in which most of the information that a clinician receives about medical equipment comes from a sales rep. The new environment also opens the door for all sorts of direct communication between clinicians and individual patients about medical products. Only time will tell how this plays out.
In the meantime, the combination of growth in the medical marketplaces sector and the highly fragmented nature of the business is beginning to stir some mergers and acquisitions talk. For instance, my company, MRP.io, so far has focused entirely on the aesthetics segment of the business, which we’ve found attractive because it’s largely recession-proof, relies on cash rather than insurance payments and is driven by the emotional buying patterns. Our tight focus on a narrowly defined niche is common across marketplaces.
Investments and Financing
But the development of trust in a digital marketplace requires continual investment. We’ve assembled a team of highly skilled technicians who process more than 100 pre-owned energy-based device systems per month at our headquarters at Park City, Utah. We continue to make significant investments to ensure our team provides knowledgeable expertise to our customers. We also launched “MedEquipTech,” a service that links our customers with professional services ranging from trainers to engineers to parts suppliers.Although we’ve met the heavy need for investment from our own resources since the inception of MRP.io, we decided a few months ago to strengthen our balance sheet through revenue-based financing from Decathlon Capital Partners. We’ll repay the financing through future revenues, and we weren’t required to give up any equity or ownership in exchange for growth capital. Importantly, our stronger balance sheet improves our negotiating position if we someday decide to bring in additional equity partners to finance our accelerating growth.
Other creators of digital marketplaces for medical providers are facing similar questions. The sector already demands substantial investment to ensure that users have trust and confidence in marketplace platforms. Those demands are increasing many-fold as the sector’s growth builds momentum, and some executives are taking a pencil to the possible efficiencies that might be available through mergers, acquisitions, or other business combinations.
Conclusion
The challenges that accompany rapid growth, of course, are hardly the worst problems that can face a business. Online marketplaces for medical equipment demonstrated creative, nimble problem-solving as they grew into an important new sector. They’re certain to rise with equal creativity and skills to the new challenges presented by success.Scott Carson, a leader in healthcare marketing and business development for more than three decades, is founder and chief executive officer of MRP.io.