The time has come to take a chance

The time has come to take a chance

Now that government has made it official and the new reimbursement rate for Medicare patients are known it’s beginning to dawn on the folks in glucose monitoring that this market is in some serious trouble. The real question is where these people and what were they doing for the past few years as the BGM was transforming into a full blown commodity style market where price is the only thing that matters. Well Diabetic Investor knows exactly where they were and what they were thinking, they were busy developing new fancy whiz bang technology and pretending that this new technology would magically change market dynamics.

All of sudden these people are realizing that it’s next to impossible to make a profit when the reimbursement rate is less than $11 for a box of 50 test strips. A fact that seems to surprise some even though costs have been cut to the bone and further cost cutting measures are coming. Yep, instead of trying something new and/or different nearly every glucose monitoring company is going with the same old, same old. Honestly one just might think that when a strategy isn’t working and hasn’t worked for years that it just might be time to try something different. That when margins are shrinking, usage is declining and competition increasing for each and every patient plus the very existence of the business is at stake that someone, anyone would stand up and take notice.

Now one could argue that there is nothing that can be done so why even try. Well for all of these geniuses Diabetic Investor has one thing to say; Apple. That’s right Apple the company that makes the way cool and very successful iPhone was once on the verge of extinction. Back in the day Microsoft, a company now struggling, was the king of the hill and owned the market for computer software. At the time even the most devout Apple users wondered whether the company would survive. Yet thanks to some very out of the box thinking, innovative design and great marketing, Apple not only survived but became the most valuable and envied company on the planet.

What’s needed now is some bold action, something truly new, and its needed yesterday. Someone  somewhere has to tell the people who run these companies that while time is not on their side there is still time if they act now. Diabetic Investor does not expect an Apple like turnaround, but whoever is bold enough to make a move now could end up in the catbird seat as everyone fumbles about. The fact is the market for BGM remains a huge market and can be profitable, albeit less so than in the past, for any company that can develop a strategy that allows them to survive while the competition goes under.

The time has come for everyone to realize that the days of having three or four major players in the market are long gone. However, just as Coke and Pepsi co-exist quite nicely, a case can made that one or two companies can co-exist in the BGM market with each making a solid return on investment. A scenario which is even more likely now as many of these, who should have sold years ago, will have no other choice but to sell. Yet, buying the competition is just the first step as getting bigger does not solve everything.

Even when bigger, companies must find a way to convince their installed user base to use more of the products they sell. New products are part of this strategy but should not be the cornerstone of the strategy. Diabetic Investor has said it before and we’ll say it again because it is true, educating users is the most successful tool to increase strip usage. All the whiz bang fancy technology in the world isn’t effective if patients don’t know what to do with the readings this whiz bang fancy technology provides. Something that is true even with insulin using patients who must have this information so they can properly dose their insulin. The simple fact is patients would test more regularly if they could manage their diabetes more effectively. To Diabetic Investor this means not just providing education but also coaching. This is the true promise of interconnected diabetes management, which when combined with education is the most promising strategy to increase testing frequency.

Any company that dares to think out of the box, who begins to reward their users, who provides easy to use educational tools has the chance not just to survive but to prosper. The question is; is there any company out there who has the gumption to take a chance. Yes we know there are risks involved but given where things are today the bigger risk is to do nothing, as that’s the surest path to extinction. Any company willing to take this chance might just be rewarded or as Thomas Fuller noted; “A wise man turns Chance into good Fortune.”