Complex regulations, increasing risks and continuing cost pressures are among the key factors that prevent healthcare executives from moving quickly to seize untapped industry opportunities, according to the results of a new survey. Globally, healthcare executives are planning for strategic partnerships and technology investment to mitigate risks and capitalize on growth opportunities.
The most significant factors contributing to uncertainty in the healthcare supply chain are more stringent regulations and increased product protection challenges, say the respondents in the seventh annual UPS “Pain in the (Supply) Chain” survey. For the third consecutive year, regulatory compliance is the top supply chain pain point, cited by 60 percent of respondents. That comes as no surprise since senior logistics executives polled at the ninth annual UPS Healthcare Forum last June reported an extremely low rate of success in addressing the challenge of regulatory compliance. Only 12 percent of those respondents reported they were satisfied with their companies’ performance in this area.
Secondly, concern about in-transit protection grows as products become more complex, often requiring temperature-sensitive transportation. As products travel further to new markets, the number of hand-offs increases, and supply chain visibility becomes even more important. With those concerns in mind, it’s no wonder product protection is seen as a key challenge. Indeed, 46 percent of the respondents cited product security as a top challenge, and 40 percent of the executives cited product damage and spoilage as a top concern.
I was interested to see that when it comes to growth and expansion, entering new markets is seen as a key strategy by the healthcare executives participating in the survey. For example, during the past 18 months, 65 percent of the respondents say their companies have entered new global markets to expand their customer base as a means to drive new revenue growth. Looking ahead, 78 percent of the respondents say their companies will expand to enter new global markets over the next three to five years. Interestingly, these responses closely match 2011 survey data, when 81 percent of executives reported they plan to expand to new global markets over the next few years.
Despite progress in addressing numerous industry challenges, there also are still a number of untapped opportunities for healthcare companies. One of these areas is to leverage new distribution channels and models to meet changing customer demands as e-commerce, urbanization and home healthcare grow. Over the past two years, 70 percent or more of those companies surveyed both years have indicated that they plan to increase their usage of new distribution channels, yet over this same time period, their channel mix remains nearly identical. This demonstrates that while the intention to take advantage of untapped opportunities is apparent, actual change is slow, the UPS report notes.
Finally, it will be interesting to see how the rise of home healthcare will have an impact on the industry. Globally, 21 percent of the survey respondents cite the shift to home healthcare as a key trend driving business and supply chain changes. Respondents report that 30 percent of their companies’ products will support the home healthcare channel in the next seven to 10 years.
In some respects, forming key partnerships, investing in new technology and entering new global markets are key strategies in any industry. What are your thoughts on the particular challenges in the healthcare industry?