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Industry Trends

Industry Focus—Health Care

Industry Focus—Health Care

Many are looking to the supply chain for solutions to the health care industry’s challenges, including rising health care costs and dropping hospital profit margins.

* By Sandy Smith *

Sometime in early 2020, Obamacare will turn 10. But that does not mean anyone is finished talking about health care—or health care reform.

In recent months, there have been plenty of conversations around drug pricing, with heart-tugging stories of people with diabetes cutting back on insulin due to skyrocketing prices or life-saving EpiPens being in short supply for the same reason. Other drugs have had shortages or significant increases, too.

It’s becoming clear that the topic will be a key issue in the 2020 presidential campaign, ranging from those who propose Medicare for all to President Trump’s promise of a plan that will deliver “truly great health care that will work for America.”

According to the McKinsey Center for U.S. Health System Reform’s February report, The Productivity Imperative for Healthcare Delivery in the United States, there is plenty of reason that the topic is still on the front burner:

There is little doubt that the trajectory of health care spending in the United States is worrisome and perhaps unsustainable,” the report’s authors write. “Underlying this spending is the complex system used to deliver health care services to patients. Given that the U.S. currently expends 18 percent of its gross domestic product on health care, this system might be expected to deliver high-quality, affordable, and convenient patient care—yet it often fails to achieve that goal.”

No surprise then, that pharmaceutical companies, medical suppliers and equipment makers all are feeling the pinch.

Jay Kim, chief strategy officer of augmented reality software firm Upskill, hears it from customers in the health care sector. “Some of the insights are business as usual, such as price pressure and the need to maintain a healthy margin with their products and services,” he said. “Emerging needs involve addressing a talent shortage across their supply chain and manufacturing operations, especially with the baby boomers beginning to retire with much of the tribal knowledge that has not been captured and shared. For those in the capital equipment business, there is an opportunity to leverage augmented reality (AR) to unlock new business models, such as equipment as a service usage and/or subscription-based pricing—particularly by lowering maintenance costs and increasing uptime. We find that material handling with AR is a critical function of enabling many of these activities.”

It seems that everyone has some idea of how to solve at least part of the health care challenge. Amazon has taken a multi-pronged approach: it is selling supplies and equipment to clinics and hospitals; its web services arm, AWS, is aiming its services at the space. Even Alexa is getting into it. Livongo Health Sciences debuted a program that will use Alexa to provide blood glucose readings and health tips for patients with diabetes.

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This issue of MHI Solutions focuses on sustainability and its progression in the supply chain. Consumers are becoming more interested in making environmentally friendly decisions when it comes to their buying habits and the brands to which they are loyal. Studies have found anywhere from 80-85% of consumers are more likely to buy from a company with a reputation for sustainability than from a neutral company, if their prices are equal.

Leading firms are tapping into this mindset by building more sustainability, and transparency, into their supply chains. They know that more sustainable operations will drive long-term brand loyalty and competitive advantage while having bottom line impacts on efficiency and profitability.

This issue of MHI Solutions will help provide you with the information and resources you need to address sustainability across your supply chain to improve your overall business performance.

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