The Healthcare Roller Coaster Part 1
White Paper: The Rise and Fall of Other Industries Foretells The Coming Transformation
There’s no doubt that sweeping change in the healthcare industry is coming—and coming fast. It’s clearly visible to manufacturers, distributors, providers and consumers as well. From our supply chain industry vantage point, we have an objective and candid opinion as to why this change is unavoidable. We propose that the healthcare industry is nearly 20 years behind other major industries in facing the factors that will shape its vertex and subsequently, its vortex—poised at the very top of the hill that precedes the slope of incredible change for the industry.
In this first white paper, we’ll take an in-depth look at the factors driving this change toward regression of the healthcare industry. We’ll draw parallels with other industries that went through similar decline to expose a pattern of predictable outcomes.
Then, in parts two and three, we address in detail, the various elements of most importance to each business segment of the industry—the manufacturers, the distributors and the providers. We’ll offer prescriptive (and proven) supply chain solutions, based on our experience with global healthcare companies like yours to successfully navigate the complex changes ahead.
We can’t prevent that first big drop or bumps and turns along the way; however we can apply what we’ve learned in our many years of supply chain experience to soften the landing and help the healthcare industry turn uncertain change into positive transformation.
We believe in the idea that history often repeats itself so we decided to assess the future of the healthcare industry through a historical lens aimed at the rise and fall of the U.S. automotive and steel industries. Our hypothesis is that healthcare will follow similar paths but at a faster pace. Making matters worse is the relationship between the timing of the decline and the degree of the slope. Once underway, the ability to effect any real change to lessen or slow the slope, quickly declines.
The Automotive and Steel Industries Cast a “Foreshadow”
There are well documented factors that drove the sweeping change in both of these industries:
– Lack of focus on shifting market demands and competition – Labor union contracts and commitments
– Volatility of oil prices
– Aging plant and manufacturing assets
Ford, Chrysler and General Motors enjoyed a booming auto market —one with seemingly endless expansion potential—for almost a century, until fuel prices skyrocketed in the 1970s due to the oil embargo. At this same time, the “Big Three” manufacturers arrogantly ignored consumer demand for greater innovation. High fuel prices inspired innovation in fuel efficiency, with one effective solutions being smaller vehicles.