We deliver fresh insights about your customers and competitors so that you can make key decisions more confidently. Because of our firm’s deep understanding of the entire healthcare ecosystem, we can protect you from being blindsided by disruptive changes in reimbursement or technology. We can also help anticipate your customers’ future pain points which may present new service opportunities.
In service segments confused by competitors’ brazen claims, we cut through the noise to identify your organization’s true core competencies. We then work with your team to explore and prioritize new lucrative growth vectors where you can apply these competencies successfully and/or leverage information technology to enhance care and/or eliminate labor-intensive processes.
With a keen focus on customers’ unmet needs, we consider a wide range of business models that might help you extend your capabilities to establish stronger customer relationships with greater staying power. Examples include going-at-risk contracting, leveraging HIT to reduce labor content, and selling data created as a by-product of the main business.
Here are some of the ways our Service Businesses team is helping clients drive business value:
Paula Ness Speers: “Most successful healthcare service businesses are led by executives extremely focused on operations. This strength can become a company’s Achilles heel if the executives lose track of threats from indirect competitors. For example, one recent project identified a technology threat whereby the client’s infusion business was at risk of cannibalization by a new oral med in late-stage development.”
Andrew Funderburk: “The pharmacy landscape is undergoing a period of rapid change with the explosive growth of specialty drugs. We’re seeing both consolidation among the biggest players in the industry and numerous niche competitors successfully addressing challenging, high-need segments. With our perspective across drug manufacturers, pharmacies, physicians and consumers, we’re uniquely equipped to help our clients succeed.”
Mark Speers: “Outsourcing, particularly of the supply chain, continues to grow as many OEMs realize their true core competencies are in sales and marketing. Suppliers focused on subsets of the development process and/or manufacturing process and/or supply chain logistics can attain scale and expertise well beyond any OEM’s potential. These companies are also attractive to private equity investors, as they benefit from the growth of healthcare without being vulnerable to the first-order effects of decreases in reimbursement.”
The term “distributor” sometimes includes logistics providers skilled at warehousing and order fulfillment. Other times, the term refers to contracted sales reps able to detail manufacturers’ products to key decision makers. As society becomes accustomed to Amazon-like service levels and salesforces become cost-prohibitive for companies with small product lines, the economic role for distributors increases. We have helped distributors focusing on particular end markets (e.g., EMS, physician offices, homecare) and/or narrow product lines (e.g., anesthesia, fine surgical instruments) grow rapidly by confidently and deliberately moving into logical adjacencies.
Once limited to therapies requiring significant compounding and customization and/or 24:7 resources for patients, specialty pharmacies have migrated into many therapy areas solely due to their high prices. This domain is far less defendable as PPMs are inclined to vertically integrate into pharmacy to control costs. We can help specialty pharmacies determine which new categories represent wise moves vs. short-lived forays.
Physician practice management (PPM) companies were the rage in the late 1990s with the likes of Phycor soaring in the public markets. The PPMs were subsequently battered as MCOs reduced physicians’ rates and the absence of corporate practice of medicine case law led to convoluted management structures. We believe PPMs are now poised for profitable growth, particularly when they can attain strong regional market share and negotiate more favorably with payers. We believe other providers like reference labs and ASCs can also grow profitably by thoughtfully focusing on subsets of their markets.
Biopharmaceutical companies recognize that their key skills are typically in the areas of R&D and sales & marketing. As a result, they are increasingly relying on outsourcing many other functions from manufacturing and packaging to managing clinical trials to monitoring adverse events. This outsourcing trend is accelerating the growth of many niche providers who are now gaining economies of scale not attainable by any one customer. As these vendor-biopharma relationships are “sticky,” we can forecast the service providers’ likely growth based on their client lists.
Similar to the biopharma industry, the medtech industry OEMs are also realizing that their main skill is in the area of sales & marketing. While most had historically performed manufacturing – or at least final assembly and inspection – internally out of paranoia to ensure quality, they now realize that many of the vendors have attained higher levels of competency and lower cost positions by aggregating the parts of multiple OEMs. But, the contract manufacturing organizations are also consolidating rapidly as OEMs prefer fewer vendors. The key decision is, then, whether to be a consolidator of general manufacturing processes or double down on a narrow process and defend your turf as a specialist.
View our service businesses case examples.
“I find Health Advances refreshingly easy to work with and pragmatic among consulting firms I have tried. Ever since we first worked together on our Corporate Strategy in 2009, Health Advances has been my go-to firm for seasoned business judgment backed by objective facts.”
Sheela Hegde
Mark Speers
Paula Ness Speers