Complex Global Regulations Affect Healthcare Supply Chain

June 17, 2010
The top supply chain concern however is managing costs.

The UPS 2010 "Pain in the (Supply) Chain" survey explored healthcare companies' top business and supply chain issues. Not surprisingly, the top business concern remains what the industry considers an escalation of complex regulations around the world. The top supply chain concern is managing costs.

"What we're seeing here is a huge dose of uncertainty about every aspect of their business, inside and outside the United States," said Bill Hook, vice president, global strategy, UPS Healthcare Logistics. "Reform as well as other industry factors are placing unprecedented pressure on healthcare companies and stressing their supply chains. Logistically, healthcare companies will have to re-examine their strategy."

As the top business concern ("increasing regulations") and second largest supply chain concern ("regulatory compliance"), industry regulations are a critical focus area for healthcare companies. In addition to country regulations being named the largest barrier to global expansion, 60% of companies are "very" or "extremely concerned" with regulatory compliance as a supply chain issue.

Fifty-eight percent rank increasing regulations as their top business concern, making this the top overall business concern ahead of such things as intellectual property protection, increasing competition and patent expirations.

For the third year in a row, managing costs tops the list of healthcare companies' supply chain concerns. Sixty-four percent of respondents report being "very" or "extremely concerned" with managing supply chain costs, up from 55% in 2009. At the same time, only 44% of companies report success in addressing cost management.

Withregard to the enactment of healthcare reform, senior U.S. healthcare executives are divided over whether the new environment offers growth possibilities or challenges to the survival of existing business models.

Of the senior supply chain executives surveyed, a third said reform would either open up new markets or create new customers. But 20% doubted the ability of their companies "to afford to operate" in the coming new world; 26% said flatly that reform would hamper their research and development programs, and another 22% said they already had concluded their firms did not have the infrastructure needed to compete in the future.

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