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Special report: Linking the health care supply chain

by Carol Ko, Staff Writer | December 18, 2013
From the December 2013 issue of HealthCare Business News magazine

But as firms go global in search of bigger profit margins, the challenges pile up, too. Entrance into these markets requires specialized knowledge of the regulatory ins and outs of each country. With these complications, companies that formerly managed their own supply chains have an increased need to hire third party companies whose core expertise is logistics.

It makes sense, then, that big shipping companies would step in to help fill in the void, since they already have a global logistics infrastructure that allows them to build relationships with these firms.

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By partnering with a third party company, firms looking to penetrate international markets can do so without incurring the massive cost of building a global presence from scratch.

“You’re doing it with less risk,” says Hooker.

Not that there isn’t something in it for parcel companies, too — the global economic slowdown has resulted in stagnant business from consumers, who tend to opt for slower, less costly shipping methods in a financial crunch. Meanwhile, clients in the health care logistics business are still willing to pay a premium for more specialized, niche services, resulting in better margins.

No place like home
Health care logistics is also becoming more complicated due to the rise of home health, which the U.S. Department of Labor projects to be one of the fastest growing industries in the country. Demand for home health services is driven by aging baby boomers and the advent of novel technologies that allow patients to be safely monitored outside the hospital.

According to Transparency Market Research, Inc., the current home health care market accounts for approximately $196 billion in revenue, and that number is expected to climb to about $305 billion by 2018.

But this major shift in point of care means that the health care supply chain will increasingly involve deliveries from the hospital to the patient’s home.

Recognizing that home health is the way of the future, health care logistics firm Cardinal Health announced this September that it acquired AssuraMed, which specializes in patient home delivery.

The big shipping players in particular seek to leverage their retail delivery expertise to meet this new demand. For example, FedEx has time-specific delivery appointments.

“It fits perfectly into patient care because in so many cases, many of those deliveries need to be done late in the afternoon or early evening,” says Carl Asmus, vice president of supply chain solutions and market development at FedEx.

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