The current global pandemic is disrupting business ecosystems, supply chain systems, industries and consumer behavior. The range and nature of this pandemic’s impact on various industries, entities, and geographies varies in intensity and amplitude. As the world heals from the pandemic, there will be a ‘new normal’ that calls for innovative mechanisms to adapt while mitigating risks.
Disruptions waiting to happen
COVID-19 will have an impact on global economy, with implications for all industry segments, especially healthcare. That’s because this pandemic has some deep undercurrents that can wipe out significant gains and push the global health systems into a long-lasting crisis. It has not only put the pharma and medtech sectors under pressure, it has also put massive influence on other regular activities and procedures in the healthcare sector.
For instance, let’s consider the case of elective surgeries. An elective surgery is a procedure that is planned well in advance, rather than performed in an emergency. These procedures can include, but are not limited to, cancer surgery, neurosurgery, orthopedic procedures, pediatric surgery, vascular surgery, etc. With the drastic rise of COVID-19 cases in the US, the US Surgeon General Jerome Adams, earlier this year, requested hospitals and healthcare systems to consider stopping elective procedures. In the light of the current situation, this is an appropriate action, however, the cascading impact of reduction in electives on the overall health, and the potential impact on the industry, can be staggering.
According to a 2011 study titled ‘Characteristics of Operating Room Procedures in U.S. Hospitals, 2011’, 29% of US hospitalizations account for all surgical interventions, which also constitute approximately 48% of the total hospital costs. According to another report, 'How consumers pay for elective medical procedures, 2019', around 63 million electives are performed in the US annually, which accounts for approximately 10% of America’s healthcare economy, around $171 billion. Considering that in countries such as China and Italy, the elective surgeries have plummeted by 85% to 90% in February and March, the impact of reduced electives on the US healthcare industry, and on the healthcare industries in other countries, could be damaging.
There are two main reasons why this pandemic could adversely impact the healthcare economy in various countries:
- The pandemic has changed the healthcare supply chain landscape
COVID-19 has completely changed the landscape of the healthcare supply chain. With the fall in the demand of products related to orthopedics, general surgery apparatus, etc., manufacturers and suppliers of medical equipment are facing an urgent rise in demand for products needed to fight the pandemic, and are under pressure for creating flexible capacity to supply the urgently needed equipment. However, post-pandemic, the deferred demand of various products may also cause shortage. . Companies will have to be very analytical and calculatedly prepared to deal with unprecedented fluctuations. As a response to the pandemic, the European Commission has identified the need to defer the application of certain provisions of MDR (Medical Device ) by a year. This will result in the slowing down of EU-MDR initiatives. The shutting down of manufacturing plants and the stressed supply chain systems will have an impact on the healthcare sector at large. Furthermore, the delays caused by this might add to the financial stress on healthcare providers by affecting their participation in payment models sponsored by Medicare and other payers. There could be a potential snowball effect.
- Preference for remote patient care, and the right technology solutions
Patients in need of ongoing treatments or consultations would want to avoid visiting hospital premises. This may cause a rise in demand of home-based solutions, creating a pressure on medtech organizations to bring to market technology solutions that address the changing needs of the market. Other areas like clinical trials, test laboratory equipment can also pose demand for new technologies to deal with the requirements post pandemic.
Hence, not just one but all aspects of the industry are currently on the verge of a massive disruption, waiting to shuffle up the entire landscape, perhaps with a far greater effect than that inflicted by COVID-19.
Moving forward with resilience
In these pandemic times, tenacity gives new thrust to business growth. The medical devices industry is a resilient one. As we come to terms with the pandemic, we see the following changes reshape the medical devices industry:
- There will be sharper focus to develop stable local supply chains, explore alternatives to multi-sourcing materials and products from different geographies. There will be demand for accelerated onboarding of potential suppliers and adoption of newer regulations to help reduce any supply chain instability. This will drive significant avenues for adopting newer technologies to digitalize the process and workflows of the supply chain.
- There will be an increase in rapid testing protocols and at-home testing, which might pave the way for newer ways to deliver point of care diagnostics closer to the consumer. There will be a massive demand for sharing information across stakeholders of health systems, and this will drive deeper emphasis on data protection and cybersecurity.
- Furthermore, companies will look at measures that focus on reducing the finished good inventory, improving logistics, and partnering with suppliers to share the risks and burden. To mitigate the use of hospital real estate for electives, the industry will explore a shift toward a new normal of expanding into ambulatory service centers (ASCs), which can create new revenue streams and business models.
- To manage and create a care continuum, already established protocols for remote patient monitoring will reach higher adoption along with technology that can couple telemedicine and other virtual platforms. These shifts in engagement models of the health systems will drive demand for next-gen technology services. The industry will drive the growth momentum and create more opportunities for manufacturing and employment.
Resilience is what defines the healthcare and it will continue to hold us in good stead in these trying times. The medical devices industry is tackling the ultimate challenge, however, committing to the situation is the only way to strengthen businesses for the future.