In the past few years, pharmaceutical distributor Cardinal Health (NYSE:CAH) has acquired a major distributor and half a dozen pharmaceutical companies in China. It also acquired AssuraMed to enter the home-health supply market, and invested in startups including HealthSpot, which makes a telemedicine kiosk, and Intralign, which helps providers optimize the cost and quality of surgical care.
Those moves were all part of a clearly defined strategy to meet the changing healthcare marketplace. John Rademacher, president of ambulatory care at Cardinal Health, told BioOhio members at the trade group’s annual event on Tuesday that the company’s investment and acquisition strategy is driven by these 12 healthcare industry trends:
- A growing population of sick and aging Americans. “We’re going to have both an increase in demand as well as stress on the system.”
- Accelerated shift away from small molecule drugs toward biologics. “This has substantial impact on the way the distribution channel works and the supply chain.”
- Care moving away from acute facilities to lower-cost, more efficient models.
- Upstream and downstream consolidation and business model evolution. “When we looked at integrated delivery networks — whether it’s buying physician practices, buying the reference lab, buying the different aspects of home health agencies — across the country we’re seeing a lot of different models emerging.”
- Information transparency. “Not only electronic medical records, but really getting deep into data analytics and informatics to drive better care and better outcomes.”
- Regulatory changes. “Whether it is the FDA or the government in the ACA, those are having an impact on how care is being delivered and where investment dollars are being spent.”
- Considerably faster growth of healthcare spending outside of the U.S. “China (is) one of the largest. Brazil (is also) an area where there’s a substantial amount of growth.”
- Waning trust in the healthcare system. “There are things we need to do, not only as an industry but in all of our organizations, around increasing trust in healthcare in the way that the dollars are spent and, more importantly, in delivering exceptional outcomes.”
- Cost focus expanding from price to utilization. “The shift is moving from, what’s the price per unit, to more looking at driving or constraining utilization.”
- Consumers are increasingly knowledgeable and involved in healthcare. “As we see through consumer-driven health plans and consumers taking a bigger portion of their own risk with their wallet, knowledge is increasing as well as increased pressure and questioning around utilization of tests and services.”
- Increased focus on coordination of care. “Moving more from just the four walls of the hospital to following that patient on a longitudinal basis — post-discharge and ultimately into the home.”
- Technology advancement and adoption. “We’re seeing finally that the adoption of technology continues to move as long as it’s helping to drive a more efficient and a better outcome and helping to reduce costs.”
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“We continue to look for innovations around logistics and supply chain, but we’re also investing substantially into informatics, spend analytics as well as inventory management, to help identify and reduce costs and waste,” he said. “We understand that we need to continue to evolve our business model and look for ways to innovate around our customers.”
