In addition, there was a moral imperative to deliver those products and save lives. That meant higher prices, making it easier to justify unusually high costs for freight and raw materials. On the other hand, demand for personal protective equipment far exceeded supply for much of 2020 and into 2021. The decline in elective procedures meant that manufacturers and distributors simply had fewer products to produce and ship, reducing the impact of rising prices. (Data: Peterson Center on Healthcare and Kaiser Family Foundation) Overall health care spending dropped in 2020 - the first time that’s happened in decades - largely because many health care providers reduced or canceled elective procedures. … Until that stabilizes itself, I think we’re going to continue to see inflation.”Įxecutives cited polypropylene prices, ocean shipping rates and container shortages as some of the biggest supply chain hurdles last quarter.īackground: Freight and raw materials costs have been a concern for the health care supply chain throughout the pandemic, but most companies were more focused on utilization trends, the amount of health care patients were seeking. “There’s not enough supply based on the V-shaped recovery. … And then logistics cost has continued to be a pretty strong headwind,” 3M CFO Monish Patolawala said on a conference call. “What we have seen is a broad-based increase in all commodities. (BD), Cardinal Health, Owens and Minor, and AmerisourceBergen all called out the increasing cost of freight, logistics and raw materials as a big hurdle for the remainder of 2021. In recent earnings calls, leaders from 3M, Becton, Dickinson and Co. The story: The high price of freight and raw materials continues to be a major problem for a number of companies in the health care supply chain. This is an excerpt from Medically Necessary, a health care supply chain newsletter.
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