The healthcare system is focused on cost, quality and patient experience. Healthcare distributors play a crucial role in increasing the efficiency and effectiveness of healthcare delivery across a fragmented provider network. Participants in this sector — including drug, specialty and medical supply distributors; group purchasing organizations; supply chain management companies; retail and specialty pharmacies; and pharmaceutical benefit managers — are challenged to develop value-creating strategies by addressing evolving customer needs, identifying new market opportunities, developing forward-thinking business models and providing customers with innovative, pragmatic solutions.
Key questions and challenges
L.E.K. Consulting helps clients address the following questions:
- What are the key distribution and supply chain trends (e.g., centralized vs. decentralized purchasing across locations, GPO usage, transactional relationships with many suppliers vs. deeper relationships with preferred partners), and what is their impact on our business?
- How can we differentiate or develop new service offerings and articulate the value we provide to our various customer segments?
- How will the trend toward accountable and value-based care impact our business and our commercial models, and what are our strategic options?
- What are the impacts of provider consolidation and integration and of manufacturer consolidation on our organization, and how can we address these impacts most effectively?
- How does the development of centralized public-sector procurement groups and centralized tendering influence competitive dynamics in the market?
- Where do opportunities exist for us to add value-added services to our offerings?
- What are the implications of new contracting, pricing and distribution models on our business?
- Do providers tend to prefer direct distribution models from their suppliers or to contract directly with suppliers? How should we respond to manufacturers’ efforts to move further up the value chain and collaborate directly with healthcare providers?
Examples of our work
To learn more about how we help clients create value, please refer to these case examples:
- Evaluated the home healthcare end market and developed innovative market entry strategies for a distributor of pharmaceuticals and medical products to hospitals that leveraged an existing home healthcare asset. The client was able to generate consensus on the strategic path forward, and the project’s robust database of research and analysis significantly increased management’s confidence in the growth plan, which led to multiple major strategic acquisitions.
- Developed an integrated channel strategy, and reorganized the sales framework following the merger of two companies to create a leading medical supplies and equipment distributor. Our efforts yielded an integrated and optimized sales organization that contributed to increased growth, improved efficiency, reduced channel conflict and enhanced margins.
- Completed an in-depth assessment of the specialty pharmacy market, and developed an acquisition strategy for a supply-chain and business solutions organization preparing to enter the sector. The client elected not to pursue the initiative, but a strategic partner completed an acquisition in the space based on L.E.K.’s recommendations and created a strong internal solution that has driven significant margin and spend capture by the original client.
- Developed a compelling and actionable commercialization and growth strategy, business model, and value proposition and group purchasing organization roll-up and acquisition strategy for an innovative, end-to-end resource and supply management organization and GPO.
- Developed a growth strategy for a master distributor of medical-surgical supplies, providing value-added supply chain solutions to its manufacturer vendors and distributor customers in multiple healthcare channels, including acute care, physician offices, long-term care, dental offices and physical therapy.
- Assessed the competitive landscape for pharmacy benefits management for a national PBM organization, including the completion of scenario planning to account for various expected healthcare reform, demographic and structural changes, and the development of a transformational strategy for the client.
- Developed a financial performance improvement plan for a pharmaceutical care solutions provider with community pharmacy, specialty and traditional mail pharmacy, PBM, and infusion operations, to close performance gaps and deliver earnings growth.
- Assessed size, segmentation, trends, channel dynamics and competitors of multiple end markets for a leading healthcare supplies and equipment distributor. We recommended for or against market entry, and supported the development of product and service offerings and business models for prioritized end markets.
- Developed a strategic business planning framework for a major U.K. pharmacy chain, including assessing ways to provide primary care services and to extend the offering into the hospital setting. Our work supported the development and rollout of a healthcare division alongside the business’ core retail pharmacy organization.
- Supported an international pharmaceutical company in developing a key account management program with its retail pharmacy channel customers. This project included defining an optimized engagement model as well as identifying value-added services for incorporation into the client’s offering. The project received a national marketing award for its innovative approach to customer engagement.