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U.S. healthcare costs are $2.2tr a year, approaching $8,000 per person or 16 percent of the economy. The looming impact of the Health Care Reform Act is largely unknown, but no one argues that it won't be significant. Solving the issues in the healthcare value chain will be a monumental, if not an insurmountable task. In May, I interviewed 17 pharmaceutical executives on how they are preparing for increased regulation, process complexity and uncertainty. They are reading the pending legislation like tea leaves. Nothing is sure except change.
Companies in the healthcare value chain are laggards. Historically, the margins have been too high for companies to place importance on supply chain, much less move to think about redefining the multi-tier, complex relationships within the value chain. Inventory positions are 25-percent higher than in other process peer groups; and when I speak to a healthcare team, I feel that I have been jettisoned back in time 10 years.
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