Outsourcing for the $300 billion global medical device industry is rapidly becoming a trend, with a projection that the market for medical device outsourcing will steadily rise to as high as $44.7 billion by 2017.
While outsourcing isn’t a new phenomenon, its benefits for the medical device industry are clear. The medical device industry is under constant pressure to control costs without sacrificing research development, timelines or safety. It doesn’t help that new technologies, process advancements and a booming and aging population have led to the explosive growth within the market in the past years. With its growth, regulations evolve and become more strict and complex and competition more intense. By outsourcing some of its operations, medical device original equipment manufacturers (OEMs) can take advantage of lowered operation costs, increased agility, a reduction on time-to-market and a boost on their return of investment (ROI). In turn, OEMs can transform their companies into strategic investments rather than merely cost centers.
Customer support and information technology (IT) aren’t the only aspects of operation that can be outsourced. There are so many outsourcing models available today that can suit an OEM’s needs. Examples range from full service to targeted functions including product design, development and production, engineering services, packaging to supply chain management to more traditional areas of procurement, finance and accounting, human resources (HR), real estate and facilities management (REFM), customer care, research and development (R&D), and, of course, information technology.
How Medical Device Companies Can Benefit from Outsourcing
1. Cost savings and improved service delivery
According to a recent KPMG survey, among 94 respondents in the medical device and service provider industries, cost reduction and improved service delivery are two of the primary drivers for outsourcing. IT outsourcing (ITO) was identified by 38% of respondents as a top means for cost reduction, while 26% of respondents viewed it as good method to improve service delivery. In comparison, business process outsourcing (BPO) was viewed by 30% of respondents as a top means for cost reduction, while 19% of respondents believed it was a good method to improve service delivery.
2. Tapping into (better) resources
Outsourcing will give OEMs the opportunity to take advantage of resources (human, materials or machinery) than to keep it locally within their headquarters. It will ultimately be more cost-efficient to outsource production especially if operations and expertise of machinery can be better handled from outside than to bring an expert in their headquarters and then train people on how to operate.
For example, it is no question that medical devices manufacturing equipment are made primarily by Taiwan, China and Korea. Instead of bringing in equipment to manufacture medical devices or products, it might be a better decision to outsource production operations entirely overseas to handle quality assurance and maintenance better.
3. Better focus on core activities
When you outsource certain aspects of operations, you are not reducing additional overhead and expenses; you are enhancing your ability to focus on main goals. Instead of worrying about production, you can have it outsourced and focus on marketing the product or device. Instead of training employees or recruiting new hires for additional departments like IT and HR, have it outsourced. Whereas it could take months for your business to manufacture complex innovative medical devices, a company that focuses only on manufacturing medical devices might be able to build them in weeks. By letting other experts in their respective industries handle what they do best, OEMs can focus on what they’re good at – researching and developing new medical devices to help mankind. This is similar to contracting sales companies or research organization.
Medical Device companies can thrive from outsourcing
Not only can outsourcing be a cost-effective approach to increase speed to market, improve quality and allow your company to focus on its core business, it can ultimately help OEMs achieve their goal of generating more income and put out world-class medical devices.
The Challenge of Outsourcing
The challenge with outsourcing is managing the relationship. There a lot of outsourcing services opportunities in medical device companies. There must be trust between the OEM and the outsourcing provider (IT, HR, customer support, manufacturing, etc.). You need to be sure the organization can meet regulatory requirements, can stay compliant and will not cut corners. By undertaking operational efficiency improvements, creating workplace environments that promote sustainability and productivity, employing highly qualified, talented, trainable and competent staff and ensuring safety and regulatory compliance along with OEMs’ global standards, the outsourcing provider will be able to gain the OEM’s trust and can even bring more business in.
No matter how cliché the statement, “Health is wealth” can be, it is definitely something that each individual should take into account. Need not worry though, because we can provide your medical institution all the assistance you’ll need through our exceptional patient services such as billing, coding, and even back office responsibilities. Learn more!