As we entered 2021, I believe we all anticipated a less dramatic year than 2020. Putting the first waves of COVID-19 and a highly charged election behind us, it seemed 2021 had the makings to be calmer.
As we are now moving into 2022, it appears that while 2021 was less volatile than 2020, it certainly has had its own drama which will impact us as we head into a new year.
Here are some of the high impact areas affecting the healthcare industry for 2022:
Labor shortages: Anyone in manufacturing understands there are current challenges maintaining a steady workforce for production jobs. Some workers continue to have a legitimate fear of working while there’s an ongoing pandemic. Others simply don’t see the incentive to find employment when they can receive government subsidies and not work. This challenge likely continues through the first half of 2022. After that, it’ll depend on the status of the pandemic – let’s all hope cases continue to decline in our communities.
Supply chain challenges: If you’re in manufacturing, I don’t have to inform you about the supply chain challenge. You’re living it every day! Some lead times have gone from 12 weeks to 12 months. Supply chain leaders are scrambling to be creative in finding new sources to obtain key components to keep manufacturing going.
Re-shoring (vs off-shoring): This was a trend started pre-COVID due to the necessities of dealing with the U.S./China trade war. Obviously, COVID-19 has further emphasized the risks of having manufacturing plants in regions where key executives can’t travel to see their own facilities. While manufacturing in the region to sell in the region continues to make sense, off-shoring for the purposes of low cost manufacturing is no longer a priority. It’s becoming clear the extraordinary costs of managing an off-shore facility may negate some of its low-cost labor benefits. Being close to your customer is continuing to make more sense.
Vaccine mandates: Right or wrong (could be a separate topic for debate in another blog), employees are being terminated (at the request of governments) for not getting vaccinated, adding additional pressure to both the availability and the mental mindset of the workforce. Even those vaccinated aren’t necessarily excited to lose their colleagues and have extra burdens placed on them.
New potential taxes: While still fluid at press time, a wide range of tax increase proposals from Washington D.C. may impact businesses of all sizes in our industry. As seen in previous tax increases, this may lead to further reductions in workforce – depending on the final legislation.
In summary, all of us enter 2022 with some degree of uncertainty. I didn’t even mention things such as inflation and interest rates that may be more volatile in the near future. My suggestion is to remain calm and plan to be flexible through the changing dynamics in the coming year. As always, you’ll find bumps in the road, but you’ll reach your destination if you know where you’re going.
Dave Sheppard - MedWorld Advisors
About the author: Managing Director Dave Sheppard is a former medical OEM Fortune 500 executive and an experienced medtech M&A professional. He can be reached at firstname.lastname@example.org.