Healthcare Session OFDA Conference by Brian Mc Laughlin


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Topices to be addressed include assessing your local market opportunity and tips on relationship development, organization of your healthcare team and business unit, understanding hospital contracts and diverse product options for patient-care environments. Marketing your dealership\'s capabilities in this large, growing market. For more information visit or our new linked in group Office Furniture Dealers Alliance.

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Healthcare Session OFDA Conference by Brian Mc Laughlin

  1. 1. 2008 OFDA Dealer Strategies Conference/Expo U.S. Healthcare Industry Overview 2008 and Beyond Brian McLaughlin
  2. 2. U.S. Department of Labor Statistics <ul><li>Healthcare in the U.S. is a two trillion dollar industry with twice the projected annual growth of any other industry for the next ten years. </li></ul><ul><li>Over seven thousand dollars per person in the United States is spent on healthcare which is 16.1% of the total U.S. economy. </li></ul><ul><li>By 2030, 25% of GDP will be healthcare which will be a thirty plus year run up. </li></ul><ul><li>In the past seven years, over 2.2 million healthcare jobs have been added to the U.S. workforce – healthcare is now approximately 10% of the U.S. workforce. </li></ul>
  3. 3. U.S. Department of Labor Statistics <ul><li>Without healthcare growth, the U.S. economy would have been relatively flat the past seven years – unemployment would be 1 ½% to 1 ¾% higher. </li></ul><ul><li>The Bureau of Labor Statistics projects between 2004 and 2014 the entire U.S. workforce will increase by 20%. </li></ul><ul><li>The healthcare sector will add 42% to its workforce which is twice any other segment in the economy. </li></ul><ul><li>Economists project that 30% of all new jobs created in the next 25 years will be in the healthcare field. </li></ul>
  4. 4. Hospitals and Population Shifts <ul><li>There are over six thousand hospitals in the U.S. - One-half public and one-half private. </li></ul><ul><li>Hospital construction is adding approximately 200 beds per week which will continue for the next ten years as a result of hospital obsolescence and population shifts. </li></ul><ul><li>All new hospitals are built like five star hotels with private rooms, room service menus, flat screen televisions, and overnight guest accommodations. This is the result of not only providing the better healing environment but competition as well. </li></ul><ul><li>Seismic laws in California alone will require replacement of over 50% of their hospitals by 2015. </li></ul>
  5. 5. Total Hospital Construction Forecast <ul><li>In the U.S., there will be over 27 billion dollars in hospital construction spending in 2008. The following represents future hospital construction projections: </li></ul><ul><ul><li>2008 – 27.3 Billion </li></ul></ul><ul><ul><li>2009 – 28.4 Billion </li></ul></ul><ul><ul><li>2010 – 31.1 Billion </li></ul></ul><ul><li>Approximately 2.5% of this construction will be new furnishings which is a $650 MM plus opportunity in new construction alone. </li></ul>
  6. 6. Total Hospital Construction Forecast <ul><li>This growth will continue for the next few decades regardless of the latest changes in the political landscape. </li></ul><ul><li>Additional growth in the clinics, medical office buildings, outpatient surgery centers, skilled nursing centers, etc. are in addition to the hospital opportunity. </li></ul><ul><li>Although BIFMA doesn’t track healthcare sales, most industry insiders believe healthcare furnishings represent approximately 2 to 2.5 billion dollars in annual sales. </li></ul>
  7. 7. What’s Driving the Numbers? <ul><li>The answer is the aging population – baby boomers. </li></ul><ul><li>Twelve thousand baby boomers per day reach the age of sixty. </li></ul><ul><li>By 2025, there will be 62 million people over the age of 65 which puts an increasing strain on hospitals, clinics, medical office buildings, retirement homes, etc. </li></ul><ul><li>Retirement centers to include independent living, assisted living and long term care are being built throughout the country at an ever increasing rate. </li></ul>
  8. 8. What’s Driving the Numbers? <ul><li>The baby boomer demographics will drive the U.S. economy for the next twenty years. </li></ul><ul><li>Generation “X” and “Y” will influence what happens in the work place, without question. </li></ul><ul><li>Baby boomers will influence what happens in healthcare and several other areas of our lives. </li></ul><ul><li>Examples: </li></ul><ul><li>Senior housing – Smaller footprint for homes, one floor construction, handicap accessibility, etc. </li></ul>
  9. 9. What’s Driving the Numbers? <ul><li>Home Furniture – Fastest growing market segment is smaller scale furniture built up to 30% smaller than recent large styles to accommodate senior housing and urban lofts. </li></ul><ul><li>Food – Both prepared food and restaurants are providing smaller portions and more health conscience selections. </li></ul><ul><li>Retirement villages – Campus environments provide independent living, assisted living, extended care facilities in a campus setting complete with clinics, restaurants, shops, golf and recreational activities in close proximity to a hospital. </li></ul>
  10. 10. What’s Driving the Numbers? <ul><li>Both healthy and unhealthy baby boomers will continue to drive the economy. </li></ul><ul><li>Examples: </li></ul><ul><li>Obesity – causes high blood pressure, diabetes, need for joint replacement, kidney failure all requiring major health care procedures including treatments such as dialysis. </li></ul><ul><li>Diabetes – Currently, 8% of the U.S. population has diabetes. This number has doubled in the past ten years with one in four cases unreported. </li></ul>
  11. 11. What’s Driving the Numbers? <ul><li>Healthy seniors – Fit seniors continue to fight weight and the aging process with vigorous exercise such as walking and running and sports activities – they wear out knees and hips requirement replacement at an accelerated rate. </li></ul>
  12. 12. What’s Driving the Numbers? <ul><li>These are the current facts and a look at future trends in the healthcare industry in the U.S. The next question is where you feel you want your business to be in this growing field. Several of you are well established leaders in your community and several aren’t. The following is a guideline on what you might need in order to be successful. </li></ul>
  13. 13. Healthcare Dealer Suggestions <ul><li>How to structure healthcare department within your dealership </li></ul><ul><li>A business plan with separate healthcare management </li></ul><ul><li>Independent sales management and staff </li></ul><ul><li>Relationship with client is essential </li></ul><ul><li>Separate profit and loss accountability with specific expectations </li></ul><ul><li>Separate healthcare design team </li></ul><ul><li>Determine start up or expansion cost (investment, not expense) </li></ul>
  14. 14. Healthcare Dealer Suggestions <ul><li>Provide product alignment to cover all aspects of healthcare to include acute care, specialty use such as dialysis, infusion centers, MOB’s, etc., with a variety of price points and function </li></ul>
  15. 15. Healthcare Dealer Suggestions <ul><li>Define partner and profit opportunities </li></ul><ul><li>Setup – guaranteed quick turnaround on specific items </li></ul><ul><li>Repair and hold replacement product such as treatment recliners </li></ul><ul><li>Maximize warranty recovery from manufacturers </li></ul><ul><li>Determine how to track and charge for time </li></ul><ul><li>Develop accounting process to track revenue vs. expense </li></ul>
  16. 16. Healthcare Dealer Suggestions <ul><li>Design Requirements </li></ul><ul><li>How to get paid for design service </li></ul><ul><li>How to track time spent per project </li></ul><ul><li>What portion of design should be charged back? At what rate? </li></ul><ul><li>How to partner with design firms to benefit all parties. </li></ul>
  17. 17. Healthcare Dealer Suggestions <ul><li>Hospital Furniture and Service Contracts – Holistic Approach </li></ul><ul><li>Advantage and disadvantage of cost plus contracts </li></ul><ul><li>Other first call contract opportunities – new offices, conference rooms, etc. </li></ul><ul><li>Service Department Repair – Store – Deliver – Install (Track Dept. as profit center) </li></ul><ul><li>Rental Opportunity during renovations </li></ul><ul><li>Reconfiguration and annual service on systems installations, etc. </li></ul>
  18. 18. Healthcare Dealer Suggestions <ul><li>Asset management and storage </li></ul><ul><li>Recondition – reupholster of furniture </li></ul><ul><li>Casework in-house or contract out </li></ul><ul><li>Partner with construction management company </li></ul><ul><li>Janitorial and sanitation supplies, example: Purell hand cleaner, etc. </li></ul>
  19. 19. Healthcare Dealer Suggestions <ul><li>Capabilities Brochure – Why have? How to set up and show each department beyond furniture pictures </li></ul><ul><li>Mill work – in-house or contract </li></ul><ul><li>Service Department capabilities </li></ul><ul><li>Design Staff and capabilities </li></ul><ul><li>Case studies – hospital / clinic – MOB, etc. – Client names with pictures and design partners </li></ul><ul><li>Product alignments </li></ul><ul><li>Testimonials </li></ul>
  20. 20. Healthcare Dealer Suggestions <ul><li>How to brand your dealership as healthcare leader in community </li></ul><ul><li>How to improve cash flow and reduce payment cycle </li></ul><ul><li>Determine local influence of GPO’s and how to work with them </li></ul>
  21. 21. Healthcare Dealer Suggestions <ul><li>Sponsor continuing education seminars such as: </li></ul><ul><li>Patient handling, procedures and laws </li></ul><ul><li>Design update of patient rooms, common areas and clinics </li></ul><ul><li>Bariatric equipment and furniture needs </li></ul><ul><li>Facilitate focus group with hospital staff, suppliers and design groups </li></ul><ul><li>Round table with set of discussion topics and questions followed by dinner. </li></ul>
  22. 22. Healthcare Dealer Suggestions <ul><li>Where is money spent in hospitals? </li></ul><ul><li>Cardiology - 19% </li></ul><ul><li>Medicine - 17% </li></ul><ul><li>Pulmonary - 13% </li></ul><ul><li>Gastro - 9% </li></ul><ul><li>Orthopedics - 9% </li></ul>
  23. 23. Summary <ul><li>Healthcare furniture sales </li></ul><ul><li>Each one of your dealerships has achieved a degree of success in your community. </li></ul><ul><li>It took many years of hard work and planning to achieve your current level of success. </li></ul><ul><li>Some have achieved success in the healthcare market – some have not. </li></ul><ul><li>Do you want to advance your healthcare sales initiative? </li></ul>
  24. 24. Summary <ul><li>The path to entry or further success will be different for each of you depending on your current circumstance. </li></ul><ul><li>The common denominator for achieving success is the same as any other business. </li></ul><ul><li>- Study the market </li></ul><ul><li>- Develop a plan </li></ul><ul><li>- Execute the plan </li></ul><ul><li>- The most important is hard work </li></ul>
  25. 25. 2008 OFDA Dealer Strategies Conference/Expo QUESTIONS ??