How HCLS firms can thrive during the downturn

Responding to our new global survey, more than three out of four decision-makers in healthcare and life sciences (HCLS) say they’re concerned about a recession. They’re also more likely than respondents in most other industries to expect the recession to last more than a year. Inflation and staff shortages are already compressing margins and revenues at many hospital systems, and biopharma companies are facing their own inflation and supply-chain challenges, none of which is likely to disappear any time soon.

Based on our experience across industries and new research, we believe HCLS companies should be taking four steps now, recession or not, to keep pace during this downturn and set the stage for outperformance long after the economy has recovered:

• Pursue smart M&A. Rebalance the portfolio to improve competitive positioning in a changing marketplace. Many outperformers will shed low-growth operations to raise cash and acquire high-potential assets, some of which may be more affordable during the downturn.
• Improve performance based on data. Lean into analytics to understand where cuts would impair growth and where targeted new investments, such as in geographic expansion or superior pricing tools, could deliver outsized returns.
• Focus on what will sell now. Understanding immediate customer needs is paramount in a down market. Many outperformers in past downturns pulled back on some long-term investments, such as in breakthrough treatments, in favor of quick improvements in the customer experience that could help maintain quality, loyalty, and revenues.
• Use new tools and approaches to attract, retain and build talent. Employees at every level, from the loading dock to the bedside, and from IT to the C-suite, now have more options—and want more than a paycheck. Companies that provide their people with meaningful work and more flexibility, autonomy, recognition, and advancement opportunities will attract and retain more of the talent they need to outperform for years to come.

KPMG Deal Advisory & Strategy has a long history of helping HCLS leaders navigate economic cycles. We help them cut costs while maintaining the quality of their products and services, raise margins quickly, and identify promising growth opportunities. We also offer proprietary tools to help them increase the number of qualified applicants for open positions.

Perhaps most important, we help clients build forecast models, make valuations, and develop overall strategic points of view to justify spinoffs and acquisitions—or avoid them—and integrate acquisitions to create sustainable value quickly.
To learn more, please see our new paper, “Making the most of a downturn in healthcare and life sciences.”