Identifying opportunities for growth of a social enterprise within the context of the Belgian healthcare industry

Abstract

In Belgium, social enterprises of different types and sizes have been around since 1964, after in April 1963 the Parliament voted the supporting regulatory framework in place. Due to the low degree of variation in terms of the actual activities performed, those social enterprises located in nearby geographic areas often compete with each other for the same customers - which are more often than not situated in the very same region. One possible solution to overcome this, is consolidation, bringing several social enterprises located relatively close to each other together under one company. Another can be to specialize in a limited number of sectors, thus differentiating from competitors in terms of experience and expertise. It seems like Amival has already taken some steps towards the latter option, by replacing its old activity-centered structure with a new business unit-centered structure. The goal of this report is to further research the possibilities for growth of the Healthcare business unit in particular. Much to the authors pleasant surprise, the threat of automation, a commonly referred to enemy, should not be overestimated. Even in a highly technological sector like healthcare, where the demand for manual repetitive work is still strongly present. Though it is true that big multinational players usually prefer to automate their primary production processes, because they have the volumes to take advantage of the better economies of scale, (re)work opportunities in the form of quality control or product repackaging and relabeling do still occur, albeit less frequent and in more of an incidental fashion. Similar activities, but for very different customers need to be performed in relation to the parallel import business model that is being employed by some international logistic players. In this arbitrage scheme, where the same good is bought cheap in one country and then sold at a higher price in the other, cost-efficiency in terms of transport, storage and repackaging (often needed to provide all the necessary information in the correct language of the country of destination) is primordial as this can make or break the business case. The secondary and incidental nature of these two possibilities, could lead to uncertainty about both the volume as well as the occurrence of related revenues for Amival, which would therefore prefer to become a part of the primary production process. In this respect, several opportunities were identified. The most promising one in the short term being the packaging of unit dose medication for use in hospitals and other care institutions. Since big pharma companies currently are unwilling to undertake this activity, and hospitals are reluctant to make the necessary investments to do it themselves, they rely on third parties to perform this service for them. Because also here cost-efficiency is of great importance to the hospitals - in the hospitals' ideal world, all of the medication is immediately supplied to them in unit dose at zero extra cost, limiting the hospitals willingness to pay for this service - and investment costs can be significant (cleanroom facilities, unit dose packaging machines for blisters, vials etc.), the safest way to enter into the market is first securing enough customers before making the necessary investments. The ongoing hospital reform, forcing cooperation between hospitals of the same care network offers an interesting window of opportunity for doing this. Another interesting possibility, albeit less obvious as not all interviewees seemed to be unanimous on the topic, is the assembly and/or packaging of medical devices. From a purely economic point of view there can be no doubt about the probability of success: many of the young medical device manufacturing companies in Belgium are looking for cost-efficient and reliable partners to outsource part of their (sub)assembly and packaging process as it requires a lot of manual labor, generally at rates high above what social enterprises like Amival would charge. This potential cost saving can stir up the interest of any company manager in the industry. What is hindering them to make the decision are the strict regulatory requirements in terms of process control to qualify for the needed ISO 13 485 certification, together with the reluctance of these relatively new kids on the block to risk the company's reputation on product quality by entrusting their high-tech, innovative product into the hands of an inexperienced social enterprise. At this point in time no am knowledge and expertise in the coming years, this might change sooner than one might think. The mandatory reverse logistics process, forcing manufacturers of medical devices to take care of the complete product life cycle can have some potential for Amival as well, because it might give rise to more manual labor in terms of rework of reusable products or disassembly of products to prepare them for recycling. For now, however, not enough concrete information was gathered by the authors in the short timeframe of their research, to confidently assess the potential. It is therefore recommended to further look into the matter and carefully monitor the evolution of this process. The same can be said for the introduction of smart packaging. Even though this is one of the buzzwords in and around the healthcare industry today and a lot of information on the potential benefits can be found in the literature, the practical introduction is not expected to take place anywhere in the near future.