The healthcare sector is one of the largest and most complex industries in Australia with a market size of $197 billion that employs over 1.8 million professionals. In New Zealand, the total healthcare expenditure per capita is among the highest in the world, with $11.1 billion investment announced in 2022 to restructure the healthcare system.
The healthcare industry can be defined as businesses and individuals that provide wide ranging goods and services across the following categories:
- Medical suppliers – businesses that provide goods or services such as the manufacture of medical equipment and pharmaceutical drugs, insurance providers, staff, transportation, laundering, and hospitality services.
- Medical service providers – individuals or institutions that provide healthcare services such as hospitals, surgeries, nursing homes, pathology, diagnostic services, and individual medical practitioners.
Contracts for businesses supplying goods or services to the healthcare industry can be highly lucrative, providing a long-term income stream and opportunities for expansion. However, supplying to the healthcare sector can also be extremely complex with multiple bureaucratic layers as well as safety measures, restrictions, and insurance obligations.
Given these intricacies, SME suppliers and providers can sometimes wait weeks or even months for their invoices to be paid. For smaller operators, this can be a back breaking position, negatively impacting cash flow, putting at risk the prompt payment of their own staff or suppliers – as well as hindering opportunities for investment and growth.
The invoice finance solution
Invoice finance is an ideal solution for both medical suppliers and medical service providers because in both instances the debtor is generally a large, creditworthy (albeit often slow paying) organisation. Good cash flow is critical for any business. Businesses need cash to operate; pay employees, purchase or hire equipment, distribute their product – as well as cover rent and utility costs. The goal for any business is to deliver their products or services without putting undue stress on their operational capabilities or cash flow.
An invoice finance facility can deliver:
- Better cash flow – with funds available on approval, get your money back into the business faster.
- More flexibility – choose which invoices you would like funded, when and at what percentage (up to 95%).
- Supported business growth – enjoy the peace of mind when taking on a new contract, that existing and new obligations can be met.
- Better time/value of money – faster payments mean working capital is re-invested sooner, creating stability, less need for loans and larger returns.
Rather than taking out a loan, an invoice finance facility gives businesses access to the funds from their own invoices as soon as they are approved. This closes the gap between when invoices are issued and when the business receives payment, easing the pressure on SME suppliers.
Healthcare sector trends and opportunities
The healthcare sector is a multibillion-dollar industry offering significant opportunities for SME providers. There are several factors currently at play in the healthcare sector giving rise to industry change and transformation. The evolving COVID-19 pandemic continues to foster advances in medical science through broader adoption of digital technologies and there is now a shift in focus from disease care to prevention and well-being. In addition, the following key drivers will contribute to the clinical, financial, and operational transformation that the healthcare industry will experience in the coming years.
- Digital technologies, data access and analytics – COVID-19 has accelerated the development and adoption of digital health apps, online services, wearables, and remote diagnostic tools. Innovations like these deliver access to better quality data and analytics, creating a more robust and informed digital health infrastructure.
- Ageing population – Australia and New Zealand follow the global trend towards an substantially ageing population that is living much longer than previous generations. This results in increasing prevalence of chronic diseases and need for long-term care, increased demand for aged care facilities or home care management and rising private health insurance coverage.
- Environmental, Social and Governance (ESG) – climate change outcomes including extreme weather, pollution and food security are being labelled the 21st century’s greatest threat to public health. Extreme weather events like prolonged heatwaves, bushfires, floods, and droughts have a direct impact on food production, public health and healthcare services.
- Carbon neutrality by 2050 – the round the clock nature of the health care industry with extensive use of specialist medical equipment, refrigerated storage, air conditioning, transport and clinical waste disposal means that global health care systems account for 4% of global carbon emissions. With many traditional hospitals and health care facilities poorly designed for energy efficiency there is a real transformational opportunity to provide infrastructure and solutions that enable decarbonised health care.
Capitalising on these challenges and trends present a significant opportunity for businesses. SME suppliers that are forward thinking, with a focus on products and services that deliver more sustainable outcomes in healthcare may have a bright future indeed. Here’s an example:
Pingelly and Cunderdin in Western Australia created two Health Centre facilities that were designed to reduce their environmental impact. Examples of design features include the use of airlocks (to improve climate control and avoid wind tunnels); natural light, laminated safety glass windows and treatments to reduce heat transfer; grey water systems, water wise gardens and landscaping to reduce water consumption; and installation of solar panels to produce electricity. Both facilities received a 4 Star Green Star rating.
Despite the intricacies and protocols that exist, the healthcare industry is no different from any other in terms of competitiveness and opportunity for SME suppliers. The industry is expected to experience strong growth and transformation in the next five years, driven by the trends highlighted above and boosted by government investment. For businesses that have a strong foundation delivered by regular, reliable cash flow the opportunities in the healthcare sector abound.
Click here to learn more about invoice finance and how it can help power business growth.