By: Beau Hoy
Gas supply is a vital aspect of operations for the medical industry. From clinics, medical facilities, and long-term care to dental offices and veterinary offices, medical-grade gas is essential.
And, despite ongoing obstacles and challenges presented by the pandemic and its impact, globally, the medical gas industry continues to grow, with market research predicting it will reach $25.6 Billion by 2030 due to the rapid rise in demand for medical gases across the industry.
While medical gas distribution companies experienced headwinds similar to others in 2022, including supply chain and labor shortages, we expect growth this year as companies and suppliers identify new best practices and strategies for navigating gas supply.
Let’s look at trends from last year and how they might continue to evolve in 2023.
2022 Medical Gas Challenges and Accomplishments
Like many industries, the medical gas industry felt pressure in 2022 due to labor shortage concerns that impacted the supply chain. There are a variety of gases needed for the medical industry – Oxygen, Nitrous Oxide, Nitrogen, Carbon Dioxide, and Helium – however, shortages of all can be attributed to one major obstacle: there is a lack of workers to support the production and delivery of gas. Ultimately, this is driving up distribution costs for medical organizations.
This and other factors meant that medical organizations had to rethink their gas supply processes and practices to identify opportunities for improvement in response to these challenges.
The medical gas experiencing the most price volatility today is nitrous oxide – this is important because there has also been more demand for this type of gas. The volatility is primarily due to the inherent difficulties of producing nitrous oxide. Since it is not atmospheric, nitrous oxide is subject to price volatility based on its complex production process.
While we still expect to see some pressure on the supply chain in 2023, we predict improvements as more organizations focus on increasing inventory.
Beyond the supply chain, we’ve also seen some positive changes in the medical gas space, including an increased focus on providing a better experience for customers. More and more, customers expect a higher service standard – they are looking for strategic partners who can help them identify a go-forward supply plan that fits their specific needs. We see this as a significant change at EspriGas because getting gas is essential, so improving the supply process can only be a positive for the sector.
How Trends Will Carry Over in 2023
A big trend we saw in 2022 and expect to see more of moving forward is an increase in Requests for Proposals (RFPs) for medical gas supply. We’re seeing much more momentum in the healthcare sector as more organizations are willing to evaluate their current supply chain to see what is and is not working. People were hesitant to have these conversations during the height of COVID, but now that there is more stability, we are seeing more interest in evaluating how, when, and at what price companies get their gas.
Streamlining the supply chain is a newer yet positive trend for medical gas supply. Medical organizations are moving from dozens of supply partners to one supplier who they feel can confidently meet their needs and provide long-term guidance for their operations. This streamlined approach helps save time and resources spent negotiating with multiple partners. It also allows for more visibility into what one should expect from a successful gas supply operation.
New Best Practices for Medical Gas Supply
One big step we’re seeing medical organizations take in managing medical gas supply is evaluating spend and supply on a regular cadence and taking a granular look at where money is lost so they can reduce unnecessary costs. As companies think more holistically about their medical gas supplier, a few best practices are emerging to help them better manage their spending.
This includes a more focused look at whether it makes sense for a company to invest in bulk oxygen. Medical organizations can begin to reduce these costs by determining if it makes sense for them to opt for bulk tank gas versus cylinders. We’re seeing more companies realize the benefits of upsizing if it fits their holistic gas needs.
A similar best practice is the idea of inventory management or holding onto more inventory, knowing there could be supply or delivery obstacles in the future. By doing this, medical organizations can ensure they are prepared for the unexpected and have the gas they need when they need it.
As we look toward the future, we expect that technology will play a more prominent role in driving improvements and informing better processes for gas supply. From order tracking for better visibility to integration with payment systems, there is a collective focus on identifying new ways to improve how we service and supply gas for the medical industry.
What’s Driving Growth for Medical Gas
The medical gas sector is growing rapidly, which we attribute to changes and trends in the larger medical space.
One of the most significant factors driving growth for gas is more specialization within the space. For example, there is a growing number of specialized clinics with continued demand for outpatient healthcare services. In some cases, this means more demand for medical-grade gas, which is helping to grow the sector. This also presents new business growth opportunities for suppliers as more organizations are looking for medical-grade gas.
At the same time, consolidation efforts are taking place in the industry, specifically for veterinary and dental care providers. Consolidation of dental organizations has ramped up significantly in the last few years, with private equity firms taking note and joining in this movement. At the same time, well-known veterinary offices, like Mars Petcare, continue to drive consolidation by acquiring and partnering with other care providers.
How EspriGas Can Meet Your Medical Gas Needs
Medical organizations are seeking strategic gas supply partners to meet their needs across a growing number of locations. With the continued evolution of the medical gas industry, our team at EspriGas is here to help clinics, medical facilities, dental offices, veterinary offices, and more supply the gas they need to help meet and predict demand while still looking for cost-cutting opportunities. To learn more about our offerings, contact us today to get started with human and or animal gas options.Learn More Get Started