Small Business Projections for the Healthcare Sector

Jun 03, 2022 at 03:33 pm by Staff

By Ben Johnston

An aging population, new innovations in treatment, a backlog of elective procedures due to pandemic-related disruptions and broader insurance coverage for Americans are combining to drive increased demand for healthcare in 2022.  While staffing shortages and burnout are serious problems facing the industry, healthcare professionals are poised for growth.

For the past 16 years Kapitus has funded the growth of small businesses nationwide, including in the healthcare industry.  Through periods of economic expansion, recession, natural disasters and now a global pandemic, we have worked with small businesses to plan, adapt and grow.  As we look ahead, we are excited by what we see, but cautious about lingering economic uncertainty.

Factors impacting the healthcare industry

Inflation:  The US inflation rate is surging.  While we expect inflation to remain higher through 2022, we believe that Federal Reserve rate hikes, increased investments in energy production and repairs to the supply chain will combine to cool inflation.  Lower inflation is generally preferrable for small businesses which struggle to pass on higher costs of goods and labor to their customers without negatively impacting demand.

Supply Chain:  We expect disruptions in the supply chain to improve but not fully return to normal in 2022.  Lead times will come down for many products, especially those with fewer component parts and those manufactures in onshore or nearshore locations.  We also expect backlogs in ports and on cargo ships around the world as pent-up demand continues to outstrip the supply of containers, ships and port-space.  Covid spikes in China could exacerbate existing problems in the global supply chain.

Manufacturing:  Stretched and unreliable supply chains have forced companies to look for more dependable manufacturing partners closer to home.  This trend will continue as domestic manufacturing incentives in the Infrastructure Bill kick in and as investments in factory automation make US manufacturing more cost competitive in the long run versus lower-cost labor markets overseas.  The result will be continued repatriation of manufacturing to the U.S. and our North American neighbors.

Labor shortages: Staffing shortages and burnout are serious problems facing the healthcare industry and we expect labor shortages to persist through 2022.

Changes to the political environment:  Political polarization has reached an extreme, making bi-partisan legislation extremely difficult.  As navigate a mid-term election year, it is hard to see legislation being passed before a new Congress has been seated in January 2023.  In the interim, small businesses should keep an eye on the Federal Reserve to gauge how aggressively it chooses to implement rate hikes as these actions could have a significant impact on consumer prices and economic growth in the coming year.

The small business economy has proven resilient over the last two years of unprecedented turmoil and change.  We expect some normalization as the year continues.  However, many uncertainties remain for America’s small businesses.

Ben Johnston is the Chief Operating Officer of Kapitus, one of the most reliable and respected names in small business financing. Kapitus provides growth capital to small businesses and has provided over $3 billion to over 50,000 small businesses since 2006. Kapitus offers a number of loan products to small businesses, including SBA loans, revenue financing, equipment financing, cash-flow based factoring, revolving lines of credit and invoice factoring.


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