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Health System Supply Chain Strategies: Insights From IDN Executives

Health System Supply Chain Strategies: Insights From IDN Executives

Executive Summary

Health system supply chains are rising to the challenge of reducing costs while improving the quality of care. HIDA recently surveyed 171 integrated delivery network (IDN) executives to learn how systems will approach supply chain strategy over the coming years.

Nearly all systems continue to depend on their partnership with healthcare distributors to reduce costs, and many plan to expand that partnership.
• 90% of systems use a prime vendor distributor to acquire medical-surgical supplies.
• 73% obtain all or most medical-surgical supplies from distributors
• 40% of systems plan to increase the role medical-surgical distribution plays in their supply chain.

Distributor expertise and business partnership are highly valued by supply chain executives. 88% are satisfied with their prime vendor distributor. Executives say customer focus, responsive logistical support, and cost-savings are the biggest drivers of loyalty to their distributor partners.

A majority of executives say their prime vendor healthcare distributor:
• Streamlines ordering and procurement
• Provides easy access to products during demand spikes
• Reduces the need for real estate and inventory, supply chain costs
Systems planning to expand their use of distributors will:
• Increase the number or products purchased through distribution
• Expand logistical support, including increased use of low-unit-of-measure and just-in-time deliveries
Most hospitals and health systems purchase medical-surgical supplies directly from manufacturers. By far, the leading driver to purchase direct is perceived cost-reduction.
• 76% purchase a few or some supplies direct
• 10% purchase most or all supplies direct
Most systems report having no plans to make investments at this time in building new supply chain facilities.
In the next three years:
• 7% plan to build a consolidated service center
• 8% plan to build a distribution center(s)
While most systems are not investing in new supply chain facilities, 71% still perform some internal distribution to care sites to care sites within their organization.


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