Transforming Healthcare Supply Chains: National Medical Logistics' Innovative Solutions (Full Transcript)

Speaker 1: It's no secret that the highly fragmented healthcare supply chain is often unproductive, inefficient and generally dysfunctional. What may not be known, however, is that it is that way by design. In today's supply chain, the typical IDN's trading partners have built business philosophies and strategies around profits and redundancies. The result is an industry that is incented to keep things as they've existed for decades. The current flow of products and services between each trading partner is designed to protect their existing business models and sometimes their strategies suppress transparency and promote confusion. The typical hospital has to maintain relationships with multiple partners that provide different products and services. National Medical Logistics is an industry leader in providing unbiased cost reduction and service enhancement solutions to the healthcare supply chain. As a best practice integrator, NML applies proven multi-industry methodologies combined with decades of healthcare experience to solve the challenges facing providers today. NML develops and implements strategies ranging from incremental process improvements to those that produce significant financial benefits and service enhancements such as self-distribution. The concept of self-distribution is not new. What is relatively new is the heightened interest by providers to pursue supply chain control as the next logical evolution toward continued cost reduction. Many hospitals now have the economies of scale or are forming alliances to take advantage of self-distribution without being confined by the forces of status quo. Self-distribution is a direct-to-manufacturer procurement model that removes unnecessary or unwanted outside interests. This provider-owned model distributes products and services that are tailored to meet each hospital's needs. This increased ownership also provides access to purchasing incentives traditionally enjoyed by distributors. For example, about half of a distributor's profit margin comes from back-end incentives and sourcing deals made with their manufacturer partners, secondary markets, or private label brands. Under a self-distribution model, these benefits are garnered by you, the provider, and can produce savings that range from 4% to 12% of annual spend. A self-distribution center can also offer ancillary services such as mail services, record storage, kit packing, unit dose packaging, central sterilization, shredding, third-party logistics services, and more. All of these create additional savings opportunities. National Medical Logistics often deploys a three-phase process when supporting a self-distribution initiative. First is developing a business case and overall supply chain strategy. Second is the creation of a detailed implementation plan. The third is the actual execution of that plan. Each of these phases is designed to move a hospital system from point of inquiry to actual implementation. The necessary capital investments and implementation timelines can be dramatically reduced if the provider examines outsourcing certain components. NML is a reliable partner that is experienced in designing, implementing, and managing a health care distribution center. This option can be extremely attractive to IDNs that may have limited access to capital and a desire to accelerate their return on investment and keep risks as low as possible. For example, using NML to provide everything from project planning and execution to infrastructure and technology can allow a hospital system to achieve maximum benefits with the lowest amount of risk and investment, but without giving up control. Developing optimal distribution capabilities, best practices, and supportive technologies are important attributes of a self-distribution model. The facility will need to be capable of handling the service requirements of each member and must support activities such as order fulfillment, demand planning, procurement, inventory management, and more. In addition, granting manufacturers access to data through the deployment of a contemporary technology platform will help them plan production schedules, set staffing requirements, and reduce overall operating costs. These benefits, along with others, will generate very attractive pricing point opportunities. With the ongoing pressure on health care to significantly reduce costs, there's little doubt the winds of change are causing close scrutiny of our status quo supply chain practices. As you examine your hospital's strategies, please consider contacting National Medical Logistics. Our proven leadership can enable your transformation. National Medical Logistics, enhancing supply chain value.