At the Center of Supply Chain Success

The range of supplies any healthcare system needs for patient care is diverse and complex. And the types of disruptions that could keep a facility from having those supplies on hand is daunting. Even though we’re five years removed from a global pandemic, supply chain leaders continue to face threats posed by natural disasters, manufacturing delays, cyberattacks and more.

If a healthcare system doesn’t have the supplies it needs, costs can increase, medical procedures can be delayed, and patient safety can be compromised.

CSCs—a key to resiliency

It’s no wonder that resiliency remains the number one reason large healthcare systems are turning more and more to supplier partners like Medline for comprehensive inventory management and distribution solutions—in particular, consolidated service centers (CSCs).

A CSC streamlines a healthcare system’s supply chain operations—procurement, inventory management, distribution, and logistics—into dedicated warehouse space where supplies are managed by people skilled in these respective areas. Here is how this all breaks down:

1. 1. Space procurement: Hospital supply vendors work with real estate and construction professionals to locate either existing warehouse space or land that precisely meets the needs of a healthcare system.
   2. Design and installation: Supply chain experts design a CSC that is customized to a healthcare system’s workflow, with certified project managers involved to ensure a smooth, cost-effective build. Preferred pricing helps bring down costs for racking, material handling equipment (MHE) and other warehouse materials.
   3. Distribution and transportation logistics: Supplies are distributed from the CSC to a healthcare system’s various hospitals, physician offices, surgery centers, clinics, etc. Optimization of delivery routes and schedules and use of Medline’s fleet of 2,000+ trucks reduce transportation costs and ensure timely delivery of critical supplies.
   4. Staffing and labor management: In what’s proven to be a game changer, daily workforce operations are managed by the CSC to ensure staff continuity and optimal productivity.

1. Efficient operations and inventory management: Key measures for successful integration include:

• Technology adoption: Warehouse operations can be run on either Medline’s or the healthcare system’s ERP (enterprise resource planning systems) or WMS (warehouse management system).
• KPI reporting: Daily and weekly reporting ensures operating efficiency.
• High fill rates: Safety stock management delivers best-in-class fill rates.

What makes this engine run are the consumables—med-surg supplies that a healthcare system needs every single day. These items are low-cost and used repetitively, yet the level of complexity necessary to owning, managing and distributing them is fairly high.

Medline has the infrastructure, the processes, and the expertise to support this type of distribution network. In leveraging all of this, healthcare systems benefit from a more economic model that enables them to do what they do best, which is patient care. It’s a symbiotic relationship.

Healthcare systems also derive significant value through complementary services a CSC can offer that would otherwise have to be managed by the healthcare system itself or outside vendors. For example:

• A large IT department capable of transporting and repairing costly high-tech capital equipment, such as infusion pumps, imaging units, bedside monitors and robotics equipment.
• A dedicated place for the collection and repair of patient beds and other portable capital equipment.

Having a facility that can centralize and deploy all of this can have a significant positive impact on healthcare system savings—not just in terms of processes but also true capital expenditure and equipment repair costs.

Dedicated warehousing and speed-to-value

Before moving forward on a CSC strategy, there are factors a healthcare system has to seriously consider:

1. Initial investment: Setting up a CSC requires initial investment in infrastructure, technology and staff training.
2. Change management: Transitioning to a centralized model involves changes in processes and workflows, as well as ensuring buy-in from all stakeholders.
3. Technology integration: Integrating advanced technology systems for inventory management, procurement and data analytics are integral to implementing a CSC.
4. Scalability: Accommodating future growth and the evolving needs of the healthcare system requires a scalable CSC design.

What healthcare systems are finding makes this all worthwhile is speed-to-value. Working with the right partner that offers a multitude of skill sets—that’s more plug and play—is far less overwhelming and costly than trying to accomplish this alone.

Medline has opened seven CSCs since 2010, and five in the last 12 months. Our proven methodology involves:

1. Forming strategic alliances to enhance supply chain efficiency and resilience. These collaborations can lead to shared resources, better negotiation power and improved service levels.
2. Adopting shared services models where multiple providers within a healthcare system use a common CSC to manage their supply chains. This model helps to reduce costs and optimize resource utilization.
3. Integrating advanced technological systems ensures seamless operation of CSCs.
4. Offering expertise in supply chain infrastructure and operations allows a healthcare system to focus on providing excellent care.

Just recently, Medline entered into an agreement with a large cancer hospital. They chose Medline after visiting multiple health systems with CSCs and seeing that those we were involved with were much further along than those that tried doing it on their own. On a smaller scale, some clinics and hospitals are running their supply chains from dedicated space inside a Medline distribution center. They’re using our capacity rather than incurring a significant capital investment.

People—not just products

As much as healthcare systems are talking about resiliency, they’re also talking staffing shortages—not just nurses and other clinical staff but also the people they rely on to manage supplies and provide support services throughout the hospital. These healthcare systems are struggling to keep such a labor force intact because they can’t offer these employees the opportunity to grow and advance.

It’s a different category and classification that’s typically outside a healthcare system’s core mission. As CSCs continue to evolve, however, Medline is looking to help address this challenge by creating a job classification for service center employees and hospital supply chain workers that offers them a career path as part of a larger organization.

The vision—a singular supply distribution source

Since 2018—before anyone heard of COVID-19—Medline has invested $2 billion in its infrastructure to bolster the resiliency of the healthcare supply chain, all in an effort and commitment to continuously empower providers with the resources needed to deliver optimal care.

CSCs are one way to do just that, by allowing healthcare systems to improve:

• Efficiency. Healthcare systems are looking to reduce their reliance on labor. Support services like materials management, IT, environmental services and others all involve costs not just for labor but also valuable hospital square footage. A service center can house these kinds of services and aggregate their costs.
• Simplicity. A multitude of disparate suppliers and processes are involved to fill a supply order for any given med-surg unit. There can be distractions, and once again, too much labor is involved. The more a healthcare system can force supply chain operations through a single source, the more efficient the end-user supply chain becomes.
• Economics. Beyond dedicated warehouse space, CSCs process low-unit-measure deliveries to healthcare system facilities for regularly distributed items and manufacturer-direct items and provide in-house complementary services such as IT, clinical engineering, and equipment repair. Health systems typically can’t justify these kinds of costs.

Key takeaway

In sum, healthcare system leaders increasingly are recognizing the value of relying on CSCs to protect their inventory from disruptions and supply variables they cannot easily control on their own. Think of it as the insurance policy you hope you’ll never have to use.