Hospitals Gain Time and Money Maximizing Distributor Value

ALEXANDRIA, Va., May 29, 2012 /PRNewswire-USNewswire/ -- Hospitals realize substantial cost and time efficiencies by maximizing their spend through a distributor, according to a study released today by the Health Industry Distributors Association (HIDA). The PricewaterhouseCoopers-conducted study looked at hospital purchasing practices for distributor and manufacturer-direct orders.

"This study quantifies the efficiencies associated with the distribution channel," said Matt Rowan, HIDA president and CEO. "It's a good business decision; time and money are saved by having one single vendor handle as much as possible."

The Hospital Procurement Study, "Quantifying Supply Chain Costs for Distributor and Direct Orders," focused on hospitals that used a prime vendor distributor, and compared the time and related costs associated with distributor orders to those for manufacturer-direct orders.

Major findings include:

• Distributor orders are three times as likely to be electronic and average less than 30 seconds per purchase line order. Manufacturer-based orders average more than three minutes per line due to manual ordering and sign-off.
• Distributor-dominant practices such as advance ship notice reduce staff time spent reconciling receiving invoices and orders.
• Hospitals spent an estimated $67 per day receiving distributor orders versus $131 on manufacturer-direct orders.

The study notes that while some high-dollar products do not fit within common "cost-plus" distribution models, hospitals benefited from increasing the share of commodity products purchased through a single distributor, and from examining new models that can move expensive preference items through distribution as well.

PwC conducted in-depth analysis of procurement practices in 32 hospitals that varied in size and location. For the full study and a list of recommendations hospitals can take to operate more efficiently, visit the HIDA website.

About HIDA
The Health Industry Distributors Association (HIDA) is the premier trade association representing medical products distribution. HIDA members primarily serve the nation's hospital, long term care, and physician/alternate care markets. For more information, visit www.streamlininghealthcare.org or www.HIDA.org.

SOURCE Health Industry Distributors Association (HIDA)