Cutting Out The Middleman

Health systems can’t defend their margins with small incremental cost improvements – they need breakthrough cost savings to thrive in today’s market. Leading IDNs are seeking new ways to save in their highest-volume spend categories – non-PPI clinical supplies.

Are the savings really worth it? This is a question we hear often at every conference. Having a sourcing agent for direct medical supplies unlocks new hidden value for health systems by eliminating the middlemen in the supply chain between the manufacturer and your facility. ASP Global helps you achieve double-digit savings for your medical supplies in many categories, and we can improve alignment with clinicians and improve product quality by sourcing for your unique product requirements.

A large East Coast AMC-anchored system knew that direct sourcing from manufacturers would let them tap double-digit savings, but purchasing products directly from the marketplace was not a core competency of their supply chain organization. The new Director of Product Development and Direct Sourcing knew a $4 billion facility could save significantly by purchasing items directly from suppliers instead of relying exclusively on distributors but needed the right partner to help with sourcing and logistics.

Specifically, the director sought a sourcing agent for direct medical supplies that would:

• Identify the right high volume products with multiple source factories that can be branded and lead to clinical improvements
• Regularly evaluate new, but equivalent products and be open to change when appropriate
• Plan for efficient acquisition, supporting large containers and working with suppliers, distributors, or 3PLs to provide assistance
• Apply quality control activities that include regular visits to supplier factories and inspections prior to each shipment
• Become a true partner, exhibiting honesty and transparency, understanding direct sourcing needs and providing a dedicated account team

$1.2 million saved on a $3 million hospital medical supply spend

These requirements led to an engagement with ASP Global in 2013 that included more than 20 items and resulted in an average savings of 32%, for a total of $1.2 million saved on $3 million in supply spend. 13 of the 23 medical supply units procured were higher quality than the units they replaced and cost less, helping improve patient experiences and outcomes. Utilizing distributors to help with logistics and warehousing, there are realized savings from direct sourcing without investing in large capital expenditures that enhance supply chain capabilities.

Results realized by sourcing medical supplies through ASP Global

• Savings of $1.2 million on less than 30 high volume items
• Improvement in product quality on directly sourced medical supplies
• Seamless transition to directly sourced items
• Expansion of directly sourced supplies from 23 to more than 80
• Reinvestment of saved costs into resources that improve patient outcomes

The program, which now includes over 80 items, is accelerating savings further and enabling the provider to focus on its core mission of “Putting Patients First.” 

Half of your brand-name products are made by independent manufacturers, not the brand company on the packaging. Each step between the factory and your end-users adds cost for you, without creating additional value. The costs of various agents, marketers, brokers, and re-sellers are included in the price you pay for thousands of care products. Direct medical supplies through ASP Global offers a low-risk way for health systems to source products from the manufacturer, cutting out unneeded middlemen.

ASP Global also gives health systems control over the packaging, shipping, and distribution options for direct medical supplies that work for you. Self-distributing health systems can receive shipments into their distribution facilities, but we also work with your existing distributor or deliver to your loading dock just like any other supplier would.

Are you ready to determine if a direct sourcing program for your high volume medical supplies is right for you? Let us help you. Contact info@aspglobal.com or call 404-696-6999 today.