Product Standardization

When analyzing a health system’s supply spend through medical-surgical distributors, we frequently see systems purchasing products from 500 to more than 1,000 manufacturers. The target should be closer to 250. We also see health systems purchasing as many as 10,000 to 20,000 unique items from medical-surgical distributors, for what should be a fraction of that.

Most health systems strive for a high level of group purchasing organization (GPO) contract compliance, but this alone does not drive system-wide standardization. Products might be standardized within an individual hospital, which may or may not be operating under a formulary program, but are rarely standardized across the entire system. Consequently, it’s not uncommon to find high contract-compliant health systems within which not a single common SKU is used by all hospitals.

Regardless of whether you’re considering self-distribution, product standardization (and, therefore, manufacturer consolidation) should be a priority. Product standardization ensures optimal cost-to-serve models and high service levels that directly support standardized patient care. The RiseNow team, with its approach and data models, can help identify, prioritize, and accelerate this critical process.