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From patient care and staff workflow to healthcare equipment acquisition, in the world of healthcare, efficiency and cost-effectiveness are almost always top of mind. For many years, the "prime vendor" model has been the gold standard for managing the sometimes-complex acquisition of medical equipment and supplies. The prime vendor relationship is a strategic partnership where a healthcare organization agrees to purchase a significant majority of its healthcare equipment and supplies - often 80% or more - from a single, dedicated distributor.
This approach offers undeniable advantages. It simplifies the purchasing process, reduces the administrative burden of managing multiple vendor relationships, and often leads to favorable, negotiated pricing on a broad range of products. For a busy hospital or clinic, the convenience of a single point of contact and a streamlined ordering system can be a powerful draw.
But what happens when that sole source becomes a point of challenge? While the prime vendor model works well in stable times, it can have significant limitations that become glaringly obvious when the unexpected occurs.
To answer that question, this post will explore:
- The Risks of Putting All Your Eggs in One Prime Distributor Basket
- Real-World Scenarios Where the Prime Vendor Model May Be Challenged
- The Case for a Diversified Healthcare Equipment Distributor Base
- The Call to Action for Purchasing Strategies
The Risks of Putting All Your Eggs in One Prime Distributor Basket
Relying solely on one prime distributor can create vulnerabilities that threaten the very agility and resilience of a healthcare facility. Here are some of the key weaknesses:
- Minimal Focused Expertise: With a large catalog of both healthcare equipment and consumable supplies it is unrealistic to expect a prime vendor to be an expert in any one area. General knowledge is just not the same as expertise and can lead to the acquisition of medical equipment, which is not the best solution for the needs of staff, patients, or budgets.
- Limited Product Availability: A prime vendor may have a comprehensive catalog, but they will not carry every single item you need. This can be a major issue for specialty departments, new services, or when a physician prefers a specific brand of equipment. You may find yourself unable to access the most current technologies or niche products without navigating a cumbersome exceptions process.
- Slower Lead Times for Niche Items: Even if your prime vendor can source a specialty item, it may come with a much longer lead time. Since it is not a standard stocked item for them, they will need to order it from a third party, adding an extra layer of delay to an already urgent need.
- Inflexibility and Vendor Lock-In: A single-source contract can make it difficult to quickly pivot to innovative technologies or take advantage of innovative products from other manufacturers. You may be locked into a specific product line or technology platform, hindering your ability to stay competitive and provide the best possible care.
- Challenges During Supply Chain Disruptions: We saw this risk play out on a global scale during the pandemic. A single distributor, no matter how large, can only manage so much. When faced with unprecedented demand and manufacturing shutdowns, prime vendors can struggle to fulfill orders. This can leave many healthcare providers scrambling for essential supplies.
Real-World Scenarios Where the Prime Vendor Model Be Challenged
- Widespread Health Emergency: Healthcare networks and facilities with diverse supplier networks were better positioned to navigate the chaos of widespread (think global) health emergencies. They can tap into a secondary distributor for one product, a regional supplier for another, and a specialty vendor for a specialized piece of equipment or service, all while their prime vendor works to stabilize its own supply chain.
- Facility Expansions: As a hospital opens a new wing or a new specialty clinic, it often requires large (think hundreds) of pieces of healthcare equipment from multiple manufacturers and the precise scheduling of deliveries around construction timelines. Prime vendors may not have warehousing or logistics teams available to store incoming orders for a single delivery, project managers dedicated to coordinating a project from start to finish, or access to the specialized delivery teams best for medical equipment delivery and installation.
- Last-Minute Equipment Needs: A surgical team needs a very specific type of surgical staple for a complex procedure, but the prime vendor's stock is out. A well-vetted secondary vendor, perhaps one that specializes in surgical instruments, could have the product on hand, preventing a costly and dangerous delay in patient care.
The Case for a Diversified Healthcare Equipment Distributor Base
In addition to focusing on a single product category (like healthcare equipment for example) or clinical area, some specialty distributors augment their product expertise with some, or all the services healthcare facilities need most for equipment acquisition and maintenance: project management, design and CAD services, delivery, installation, equipment maintenance and in-service training.
Project management: Some specialty distributors offer professional acquisition and planning services. Dedicated project managers (PM) oversee the acquisition of medical equipment by coordinating everything from warehousing and logistics through to delivery, and installation.
Design and CAD Services: Experienced designers combine extensive knowledge of healthcare equipment with design and CAD tools to ensure you are purchasing the best equipment for available space and workflow. The benefits of these services include (but of course are not limited to) customized solutions for storage and workflow, compliance and safety, visualization, and collaboration.
Delivery and Installation: Expert delivery and installation services offered by in-house, manufacturer trained installers ensures medical equipment is properly set up and ready for use, reducing the risk of incomplete or faulty assembly by staff or third-party general delivery teams that could lead to the injury of patients or providers.
Biomedical Services: Inspection, testing, and asset tagging of medical equipment by biomedical technicians free in-house biomedical teams to address regular maintenance tasks. Post delivery and installation, biomedical technicians can also work with healthcare facilities to establish equipment maintenance plans structured to ensure the reliability of medical equipment and compliance with regulations.
In-service training: Many specialty distributors have clinical experts – nurses, medical technologies – on staff to train providers in product use. The type of clinical personnel and expertise depends on the distributor’s specialty area.
By working with multiple, qualified vendors, healthcare facilities can often reduce downtime, improve the healthcare equipment acquisition process, and ultimately ensure better patient care outcomes knowing their healthcare equipment has been professionally installed. It is about building a robust network of partners who can support the organization's evolving needs.
The Call to Action for Purchasing Strategies
In response to the policy and regulatory changes on the horizon it may be necessary to evaluate current healthcare equipment acquisition strategies. Here are some questions to start the evaluation:
- Does my current prime vendor relationship truly meet the evolving needs of my organization?
- Do I have a plan in place for supply chain disruptions?
- Are there any gaps in my current product availability that could be filled by a specialty vendor?
A recent survey of the actions healthcare organizations can take in response to the political climate, 86% of respondents have already, or are planning to, diversify their distributor base.
Building a resilient supply chain is not a one-time project; it is an ongoing process. By strategically diversifying your vendor base, you can ensure your organization is prepared for any challenge, without compromising the high-quality care you offer your patients - no matter what the future holds.
Partner with CME Corp. for One-Stop Healthcare Equipment Acquisition
CME, driven by its employee-owners, is focused solely on equipment used in healthcare. In addition to equipment expertise, we offer specialty services of design and CAD, project management, logistics, delivery, installation, and biomedical services, making us a one stop shop for healthcare equipment.
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About CME: CME Corp is the nation’s premier source for healthcare equipment, turnkey logistics, and biomedical services, representing 2 million+ products from more than 2,000 manufacturers. With two corporate offices and 35+ service centers, our mission is to help healthcare facilities nationwide reduce the cost of the equipment they purchase, make their equipment specification, delivery, installation, and maintenance processes more efficient, and help them seamlessly launch, renovate and expand on schedule.
