Your summary of the changing distribution business ("Suppliers endure large doses of change," Oct. 21, 1996, p. 36) was on the money. But I would like to follow up.
Unquestionably, hospitals have to tap the potential of huge cost savings found in supply-chain transaction costs, product utilization and inventory management. But I think there's a better way than to simply outsource the entire matter to one of the "big four" general line national distributors mentioned in the article. The fact that, as you report, some purchasing executives seriously question these distributors' futures as pre-eminent firms suggests a need for alternatives.
To read the article is to understand healthcare distribution in its most narrow sense-a handful of large, national general line suppliers. In fact, several hundred specialty distributors provide a cost-saving service that the large nationals do not and cannot-namely introducing healthcare's emerging, innovative and cost-reducing products and technologies. These are the devices and instruments that represent quantum leaps in savings. Specialty distributors introduce these products and provide outcomes trials, the in-servicing, the end-user education and the ongoing follow-up required to ensure the products are used correctly and most efficiently.
The national distributors are indispensable. But I contend that hospitals can operate most efficiently by using a national general line distributor and/or a local distributor for commodity products-representing the bulk of hospital purchasing volume-combined with a number of specialty distributors that have extensive clinical/product knowledge and provide the emerging, cost-reducing technologies.