When Conventional Wisdom Doesn’t Cut It Anymore
Edition: March 2003 - Vol 11 Number 03
For years, hospital networks and IDNs have represented opportunity for manufacturers eager to sidestep GPOs. Distributors have recognized the opportunity as well. But why does Repertoire print a story about how one network – Sisters of Mercy – chucked their distributor (and GPO) and started dealing direct with manufacturers?
First, it’s news, although perhaps not the best news for our readers. But we believe it’s better to be informed than to get blindsided.
Second, there’s something instructive about it. After all, how can a large IDN, made up of 19 acute care facilities and a bunch of non-hospital sites, outservice the professionals?
Before I go further, let me state that the conditions at Mercy were unique. Materials executives point out that most of the network’s facilities lie outside the well-traveled routes of most distributors. That’s why Mercy explored self-distribution in the first place. It’s less likely that an IDN confined to a relatively compact, congested metropolitan area would follow Mercy’s footsteps. So we don’t want to overstate the case. It’s not like there’s going to be a stampede toward self-distribution. Yet …
One of the most fascinating things about the Mercy story is the mindset that led to the decision to pursue self-distribution. As we point out in this month’s story, most providers have bought the conventional wisdom that distribution and materials management are not their areas of core competency. Conventional wisdom says that providers should stick to their knitting – providing patient care.
But Mercy didn’t buy the conventional wisdom. They refused to see logistics and patient care as two separate things. In their eyes, logistics is part of their mission of providing first-class healthcare. Once they made that leap in thinking, the rest played out pretty much as one might expect. Sad to say, for Repertoire readers, Mercy execs saw the decision to self-distribute as a “no-brainer.” Ouch.
Who knows where the experiment will go? Who knows how many other provider networks will try what Mercy has done?
Repertoire readers should note one thing: If other providers make the same leap in thinking as did Mercy, then distributors will be forced, once again, to be very explicit about the value they bring providers. The old “core competency” argument might not cut it anymore.
If that’s the case, so be it. Distributors who are used to talking – and demonstrating – value have nothing to fear. Those who don’t, probably do.
Who said that adversity only makes us stronger, provided, of course, that it doesn’t kill us first? Well, whoever it was had a point. IDN executives who hear stories like Mercy’s may be asking you and your companies some very pointed questions. Be prepared to answer them. And be grateful that at least they’re taking the time to let you respond to their questions, rather than simply sidestepping you.