For most healthcare organizations, physician preference items (PPI)
account for a significant portion of spending and are rife with
logistics inefficiencies. Historically, PPI management was not an area
typically supported by full-line distributors. However, recent HIDA
research suggests more hospitals are looking to their prime vendor
distributor to manage PPI purchases in order to reduce cost and waste
HIDA’s 2017 Acute Care Market Survey of hospital CFOs and supply
chain executives finds nearly half of all hospitals have explored
purchasing PPI through their distributor, and 90 percent of those
organizations decided to move forward with such partnerships.
Satisfaction rates among those that pursue PPI purchasing models with
distributors validate their decision; 93 percent are somewhat or very
satisfied, while none are dissatisfied.
Whether or not a hospital uses a distributor for PPI, a majority of
providers agree that cost control is the leading benefit of doing so.
For those that have explored purchasing PPI through distribution, 56
percent also identified reducing supply chain waste as a secondary
benefit (see Chart 2 below). Hospitals remain most challenged
by bottom line performance — a statement reinforced by the fact that the
top three challenges survey respondents face this year are
reimbursement, reducing operating costs, and meeting budget targets.
Still, not all providers are convinced or able to utilize
distribution for PPI management. Physician opposition presents a
significant barrier for both those that have or haven’t explored such
paths. And implementation costs weigh heavily on those that have yet to
consider distributor PPI partnerships, yet this could simply be a
misperception judging by the experience of those that actually pursue
PPI management also requires a certain level of expertise needed to
navigate product complexities, specialized training, or liability risks
associated with certain items. The good news is that the distribution
channel annually invests billions in IT, supply chain technology, and
other infrastructure to continuously improve and innovate solutions
across the care continuum, providing an ideal PPI environment that’s
poised for future growth.
Only 19 percent of all physician preference items are purchased
through distributors at present, leaving ample room for hospitals to
explore. For those that have already pursued this route, half plan to
expand their volume of PPI purchased through distribution while another
20 percent are unsure.
Visit www.HIDA.org/Infographics to access our free “Distributors Reduce PPI Supply Chain Costs” infographic for more on this research.