Commercial distribution remains the dominant, resilient model in hospital supply chains. True self-distribution is increasingly rare and evolving toward hybrid partnerships that balance control, efficiency, and resilience.
About 90% of hospitals partner with commercial medical supply distributors for products and logistical support, about the same percentage as 10 years ago, according to HIDA research.
HIDA has informally tracked health systems’ supply chain models since 2016. Overall, it found that while some integrated delivery networks (IDNs) have added warehouses or consolidated service centers to centralize their inventory, true self-distribution models are still fairly rare.
Reliance on third-party distribution has remained strong despite concerns a few years ago that pandemic-driven shortages would lead more providers to build their own distribution operations and act as their own “middlemen.”
A self-distribution model requires the IDN to have a warehouse or consolidated service center; however, simply having a warehouse doesn’t make the system a true self-distributor. For its analysis, HIDA considered how the organization’s leadership described their model and what tasks and what inventory are managed in-house vs through an external partner.
HIDA identified 17 health systems comprising about 470 hospitals as self-distributors. Another 28-30 systems were counted as having hybrid models combining a mix of internal and external components.
|
Number of Systems With Self-Distributing Models |
Number Of Hospitals In Those Systems |
| 2016 |
33 |
462 |
| 2026 |
17 |
470 |
Source: HIDA Research
Over the tracking period, the number of systems classified as self-distributors decreased significantly, but the number of hospitals increased, both partly resulting from system consolidation. Several systems such as Sentara and Providence discontinued or modified their self-distribution models since 2016; others created new models, partnering with a commercial distributor but in different and innovative ways.
“Classifying IDNs by supply chain model is tricky, since every organization is unique” said Elizabeth Hilla, HIDA’s senior vice president of content. “No IDN is a pure self-distributor; all of them buy some items through various distributors. And conversely, all hospitals buy some products, such as large capital equipment, direct from manufacturers.”
How Many Self-Distributors? It Depends On Definitions
Many items don't go through distribution
- ■ Use Commercial Distribution
All providers buy some items through distributors
Today, “we see fewer supply chain leaders using the term self-distribution to describe their models, and more describing hybrid relationship such as an IDN-owned warehouse supported by a distributor partner,” Hilla noted. For the large majority of providers, a commercial medical supply distributor is a key partner. A distribution partner typically enables the healthcare system to order and receive both common consumables and specialty products from thousands of manufacturers without having to manage thousands of relationships and transactions.
With Distribution: Fewer Transactions, Less Investment
White Paper: Distribution Channel Considerations For Medical Products Manufacturers
