The Multi-Site Standardization Challenge

Multi-site health systems face unique supply chain complexity. Each facility often has its own purchasing history, clinical preferences, supplier relationships, and inventory systems. This fragmentation creates significant inefficiencies:

• Diluted Purchasing Power: Splitting volume across multiple products and suppliers prevents volume leverage
• Price Variation: Same item costs different amounts at different facilities (often 20-40% variance)
• Duplicated Effort: Each facility negotiates separately, evaluates products independently, manages its own suppliers
• Inconsistent Quality: Different products for same clinical need creates training complexity and potential quality variation
• Data Fragmentation: No system-wide visibility into spend, utilization, or opportunities

1. Establish System-Wide Governance

Successful standardization requires strong governance to make decisions, resolve conflicts, and drive implementation. Without clear authority, standardization initiatives stall in endless debates.

Governance Structure

Executive Steering Committee

Membership: System CEO or COO (chair), CFO, CMO, CNO, VP Supply Chain

Role: Set strategic direction, approve major initiatives, resolve escalated issues, allocate resources

Meeting Frequency: Quarterly

System Value Analysis Council

Membership: VP Supply Chain (chair), clinical leaders from each facility, pharmacy director, infection prevention, quality, finance

Role: Evaluate products, make standardization decisions, approve new product requests, monitor savings

Meeting Frequency: Monthly

Category Teams

Membership: Clinical experts, procurement category managers, data analysts

Role: Deep-dive analysis of specific categories, develop standardization recommendations, manage implementation

Meeting Frequency: As needed for active projects

Decision-Making Framework

Establish clear decision rights to prevent gridlock:

2. Data Integration & Visibility

You can't standardize what you can't see. The foundation of system-wide standardization is integrated data that provides visibility into spend, utilization, and variation across all facilities.

Building the Data Foundation

Step 1: Inventory All Systems

Document every system that touches supply chain data:

• ERP/materials management systems (may be different at each facility)
• Pharmacy systems
• GPO portals and transaction files
• P-card systems
• Accounts payable systems
• Clinical systems (EMR, surgery scheduling, etc.)

Step 2: Extract and Consolidate Data

Create a system-wide data warehouse that aggregates:

• Purchase Orders: All POs from all facilities
• Invoices: All supplier invoices paid
• Item Masters: Product catalogs from all facilities
• Supplier Masters: Vendor lists and contact information
• Contracts: All active supply contracts
• Clinical Utilization: Usage by procedure, service line, physician

Step 3: Normalize and Cleanse Data

The hardest part of data integration is dealing with inconsistency:

• Supplier Name Variations: "Medline Industries", "Medline", "Medline Inc." all refer to same supplier—normalize to single name
• Product Description Variations: Same item described differently at each facility—create standard taxonomy
• Category Mapping: Map all items to standard category structure (e.g., UNSPSC codes)
• Unit of Measure: Standardize to common UOM (each, box, case, etc.)

Key Reports for Standardization

1. SKU Proliferation Report

Shows all items used across system for a given clinical need:

• Example: "Exam Gloves - Nitrile - Medium"
• Lists all brands, item numbers, facilities using each, unit costs, total spend
• Highlights opportunities to consolidate to 1-2 standard options

2. Price Variance Report

Shows price paid for same item at different facilities:

• Identifies facilities paying significantly more or less than average
• Quantifies savings opportunity from standardizing to best price
• Reveals contract compliance issues

3. Physician Preference Card Analysis

For surgical supplies, shows variation in products used by different surgeons for same procedure:

• Identifies high-cost outliers
• Quantifies cost difference between high and low-cost approaches
• Provides data for clinical discussions

4. Contract Compliance Dashboard

Shows percentage of spend flowing through system contracts at each facility:

• Identifies facilities with low compliance
• Quantifies off-contract spend and estimated premium paid
• Tracks compliance trends over time

3. Clinical Standardization Methodology

The technical work of standardization is straightforward—the challenge is clinical change management. Physicians and nurses have strong product preferences, often based on training, habit, or perceived quality differences.

The Evidence-Based Standardization Process

Phase 1: Category Selection & Prioritization

Start with categories that offer high savings potential and low clinical resistance:

Launch 2-3 "quick win" categories first to build credibility and momentum before tackling physician preference items.

Phase 2: Current State Analysis

For each category, document:

• All products currently used across system (brands, item numbers, specifications)
• Which facilities use which products
• Annual spend by product
• Unit costs and price variation
• Clinical champions and resistors for each product
• Outcomes data if available

Phase 3: Clinical Evaluation

Engage clinical experts to evaluate options:

• Literature Review: What does evidence say about clinical differences?
• Outcomes Analysis: Do facilities using different products have different outcomes?
• Product Trials: Allow clinicians to test leading options side-by-side
• Total Cost Analysis: Calculate all-in costs including training, storage, waste
• Vendor Presentations: Hear from manufacturers about product features and support

Phase 4: Standardization Decision

Value Analysis Council makes decision based on:

• Clinical evidence and outcomes data
• Safety profile and regulatory compliance
• Total cost of ownership
• Clinical preference (weighted appropriately)
• Strategic fit with system goals

Select 1-2 standard options (primary and alternate) for each clinical need.

Phase 5: Implementation & Change Management

• Communication Plan: Explain rationale, benefits, and timeline to all stakeholders
• Training: Hands-on education for clinical staff on new products
• Phased Rollout: Implement at 1-2 pilot facilities first, refine approach, then expand
• Clinical Support: Product representatives available during transition
• Feedback Mechanism: Easy way for staff to report issues or concerns
• Compliance Monitoring: Track adoption rates and address resistance

Phase 6: Sustain & Expand

• Monitor utilization and outcomes post-implementation
• Calculate and communicate savings achieved
• Address any quality or safety issues quickly
• Apply lessons learned to next category
• Recognize and celebrate contributors

4. Contract Consolidation & Negotiation

Once products are standardized, leverage combined system volume to negotiate superior contracts.

System-Wide Contracting Strategy

Primary Distribution Agreement

Negotiate a single primary distribution contract covering all facilities:

• Volume Commitment: Commit 60-70% of system spend for best pricing
• Tiered Pricing: Negotiate volume tiers based on system-wide spend, not individual facilities
• Standardized Terms: Same payment terms, freight thresholds, and service levels at all facilities
• Performance Guarantees: System-wide fill rate and delivery commitments
• Rebates: Aggregate rebates based on total system performance

Category-Specific Contracts

For major categories, negotiate manufacturer contracts:

• Orthopedic Implants: System-wide agreement with 1-2 manufacturers
• Cardiovascular Products: Consolidated across all cath labs and ORs
• Pharmacy: System formulary with standardized contracts
• Laboratory: Consolidated reagent and supply contracts

Negotiation Leverage Points

Use these tactics to maximize savings:

• Volume Aggregation: Present total system spend to demonstrate purchasing power
• Competitive Tension: Run RFPs with multiple suppliers competing for your business
• Long-Term Commitments: Offer 3-5 year contracts in exchange for better pricing
• Standardization Commitment: Guarantee SKU reduction in exchange for volume pricing
• GPO Leverage: Use GPO contracts as baseline and negotiate improvements
• Payment Terms: Negotiate extended terms (Net 45-60) to improve cash flow
• Performance Incentives: Tie rebates to service level achievement

5. Implementation Roadmap: 18-Month Plan

Months 1-3: Foundation

• Establish governance structure and decision rights
• Build data integration and reporting capabilities
• Conduct system-wide spend analysis
• Identify and prioritize standardization opportunities
• Develop 18-month roadmap and savings targets

Months 4-6: Quick Wins

• Launch 3-4 low-resistance standardization projects
• Negotiate system-wide primary distribution contract
• Implement first wave of standardized products
• Calculate and communicate early savings
• Build credibility and momentum

Months 7-12: Scale & Expand

• Launch 6-8 additional standardization projects
• Tackle first physician preference item category
• Implement system-wide inventory management practices
• Deploy e-procurement platform with standardized catalogs
• Achieve 50% of savings target

Months 13-18: Sustain & Optimize

• Complete remaining high-priority standardizations
• Implement continuous improvement processes
• Expand to additional categories and facilities
• Achieve full savings target (12-18%)
• Transition to sustainment mode

How LAC Health Supports Health System Standardization

LAC Health has deep experience supporting multi-site health systems through standardization journeys. We provide:

🎯 System-Wide Distribution Solutions

• Single contract covering all facilities
• Consistent pricing and service levels system-wide
• Local fulfillment centers for responsive delivery
• Dedicated system account team

📊 Data & Analytics Support

• Spend analysis and opportunity identification
• SKU proliferation and price variance reporting
• Benchmarking against peer health systems
• Contract compliance monitoring

🤝 Clinical Engagement Services

• Value analysis facilitation and consulting
• Product evaluation and trial coordination
• Clinical education and training
• Outcomes data and literature reviews

💻 Technology Integration

• EDI integration with all facility ERP systems
• Standardized e-procurement catalogs
• System-wide reporting and dashboards
• Mobile ordering for all locations