Pharmacy Systemness, Part Two: Consolidation Offers a Better Distribution Method for Health Systems

By Mitch Wood |

Health systems can affordably and efficiently implement centralized distribution by leveraging existing resources and avoiding major capital investments. 

Our previous article in this series examined the primary drawback pharmacies face in deploying a centralized distribution model for prescription drugs and supplies: the cost of building and operating a free-standing warehouse. Let’s take a look at how to overcome this obstacle. 

The answer lies in building a consolidated infrastructure and storage space rather than a new warehouse that requires a high initial capital investment and a budget to cover the ongoing fixed costs. The resources you need may already be available throughout your organization.

For example, you very likely have an existing internal delivery structure that connects your hospital departments and other care sites. For many facilities, the changing healthcare landscape has led to an increase in outpatient treatments, fewer admissions and other factors that have resulted in un- or under-used space that can be effectively repurposed with significantly less investment.

"...consolidating operations and eliminating redundancies will free up significant pharmacy resources that can be redirected elsewhere in your organization. Or, you can apply the
savings to your bottom line."

Mitch Wood

You can leverage these existing resources via a consolidated distribution model—which gives you the benefits of centralization without the intense capital costs. In addition to avoiding the high brick-and-mortar investment, there are other significant advantages:

  • No additional staffing investments to comply with complex regulations
  • No need to create and maintain duplicate IT systems for warehousing and distribution
  • No duplication of other overhead expenses
  • Minimized contracting barriers: Maintains access to GPO and other acute care-priced contracts, whereas a free-standing warehouse may not be considered part of the hospital, complicating contract access

Just as importantly, consolidating operations and eliminating redundancies will free up significant pharmacy resources that can be redirected elsewhere in your organization. Or, you can apply the savings to your bottom line.

In our next article we will demonstrate why a consolidated distribution model makes sense.

For more information on reducing pharmacy costs and improving pharmacy systemness efficiency through consolidated distribution, download this white paper or contact us at or 877-892-1254.

About the Author

Mitch Wood

Managing Director, Supply Chain Consulting Services
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