Outsourced Distribution (3PL)

Distributor

unbiased - their only customer/revenue source is the health system

have to balance shareholders', customers', GPOs' and manufacturers' interests

design and operate a facility at a lesser true cost

Embedded costs associated with model that serves multiple masters

focused on optimizing logistical processes

Focused on product sales and/or margin enhancement

can offer customizable and dedicated solutions

built to offer a similar service across many customers, often with little dedicated differentiation.

paid to reduce process and health system supply spend

paid more with higher health system spend and as product price increases with their cost-plus model

help re-contract for lower net pricing based on the economics of aggregation

constrained from contracting due to their GPO relationship

do not always pay GPO fees based on contracting strategy

pay GPO fees

do not carry the heavy corporate overhead

overhead higher, especially in publically traded companies

do not carry under utilized assets such as excess facility space and fleet capacity

tend to operate anticipating the next client and ability to leverage volume

do not have to carry the burden of administrative staff to process make-whole repates

incremental staff costs passed on to clients

can establish a purchasing coalition (aggregation) for further net-price improvement

can not, without impacting GPO relationship and exchange of fees