New Intermountain Health facility aims to strengthen healthcare supply resilience, centralize distribution and support hospitals statewide with faster access to critical medical supplies.
Coming from an auto parts distribution background, Scott Dana was struck by the lack of in-state healthcare logistics for Montana when he entered the industry more than a decade ago. In a state where most industries rely on local distribution hubs, hospitals and clinics have long depended on shipments from hundreds of miles away.
“I just thought it was amazing that it’s easier for me to get a spark plug for my car than a lifesaving device,” said Scott Dana, Director of Supply Chain Operations in Montana for Intermountain Health.
An ambitious initiative from Intermountain Health aims to bridge that gap. The health system will complete construction this September on Montana’s first large-scale medical supply warehouse, a centralized hub designed to improve reliability and speed of deliveries across the state.
The facility, the Intermountain Consolidated Services Center, will store and distribute medical supplies and support a network of hospitals, clinics and other care sites statewide. It will also provide services such as laundry and transportation.
Health system leaders said the project is especially critical in Montana, where the nearest major distribution centers are hundreds of miles away in cities such as Salt Lake City and Denver. Harsh winter weather and mountainous terrain can further complicate deliveries, sometimes delaying essential supplies.
Once operational, the center is expected to handle more than 500,000 medical supply items each year and support a courier network making about 25,000 stops annually.
Added layer of supply chain security
Leaders at Intermountain Health say a new centralized supply warehouse in Montana is expected to streamline operations, reduce costs and improve hospitals’ ability to respond to disruptions.
A key efficiency comes from shifting storage out of hospitals and into a dedicated distribution facility. Traditionally, hospitals maintain large on-site inventories in central supply areas – space that could otherwise be used for patient care.
“Hospital square footage is very expensive compared to warehouse square footage,” said Dana. By relocating inventory to the new CSC, facilities can repurpose clinical space for revenue-generating and patient-focused activities.
The new model also changes how supplies move. Instead of delivering bulk shipments to a central storage area and redistributing them internally, the warehouse will send smaller, more precise orders directly to supply closets on nursing floors and clinical units. That approach reduces the need to hold large inventories while improving efficiency and access for care teams.
Additional savings come from consolidating deliveries. The facility will house both medical supply distribution and a laundry operation, allowing a single truck to deliver linens and supplies together, rather than requiring separate shipments from different vendors.
Beyond day-to-day efficiencies, the warehouse is expected to strengthen supply chain visibility and resilience. Under the current model, hospitals rely on third-party distributors, limiting insight into upstream inventory levels. With a centralized system, leaders say they will be able to identify shortages earlier and respond more quickly to disruptions.
Those improvements are especially important in Montana, where geographic isolation presents unique risks. Unlike urban markets such as Denver or Salt Lake City – where multiple distributors allow for same-day or even same-hour deliveries – many Montana facilities are at least a day away from critical supplies.
“That extra distance means you have to be prepared,” Dana said, noting that back orders and inventory gaps can have more immediate consequences. “If we don’t have it, we’re not going to be able to get it the same day.”
By bringing inventory closer to care sites, the new warehouse is expected to provide an added layer of security for clinicians, particularly in high-stakes settings such as operating rooms, where delays in obtaining supplies can directly impact patient care.
Local jobs, new technology expected to shape economic impact
For Intermountain Health officials, the project was initially driven by supply chain resiliency concerns in a geographically isolated state. But they say its broader impact on the local economy is becoming equally significant.
“That was really our primary factor, looking at that market and saying supply resiliency is a concern up there,” said Gordon Slade, Senior System Director of Distribution Services at Intermountain Health. “But the second thing that I think it really addresses too is local economic stimulus.”
Slade said the facility – which will combine distribution, transportation and laundry operations, with potential future pharmacy functions – is expected to generate a range of local jobs that previously would have been handled out of state. That includes positions in warehouse operations, logistics coordination and transportation services, as well as linen/laundry jobs.
He noted that keeping those roles in Montana means more healthcare-related infrastructure dollars remain in the state rather than flowing to regional hubs elsewhere.
Construction of the facility is also expected to deliver a near-term boost. While a national contractor is overseeing the project, Slade said roughly 95% of the work is being completed by local construction firms, with materials and labor sourced within the region. That, he said, helps inject money directly into the local economy during the build phase.
Once operational, the warehouse is expected to create permanent jobs tied to ongoing supply distribution, transportation coordination and laundry processing – roles that Intermountain Health leaders describe as foundational to the facility’s long-term economic footprint.
Slade emphasized that workforce development is closely tied to the organization’s broader mission. “We feel that is a significant part of our mission at Intermountain Health, to be supportive of local communities,” he said.
In addition to economic and resiliency benefits, the project is also positioned as a testing ground for new logistics technologies that could influence future facilities across the health system.
Slade said Intermountain Health is exploring “micro fulfillment” strategies that use smaller, regional distribution centers to complement a larger hub in Salt Lake City. Similar satellite-style facilities are also planned or under consideration in markets such as Las Vegas and Denver.
Because the Montana site is smaller than a traditional mega-warehouse, Slade said it will rely on flexible automation rather than large-scale fixed infrastructure. One key innovation under review involves autonomous mobile robots that move supplies through the facility.
Instead of fixed conveyor systems, the robots would transport carts of supplies to workers who complete picking and packing tasks at assigned stations. The system allows human workers and machines to collaborate, improving efficiency without requiring extensive structural automation.
Slade said the Montana facility will likely begin operations without full automation, allowing teams to establish stable workflows first. Once processes are refined, automation tools are expected to be introduced within six months to a year.
Regional “micro fulfillment” model ties supply chain to hospital design
Intermountain Health leaders say Montana’s new supply warehouse is part of a broader regional strategy that balances centralized efficiency with local responsiveness across multiple states.
At the top of that system is a large anchor facility in Salt Lake City, which serves as the system’s primary distribution hub for bulk storage and large-scale operations, including value-added services such as surgical kit assembly.
From there, smaller regional sites – including planned facilities in Montana, Las Vegas and Denver – function as “micro fulfillment” centers designed to serve nearby hospitals and clinics with faster, more direct deliveries.
“Our larger facilities are what we’ll develop as centers of excellence,” said Slade. “The regional facilities are really geared towards servicing the marketplace. They’re not designed for huge amounts of bulk storage.”
Instead, those satellite locations are intended to keep essential supplies close to care sites while relying on the larger hub for specialized or high-volume production.
Slade said the approach allows Intermountain Health to centralize complex work, such as assembling surgical kits, while ensuring smaller facilities maintain full capability to support daily clinical needs.
The strategy is also influencing hospital construction itself in Montana.
According to supply chain leaders, the design of a new hospital in Billings was coordinated alongside the consolidated services center project. That planning reduced the need for large on-site storage areas, freeing up space that can be used for clinical care instead of inventory storage.
“We don’t need the square footage down in central supply like we do in some of these other hospitals,” said Dana.
Instead, the new hospital will feature redesigned supply rooms that combine medical supplies and clean linens in shared locations, allowing deliveries from the warehouse to flow directly into patient care areas more efficiently.
“Everything we do is an investment in patient care”
Ultimately, the new Montana supply warehouse is not just a logistics project – it is a long-term strategy tied directly to patient care, cost control and system resilience.
“The intent there is to mitigate against risk and resiliency challenges, as well as ensuring we’re providing care to the patients who need it most,” said Jeromie Atkinson, Chief Supply Chain Officer, Intermountain Health. “Everything that we do here is an investment in patient care at the end of the day.”
Atkinson said success over the next several years will be measured by how effectively the system can expand supply operations closer to where patients are served, particularly in regions far from major distribution hubs in Salt Lake City and Denver. By shortening those supply lines, he said, the organization can reduce transportation costs and reinvest savings back into clinical services.
“Ultimately, when we save money, that’s money that goes directly to the bottom line that can be reinvested in patient care,” Atkinson said.
Leaders also pointed to resilience as a core benchmark for the facility. The consolidated services center is designed to function as a buffer during emergencies, including natural disasters and large-scale disruptions that could otherwise strain supply chains dependent on out-of-state vendors.
“That’s what happens if we have a natural disaster in the marketplace?” said Slade. “If you don’t have a CSC, you’re very reliant on others.”
Slade said lessons from the COVID-19 pandemic underscored the importance of controlling supply chains locally, rather than relying entirely on external distributors. Having inventory and distribution capacity within the state, he said, provides greater stability when national supply networks are strained.
He also emphasized that resilience extends beyond high-tech equipment or pharmaceuticals. Basic hospital needs – including linens and everyday consumables – are critical to keeping facilities operational.
“There’s a lot to be said about linen as well,” Slade said. “At the end of the day, the basic staples matter.”
As Montana’s first large-scale facility of its kind, the warehouse is also expected to serve as a model for future expansion across Intermountain Health’s regional network. Leaders said it will help define how smaller, localized distribution centers connect to larger “center of excellence” hubs while maintaining flexibility during emergencies.
For clinicians and supply chain teams alike, the goal is straightforward: fewer delays, fewer shortages and a more reliable flow of supplies to the bedside.
As Atkinson put it, “We won’t eliminate every variable of risk, but we’ll be able to buffer against most of them.”