Understanding the Evolving Laboratory Supply Chain 

Health systems enhance their relationships with the right partner.

Understanding the Evolving Laboratory Supply Chain  May 2023- The Journal of Healthcare Contracting

Cardinal Health ™ Laboratory Products and Services distributes to more than 6,300 hospital labs, hospital-owned clinics, and reference laboratories. It leverages the scale of one of the largest dedicated lab distribution networks in the U.S. to deliver best-in-class laboratory products and logistics solutions.

“There’s been an evolution during the pandemic on the importance of the laboratory supply chain and having a distribution partner who understands the laboratory from both a technical and logistics perspective,” said Emily Berlin, Vice President Laboratory Marketing & Aero-Med Commercial Sales and Operations.

“We intensely focus our time from a product management and global sourcing perspective making sure our portfolios have the breadth and depth needed to support testing.”

Berlin said Cardinal Health has added more products, product programs and additional service and/or cost options to its portfolio to make sure there is reliability on the supplies needed at the time the clinicians need them for testing, as planning has become paramount for health systems.

“Many health systems historically operated on a just-in-time approach, which was a standard practice until the pandemic,” Berlin said. “But then weaknesses in this approach were identified. So, by partnering with a laboratory distributor, healthcare systems can create resiliency plans on the necessary products they need within their facilities to keep patient care and testing ongoing.”

Enhanced partnerships, new programs

“Distribution has always been critical to a healthcare supply chain, but it is the recognition that a true partnership with transparent collaboration needs to occur between the distributor, customer and manufacturers,” she said. “Everyone is coordinated and communicating to make sure information is flowing seamlessly.”

To that end, Cardinal Health has offered some unique programs to its customers like the Cardinal Health Reserved Inventory Program, available for labs and health systems nationwide. It is individually tailored to participants and leverages data, such as historical utilization, to inform inventory needs more accurately.

This approach offers supply assurance for an often-unpredictable respiratory season further complicated by virus co-circulation. 

“Exclusive programs like the Reserved Inventory Program, focus on maximizing the value of the program contract,” Berlin said. “Making sure as much of the contracted lab supply is going through the distribution contract creates efficiencies and supply visibility from a workflow perspective for those participants.”

Berlin adds there has been an overall greater focus on laboratory distribution adherence to standardization of formularies too. “This is really where supply chain professionals can collaborate with their clinical stakeholders to identify and implement product formularies across their network,” she said.

Specimen collection kitting services

With the acceleration of decentralized care and the growing focus on wellness and prevention, Cardinal Health has invested in its Lab Kitting Services business to meet demand.

“Patients are consuming healthcare like a product as testing continues to move closer to the home and more direct-to-consumer testing companies are providing services to patients. The services provided all originate with a laboratory test,” Berlin said. 

Cardinal Health’s new Aero-Med facility in East Hartford, Connecticut focuses on manufacturing and distributing customized and standardized specimen collection kits. The 110,000-square-foot facility replaced its previous 55,000-square-foot lab kitting space. It operates as one centralized warehouse, and both manufactures and distributes more than 50 million specimen collection kits annually to hospitals, reference labs and testing organizations.

Collaboration is the key to success for organizations employing kitting services. Dedicated Cardinal Health Kitting Specialists work with customers to help them understand their requirements, such as collection protocols, product usage and standardization, to simplify the kitting process. Customers can choose the components, including Cardinal Health ™ Brand Products, packaging, labeling, and shipping options that fit their needs. From design to distribution, Kitting Specialists manage the process to ensure regulatory compliance and customer satisfaction.

An investment in customer experience

Cardinal Health has made a significant investment focused on improving the customer experience and addressing supply chain resiliency and reliability. Investments have also been made in its quality procurement and planning systems and increased its inventory levels and days of inventory on hand within its network. One of the investments also includes a new, nearly 600,000 square foot distribution center opening in early 2023 in Central Ohio. Finally, there is a focus on broad access to components as a laboratory distributor, which is a differentiator for current customers connected to the Cardinal Health ™ Laboratory Products and Services part of the business.

“We view our role as enabling healthcare to be delivered; our customers count on us for our strategic partnership when it comes to reliability of laboratory supplies,” Berlin said. “So, our commitment to the healthcare ecosystem is something that we take very seriously.”

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