Medline Launches Activity-Based Supply Management Program

MUNDELEIN, Ill - To help healthcare facilities determine their actual supply chain costs, Medline Industries, Inc., recently launched TrueCost, an activity-based supply management program that breaks down supply and distribution costs and guarantees quantifiable cost savings for its healthcare customers.

TrueCost begins with Medline's logistics and operations team conducting onsite due diligence to determine a healthcare system's actual supply and distribution cost broken down line by line, distinguishing between what the manufacturer charges for products and what the distributor charges to distribute them. Once that information is obtained, Medline works with the facility to identify areas to improve efficiency and reduce cost.

"TrueCost was designed to address the flaws in the cost plus distribution program, a widely used system which combines the cost of the product with an overall mark-up," said Tim Jacobson, senior vice president of corporate programs for Medline. "By doing this, the health system cannot identify its actual costs, and, as a result, is unable to clearly analyze where it can achieve real cost saving and other logistical efficiencies."

Medline TrueCost is different from the costs plus system because it separates out the supply and distribution costs, identifies cost savings within those areas and guarantees savings by a minimum of 10 percent from the healthcare facility's current distribution expenditures.

"Most importantly, with TrueCost our goals are aligned with our customers' goals," said Jacobson, "since the more efficiently our customers' supply chain is run, the more cost effectively we can operate our business."

Saving elements in the TrueCost program include:

· 10 percent reduction from the health care system's current distribution services.

· Standardization and utilization programs for further cost saving and efficiency.

· Inventory cost reduction through Medline's ACCESS 90 program. Medline will buy back up to 30 days of inventory and issue a credit or a check to the facility for that inventory.

· Lower supply acquisition costs for those supplies converted to the Medline brand.

The facility will be billed monthly through an activity fee determined by the services provided. The bill will be broken out by the activities performed so the facility can identify the cost drivers for the predetermined services being provided. As part of the TrueCost partnership, Medline will provide logistical support and consulting services at no additional fee, including par level area review and redesign, warehouse redesign and setup, old equipment cleanup plan, materials management review, inventory review, reordering and purchasing review and other services.

Medline is a leading provider of cost management programs and logistics consulting services to the healthcare industry.

Source: Medline