What we do, and the order we do it in.

Before you commit capital, you need an assessment that isn't selling you the capital commitment.

We sell no product, technology or distribution service after the assessment. That independence is why boards believe the answer, including when the answer is not yet.

The business case is built backwards from your manufacturers. We map the manufacturer community your spend is concentrated with, estimate each one's cost-to-serve from its category and channel structure, size the portion a CSC and an LSA program can reach, and model capture over three to five years. Inventory, freight and labor savings are added on top as complementary benefits. A case built this way is usually several times larger than the internal-efficiency version, and easier to defend, because the board can see the mechanism.

The largest part of the assessment is not the spreadsheet. It is governance. The biggest risk to a CSC is taking on more than can be managed, on timelines that cannot hold, without a strong relationship between supply chain and clinical leadership. We test that before the building, along with culture, organizational structure and the operating model, and we say plainly what has to change first.

Deliverables: the correctly directed business case and financial pro forma, an LSA valuation by manufacturer, a governance and readiness assessment, the future-state network and operating model, and a phased roadmap.

The LSA is a trading instrument, and your team should learn to negotiate it like one.

The Logistics Service Agreement defines what the CSC does for each manufacturer, what that manufacturer pays for it, and the behaviors both sides commit to: scheduled orders, case-level units of measure, electronic payment, EDI, sales data returned. It sits alongside the supply agreement, whether that agreement is a GPO contract or your own, and its terms take precedence where the two meet.

We have sat on the manufacturer's side of the table, and we know where the costs actually are. We use that experience to teach your team how to negotiate, not to negotiate for you: your team leads every negotiation and owns every agreement. Most self-negotiated LSAs recover a fraction of what is available, because the team negotiating them knows its own costs, not the manufacturer's. We close that gap. We help your team design the program, build the tools and research behind each negotiation (each top manufacturer's cost-to-serve profile, the term sheets, the targets), and prepare for each conversation, so it is an informed and intelligent negotiation rather than a guess.

An LSA program is never one and done. Manufacturers reorganize, products and channels change, agreements renew, and the terms have to keep pace. The program needs constant expert attention, so we train the people who will run it to build that expertise and maintain an effective LSA program long after our engagement ends.

Sequence is half the value. Execute the LSAs before you standardize: standardization is the concentrated market share the manufacturer is paying for, and once it is given away it cannot be sold. For a CSC under construction, start at least a year before inbound go-live. Then each signed manufacturer goes through onboarding (contract, data, EDI transaction sets, operating procedures), and we help your team run it, because terms that are never operationalized are never paid.

We also review existing LSA programs with your team. Most health systems that built their own CSC are leaving funding uncollected on agreements they already have.

A CSC is designed for the next ten to twenty years, not for the day it opens.

Several of the CSC models we implemented are still operating after twenty years. The ones that last were built with room to change, because the health system around them never stops changing. Mergers and acquisitions come faster, systems take on hospitals under management, and the care network keeps spreading.

That spread is the design problem most CSCs miss. Health systems are growing less by adding large acute hospitals and more by adding many small care sites: clinics, ambulatory surgery and procedure centers, urgent care, imaging, infusion, and home and post-acute locations. Each orders less, more often, in smaller units, with little storage and often no dock. A CSC designed around the hospitals it serves on opening day struggles to serve hundreds of small nodes efficiently. We design for that network from the start: order and delivery models for low-volume sites, picking and packing in smaller units of measure, routes built to reach many small stops, and an operating platform that adds a new hospital or clinic as a new customer rather than a re-implementation.

Do not run the CSC on your ERP or EMR. Neither is configured for distributor-grade order-to-cash, and replacing them mid-operation is expensive and disruptive. The CSC needs its own demand planning, distribution management and warehouse management systems, connected to the rest of the health system by EDI, so that it sells to its customers rather than transferring stock to them. Built that way, it can serve acquisitions, managed and affiliated sites, non-acute locations and 340B entities without re-platforming.

Labor is the largest recurring cost, so the facility is designed around travel time: where each item is stored and picked, how orders flow to the dock, how deliveries are sequenced to procedural areas and made store-ready for par locations. Self-designed CSCs most often start too small for the growth and the services that follow. We size the site and the utilities for every service the center might take on, and plan for adding them one at a time once the core is stable.

Transport is centralized and contracted to third-party carriers, not owned. A health system should not carry the liability for traffic fatalities, or the driver recruitment problem every industry now has. Automation is assessed against requirements during the design, not chosen in advance, because the market changes fast and every option has costs.

On implementation engagements we do not ask our client executives to spend political capital defending the design. If the design is right and someone pushes back on it, we take the heat. That is agreed in advance, and it is one reason our projects finish on time and on budget.

Most underperforming CSCs are fixable, and the fix is rarely more internal efficiency.

A CSC that is not paying back usually has one of three problems. It is contracted badly, with LSAs that were signed late, never operationalized, or never written. It runs on technology that was configured by people who have never set up a distribution business, often the software vendor's own team. Or it was sequenced wrong, with standardization and conversions done before the commercial terms were in place.

We start with two days on site: observation, interviews and data. Then we make recommendations that are each tied to a dollar figure, and if you do not have the people to carry them out, we bring the people who do. The usual outcome is a rebuilt business case pointed in the right direction, and a team equipped to renegotiate its LSA program against a cost-to-serve target the original team did not know how to reach.

Manufacturers are adversaries at the table and collaborators after it.

Once an LSA is signed, the relationship becomes operational, and most health systems are not set up to run it. Neither, often, are the manufacturers. We translate the commercial intent into working order, data and payment flows, set the measures and scorecards both sides are held to, and keep both sides accountable and on time. Value has to flow in both directions. If the manufacturer does not win, the funding stops.

Every CSC needs a wholesale distributor license, even if it never ships a drug.

State boards of pharmacy generally regulate the wholesale distribution of drugs, devices and medical supplies, so a CSC needs a wholesale distributor license in the state where it operates and in each state it ships into, even when every customer belongs to the same parent health system and no drug is in the building. A system with hospitals in several states, or more than one CSC, should hold the National Association of Boards of Pharmacy's Drug Distributor Accreditation (formerly VAWD), which eases licensing across states and is a prerequisite in some. Once drugs are in scope, DSCSA, DEA and FDA requirements follow.

We write the policies and procedures, train the staff, and prepare for and support the on-site surveys that licensing and accreditation require.