What Do Healthcare Supply Chain Managers Think? Excerpts from a Focus Group of Supply Chain Leaders

Two weeks ago, members of my senior management team and I traveled to Orlando to attend the 2012 Spring IDN Summit. Before the summit officially kicked off, I sat down with supply chain leaders at some of the top healthcare organizations in the country to get their insight and feedback about their healthcare transportation needs. The conversation was fast and furious and a number of themes emerged. (Italicized comments below were contributed by participants and taken directly from a transcript of our session together.)

Where’s the data?

Unless an organization has undergone a transportation effectiveness diagnostic (only one of them had) they honestly had no insight or understanding of their actual transportation costs. As one supply chain manager put it:

“I can’t put a finger on our transportation expense, but I suspect that it’s pretty significant.  And when we think about the enormity of that,
where could that go to in terms of cost reductions and efficiencies?

“In healthcare, our entire business is based upon reacting to data; that’s what we do.  So I’m convinced if you provide the right data, we’ll make the right
decisions.”

Transportation isn’t tactical; it’s strategic

There was a lot of discussion about how transportation resides within the operations of the supply chain, but given the breadth of touch points, it should instead move to a strategic initiative at the C-Suite level.

“That’s a really key point because when you get to the heart of it, it’s not just the cost of the actual transportation, but it’s that opportunity cost…. What happens if a case doesn’t occur?”

“It’s not just the cost. There’s additional impact that can’t really be calculated in the terms of cost. For example, what happened with the patient and his or her family who have taken time off from work and scheduled all this? What about the physician?”

“And then when we put all that together and take it to the C-Suite, it’s like, ‘Oh my gosh!’  Now you’re talking about something that’s a lot more than just a line item on some expense sheet or profit and loss statement.”

Times have changed

As IDNs continue to grow, the complexity of those organization’s systems are not being well served with outdated transportation solutions.

“It’s about the lack of elasticity in the systems we have today.  We have old systems that are built for point-to-point delivery, yet it’s outside of the hospital walls.”

“Initially we think we can handle everything because we’re small enough.  But as it starts to grow, we lose control over that.”

Outsourcing services that are not core competencies

We heard repeatedly that many other areas within IDNs are outsourced (laundry, food service, EMS) because those are not core competencies of a healthcare provider/organization. Yet many employed their own transportation staff and had minimal technology for tracking.

“Making folks aware of healthcare transportation costs is key to controlling this animal. We’ve done a lot of the work ourselves to outsource a lot of services because it’s not core to providing patient care. Let’s apply the same philosophy to transportation, warehousing or whatever it is.”

“The sign out front says XX Health Services; it doesn’t say XX Transportation or XX Business Services. We have to apply the same methodology that we claim to be successful with on the clinical side to our business side.”

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