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Driving healthcare systems toward success Avoid those bumps in the road with smarter freight management


H


ealthcare mergers and acquisitions are occurring at record speed, result- ing in some of the largest healthcare systems to exist in U.S. history. There’s also a seismic shift from inpatient to outpatient care, more hospital-owned physician practices and a significant increase in system-managed urgent care clinics. Consequently, healthcare supply chain leaders who work within these environments must find ways to navigate this new terrain. Some have yet to start the journey while others are well on the path.


A need to retool


Supply chain represents 30 percent of a hos- pital’s operations and those performing at the top are the organizations that are able to reduce costs without sacrificing quality. How does freight management, a vital, multifaceted responsibility, fit into this new paradigm? By also changing the way it functions. Large healthcare systems are realizing they are miss- ing opportunities in other areas of their freight expense and need to move beyond the tradi- tional inbound vendor management program. “The most challenging task is scaling


transportation models that were designed for single sites of care or small health systems that have evolved into a large and diverse system, clinically and geographically, in a rela- tively short span of time,” said Rick Magyar, Senior Manager of Product Development at OptiFreight®


Logistics, a division of Cardinal


Health.™ “Instead of looking at the whole picture, most have brought on separate ven- dors as new needs arise — this is often even handled directly by various people in differ- ent departments that are unaware of other existing resources they could have utilized. Because of this trend, systems lack visibility and control over full transportation spend.” Take enterprise resource planning (ERP) systems as another example. They may be very good at capturing and reporting financial data but they can’t produce the transactional details supply chain needs to identify and analyze all of the various transportation activities and trends taking place. Was it shipped via small parcel carrier, courier or freight carrier? What level of service was used? Is the shipping rate competitive? There is still a lot of important information missing. “It’s true a purchase order provides depart- ment level detail, item cost, item quantity, cost center, etc., however it does not connect with the freight and logistics transaction activity,” said Magyar. “Without having access to these details it is nearly impossible for supply chain or materials management leaders to clearly know where to focus resources, time and


energy to impact freight and shipping. Even if they focus on an area with high spend they still would not have the data necessary to properly diagnose problems and identify opportunities to make meaningful recommendations for improvement.”


With healthcare facilities bearing greater financial risk they need a complete freight management system structured with pioneer- ing tools specifically designed to strengthen and support an organization’s mission, not hinder it.


“The focus of an effectively managed inbound and outbound freight program is to avoid a transportation infrastructure that masks broader logistics, supply chain, and inventory types of problems,” asserted Magyar. “Without effective management which includes visibility, goals, metrics, pro- cess management and improvement, small supply chain problems can eventually become big problems that transportation alone can’t fix. That’s when you have a higher likelihood of negatively impacting quality outcomes and patient safety.”


Also, keep in mind that negotiating a good rate alone won’t guarantee savings if other hidden gaps remain. Consider all the factors at play or that “great” carrier pricing agreement you just executed could end up costing your facility even more money and time. Reflect on how your nursing staff thinks for a moment. When a clinician needs important paperwork delivered by 5 p.m. the next day, he or she probably isn’t thinking about the most cost- effective way to do it. They’re thinking about their patients and how to ensure that the parcel arrives at the appointed destination on time. Understandably, they often choose the more expensive overnight service. “Driving an efficient freight and shipping program takes compliance — and compliance starts with education and requires consistent reminders,” said Chris Mathew, Director of Same Day Solutions at OptiFreight®


Logistics.


“This can be a significant challenge, especially as health systems grow — both in the number of people making daily shipping decisions, and in evolving their offerings to serve a wider demographic and/or geographic area with various delivery needs such as home delivery, courier, international, large freight, and more. The more separation that exists between users of the transportation system, the greater the chances are for deviation or circumvention of the system. Because of these challenges, even a well-designed system eventually becomes lit- tered with new carriers and couriers that aren’t part of the centralized system, or habitual utilization of the wrong carrier or service level


to ship items,” continued Mathew. “Lack of visibility to shipping practices and disparate systems keep these problems hidden.”


Try another vehicle “OptiFreight®


Logistics Advanced Solutions


enables health systems to make the invisible visible through comprehensive analytics, deep insights across inbound, outbound and same-day shipments, with processes and systems to control compliance and resources to drive compliance through change manage- ment” said Magyar. “We recently brought on a large IDN system that was on a competitive program. In our first two weeks of auditing same-day invoicing, we sent hundreds of invoice line items back to a courier because the charges didn’t match the master route file or contractual pricing. The IDN’s courier provider said they had only heard from the previous company twice in the past few years to question charges.”


A complete transportation solution also mitigates the frustrating process of managing inbound shipments, where traditionally the suppliers are in control. “Hoping the suppler will make the ‘right decision’ to comply is not an effective strategy,” added Magyar. “OptiFreight®


has a program to effectively


manage these vendors and drive program compliance through our proprietary technol- ogy and an entire team dedicated to driving supplier compliance.” OptiFreight®


Logistics Advanced Solutions


corrects issues with courier services as well, which Mathew says is even more difficult to manage. “Arguably, this area has the highest degree of complexity and is typically one of the highest average cost-per-shipment areas, making compliance significantly more im- portant,” he said. “Departments often source their own service providers instead of using existing partners that are likely stopping at the same buildings. It is important to note that the different courier companies do not collaborate with one another, and generally the details of the work they do is not passed on to the health system.” OptiFreight®


Logistics Advanced Solutions


also provides performance vs. benchmark recommendations on how to improve; cus- tomized, detailed reports developed around supply chain’s specifications; the ability to pull granular data on each shipment; and a lot more. Can your freight management pro- gram deliver the same? Put the purchasing power back in your own hands with a new generation, comprehensive, freight manage- ment program. Visit cardinalhealth.com/ optifreight-advanced to learn more.


hpnonline.com • HEALTHCARE PURCHASING NEWS • August 2018 49


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