Many hospitals and health systems overlook one key savings opportunity: reducing the amount spent on inbound and outbound shipments.
Hospitals across the U.S. can easily identify savings opportunities and cut costs related to logistics by leveraging data and a comprehensive analytics solution, according to Marc Long, director of business intelligence at OptiFreight® Logistics, a Cardinal Health company.
Mr. Long spoke with Becker's Hospital Review about how data may transform healthcare logistics management and how hospitals can tap an analytics solution to drive savings and efficiencies in shipping and transportation.
Editor's Note: Responses were lightly edited for length and clarity.
Question: Why is data important when it comes to reducing spend on shipping costs?
Marc Long: Shipping costs are often an overlooked area for savings within hospital supply chains. Along with having the right mix of inbound and outbound services and a strong collaboration with your logistics management partner, data and analytics are also critically important. There are three key reasons. First, it will increase transparency into your spend. Health systems need to monitor overall performance across all their locations and compare individual site performance with others to find areas for improvement. Second, data will help find new savings opportunities. We want to apply analysis on transportation activities, which will show where organizations can manage more shipments, optimize modes and services, and also reduce add-on costs where possible. The data is likely going to show you a lot of opportunities for savings you didn't know you had. It can also show you the best place to start to get the best return for your time. The third reason data is important is to create continual value year after year. An easy-to-use reporting system will allow you to see how you're tracking to prior year performance and break down the components to show savings.
Q: How can health systems get better visibility into their shipping trends?
ML: There are many key performance indicators logistics providers use to manage their programs, including cost per pack or annual savings. But these are just single data points that don't tell the full story. At OptiFreight®Logistics, we offer a comprehensive view into the total value of your logistics management program. TotalVue™ Analytics is a new comprehensive analytics solution that can help hospitals and health systems see how even small changes impact costs. We consider everything that influences freight costs — including shipping methods, volumes, rates and add-on costs — to help healthsystems understand their spend and see actionable steps.
Q: In your view, is managing inbound freight from suppliers or outbound shipments from care sites more important?
ML: Every hospital is different, but both are incredibly important opportunities for savings. I don't think you can focus on just one. At OptiFreight® Logistics, we use analytics to help determine where there are savings opportunities across all areas of your logistics management program. One important way to monitor performance is to use benchmarking from your industry to drive improvement. We monitor a healthsystem's performance against its peers and compare facilities that have similar inbound or outbound profiles. These data points help healthsystems fine-tune their program to reach savings goals such as a lowering cost per pack, achieving a higher ground percentage or reaching a higher number of participating locations within the healthsystem.
Q: Can you share an example of how a health system might use TotalVue™ Analytics to meet a savings goal?
ML: Let's talk more about cost per pack. Many things play into that single number, including changes in volume of freight, service mix, general rate increases or fuel. Without having clear program visibility, it is hard to know which lever to pull to lower your cost per pack. The new TotalVue™ Analytics platform has features that allow users to look into the individual components and identify things like a supplier that is shipping too many packages overnight, or a location that is not using the program to get shipping discounts. By reviewing the same data points each time, healthsystems can set measurable goals and track their performance to those goals.
Q: With rapidly changing transportation needs due to the COVID-19 pandemic, how can health systems keep a focus on savings initiatives like shipping?
ML: Our TotalVue™ Analytics platform will bring valuable information on shipping costs to hospitals directly and in a simple way. We have sophisticated technology and knowledgeable account managers who work hard so hospital systems don't have to think about shipping costs each day. OptiFreight® Logistics is an industry leader in healthcare logistics management. In 2019, we managed more than 20 million shipments and saved customers over $537 million. Having a strategic logistics partner has never been more important. During this pandemic, we have helped health systems with all of their evolving transportation needs, such as setting up courier routes to help support increased COVID-19 testing, handling more international imports of personal protective equipment and brokering more large freight deliveries of medical equipment and bulk supplies.
To learn more about OptiFreight® Logistics, click here.