Quantitative Survey: Intra-Company Logistics

Introduction

As Leading Health Systems undergo rapid transformation and expand in size and scale, logistics and the coordination of transportation across the organization becomes an increasingly important area of focus for healthcare executives to maintain and improve operational efficiency. Intra-company logistics – defined as the efficient and effective transportation of material goods (e.g., drugs, labs, equipment, samples) throughout the organization – can transform transportation into a strategic asset that more effectively utilizes scale, reduces risk, eliminates redundancies, and centralizes services.

This report covers the findings from a quantitative survey conducted by The Health Management Academy among Chief Operating Officers (COOs), Chief Financial Officers (CFOs), and Chief Strategy Officers (CSOs) at 21 Leading Health Systems about their awareness, perspective, and strategy around intra-company logistics.

Key Findings

  • All responding executives report achieving systemness is very important to their health system.
    • In order to achieve systemness, health systems have implemented a variety of strategies, most commonly improved clinical standardization (95 percent), improved/changed the supply chain (86 percent), and/or increased IT interoperability (81 percent).
  • Reflective of health systems’ focus on achieving systemness, 75 percent of responding executives report their organization has a defined strategy for intra-company logistics.
    • Health systems have most commonly integrated/centralized redundant operations (70 percent), and/or deployed technology to better track the movement of items for complete chain of custody (45 percent) to improve logistics and transportation across the organization.
  • Almost half (48 percent) of responding executives report the efficiency of healthcare transportation has a high (11 percent) or medium (37 percent) impact on care delivery at their organization.

Approximately three-quarters (76 percent) of responding executives report their health system has been involved in activities that have increased the scale and/or complexity of the organization in the last 18 months (Figure 1).

These activities commonly include the acquisition of a hospital, health system, physician group/practice, and/or ambulatory sites; mergers; partnerships with other providers including physician groups, health systems, and/or health plans; joint ventures; joint operating agreements; and/or medical group expansion.

Of the health systems that have grown in scale or complexity, most (69 percent) have seen an impact on the organization’s transportation operations, with a majority (56 percent) of executives reporting operations have been somewhat impacted (Figure 2).

Results

Reflective of this growing complexity and impact on organizational operations, most responding health systems have worked to physically integrate different entities across the system, with over two-thirds (67 percent) of health systems combining logistics operations and 38 percent combining service lines (Figure 3). Other strategies executives are utilizing to integrate their health systems include combining Electronic Health Records, organizational restructuring, and focusing on clinical growth and exportation of expertise.

All responding executives report achieving systemness – defined as delivering a similar patient-focused, seamless and high-quality care experience across the many parts of the system to maximize value for customers – is very important to their health system. In order to achieve systemness, health systems have implemented a variety of strategies, most commonly improved clinical standardization (95 percent), improved/changed the supply chain (86 percent), and/or increased IT interoperability (81 percent) (Figure 4). Additional common strategies include improving care coordination and care management (76 percent), implementing brand experience initiatives (76 percent), and improving or changing the logistics and delivery of the health system (67 percent).

Most (86 percent) responding executives are very (48 percent) or somewhat (38 percent) familiar with intra-company logistics, or the efficient and effective transportation of material goods (e.g., drugs, labs, equipment, samples) throughout the organization. (Figure 5).

Reflective of health systems’ focus on achieving systemness and improving efficiency, 75 percent of responding executives report their organizations has a defined strategy for intra-company logistics (Figure 6). An additional 10 percent of respondents indicate their organization is in the process of developing a strategy around intra-company logistics. 

While just under one-third (30 percent) of responding health systems handle the transportation of items across the organization in-house, half (50 percent) of responding health systems use a combination approach, using both in-house and external services (Figure 7).

In order to improve logistics and/or transportation across the organization, health systems have most commonly integrated/centralized redundant operations (e.g., print, mail, pharmacy, lab, etc.) (70 percent), and/or deployed technology to better track the movement of items for complete chain of custody (45 percent) (Figure 8). Fewer health systems (15 percent) have deployed advanced equipment and supply sharing infrastructure.

“We have an opportunity to reduce the costs of internal logistics. It is in insourced and has grown as the system has grown without the expertise or focus to manage this process.” (COO)

Although most health systems have a defined strategy for intra-company logistics, the majority of healthcare executives are not aware of the financial impact of transportation on their organization, with 60 percent of respondents reporting they do not know how much their organization spends on item transportation (Figure 9). Twenty-five percent of responding executives know the exact amount their organization spends on item transportation, while fewer (15 percent) have an idea of what percent of the budget transportation accounts for.

Intra-company logistics transforms transportation into a strategic asset that more effectively utilizes scale, reduces risk, eliminates redundancies, and centralizes services. As health systems are highly focused on achieving systemness, executives recognize transportation is an area for improvement in efficiency. Less than one-third (28 percent) of responding executives ranked their health system’s current transportation operations as efficient (22 percent) or highly efficient (6 percent), while over half (56 percent) ranked their current transportation efficiency as neutral (Figure 10).

Reflective of the need for improved efficiency, almost half (48 percent) of responding executives report the efficiency of healthcare transportation has a high (11 percent) or medium (37 percent) impact on care delivery at their organization (Figure 11). No executives reported transportation efficiency has no impact on care delivery.

Executives that report a high or medium impact report that the movement of items across the health system is tied to the timeliness and quality of care, as well as the general efficiency of the organization.

“The organization can't operate without the right supplies being at the right place at the right time.  If supplies are not available then care is impacted.” (CSO)

Methodology

In April 2018, The Academy conducted a quantitative survey of Leading Health Systems regarding their awareness, perspective, and strategy around intra-company logistics. Twenty-One Chief Operating Officers (COOs), Chief Financial Officers (CFOs), and Chief Strategy Officers (CSOs) responded. Respondents represent health systems with an average Net Patient Revenue (NPR) of $3.0 billion that own or operate 142 hospitals with over 40,000 beds and approximately 1.9 million admissions annually. This report reviews and summarizes the findings of the quantitative survey.  

Participating Health Systems

MedSpeed

Healthcare is changing. Healthcare organizations are growing and care continues to expand outside of the four walls of the hospital. This growth provides more capacity to utilize scale to create healthcare companies that are better functioning, smarter organizations. Intra-company - the enterprise-wide movement of physical materials, such as blood and specimens, pharmaceuticals, supplies, equipment, print, mail and more - is the foundation of the healthcare supply chain. Every health system needs transportation for its clinical operations to function. MedSpeed is the market-leading organization that is changing the way the healthcare industry views healthcare logistics by leveraging it to help health systems and other healthcare organizations integrate. MedSpeed treats transportation as a strategic asset that works as a means to achieving greater operational efficiencies, reducing risk, more effectively utilizing scale, eliminating redundancies and centralizing services. www.medspeed.com.

 

The Academy extends its appreciation to MedSpeed for providing funding for this project.

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