Modern Logistics for Modern Medicine

Hospital implements freight management program, sees benefits

Bohemia, NY  August 4, 2002  In a bid to keep its services affordable, Carle Foundation Hospital, of Urbana, Ill., recently implemented a freight management program that it said is already reducing costs in key supply and service areas. The program, from Internet-based application service provider TransportGistics Inc, was introduced to the hospital through the Group Buy program of Premier Inc., the hospital's group purchasing organization.

The adoption of new logistics technology in healthcare management has been slow, said Carle Hospital's manager of capital purchasing, Jeff Hesser. "Freight is usually considered just a natural part of the cost of supplies, so most healthcare providers are slow in recognizing the potential in managing transportation."

Carle Foundation Hospital is a 295-bed tertiary care facility with more than 25 departments, including surgical, cardiovascular and neonatal intensive care units, and the region's only Level III Perinatal and Level 1 Trauma centers. It is also one of the first major hospitals to apply modern logistics technology to both its inbound and outbound shipments of materials and supplies. "We are an innovator," said Hesser. "We are always looking for what can be done to drive down our operating costs."

The transportation management utility tools designed by TransportGistics enable Carle to perform a transportation needs assessment and then source, negotiate, procure and execute their daily transportation requirements, according to the provider.

TransportGistics said one of the features of TGI Freight Management is its ability to identify simple, incremental solutions for transportation management and logistics functions within the supply chain. The company explained that it provides a combination of products and services that affect and improve incremental pieces of larger transportation management issues. It also enables users to unbundle the costs of transportation, identify areas of inefficiency and deal with the inefficiencies one at a time.

Two of the areas where Carle found its most significant savings were in the actual cost of freight and in the payment of failed service invoices. "We found that our discounts for outbound freight improved significantly," said Hesser. "And the invoices for failed transportation services that would otherwise have been paid more than covered any costs to implement the service." He added that this was a victory in the ongoing challenge to decrease the hospital's variable costs in a market of growing financial pressures and dwindling reimbursements.