To generate savings from logistics, there's more than meets the eye

As healthcare organizations confront persistent financial challenges, ambulatory surgery center (ASC) leaders are looking at all areas of their operations to find cost savings that won't negatively affect the quality of patient care. Streamlining shipping and logistics management is a strong contender for savings, but misconceptions exist that often prevent leaders from fully realizing this opportunity.

Becker's Hospital Review recently spoke with Carson Friend, national vice president of sales & services at Cardinal Health™ OptiFreight® Logistics, to debunk several common healthcare logistics management myths.

Remember that in a logistics management program, technology, data and the human component are equally important

Shipping is complex. An automated technology platform can help ASCs analyze their logistics strategy and collect key data. Technology can also increase visibility and flexibility and improve program performance. However, technology and data alone can only go so far.

"Aside from what a [healthcare] provider pays to ship a package from one location to another, many things have to happen behind the scenes to drive the greatest cost savings and efficiencies for all shipments coming into and going out of a healthcare organization and those things don't happen automatically. They require people," Mr. Friend said.

For example, suppliers must be connected and then it's imperative to monitor compliance with the current contract. It's also important to understand organizational goals and upcoming projects where logistics management can play an important role.

Even if the ASC team has access to data and analytics, they may not have the bandwidth to analyze them and then identify and execute on opportunities to drive savings and efficiencies. This is particularly true in today's tight labor market. ASCs need to view their logistics management provider as extension of the team, offering expertise that drives swift and continuous value.

"A customer of ours — John Waller, DM, system director, supply chain distribution at CommonSpiritHealth — recently told us, 'I highly value data analytics as an important tool to gain greater visibility, track spend and make more informed business decisions," Mr. Friend said. "But what good is just having the data? I don't have the time and resources to sift through it all myself to help guide our success. For that, I need a team of logistics experts at my side. And that's exactly what I get with OptiFreight® Logistics."

Don't let a rate card give you tunnel vision

Many providers think that rate cards give them visibility into exactly how much they are paying for shipments. In reality, there's more to the story.

ASC leaders must look for other areas where fees could be built in, such as inflated accessorials, consulting or assessment fees, transaction fees or fees to access customized or "premium" reporting.

"You should also consider the value of additional support resources that help identify opportunities for savings and shipping program optimization. Those services may be at your disposal for no additional cost, but they certainly have value," Mr. Friend said.

Ask whether your logistics management provider is delivering value throughout the entire contract period

Be cautious of large year-one savings guarantees. "I'd challenge you to think about what happens in subsequent contract years. How will your logistics management provider continually drive value and how are they tracking ongoing savings for you?" Mr. Friend asked.

To maximize savings, organizations must ensure that as many small parcel and large freight shipments as possible are shipped through the logistics management provider. More managed volume translates into more savings.

Technology enhancements are one way that logistics management providers can drive additional savings. "OptiFreight® Logistics, for example, has a customer portal that offers proactive shipping advice on outbound shipments," Mr. Friend said. "That allows shippers to make more cost-efficient decisions about shipping modes, while delivering packages in the same time frame."

Don't assume that lower shipping costs mean your logistics management program is fully optimized

Unless an organization is drastically reducing its shipments, it shouldn't expect to see a major dip in shipping spend. It's a good idea to focus on how many packages are being managed, in addition to overall shipping spend. If an organization's managed package volume stays flat or goes down year-over-year, that could be a red flag.

When it comes to lower volumes of managed packages, one possible explanation is that suppliers are shipping outside the organization's logistics management program, translating into lost savings opportunities. It's essential for your logistics management provider to have a team dedicated to engaging directly with suppliers on your behalf. Monitoring ongoing supplier compliance is critical.

Employee turnover could be another contributor to fewer managed packages. New shippers may not be trained on proper shipping procedures. Logistics management providers must provide ongoing training for anyone shipping within the four walls of the ASC. A one-size-fits-all approach won't work. Education needs to be provided in a variety of formats, such as in-person and virtual and needs to be an ongoing effort.


Logistics management is a promising area for driving efficiencies in healthcare. But to be successful, organizations need a partner that understands both healthcare and all of the complexities inherent in logistics.

"At OptiFreight® Logistics, we’re proud to be an industry leader in healthcare logistics management. We know it’s because of our tailored solutions, committed logistics experts and focus on innovation and insights," Mr. Friend said.

To learn more about OptiFreight® Logistics, click here

Copyright © 2024 Becker's Healthcare. All Rights Reserved. Privacy Policy. Cookie Policy. Linking and Reprinting Policy.


Featured Webinars

Featured Whitepapers

Featured Podcast