As the healthcare industry moves towards a value-based model, the supply chain has carved itself out a critical role. Due to increased demand for streamlined processes and disruptive innovation in healthcare, the future of logistics focuses on business intelligence and technology.
As all eyes are on the Internet of Things (IoT), information technology, natural language processing, machine learning, 3D printing, and blockchain, the primary trend that will remain deciding in 2020 (as it has been in the previous years) is the changing consumer behavior, increasing demands by healthcare markets, and improving patient care.
Nevertheless, a supply chain rich in data has everything that stakeholders need to tackle various industry challenges like improving the patient experience. In the following years, healthcare providers are expecting innovative technologies to help them deliver better care at lower costs by facilitating supply chain advancements. Let’s take a look at technologies that are disrupting the healthcare logistics industry.
The Complexity of Healthcare Logistics
Advanced technologies are disrupting logistic companies to improve the healthcare ecosystem business models. In essence, the healthcare supply chain management is unique because all the stakeholders involved have their own interests to protect. For example, healthcare executives may want to buy the most affordable quality products, while healthcare providers may wish to use a specific item because they were trained with it. When supply chain goals are not aligned within an organization, the supply chain management process can become fragmented and inefficient. Organizations feel the pressure to take into account different viewpoints, requests, and product budgets.
Ultimately, what clinicians want most is having the products when they need them. But to make sure that it happens, they often opt to manage or hoard their supplies, which can contribute to off-contract spending and cost variance. Those expenses are hard to uncover. Also, the time spent on waiting for someone to deliver or looking for supplies they need is another invisible cost. Independent goals and misaligned incentives can disrupt the flow of a healthcare organization’s supply chain.
Logistics optimization tools
Thanks to AI-supported logistics tools developed by companies like Amazon and UPS, logistics optimization has recently made huge strides. Health care is increasingly moving beyond the walls of hospitals and medical centers, which is why healthcare organizations must adopt best practices from these logistics leaders. For example, UPS invested in developing its On-Road Integration and Navigation system, which helps their drivers take the most optimal routines when delivering medical supplies and other packages. Since delivery points exponentially increase beyond their walls, health institutions and systems could use this type of logistics technology to get patients, clinicians, and products to the right places and at the right time.
Artificial Intelligence (AI)
AI in healthcare has already transformed the sector, improving value-based care delivery. It is praised for its ability to allow the use of behavioral, socioeconomic, and genomics data to predict future patient needs. As for the supply chain area, AI can be used for better planning for the types of services and products needed to support patient care. Furthermore, it can help ensure the availability of products where they are needed by helping predict potential backorders or shortages while avoiding overstocking products that are at risk of expiring before usage.
Internet of Things (IoT)
When it comes to IoT applications, many of them have proven very beneficial in other industries, and there is nearly endless potential for its use in healthcare logistics. For example, hospitals can use the IoT technology to enable data sharing of analytics with their system-wide, cloud-based inventory management. This will help connect processes and products with their actual cost. Many experts think that today’s healthcare supply chain isn’t just about manufacturing, transporting, and distributing medical products. To evaluate the value chain properly, we must view healthcare data holistically and take both direct and indirect costs into account. This evaluation requires a lot of data collected via IoT technology, as well as analyzed, aggregated, visualized, and acted upon.
One of the most important factors affecting the costs of a healthcare system is the automation of manual processes. More and more industries are adopting auto-ID and capture technology, which is set to remain essential to both improving the accuracy and automating data capture. An increasing number of products gets labeled with unique identifiers and other production data (e.g., expiration dates and serial numbers). With IoT technology, healthcare organizations will be able to track better which products are used on which patients for patient safety and healthcare costs.
Utilizing drones in healthcare will unlock the opportunity to support the supply chain in healthcare beyond the hospital walls.
Drones or unmanned aerial vehicles (UAV) are most prominent in video production, but many other industries are also utilizing them (e.g., agriculture, infrastructure development and maintenance, construction, etc.). A few years ago, Zipline partnered with Gavin and UPS to use drone delivery when barriers to land transportation prevented supplies from reaching injured or critically ill patients. Using drones, blood supplies were successfully delivered to transfusion facilities in Rwanda. In locations with infrastructure deficiencies (such as nonexistent or impassable roads) and supply chain challenges, remote health centers can receive their deliveries via drones.
In case of emergencies, time is of the essence, and a faster response would potentially save lives and prevent medical trauma. Deploying samples via drone would help smooth out the inflow of test samples into labs by ensuring that specimens arrive quickly and efficiently. Instead of having a courier drop a load of samples once or twice per day, a drone would ensure a steadier flow of samples to improve workflow management.
One of the constant concerns for healthcare providers (because it can increase their expenses) is making sure people get to and from their medical appointments. In 2016, BMC Health Services Research published a retrospective study showing that community hospitals average about 62 no-shows per day, which costs the health system $3 million per year. However, this age-old problem is alleviated thanks to ride-sharing companies, such as Lyft and Uber. Some healthcare providers have even teamed up with Uber in order to reduce the number of late arrivals and no-shows.
In the case of MedStar Health and Uber partnership, the collaboration has resulted in returns. Uber costs less than a regular taxi service, and customers can hail a ride within an hour, which drastically reduces the chance of not showing to an appointment. In 2018, Uber launched Uber Health – a platform available to healthcare providers, hospitals, rehab centers, letting clinics, and others. It allows them to assign rides for their patients via a simple, centralized dashboard. The patient receives a text notification that the organization has booked a ride for them (along with the information regarding when and where the ride will pick them up).
Smart logistics platforms
To lower labor and material costs in procurement and improve efficiency, many healthcare companies have emerged to provide real-time freight bookings and pricing services. Services and apps such as Cargomatic, DashHaul, Transfix, Convoy, and Uber Freight are connecting carriers and shippers via smart logistics platforms. Instead of going through a lengthy process over the phone, shippers can now view available trucks and book them directly with just a few clicks, while carriers can quickly locate new freight capacity. Some healthcare organizations are establishing partnerships with 3PL providers and take advantage of the logistics technology that 3PLs provide. Smart logistics platforms are transforming the process and speed in which shipments are brokered, removing the time wasted on the booking process, enabling the freight booking market to operate more efficiently, and getting trucks to the right load in a shorter time. It is expected that the adoption of these platforms in the healthcare industry will increase as matching algorithms, freight pricing, and mobile applications become more convenient and sophisticated.
All of these emerging innovations and technology startups are set to disrupt healthcare and transform the logistics industry, making the healthcare sector more automated and efficient. It offers great potential for the automatization of decision-making and process optimization in logistics. These innovation areas are only a few important drivers of change in the healthcare logistics industry. Others include 3D printing, digital identifiers, cloud logistics, logistics-as-a-service (LaaS), and blockchain.
Currently, the coronavirus pandemic is forcing global healthcare to leverage advanced solutions and logistics strategies to ensure population health. As these technologies continue to grow and transform the industry, both healthcare organizations and logistics providers will need to identify the innovation areas relevant to their business and leverage its potential to evolve.