The (Very Complex) Last Mile in Healthcare

Over the past ten years, nearly ten percent of retail purchases have shifted from in-store to home delivery – a rise of about $364 billion in eCommerce sales. This is considered a revolutionary shift.

But if you want to see a real revolutionary shift, look at the increase in healthcare services at home. The US Centers for Medicaid and Medicare Service (CMS) recently estimated that home health spending would go from $97 billion in 2017 to $173 billion in 2026 – an almost 80 percent rise.

Today, physical and respiratory therapy, dialysis, intravenous administration of cancer drugs and other treatments are happening more and more in the home.

Why? Because it’s cheaper than getting these same services at a hospital or medical office.

But to gain the cost efficiencies of home vs institutional care, the healthcare system requires an efficient healthcare distribution solution to make millions of weekly home deliveries of medicine and equipment.

These aren’t UPS or FedEx types of deliveries because they often require services beyond just the transportation. Healthcare industry distributors and 3PLs that use Paragon’s route planning software are involved in deliveries of:

• Life-saving cancer drugs
• Dialysis machines
• Oxygen tanks, including set-up
• Wheelchairs, walkers and other mobility devices

Often, these items must be delivered within strict two-hour windows. The time parameters are not just about ensuring the patient is home; they’re often more about getting equipment and medicine on site to correspond with a subsequent visit by a healthcare professional, so they can administer the treatment.

Tight delivery windows put huge pressure on delivery fleets to get it right. In fact, in this industry – to borrow a NASA term – failure is not an option.

Poorly planned routes that regularly jeopardize on-time deliveries don’t trigger apologetic phone calls; they trigger urgent action to find courier services and trucking companies that can step into the breach and ensure the delivery window is met.

In these cases, patients and the healthcare providers responsible for the care plan are none the wiser. But the 3PLs or healthcare distribution companies are absorbing substantial, unnecessary costs to deploy this emergency capacity.

One of Paragon’s team – Dave Johnson – who has been working with customers in this sector for many years says, “It’s shocking to me how many delivery fleets in the healthcare sector try to manage these complex, exacting deliveries using manual methods.” For 18 years Dave has worked with healthcare product companies (and their 3PL partners) to help them use advanced route planning software to deliver highly accurate, achievable route plans.

“By automating the route planning process for home delivery, companies easily save tens of thousands of dollars by avoiding back-up courier costs,” Dave says. “And that’s not even factoring in the savings from reduced miles and better fleet and driver utilization. For healthcare product companies, ROI on route planning software is almost always less than one year, and sometimes as fast as three months.”

Tricky operational requirements

Software can assist in managing some of the unique operational requirements when delivering drugs and medical equipment. Here are a few:

• Visibility to the location of drugs in transit. For all parties involved in the distribution of pharmaceutical products, it’s essential to know at all times where drugs are in the process. When it comes to the final mile, routing software can track status every step of the way, from pick up at the warehouse through to receipt by the patient. For quality assurance tracking, the software can also report on key details such as length of time in vehicle, trailer temperatures in route, and proof of temperature on arrival.
• Driver continuity. Drivers are often the only contact a housebound patient might have during the day, so healthcare agencies dislike a revolving-door approach to driver assignment. Drivers are often asked to observe the patient and report any concerns to the healthcare agency. Route plans factor in the extra time required for these deliveries and can also align patients with a specific driver, or a small pool of drivers, for consistency.
• Value-added deliveries. Not all drivers can do all deliveries. Drivers may need to set up and connect an oxygen tank to a breathing apparatus, install dialysis machines, or deliver directly to a refrigerator and check to see if the appliance is calibrated to a specific temperature. Software can match the delivery requirements with specific driver skill sets, automating this critical function and avoiding the assignment of untrained drivers to these tasks.
• Flexible scheduling. Scheduling deliveries in the healthcare sector can get complicated – care plans change, patients request different delivery dates, new patients are regularly added to routes. The key is to accommodate the changes while still ensuring designated time windows are hit, and also that specialized deliveries are matched with the right drivers. It’s difficult and risky to manage this complexity without the aid of software specifically designed for the purpose.

Route automation at work in the healthcare industry 

NRS Healthcare uses Paragon routing software to manage delivery of mobility equipment and daily living aids from six warehouses using 300 vans. The automated route planning project has led to a 28 percent increase in activities per technician. Read more about NRS Healthcare.

The Linde Group uses Paragon routing and scheduling software in 59 countries around the world for distribution of industrial and therapeutic gases. Linde’s global fleet includes 4,500 vehicles. Read The Linde Group case study. Benefits cited from the Paragon implementation include:

• Ability to balance workflows across multiple distribution operations
• Improving customer service across the globe
• Offering next-day delivery with confidence
• Standardizing transportation planning across a global business

LF&E Refrigerated Transport is a temperature-controlled logistics company that specializes in distribution of pharmaceutical and other healthcare products. Using Paragon’s software, LF&E has continuously achieved a first-time delivery rate of 98.9 per cent for around 1500 consignments every week. Learn more about how LF&E uses routing software.

AAH Pharmaceuticals adopted Paragon to help plan delivery routes to pharmacies, hospitals and doctors’ offices using 600 vehicles. Paragon worked with AAH to overhaul the company’s fixed route network and the effort resulted in a ten percent fleet size reduction and more than $1 million in annual cost savings. Read the case study.

Manage the last mile to reduce costs and risk in healthcare distribution

The last mile in healthcare product distribution is expensive and complex. Reliance on rudimentary, non-automated route planning methods can result in inaccurate plans that are 10–30 percent less efficient, resulting in more time, more miles, more trucks and more drivers than are needed – plus substantial added costs for hiring third-party transportation partners when the last delivery of the day is at risk of being missed.

Lack of proper routing tools also creates risk – both for homebound patients dependent on medicines and treatments at specific times, and for the fleet operators handling the deliveries.

How healthy is your private fleet? To discuss options for improving service while reducing transportation costs in healthcare product distribution, contact Paragon.