New Technology

Mayo Clinic study tackles labeling errors with RFID Mayo Clinic researchers are recommending a new technologically-advanced labeling system aimed at reducing specimen labeling errors in a high-volume gastrointestinal endoscopy center. This study used radio-frequency identification (RFID) to track biopsy specimens taken during gastrointestinal endoscopic procedures and to automate identification. "The Gastroenterology and Colorectal Surgery outpatient endoscopy unit at our facility yields over 30,000 specimen bottles that are sent for pathologic review every year," said Dawn Francis, M.D., the lead author and a gastroenterologist at Mayo Clinic. "Over the past several years, Mayo Clinic identified some issues with mislabeling of tissue specimens in the units. Most labeling errors have been due to either the wrong patient label or no label being affixed to a specimen bottle. As a result, a quality improvement initiative was created to reduce the number of specimen-labeling errors." Researchers reviewed the number of specimen-labeling errors for the first three months of 2007, prior to the implementation of the initiative and the first three months of 2008, six months after the initiation of RFID specimen labeling. Specimen-labeling errors were categorized as Class 1 (only typographical with no potential patient care consequences), Class 2 (minor error, unlikely to have patient care consequences) and Class 3 (significant error that has the potential to detrimentally impact patient care). The endoscopy unit sent 8,231 specimen bottles to the pathology laboratory for evaluation during the first three months of 2007, and 8,539 bottles in the first three months of 2008. Compared to 765 errors in 2007, only 47 errors were noted in 2008. Overall, serious errors were low anyway, but the new labeling system reduced such errors even more, minimizing risk for patients. New hybrid surgical rooms for optimal imaging during OR procedures Royal Philips Electronics and STERIS Corporation announced at the Transcatheter Cardiovascular Therapeutics (TCT) annual meeting that the two companies are collaborating to provide hybrid operating rooms for open and minimally invasive cardiovascular surgical procedures. The combination of Philips cardiovascular X-ray systems and STERIS HD 360° Suites technologies and design services will create a flexible environment where clinicians can treat patients requiring minimally invasive procedures, or those needing open surgery, within a single operating suite. The relationship will also provide hospitals with opportunities for surgical innovation and improved infection prevention programs.

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One often overlooked savings opportunity lies in freight management. Historically, many facilities have paid little or no attention to the costs associated with shipping inbound and outbound goods, and as a result, have likely been paying more than necessary for the service, sources told Healthcare Purchasing News.

"Most IDNs, even small and mid-sized ones, can have roughly 2,000 suppliers shipping to them on a prepay-and-add basis, so you can see how shaving a few dollars off the freight charges for each shipment from these suppliers can add up," said Rick Bayer, CEO of HLS MedFreight, Columbus, OH. (Editor's Note: "Prepay-and-Add" typically means that the supplier pre-pays the freight charges and then bills the buyer for the freight charges plus any markup they see fit to add.)

And when organizations realize that freight costs account for roughly 2 to 4 percent of their total supply spend, it becomes clear that those expenses are low-hanging fruit that’s ripe for the picking.

"According to estimates, about 20 to 30 percent of all patient revenues are actually supply-related costs – and approximately 30 percent of those supply costs is tied up in shipping and handling. "Driving efficiencies into those costs will significantly hit the bottom line for hospitals," explained John Menna, marketing director, healthcare logistics, UPS. "Just a 10 to 20 percent savings in those costs translates to about a 1 to 2 percent improvement in the operating income of a hospital."

Organizations committed to milking more value out of their freight process must decide whether they want to manage the function in-house or with the help of a third party logistics solutions provider.

Most would agree that targeting freight expenses in an organization-wide cost-cutting initiative isn’t exactly an easy undertaking for most material managers. For starters, shipping and handling charges are frequently absent as a line item on invoices received from suppliers (instead, those fees are embedded into the cost of the item), and it takes time and patience to go to each vendor or supplier to determine the true shipping and handling costs. Visit a material manager’s office at any time and it becomes clear that time isn’t exactly their most abundant resource.

For those reasons, among others, a growing number of hospitals and IDNs are seeking the services of a dedicated freight management solutions provider that can streamline the entire shipping and receiving process, deliver both short- and long-term savings organization-wide, and allow material managers to focus their attention on their core responsibilities.

Getting hospitals to address both their inbound and outbound freight should be a core mission, according to Menna. Working hand in hand with TRIOSE, a healthcare logistics and supply chain management solutions provider, UPS is able to bring a comprehensive freight management solution to hospitals.

Because many hospitals work in such a distributed shipping environment and have many different departments in the facility doing their own shipping and transporting, Menna said some organizations prefer to focus their freight management efforts on their outbound shipments first. While that’s not a bad approach, he said it’s quickly pointed out to customers that they’re likely spending ten to twenty times as much for inbound shipments.

"We’ll sit down with them and pull out a sample of their invoices and show them – in cases where it’s broken out on the line item – what they are actually paying for inbound shipments," said Menna, adding that he then informs them that they can likely negotiate a better rate on the cost of units sold if they pay the shipping themselves.

Personal experience validates that statement. After all, how many times have we gone to place an order for a seemingly well-priced item – perhaps online – only to be floored by the high shipping and handling fee? Even if those rates aren’t alarmingly high, experts contend they’re still likely higher than what an individual would pay on their own. "Now imagine the costs if you’re receiving 300 packages a day. Those dollars can quickly add up," continued Menna. "It’s not that the parties are acting unfairly, it’s just that it’s the way that business has been done for so long. In most cases, though, once an IDN and supplier sit down and look at this, they realize there’s a better way."

While savings will vary depending upon the size of a hospital or IDN, the negotiated shipping rates and discounts, and the degree of compliance, it’s safe to say that, whatever the case, the efforts aren’t likely to be in vain. Menna said some IDNs are saving millions annually – and on a percentage basis, many organizations are reporting roughly 20 to 30 percent savings on their total transportation costs.

For TRIOSE/UPS customers, Menna said the first step is typically to set the IDN up with a UPS Freight Collect account number, so each freight shipment’s shipping charges are billed directly to the hospital through UPS. On the supplier end, UPS can set up their automated UPS shipping system to automatically default the shipping costs to the IDN’s Freight Collect account number.

Of course, driving supplier compliance is paramount to a program’s success, and it’s a task that the leading freight management solutions providers – including UPS, HLS MedFreight and OptiFreight Logistics, Cardinal Health’s freight management program — are proactively pursuing. Once hospitals are on board, their third party logistics partners help encourage compliance by contacting the vendors and suppliers directly, on the hospital’s behalf. Beyond that, hospitals can benefit from freight management partners’ relationships with vendors that are committed to participating in the program.

"We have worked to be as collaborative as possible with suppliers to ensure that their process flows through ours. As a result, we have many suppliers that are committed to working with hospitals to be part of the solution of taking costs out of the supply chain," Bayer said, noting that HLS MedFreight certifies suppliers on hospitals’ behalf and is able to secure significant shipping discounts through the company’s relationship with FedEx. Getting group purchasing organizations on board has been a big help in advancing provider-driven freight management, he said. HLS MedFreight has three-year, sole source contracts with four of the nation’s leading GPOs.

For OptiFreight, customers can benefit from Cardinal Health’s ability to negotiate on behalf of so many hospitals, as well as through its existing relationships with the supplier community – not only through OptiFreight, but also through Cardinal’s distributed product.

"Being able to [negotiate those volume discounts] and utilize existing relationships with suppliers is what helps hospitals gain extra traction," stressed Tony Vahedian, vice president and general manager of Cardinal’s OptiFreight business.

Such has been the case for WellSpan Health. The York, PA-based integrated health system, which chose TRIOSE as its third party logistics provider, is now moving a significant amount of its inbound (and even some of its outbound) shipments through UPS – as opposed to using any number of different carriers as it had in the past.

WellSpan is striving for broad vendor compliance, and while not all vendors are participating yet, the organization is still logging significant savings.

"Since July 1, the beginning of our fiscal year, we’ve saved about twenty thousand dollars" through volume discounts and the transitioning to single carrier service, said WellSpan’s distribution manager Varlen Gibbs.

Freight management experts are quick to point out that hospitals shouldn’t just be setting their sights on aggregated volumes and the level of proprietary shipping discounts their logistics partners provide. While those certainly are important benefits, and can garner nearly immediate savings, the best logistics partners are those that also provide service level and channel optimization, and flexible, customized solutions to help their customers maximize productivity and efficiency in both the short- and long-term.

Staff training and organization-wide goal alignment plays a vital role. Because of the often urgent nature of healthcare delivery, staff are often inclined to select costly rush or priority shipping – even for items that could have been received in time under a less expensive shipping option. For that reason, choosing a freight management partner that can assist with channel optimization is critical.

"Part of the decision structure is determining whether a shipment is really needed the next morning, or whether ground transportation will still get the shipment to the hospital on time because of the close proximity of a supplier," said Vahedian, adding that being focused on the greater goal — which is to help customers make the right decisions while also lowering their costs – is the underpinning of an effective freight management program.

Bayer went on to explain that it’s the availability of detailed freight information that will ultimately help hospitals reduce costs and take control of the freight process. HLS MedFreight’s Information Advantage solution can help customers on average save $20,000 to $25,000 for every 100 hospital beds through aggregated volume and information. Mode optimization solutions are built directly into HLS MedFreight’s website, and customers can readily review shipment details, summarize freight charges, obtain shipment quotes, create customized reports, monitor savings, and identify shipping trends and patterns that may lead to higher shipping costs.

"Maximizing savings and value come from aggregating information and helping hospitals use that information to understand their true freight costs so they can make better, more informed decisions moving forward," Bayer said.

Of course, freight management solutions that provide instant shipping and receiving visibility, and quality controls, to allow material managers to perform their jobs more efficiently are also garnering attention. UPS’ QuantumView desktop application, for example, gives at a glance visibility into every shipment coming in to the facility through the carrier. Facilities can push their freight management capabilities even further through the implementation of UPS’ Delivery Link and Trackpad solutions. With Delivery Link, any time a package is delivered through UPS, the driver’s electronic clipboard (DIAD or Delivery Information Acquisition Device) that contains all the electronic information about that shipment can be connected and downloaded directly to the receiving dock’s computer. If a hospital chooses to do so, that information can then be downloaded onto a handheld Trackpad, so material managers and any other individual in charge of delivering items throughout the hospital can have an electronic record of the time and location of the delivery, as well as the name of the person who ultimately received it.

While comprehensive freight management solutions will ultimately lead to significant savings, sources stressed that the first and most important thing a healthcare organization can do is start exploring their options and begin to take steps to understand their true freight costs.