When freight is something that “just happens,” it’s nearly impossible to understand related expenses, let alone control them. This is a costly mistake — though one we encounter more often than you might think. Given the complexities of freight, it’s often managed inconsistently, but through standardization, hospitals and healthcare systems have a huge opportunity to impact their bottom line.
This is the situation Rockford Health System found itself in. The largest health system serving northern Illinois and southern Wisconsin, Rockford includes a 396-bed tertiary care hospital; numerous outpatient clinics with locations throughout the region; a 55-bed inpatient hospital offering a full range of rehabilitation services; and a visiting nurses association providing a variety of home healthcare services to patients of all ages. Without a unified system for managing freight, the health system was unable to determine its true freight costs. (In fact, Rockford’s initial estimate ended up being two-and-a-half times less than its true costs.)
Realizing the need for change, the health system conducted a complete review of its supply chain process. An external consultant identified 53 immediate cost-savings measures, including the implementation of a freight management program. The consultant recommended that Rockford partner with TRIOSE, and we got right to work.
Aligning Rockford’s purchasing staff with everyone from accounts payable to the receiving dock, we enabled the health system to standardize its freight program with a comprehensive method for tracking and managing all costs. The impact was immediate. With a quick onboarding, Rockford began seeing measurable results in month one. In the first year, Rockford saved nearly $52,000 running 43% of its freight spend through the program. Having increased that to 70%, Rockford saved more than half a million dollars over 5 years.
Cost savings are just the beginning. With a more comprehensive focus on freight, Rockford also increased vendor participation and visibility across the organization.
Instead of a necessary evil that no one wanted to address, as Chip Geiger, Purchasing Manager at Rockford said, this case demonstrates just how powerful freight programs can be.
To learn more about Rockford’s freight program, click here.
How has a freight management program impacted your hospital or healthcare system? Weigh in by commenting below.