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From Warehouses to Hospitals: Logistics Insights with Hue Roach- Part One · Taking The Supply Chain Pulse

• 0:06
  Speaker 1: Hello again everybody.
• 0:06
  Speaker 1: This is Fred Krantz from St Ange coming to you with another episode of Taking the Supply Chain Pulse.
• 0:13
  Speaker 1: Today we have with us St Ange's own Hugh Roach, one of the longtime employees at St Ange and an expert in healthcare logistics.
• 0:24
  Speaker 1: Hugh, thanks for joining us.
• 0:28
  Speaker 2: Well, Fred, thank you for having me.
• 0:30
  Speaker 2: I look forward to the podcast and getting the word out, and this is a very important subject to me.
• 0:41
  Speaker 2: I know that we're going to talk about the evolution of healthcare logistics and I just wanted to put it in perspective.
• 0:45
  Speaker 2: You know, this is not to basically go back until the 1400s and talk about the entire evolution of logistics within the healthcare setting, but I wanted to talk really about my experience over the past 45 years.
• 1:01
  Speaker 1: Well, I'm glad we didn't go back to when the Carthaginians used elephants to take the supplies across the Alps.
• 1:11
  Speaker 1: Who was that?
• 1:13
  Speaker 1: I forgot who it was that did that, but it was one of the great logistical things.
• 1:18
  Speaker 1: Hugh, what's your title at St Onge?
• 1:22
  Speaker 1: How long have you been there?
• 1:23
  Speaker 1: Tell us a little bit about your St Onge experience before we get into, you know, finding out why you want to do this podcast and stuff.
• 1:30
  Speaker 1: But tell us a little bit about yourself.
• 1:33
  Speaker 2: I joined St Onge roughly about 10 years ago.
• 1:37
  Speaker 2: They asked me to come in with my expertise and provide Actually it was some mentoring capabilities, but also sales to basically bolster their presence on the West Coast.
• 1:55
  Speaker 2: And because of my education, my background in healthcare logistics, I did too well in the way of sales so they asked me if I could go back on the line and start working the projects.
• 2:09
  Speaker 2: So all in all I've been with them 10 years.
• 2:13
  Speaker 2: I am a director and I have a full working knowledge of health care design and operations.
• 2:21
  Speaker 1: So why did you want to do this podcast about, uh, about logistics?
• 2:29
  Speaker 2: well, you know I had just mentioned that.
• 2:31
  Speaker 2: You know I was with st onge for 10 years but really my background in health care uh is over 45 years and in that 45 years, you know, I have looked at hospitals from an operational standpoint, from a design standpoint and that includes over 350, but also the design of supply chain and other logistic areas within hospitals and all in all, I want to share my knowledge.
• 3:11
  Speaker 2: You know there's a lot of designers out there that you know don't have the experience that I do.
• 3:19
  Speaker 2: There's a lot of healthcare owners that you know haven't seen what I've seen and I want to pass on that knowledge.
• 3:28
  Speaker 1: Well, that's good, you know, I've actually got you beat.
• 3:33
  Speaker 1: Next year 2025, will mark the 60th year that I've been in healthcare.
• 3:40
  Speaker 1: I became a US Navy hospital corpsman in 1965, and if I live long enough, I will have made it to 60 years in this business and, of course, in Vietnam.
• 3:52
  Speaker 1: I've had a couple of these podcasts where we've talked about the fact that it was logistics as much as it was our expertise as a corpsman.
• 4:01
  Speaker 1: I was a grunt corpsman, a medic with the Marines, but it was logistics that saved people's lives, because we could get a wounded man stabilized in the field, get him on a helicopter and an hour later he could be in the perfect place for the next step of care.
• 4:19
  Speaker 1: And then from there it was to another place, and all this is logistics.
• 4:21
  Speaker 1: And today to another place, and all this is logistics.
• 4:24
  Speaker 1: And today, as health care continues to reach out back toward the home, logistics has become more and more and more important and more of a difficult problem for the supply chain folks to solve.
• 4:37
  Speaker 1: So why don't you and that's why I'm interested in we're going to have a two-part series of this too, folks?
• 4:44
  Speaker 1: So Hugh is going to talk to us today and then we'll have a later follow-up.
• 4:48
  Speaker 1: Second part of this.
• 4:49
  Speaker 1: But what does the term healthcare logistics mean?
• 4:53
  Speaker 1: Please explain that.
• 4:55
  Speaker 2: Well, let me go ahead and give you a little history of my background because it kind of rolls into logistics.
• 5:05
  Speaker 2: I started I didn't start in Vietnam but I started, you know, as a grunt in a warehouse, you know, just working for a material handling company and I was actually putting myself through college and working during the days, going to school at night.
• 5:23
  Speaker 2: But I worked for a supply chain material handling system vendor that basically catered to the healthcare industry.
• 5:32
  Speaker 2: I was moved from the warehouse inside, became knowledgeable about their systems and how they supported healthcare operations, and I began designing those systems within healthcare facilities and that included pneumatic tube systems as well as automatic guided vehicles and how they basically moved items within the facility, either lab specimens, pharmaceuticals, and on the AGVS systems, more scheduled items as well in medical supplies and pharmaceuticals, and on the AGVS systems more scheduled items as linen, medical supplies and pharmaceuticals.
• 6:08
  Speaker 2: So that's how I was kind of introduced into the healthcare industry.
• 6:14
  Speaker 2: After that I actually moved over to a consulting firm where I learned the rest of supply chain within the healthcare, which include taking a look at what was coming in across the service stocks, taking a look at supplies coming into material management, linen for distribution by housekeeping, bulk food, patient meals, pharmacy medications, sterile processing.
• 6:40
  Speaker 2: I also basically at that point learned waste management, which is the outbound of items going out, housekeeping, spd, instrument processing.
• 6:53
  Speaker 2: I also got education on other systems as pneumatic and gravity chutes and elevators.
• 7:00
  Speaker 2: So what I'm getting at is kind of all those things combined is what I refer to as logistics.
• 7:08
  Speaker 2: And logistics is very important to hospital operations because once you get the material, first you have to get the right material into the facility, you have to stage that material, you have to get a point of use at the right time in the work cycle and then, once it's done, you have to get either soiled linen or waste commodities out to basically have successful clinical operations.
• 7:36
  Speaker 2: So all those items kind of mixed together I refer to as logistics.
• 7:43
  Speaker 1: Well, it's interesting that you should say that, because I was a history major, by the way.
• 7:48
  Speaker 1: So if I had heard the term logistics because I majored in history and to me logistics was a military term that really dealt in my head with the moving of supplies and materials needed to conduct the war, if you will.
• 8:05
  Speaker 1: And yet, when I got to the healthcare supply chain, I became director of CPD at Baptist in Miami in 1973.
• 8:17
  Speaker 1: The word logistics was never used anywhere.
• 8:21
  Speaker 1: I mean, you could have asked, you could have asked 100% of the people that were directors of purchasing First of all.
• 8:30
  Speaker 1: We went from directors of purchasing and central distribution to materials management, to supply chain.
• 8:37
  Speaker 1: The term supply chain is relatively recent by comparison and I don't think they could have told you what logistics was.
• 8:44
  Speaker 1: And so you know, you, you, you.
• 8:48
  Speaker 1: I've learned more about it as the years have gone by.
• 8:50
  Speaker 1: But why is logistics healthcare logistics important to you?
• 8:58
  Speaker 2: Well, over the years, when I began my career 45 years ago, when I was starting tos pharmacies, things that really basically you know were profitable for hospital operations, and really the back of house logistic areas and systems, were secondary thoughts, you know.
• 9:34
  Speaker 2: You know they didn't think about that and we kind of got the you know bat into the stick in the sense that, you know, first come, first serve when it came to revenue generating departments, when it came to space meaning this is the space we got left to make things work with what they have, and that still happens today.
• 10:37
  Speaker 2: So I became a proponent for them.
• 10:40
  Speaker 2: You know each and every job.
• 10:42
  Speaker 2: So you they're now starting to look at these logistic operations and systems.
• 11:07
  Speaker 1: Yeah, and you know what's interesting about that that focus on revenue is.
• 11:13
  Speaker 1: I was just at the Bellwether League event this week and for the first time I heard someone other than me say what I'm going to say now is this that, um, if you're running a he was talking about a three percent margin he was making it more difficult.
• 11:30
  Speaker 1: I say a five percent margin, which very few uh, not for profits run, but if you're running a five percent margin, then in order to make $1 worth of profit, you have to take in $20 worth of revenue.
• 11:44
  Speaker 1: And so, conversely, if every dollar you save in operations by being better cost effectively at what you do, you're negating the need for $20 worth of revenue, and so actually improvement in functionality and improvement in operations that reduce costs has a bigger impact than the revenue itself does on things.
• 12:11
  Speaker 1: But no one ever looked at it that way, and so you saw that from the beginning.
• 12:16
  Speaker 1: So, to give everyone a baseline, when you started they had pencils and paper and manual spreadsheets and protractors, right?
• 12:28
  Speaker 1: What issues did you?
• 12:32
  Speaker 2: huh, go ahead.
• 12:33
  Speaker 2: I kind of aged myself on this one because, as I said, I started my career with a material handling company and I, you know, started doing system design and it was actually on a drafting board with a lead pencil and, you know, an eraser, and you created drawings physically that you know you had to hand over and reproduce them and then ship them over to the architect so they could put it in their you know stack of drawings.
• 13:06
  Speaker 2: So you know it was, um, as you could tell, a long time ago.
• 13:08
  Speaker 2: But you know, a lot of improvements, not only from a design standpoint but operationally, since I started.
• 13:19
  Speaker 2: You know I'll go back and just make a statement.
• 13:24
  Speaker 2: You know probably every hospital I've been to, you know it's basically becoming a little less common, not as much as I'd like to see it, but all the health care facilities I saw in the beginning is this is the leftover space we have.
• 13:42
  Speaker 2: This is what you got to operate in and you know, give credit to the people who operated those departments.
• 13:49
  Speaker 2: They made it work.
• 13:51
  Speaker 2: I mean, it was not the most efficient way of doing it, but you know I saw a lot of dedicated people basically leverage what they had to basically ensure you know proper patient care and clinical operations.
• 14:06
  Speaker 1: Yeah, so when you started out, what were the issues you saw with logistics, operation, transport systems and their design?
• 14:14
  Speaker 2: Well, you know, having come from the equipment supplier side of things, I could, you know, see what I did as an engineer for the equipment supplier and it was my job to design a system to fulfill the transport requirement of the facility.
• 15:02
  Speaker 2: It was my job to basically engineer value of the systems and basically not fulfilling the needs of the facility, you know itself.
• 15:13
  Speaker 2: So again, you know, I saw a lot of you know early on, a lot of facilities go to equipment manufacturers.
• 15:21
  Speaker 2: Well, actually the design architects go to appointment suppliers to design systems and equipment and at the same time, yeah, they were kind of getting a free service but they were not looking at the true needs of the facility owner and the end users.
• 15:40
  Speaker 2: So I saw that a lot early in my career and we still see that.
• 15:45
  Speaker 2: You know some today where you know we're going to go out to the equipment supplier, have them, basically you know, design the system and basically we save that cost.
• 15:54
  Speaker 2: You know, occasionally we'll see one or two things is they oversell the you know system and the equipment needs to make more profitability, or they cut the system down or equipment down to bare bones and it impacts the capacity and basically doesn't fulfill the needs of the operators of the facility.
• 16:17
  Speaker 1: Yeah, you know you're bringing up a good point.
• 16:20
  Speaker 1: As a regular supply chain guy supporting the clinicians, I always used to get upset because they would do what I call jeopardy purchasing, where they would go to an annual meeting especially the radiologists, you know, they go to RSNA and they would come back and they'd have to have a certain piece of equipment and they had so much leverage with the C-suite that they could pretty much demand it.
• 16:47
  Speaker 1: So our job was not to assess and try to get them to get what was right, but to find a way to say yes to what they already wanted.
• 16:59
  Speaker 1: And I think that with you know, the development of robotics and autonomous vehicles, stuff like that, there's a danger of people that want to either renovate or build a new thing starting out telling you what they want in their operation, whether they need it or not.
• 17:19
  Speaker 1: Do you have to deal with that?
• 17:22
  Speaker 2: We do, we do, we do and I'll go back to you know, early on, when someone came and asked me, you know we need this addition because we're at capacity and we need additional equipment.
• 17:35
  Speaker 2: We need additional space.
• 17:37
  Speaker 2: There's really no way to disprove it.
• 17:37
  Speaker 2: You need additional space.
• 17:38
  Speaker 2: There's really no way to disprove it.
• 17:40
  Speaker 2: You know a lot of things were done through benchmarking and you know, later on you know my term with St Ange we started taking a look at really using and leveraging analytics to say let's take a look at your request and see if they're founded or not.
• 18:00
  Speaker 2: You know we've seen, you know the request that.
• 18:03
  Speaker 2: You know we're at capacity with our ORs and you know we need to build a new wing with four more ORs because we're at capacity.
• 18:16
  Speaker 2: And when you go back and basically analyze the operations within the existing ORs, they're very you know you can find out in the cover they're very, you know, inefficient.
• 18:25
  Speaker 2: You know, one time we actually did an analysis for a state system, a university hospital, and we were looking at their utilization of instrument trays.
• 18:40
  Speaker 2: We were looking at their utilization of instrument trays and after we did the analysis, you know they said they need more sterilizers and they needed more washers.
• 18:47
  Speaker 2: They needed more equipment because they were at capacity.
• 18:53
  Speaker 2: When we ran the analysis we realized that they were using 13 trays of instruments per procedure, where the national average is 5.5.
• 19:03
  Speaker 2: And that arose because they didn't have accurate preference cards and they let the doctors order what they wanted.
• 19:14
  Speaker 2: And you know, for us it wasn't a simple fix.
• 19:18
  Speaker 2: But the right way to do things was go back and say correct your preference cards.
• 19:23
  Speaker 2: Basically, bring the tray utilization down so you're not pulling one instrument out of a whole tray and basically you don't need more equipment within your SVD.
• 19:36
  Speaker 2: You know again, that's just saying in recent times we've got the analytics now, before we were using benchmarking and it was hard to tell, you know, the requests weren't founded.
• 19:50
  Speaker 1: Yeah, that's interesting.
• 19:52
  Speaker 1: So what I heard in there was that by predicting demand accurately, you can be more accurate in predicting the space you need to fulfill that demand.
• 20:02
  Speaker 1: Is that correct?
• 20:04
  Speaker 2: Yeah, that'll be something we can talk about at our next podcast is predictive analytics.
• 20:11
  Speaker 2: Mine was basically just using data and basically analyzing the data to define really what was happening with an existing operation before, basically, you decide to build something else.
• 20:25
  Speaker 2: We were able to, you know, verify through analysis that really the real problem was operational, not space and or equipment.
• 20:36
  Speaker 1: So in the past four decades, what major design changes have you seen in the back of the house support departments?
• 20:44
  Speaker 2: That is one of them is really going from benchmarking.
• 20:48
  Speaker 2: Early on we basically saw where you know one size fits all, we can basically use this benchmarking from you know previous facilities and then take it forward.
• 21:03
  Speaker 2: You know, however, one size fits all doesn't work.
• 21:07
  Speaker 2: You know, I'm a size 12 shoe.
• 21:10
  Speaker 2: It doesn't work well with my wife who's a size 7.
• 21:13
  Speaker 2: So, going from you know a benchmarking methodology we've basically gone into and basically starting to analyze data to basically say we're going to specifically look at a client's needs, their volumes, and then basically drive.
• 21:35
  Speaker 2: First we define functionally what they want to do, then we define the volumes to support that function.
• 21:43
  Speaker 2: With that we define equipment and then finally space, go ahead, no, go ahead.
• 21:52
  Speaker 2: Finish.
• 21:52
  Speaker 2: That approach really basically gives a owner-specific solution for their operations and facility.
• 22:01
  Speaker 2: Okay.
• 22:03
  Speaker 1: Well, I was just going to say that you know, the size 12 versus a size 7,.
• 22:08
  Speaker 1: Although it would look terrible, probably would work better for her than it would for you as far as comfort goes.
• 22:16
  Speaker 1: Okay, I mean, I just that would be a plus.
• 22:21
  Speaker 1: She probably wears pointy toed shoes too, which would make it even worse.
• 22:26
  Speaker 2: She probably wears pointy-toed shoes too, which would make it even worse.
• 22:28
  Speaker 2: Yeah, and I'll go back to the analogy where you know we were talking, to say you know, the logistic support departments got the leftovers, in other words, the size 12 shoe and the size 7 area right.
• 23:02
  Speaker 1: You've got to deal with what they give you.
• 23:06
  Speaker 1: So you know again.
• 23:06
  Speaker 1: You know the past four decades.
• 23:08
  Speaker 1: We were doing a low unit of measure stuff, just-in-time stuff, and I've given up 5,000 and 10,000 square feet a couple times for other departments.
• 23:17
  Speaker 1: We probably regretted it later, but you know I got out of there before they figured that out, but that was not uncommon either.
• 23:25
  Speaker 1: If you could give up space to once again revenue-producing departments, the organization was always ready and willing to take it right, right.
• 23:37
  Speaker 1: So what about changes in logistic and transport systems over your career?
• 23:44
  Speaker 1: What have you seen there?
• 23:46
  Speaker 2: I've seen.
• 23:47
  Speaker 2: You know before, there was kind of you know again.
• 23:50
  Speaker 2: When I first began working in the healthcare industry.
• 23:58
  Speaker 2: They were utilizing, for example, pneumatic tube systems.
• 24:03
  Speaker 2: But they were really utilized to move, you know, medical records, some radiology files.
• 24:09
  Speaker 2: It was really paperwork.
• 24:12
  Speaker 2: Through the evolution of technology those systems became computerized and their demand shifted from paperwork, which was now being transferred over to computers.
• 24:25
  Speaker 2: Now those systems basically transported medications, things like medications, lab specimens, back to laboratories.
• 24:35
  Speaker 2: So we saw kind of a change of the systems' utilizations based on technology.
• 24:40
  Speaker 2: We also saw basically systems coming into the healthcare market basically to fit the needs of the operations, and what I mean by that is there's again not one system fits all.
• 24:56
  Speaker 2: For example, the pneumatic tube system was more of a stat transport system, so it met that stat need.
• 25:05
  Speaker 2: But you know what do you do about stuff that hadn't moved on a scheduled basis?
• 25:12
  Speaker 2: So we started seeing AGVS moving into the marketplace and basically fulfilling that need.
• 25:19
  Speaker 2: We saw AMRs, autonomous mobile robots, coming in and filling that need.
• 25:24
  Speaker 2: We saw pneumatic chutes basically taking a look at the transport of soiled commodities.
• 25:31
  Speaker 2: So what we were seeing, or what I saw over the last four decades, is really a matrix approach to transport systems.
• 25:40
  Speaker 2: So you have really multiple systems, kind of fulfilling all the needs across the healthcare facility.
• 25:50
  Speaker 2: You still have manual transport, of course, for larger items like your DaVinci machines, your C-ARMS.
• 26:00
  Speaker 2: You still have to transport beds manually, to transport bids manually.
• 26:04
  Speaker 1: But you know the other commodities, you know we start taking a look at a variety of systems to basically fulfill that demand.
• 26:17
  Speaker 1: Yeah, and I know our next episode is going to be taking a look at the future and it'll be interesting to see the impact of automated systems on the human component of transporting stuff.
• 26:30
  Speaker 1: I mean, the fallback is always going to be a person pushing something.
• 26:34
  Speaker 1: If all else fails, you better have a person who knows how to operate something that's on wheels.
• 26:39
  Speaker 1: But still, the shift toward robotics is a shift that really can impact the FTE force of the organization too.
• 26:57
  Speaker 1: So, just to frame this, as we're almost done with our first episode, here is.
• 27:00
  Speaker 1: This first episode is out here to sort of set the stage by talking about how we've gotten to where we are today.
• 27:11
  Speaker 1: And I would say that, from my perspective, when I first came in and I've said this many times on these podcasts when I first came in to healthcare, there were about 7,500 community hospitals across the country, most of which were standalone organizations.
• 27:30
  Speaker 1: There were very few systems, very few large systems, very few multiple hospital systems and, in supply chain, as far as logistics and transportation knowledge, all you needed to do was know how to pull the stuff off the truck, stage it on the dock, send it to the warehouse or directly to where it needed to go.
• 27:49
  Speaker 1: It was a very uncomplicated operation, really, and today, as we go into the future, the places that we have to deliver to the fulfillment needs that are being dictated out there are changing so much that your job as a transport slash logistics designer becomes more and more challenging, would you say?
• 28:14
  Speaker 1: That's fair.
• 28:16
  Speaker 2: That is fair.
• 28:17
  Speaker 2: That is fair.
• 28:18
  Speaker 2: And I'd just like to add, you know, when we, you know, go into the next podcast, what I'd like to add to that is again, having spent 45 years within the industry and working with so many hospitals, there are things that should have been done, that could have been done, that still needs to be done, and I think you know, I think it's you know, there's things you can do design-wise, there's things you can do through technology, but operationally, there's things that the owners can do to basically enhance their facility operations and their profitability, and we'll talk about that the next episode.
• 29:05
  Speaker 1: And I would, just before we, before we go to the next episode, sort of as a tease, would you say we're getting better at the front end now than we were 45 years ago at thinking the impact of what we're going to be doing today and what might happen tomorrow, or do you think we still have the same short-sighted challenges out there?
• 29:27
  Speaker 2: Both.
• 29:27
  Speaker 2: As I said, you know, the one I just mentioned is kind of being short-sighted.
• 29:33
  Speaker 2: It's something that could have been done the last 10, 15 years.
• 29:37
  Speaker 2: It hasn't been done, and you know.
• 29:40
  Speaker 2: But there's things that you know.
• 29:42
  Speaker 2: It's in the correct way.
• 29:45
  Speaker 2: But we need to pass on this knowledge to the people coming into the industry so you know they don't keep making the you know same old mistakes, right?
• 29:57
  Speaker 1: Yep, and one final question.
• 29:59
  Speaker 1: We have one minute here.
• 30:00
  Speaker 1: Do you think those of us that run the supply chain are getting a little bit smarter about what we need to do, or are we still as in the dark about transport and logistics as we were when you started 45 years ago?
• 30:22
  Speaker 2: I haven't.
• 30:22
  Speaker 2: From a vendor standpoint, I haven't seen a lot of change.
• 30:25
  Speaker 2: You know, because they're driven by profitability.
• 30:29
  Speaker 2: I think they're starting to take a look at getting smarter internally because of the costs associated with supply chain.
• 30:36
  Speaker 2: So I think we're moving in the right direction and I think you know what we're going to see is, you know, through AI, even a greater improvement.
• 30:46
  Speaker 2: You know and leap forward internally when it comes to health care and supply chain.
• 30:53
  Speaker 1: Well, that's great, hugh.
• 30:54
  Speaker 1: I appreciate you giving us painting the backdrop of what we're going to be dealing with in the future by telling us your experiences in the past, and I can't wait to do the second episode here, because I'm interested to find out what things are going to look like in the future myself.
• 31:13
  Speaker 1: So thanks for being on the episode today, hugh, and we will look forward to seeing you on a second episode in the future.
• 31:22
  Speaker 1: Thank you so much.
• 31:24
  Speaker 2: Well, thank you very much, and I appreciate the time to view my thoughts and look forward to number two.
• 31:32
  Speaker 1: Okay, hugh, thank you, take care, see you Okay, bye-bye.