Clinically-Driven Logistics Improve Costs, Care and Sustainability
Two significant healthcare trends – more care being delivered in the home and the rise in the number of specialty drugs – can deliver significant benefits, but they also come with risks for patients, the supply chain, and the environment. On the plus side, care in the home, including advanced or hospital level care, has been shown to lower the total cost of care, while reducing readmissions and increasing patient satisfaction. Specialty drugs are effective weapons in the fight against an epidemic of chronic disease, which is also a primary driver of an anticipated 20% increase in care at home over the next decade.
On the downside, the cold chain requirements of specialty drugs increase supply chain complexity, which, if not effectively managed, can increase risks for patients and the environment. For example, many of these drugs need to be kept at cold or even ultra-cold temperatures, which has typically been handled through the use of plastic-based packaging materials like Styrofoam and gel packs. There is also a risk to efficacy and patient outcomes if those cold chain requirements are not adhered to during the delivery process.
Phox Health, a start-up in the drug delivery space, is seeking to address several of these issues. Co-founder Amit Gir, MD, saw the potential for technology, such as mobile apps, to help patients adhere to their prescription regimens even before he began studying medicine. As a bioengineering student, he focused on the use of technology to improve both the patient experience and health, which eventually led him to medical school. Later, working as a physician in one of the Permanente Medical Groups in southern California, the technology bug bit again, as hospital pharmacies began offering same day delivery to patients, a trend that skyrocketed during the pandemic. Not only did he see a business opportunity, but he also recognized the risks to patients as a result of delayed deliveries and deviations from required storage conditions.
When Phox Health first started, Gir envisioned using the major logistics carriers, like FedEx and UPS, but with his clinical background, he soon recognized the importance of medical grade logistics for these highly expensive drugs. In his words, “It’s like delivering a diamond ring that can melt.”
Phox Health holds its couriers, who can make up to six figures, to high standards, and uses technology to both support and track their deliveries to make sure all goes as planned. Taking a cue from Domino’s Pizza, Phox Health also deploys reusable totes in which the specialty drugs are transported, eliminating the need for excessive plastic-based packaging. The totes are also equipped with high grade, reusable ice bricks and temperature monitors to assure both the patient and the pharmacy that the drugs have not been compromised along the way. The move to reusable packaging is also saving hospitals money, to the tune of about 30% less than the disposable and often non-biodegradable, non-recyclable materials.
Hospitals also benefit from no longer having to answer phone calls from patients about the status of their orders. Last year, the company fielded more than 10,000 such calls that would otherwise have gone to the pharmacies.
Clinically driven supply chain solutions like Phox Health will only become increasingly important with the rise in chronic disease and the need to reduce both the cost of healthcare and the level of waste it generates. Today, more than 60% of Americans suffer from one or more chronic conditions and that number is expected to grow to 80% in 10 to 15 years. Meanwhile, hospitals alone produce more than 13 tons of waste per day in the United States. The challenges are significant, and supply chain logistics will only become more important in addressing them.
Karen Conway | CEO, Value Works
Karen Conway, CEO, ValueWorks
Karen Conway applies her knowledge of supply chain operations and systems thinking to align data and processes to improve health outcomes and the performance of organizations upon which an effective healthcare system depends. After retiring in 2024 from GHX, where she served as Vice President of Healthcare Value, Conway established ValueWorks to advance the role of supply chain to achieve a value-based healthcare system that optimizes the cost and quality of care, while improving both equity and sustainability in care delivery. Conway is former national chair of AHRMM, the supply chain association for the American Hospital Association, and an honorary member of the Health Care Supplies Association in the UK.
