Assessing warehouse centralization and outsourcing in the healthcare sector: An Italian case study

In Western countries the ratio of the public spending on healthcare (HC) to the Gross Domestic Product is growing. In such a context the centralization of warehouses storing drugs, medical devices, and consumable products as well as the outsourcing of their management to qualified logistics providers are increasingly perceived as key drivers for the efficient provision of HC services. In fact, some projects have been carried out in Europe. However, most of the still few available literature contributions either analyze the supply network structure or preliminary address the associated performance. A limited number of approaches assess the actual implications of HC warehouse centralization and outsourcing after its implementation. Also, there is a need for straightforward evaluation methods that can be easily applied by HC providers. This paper discusses the performance of a centralization and outsourcing initiative carried out by an Italian public hospital. Main logistics, HC, and economic indicators are identified based on a literature review and discussions with the hospital management and the logistics provider. After measuring and comparing the variable values over a twelve-year time span, the associated correlations are studied to provide a systematic interpretation of the outcomes able to uncover the benefits of the new organizational approach. In particular, a centralized material management, together with logistics improvements at the bed level, allowed optimizing the time spent on logistics activities at wards. Additionally, the inventory turnover ratio increased by 23%. Finally, the total logistics costs for the analyzed hospital were reduced by about 30%. By offering a simple assessment approach, this work might constitute a methodological starting point for evaluating the benefits of other similar logistics initiatives. As such, it can foster the development of ex-post assessment methodologies to tackle the advantages and drawbacks of warehouse centralization and outsourcing in HC.