From the December 2014 issue of HealthCare Business News magazine


Walking through the LTLC is not totally unlike walking through a Costco. A huge warehouse swallows up any single human presence in the vastness of its walls. Boxes containing boxes containing boxes are all stacked up in rows and aisles like an endless lending-library of medical packages. In some cases, the boxes are covered in a red bag, a literal ‘red flag’ indicating the content is not to be shipped at this time. UPS has a motto for its health care division: it’s a patient, not a package. That sentiment is echoed by the laminated headshots at the end of each aisle, giving a name and a face to the person in charge of the products shipping from that section.

A workforce of about 3,000 fulltime, non-union workers keep the campus running night and day. Depending on seasonal demands, those workers are capable of leveraging the workloads of various customers through flexible training. “Some customers have five or six employees, but during peak-period they need up to 100 employees,” says McKenna.


This didn’t all happen overnight. “We’ve spent the last 15 years building out our health care capabilities set,” says John Menna, UPS vice president of global healthcare strategy. Menna says the solutions they have developed in partnership with their customers are highly tailored to reduce operating costs, increase operational efficiencies through their supply chain, and lower inventory carrying costs.

Part of what allows UPS to invest so much in their health care customers is the loyalty they get in return. “We tend to push for fairly long agreements with our customers,” says Menna, “typically three to five years, maybe the average is about three.”

“We’ve been told that our solutions have reduced costs by as much as 15 percent for total logistics; not just transportation costs per se, but inventory management, transportation, contract logistics, distribution, and storage,” says Menna. He cites illustrating those benefits to potential customers with similar business models and supply chain concerns as a key part of the UPS health logistics plan moving forward.

Building a three party system
UPS has always had wholesaler licenses, even though the company is not a wholesaler. The same logic extends to their involvement in pharmaceutical and medical devices; as a third party they still need proper documentation. At one point during the tour, McKenna described a direct-to-patient insulin pump UPS has started shipping.

With direct-to-patient, McKenna says the company is getting into a whole new world of regulations—and because it’s not a consumable, the licensing is a little less complicated. It can be done with pharmacy oversight versus a pharmacist touching every order going out. “That knocks off about 800,000 to a million dollars in pharmacist costs, and also means product can ship faster,” says McKenna. The manufacturer of the pump makes sure there is someone at the facility at all hours to take emergency orders .

December 2014 Magazine

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