Cost Benefit Analysis of Adopting the Third Party Logistics in Hospitals--from the Perspectives a Hospital and a Logistics Service Provider
Date Issued
2004
Date
2004
Author(s)
Lin, Wei-Chung
DOI
zh-TW
Abstract
Background
Because of the continued growth of medical expenditure after the initiation of the National Health Insurance program, the Bureau of National Health Insurance has been making a series of policies to depress the growth of medical expenditure. In view of limited revenue sources, hospitals emphasize more on cost control. In the cost structure of a hospital, personnel cost is in the first place and the next is material cost. A hospital can lower its material cost from several ways like purchasing, warehousing, deliverying, stock management etc. This ushers the business of hospital logistics outsourcing for drugs and medical materials.
Objectives
The purposes of this research were to evaluate the cost and benefit of the case of logistics outsourcing for drugs and medical materials from the viewpoints of both a medical center and a third party logistics (3PL) company. Also, we hope to build up a new model of cost benefit analysis for hospital logistics outsourcing as the evaluating instrument in the future.
Methods
We used cost-benefit analysis to evaluate the adoption of the third party logistics in a public medical center.
Results
From the viewpoint of the logistics company, the operation of the logistics outsourcing business cost NT$4,205,576 in the year 2002, and the revenue taken from the hospital was zero because of undertaking the logistics outsourcing business free of charge. The logistics company did not achieve the expected effect from drug and medical material suppliers, either. Thus the logistics company did not have any physical benefit at all, which means it practiced the contract in the state of loss. Under the circumstances of cost larger than benefit, it was not worthwhile to devote to the business, but the intangible benefits need to be studied further. From the viewpoint of the medical center, it obtained a benefit of NT$3,796,634 in 2002 because of free charge. It seems that the effect of reducing expenditure was significant, but it became seems trivial compared with four billion expenditure on drugs and medical materials. In this regard, we advise that the medical center try to increase the benefit in order to enhance advantages of outsourcing.
Conclusion
Looking at the results from a holistic point of view, the case is not mutually beneficial for both sides. Only the medical center got tiny benefits, and the logistics company took the whole operating costs and bore the loss. Therefore, the practice of the logistics outsourcing model is not completely successful. The most important reason is that the suppliers worried about the loss of their rights and interests and had low intention to join the case. If the logistics company and the medical center want to make the model reach worthy to be continuously practiced, they have to think about the suppliers to a consensus with reasonable schemes to exclude the possibility of the boycott. They should expand the scale of outsourced items to get the benefits of economics of scale. However, the benefits of the logistics company should be greater than the costs; in other words, it should change the cost-free relationships either with the medical center or the suppliers to acquire the revenue source for break-even. Thus, by maintaining common benefits for three sides with integrated programs, the hospital logistics outsourcing model would be established as the paradigm and operate permanently on the foundation of mutually beneficial partnership.
Subjects
第三方物流
經濟評估
成本效益分析
third party logistics (3PL)
cost-benefit analysis
hospital logistics outsourcing
economic evaluation
Type
thesis
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