Healthcare is different from other asset-heavy industries — except it truly isn’t

Every day, UPS has to predict where millions of packages are going to originate on future days and where they are going to go.

Many of these will be overnight deliveries from far-flung cities and must be delivered to specific addresses before 10:30 the next morning.

Why does UPS need to predict this information far into the future? Because that’s how the company can optimize the use of its fleet of aircraft and trucks to deliver on time and on budget, meet its promise to customers, and make a profit. This is very hard to do and yet, few of us can remember the last time UPS or Fedex failed to deliver on their promise in the midst of sun, rain, snow, or storms all over the country and the world.

Pre-COVID, and now as we continue working through the impact of COVID, every airline must predict how many passengers will fly from any of the nearly 20,000 airports in the country to any of the others. That’s 400 million possible combinations, with almost no certainty of which one of 330 million Americans will get up one day and decide to go from Airport A to Airport B, possibly through Airport C, on some future date. They’ll expect an affordable cost and a huge emphasis on safety.

Why do airlines have to anticipate this? Because that’s how they’re able to price each seat on each flight, staff each flight based on the type of aircraft, and schedule the aircraft and engine maintenance. It’s also how airlines determine how to hire and maintain their fleet of pilots, flight crews, and ground staff. It’s how they choose the airports they want to fly in and out of, and how they make thousands of similar decisions that impact their own viability and the quality of the traveler’s experience. For decades, due to these decisions, millions of people have flown safely and reasonably quickly to their destinations every day.

There are dozens of similar examples from industries outside healthcare. Uber matches volatile demand and supply at each street corner. Waze and Google Maps come extremely close to predicting how long it will take to get from point X to point Y on any date or time into the future, and in real-time rerouting through point Z. Marriott and other hotel chains plan and price every bed, every single night.

What do these businesses have in common with healthcare? Please click here to continue.

To learn more about improving capacity management in healthcare, click here.

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