When dealing with servicing and delivering medical equipment to locations throughout the state—or the nation—a fleet of vehicles is a necessity. 24×7 spoke to fleet managers at three companies in the United States to learn how they streamline the fleet process, especially when they are dealing with hundreds of drivers spread across thousands of miles. Most keep their fleets under control by dealing with just a few leasing companies and investing in management services to keep tabs on this crucial aspect of their businesses.
Mediq, headquartered in Pennsauken, NJ, delivers and services critical care equipment, monitoring equipment, respiratory therapy equipment, support services, and biomedical services 7 days a week and 24 hours a day to locations in 46 states. A fleet of vehicles at the ready is a necessity.
Consequently, the company’s 900 employees have access to 525 delivery vehicles, which are leased on 36-month terms. The price range of the vehicles is from $17,000 to $32,000, and Bill Izganics, director of facilities, fleet, and shipping and receiving, says he spent $2.7 million for 91 vehicles last year. Those vehicles remain in service until they have 250,000 to 300,000 miles on them, and Izganics estimates that his fleet logs some 16.5 million miles a year.
“The average number of miles does vary a bit geographically. In the Phoenix area, we lose about 25,000 miles on longevity because of the heat, which is an average of 110 degrees in the summer,” Izganics says. “And in Michigan the bodies corrode because of the rock salt they use on the roads in the winter.”
Tempe, Ariz-based ENTECH, also has to combat wear and tear of its fleet, which consists of 18 vehicles. ENTECH is the outside repair department of Banner Health System, one of the largest health care groups in the Southwest. According to E.L. Gordon, materials manager, ENTECH’s staff of eight repairmen is called on to fix a variety of medical equipment at seven facilities in the Phoenix area. They also work for a few customers outside the Banner Health System.
ENTECH currently has a combination of leased and purchased vehicles. In some cases the leases have been extended so that ENTECH owns them, because Gordon says it is difficult to get replacement money for vehicles.
“We have to get capital money requests to get approval, and since the Banner Health System is building several hospitals right now, getting vehicle money is not easy,” Gordon says. “There is no budget set aside for fleet vehicles, and we have to budget for the payments out of our operating budget.
“While we used to replace our fleet vehicles every 3 years, now we have some that are 5 years old,” he continues. “Many have well over 100,000 miles on them. I’m also spending a fortune in maintenance because vehicles don’t hold up well in Arizona.”
Regardless, Gordon points out, when his technicians need to go out on a minute’s notice, there must be a vehicle available for them.
“We have two delivery people that go to each Banner facility every day, two technicians in Tucson and Sierra Vista, and then our technicians based out of here use some vehicles as a pool,” Gordon says. “Employees use their own vehicles only when it is absolutely necessary, like when the company vans are in the shop and they need to go someplace immediately. As a general rule we try not to do that.”
“Some employees, including our sales force, use their own vehicles,” says Mediq’s Izganics. “There are times when all the vehicles are out and we have a STAT delivery. [In these cases] employees use their own vehicles to complete the moveable medical equipment emergency delivery, and we reimburse them $0.36 per mile.”
For both companies, the fleets are composed of specific types of vehicles leased from only a handful of manufacturers and leasing companies. The majority of ENTECH’s fleet cars are Chevy Astros, although Gordon opts for bigger vans for the drivers who pick up equipment to bring back for repair. ENTECH also has a few other, older vehicles that are not allowed out of town, but are available for project managers to go to meetings close by. Izganics says Mediq generally deals with two leasing companies and gets a combination of GM 3500 chassis with a Spartan box or an Isuzu NPR.
Bothell, Washington-based Philips Medical Systems has more than 3,600 fleet vehicles to accommodate the sales, service, delivery, and technical help the company provides in 50 states and in Puerto Rico. Even with such a large customer base, Philips also limits its fleet choices.
“We routinely go out to bid with domestic manufacturers, but Chrysler has the current contract,” says Gage Wagoner, acting fleet manager for Philips. “Ultimately our fleet has to contain three types of vehicles to meet our various needs: domestic sedans, upscale domestic sedans, and minivans.”
Philips takes out an industry-standard operational lease on its vehicles, although the lease period varies. Normally, Wagoner explains, the company sets a mileage parameter to turn the vehicle.
“For sedans, we go to 60,000 miles, and for minivans we go to 80,000 or 5 years, whichever comes first,” Wagoner says.
While Philips does not need to customize its fleet, the situation is very different for both ENTECH and Mediq, whose vehicle customization cost runs about $10,000, according to Izganics.
“If it’s a van we have to raise the top 18 inches, add fiberglass-extended doors and put in a lift capable of raising 850 pounds,” Izganics says. “For the Isuzu NPRs, we add a lift gate with a capacity of 2,200 pounds, and put 16-foot boxes on those. We put E-tracks inside the vans so we can secure our equipment with ratchet straps. Finally, for general cargo vans or minivans, I put a cage between the driver and equipment.”
At ENTECH, the repairmen use tracks in the flooring that have been specifically measured to fit the Astro vans.
“Our guys have to haul huge carts around and those have to be strapped to tracks so they don’t go anywhere,” Gordon says. “We also put shelving in the vehicles to hold our equipment.”
Once the fleet is set, managers have to deal with maintenance and repairs, and many opt for the standard tools offered by leasing companies to do the job.
“It’s pretty simple to manage the fleet using an online management service,” Izganics says. “We can go online and see everything that happens with our vehicles to the hour, and the management service is specific to our fleet. It even includes the unit number, and we are able to get purchases live.
“Getting the branches to comply with policy is the most difficult aspect of managing the fleet,” he adds. “A lot of [the technicians] don’t report their mileage or send their monthly gas logs to corporate, due to the fact that vehicles are on the road 24 hours a day with numerous drivers behind the wheel during the course of a business day, placing up to 10,000 miles a onth during our busy season, but we constantly get status alerts if the vehicles are over 5,000 miles and haven’t done an oil change.”
All of Mediq’s vehicles have a coupon book for maintenance and the drivers are provided with gas cards that have a limit of $50 for a single purchase or $200 daily. The gas cards are reggulated by placing safeguards to prevent the unauthorized use by anyone other than a Mediq employee.
Wagoner also tracks every nickel, every mile, and every gas purchase on the cars in Philip’s fleet, although his drivers are given access to a gas card with no limit.
“We have some drivers who travel 80,000 miles a year,” Wagoner explains.
On the maintenance side, both chain and independent repair shops nationwide can work on the vehicles as long as they accept the fleet agreement. Each shop calls the leasing company to approve work that costs under $400, although Izganics has to authorize repairs over that amount.
ENTECH works with a few repair shops that have been extremely helpful at keeping finances under control, including a local mom and pop business. Ultimately, though, Godron hopes to cut the high costs of this necessary part of business by leveraging the company’s buying power.
“We are on the verge of combining our fleet buying with Banner Health’s fleet buying in order to get better lease terms,” says Gordon, who is on the system committee currently going out for bids. “We determined that if we combine all of our vehicles, we will have more buying power to negotiate our leases. That will benefit all of us.”
Liz Finch is a contributing writer for 24×7. This article was first published in the December 2003 issue of 24×7.