Last-mile Delivery in Health Care: Drone Delivery for Blood Products in Rwanda

Abstract

Last-mile delivery is one of the most challenging and costly facets of the supply chain. Using data from Rwandan public hospitals that transfuse blood, we examine whether and the extent to which the adoption of a technological innovation---delivery drones---for the last-mile delivery of blood products impacts the way hospitals manage the inventory of these products and the downstream health outcomes for patients. To estimate causal effects, we exploit the staggered rollout of the drone delivery system and use a generalized difference-in-differences approach. We find that all hospitals, regardless of their distance to the drone port, substantially decrease their on-hand inventory of red blood cells, most notably for the most flexible product (i.e., Type O blood). Hospitals also meaningfully reduce their wastage of red blood cells, especially for "in between'' products that are neither the most flexible nor the least flexible (i.e., Type B blood). With respect to health outcomes for patients, we document a large reduction in in-hospital mortality due to post-partum hemorrhage, which is the leading cause of maternal mortality and a condition where blood is a critical input for treatment. Interestingly, this change is concentrated among hospitals closer to the drone port, and these are the same set of hospitals that increase the transfusion of blood products. This increase is especially pronounced among blood products that cannot be held in stock at the hospital, including platelets and fresh frozen plasma. Our results highlight key considerations for decision makers allocating scarce resources to improve hospital operations and health outcomes. While the drone delivery system implies large improvements to inventory management for all hospitals, improvements in health outcomes are not realized by all hospitals and should be considered in key managerial decisions, such as optimal location of drone ports. 

Note:
Funding Information: Support from the Wharton Dean’s Research Fund, the Wharton Global Initiatives Research Program, the Mack Institute Research Fellowship, the Fishman-Davidson Center for Service and Operations Management, and the Claude Marion Endowed Faculty Scholar Award.

Conflict of Interests: None to declare.

Keywords: empirical operations, last-mile delivery, delivery drones, resource-constrained settings, health care