Hospital Automation Logistics: A Multi-Billion-Yuan Market Driven by Smart Hospital Transformation

In hospitals, we frequently encounter such scenarios. Upon receiving a call for blood reservation, the Blood Transfusion Department prepares the blood according to relevant procedures. Staff members then carry small baskets containing blood bags and hurry through the hospital corridors to deliver them to the operating rooms where blood is urgently needed. Alternatively, during surgery, surgeons may require an immediate pathological examination. The excised pathological specimens are transported by staff to the Pathology Department. After the department rapidly issues the report, the surgeon accesses it via the information system and determines the subsequent surgical plan based on the findings. Each of these steps must be closely interlinked to ensure both timeliness and accuracy while maintaining standardized processes.

This is merely one aspect of material flow within hospitals. Beyond blood, specimens, and medications, the expansion of hospital scale has necessitated the frequent transport of large volumes of pharmaceuticals, medical devices, linens, and waste between various departments and buildings. Consequently, issues related to the efficiency and safety of material delivery have become increasingly critical. As hospitals advance in automation, informatization, and intelligent infrastructure, the traditional transportation model—relying on manual labor, baskets, carts, and elevators—is being replaced by advanced automated logistics transmission systems.

By transforming hospital logistics systems and building logistics information systems, it is possible to establish a comprehensive internal logistics management system that meets the needs of modern hospitals, forming a safe, efficient, and standardized hospital logistics management framework. As a result, smart logistics systems have become increasingly prevalent in the construction of large-scale hospitals in recent years.

Logistics encompasses many aspects, such as transportation, warehousing, packaging, loading and unloading, distribution, recycling, and related logistics information technology. The hospital automated logistics system discussed in this article mainly refers to intra-hospital distribution, which is the SPD (supply, processing, distribution) process.

VCBeat interviewed Wang Zhiwei, General Manager of the Logistics Department at Chuanshi Boruo, and Lv Zijian, General Manager of Yinyi Medical, as well as physicians from relevant departments at the Second Affiliated Hospital of Chongqing Medical University and Chongqing Kanghua Zhonglian Cardiovascular Hospital. The interviews aimed to assess the current state of hospital automated logistics, evaluate the advantages and disadvantages of different logistics systems, and gain preliminary insights into future development trends in this field.

Hospitals handle a substantial volume of materials requiring internal transportation on a daily basis, including pharmaceuticals, consumables, medical instruments, X-ray films, documents, laboratory specimens, soiled linens and clothing, meals, as well as medical and general waste. These items vary in size and weight, with differing levels of urgency. Logistics personnel transport and deliver these goods using hand carts, baskets, elevators, and other means, constituting a considerably arduous workload.

Typically, hospitals outsource low-value-added labor-intensive tasks, such as patient care assistance, sterilization, and waste disposal, as well as logistics and warehouse management. If a hospital’s automated logistics capabilities are insufficient, it will often opt for outsourced managed services to reduce costs, improve efficiency, and optimize its workforce structure.

However, even when hospitals outsource their internal logistics services, the essence remains human-delivered service, and the drawbacks of manual transportation persist. First, transportation efficiency is low. Hospitals handle a large volume of urgent item deliveries, such as intraoperative blood transfusions and pathological testing samples. Manual transportation is time-consuming, especially when dedicated elevators are unavailable, leading to prolonged waiting times. Second, safety standards are poor. The mixing of pedestrian and logistical traffic increases the risk of infection, making it difficult to ensure the safety of transported items. Third, the error rate is high. Due to the relatively low educational level of transport staff, mistakes such as picking up the wrong items or delivering them to incorrect locations occur frequently. Fourth, transportation conflicts are common. During peak delivery periods, logistical staff often fail to provide timely service due to shortages, forcing nurses to run errands themselves and preventing them from devoting their full attention to patient care.

So, is the reason hospitals cannot widely adopt automated logistics equipment due to cost issues? In terms of cost comparison, the construction cost of intelligent logistics systems is indeed relatively high, mainly due to initial investment and subsequent maintenance expenses. According to information disclosed on the Chinese Government Procurement Bidding Network, the winning bid prices for medium-sized box-type logistics transmission systems in hospitals mostly range between 10 million and 20 million yuan, with annual maintenance costs amounting to several hundred thousand to over a million yuan.

Moreover, the cost of manual transportation is not insignificant, representing a continuous expenditure. According to data retrieved by VCBeat, a tertiary hospital’s annual labor cost investment in internal logistics ranges from RMB 1 million to RMB 3 million. The 2019 bid award announcement for the Beijing Geriatric Hospital’s logistics service project indicated that, with 800 authorized beds, the winning bid price for one year of hospital support services—including 24-hour delivery (covering personnel, items, medications, etc.), patient transport, and specimen submission—was RMB 1.482432 million. The staffing requirement was 28 person-days, resulting in an average annual labor cost of approximately RMB 50,000 per person.

As the number of hospital beds increases, the complexity of material transportation rises significantly, leading to a substantial increase in the required logistics personnel. Data shows that a hospital with 1,200 beds transports over ten tons of materials daily, requiring 60 delivery staff and more than 2,000 transport trips. With an annual labor cost of RMB 50,000 per person, the total annual logistics labor cost exceeds RMB 3 million, which is not necessarily lower than that of automated logistics systems. Furthermore, the greater the human involvement and the volume of items transported, the lower the safety and efficiency become.

Therefore, cost is not the key factor driving hospitals to phase out manual delivery models in favor of smart logistics systems. Manual models inherently suffer from deficiencies in efficiency and safety, and fail to achieve refined management. The limited adoption of automated logistics systems is primarily due to the aging infrastructure of most hospitals, which makes retrofitting difficult; consequently, these systems are being extensively deployed mainly in newly built hospital campuses and new buildings.

For hospitals, the primary requirement is to achieve fast, accurate, automated, and safe material transportation. Currently, the logistics systems commonly adopted by hospitals mainly include pneumatic tube systems, rail-guided cart systems, medium-sized box-type logistics systems, and Automated Guided Vehicle (AGV) robots. The emergence of these different technologies has met hospital needs for varying speeds and weight capacities in transporting diverse materials.

Pneumatic Tube SystemsPneumatic tube systems are powered by compressed air and utilize pipelines constructed from PVC and steel. They employ PVC carriers to facilitate the rapid transport of small items within and between buildings. Common pipe diameters for pneumatic logistics systems are 110 mm and 160 mm, with a payload capacity of less than 5 kg and limited spatial volume. The transmission speed of the carriers within the pipes can reach 5–8 meters per second at high speed and 2.5–3 meters per second at low speed; the lower speed is typically used for transporting fragile items such as plasma and glassware. Characterized by low cost, long transmission distances, and high speed, these systems can address approximately 20% of a hospital’s item transportation needs.

The rail-guided cart logistics system requires the installation of aluminum alloy tracks at various transmission stations, enabling electric carts to transport diverse types of items within buildings. Users simply place items into the cart and enter the destination address code via the keypad; the cart then delivers the items quietly and safely. Each rail-guided cart has a load capacity of approximately 15 kg, addressing roughly 60% of item transportation needs in hospitals.

Medium-Sized Bin Logistics SystemThe medium-sized bin logistics system uses high-capacity tote bins as transport carriers, transferring them via lifting equipment and conveyor tracks. Operators place medical supplies requiring transportation into the tote bins and input delivery information into the logistics information system. The warehouse control system then assigns destination addresses to the barcodes or RFID tags of the tote bins scheduled for operation based on these instructions. The logistics automation system automatically lifts the tote bins to the target floors by reading the information stored on them. With a load capacity of 30–50 kg per bin, the medium-sized bin logistics system can address over 90% of item transportation needs in hospitals.

AGV robots can automatically load items, navigate to target locations, and transport goods within the hospital premises. However, due to their high cost, current adoption remains limited. By implementing minor modifications to logistics elevators, door operation and floor transitions can be achieved via wireless signals, while inter-building transportation relies on connecting corridors.

VCBeat has compiled statistics on 27 companies involved in hospital automated logistics systems (if any are omitted, please contact the author via WeChat: q19930797). Among foreign brands, most are engaged solely in pneumatic tube transport systems. In the early stages, Chinese hospitals frequently adopted brands such as Otis, Swisslog, and Aihua Kang. Swisslog entered the Chinese market relatively early and offers comprehensive solutions for both logistics systems and intelligent warehousing; it is currently one of the most widely selected imported products by Chinese hospitals. Among domestic brands, Sanwei Hairong holds a significant market share in the fields of pneumatic tube transport systems and medium-sized box-type logistics systems.

Pneumatic tube transport systems are currently the most widely adopted automated logistics systems in hospitals. Emerging in the 1960s, these systems gained traction due to their strong compatibility with both new and existing buildings, significantly enhancing healthcare workers’ efficiency and the accuracy of item delivery. They began entering the Chinese market in the late 1980s. In the early stages, the market was dominated by foreign brands such as Germany’s Ottevanger and Switzerland’s Swisslog.

Installation of pneumatic tube systems does not require major structural modifications to buildings. It primarily involves drilling holes through floor slabs and walls, with pipelines routed within the ceiling spaces. Inter-building connections are established via underground conduits or overhead bridge structures. This approach minimizes disruption to hospital operations and causes limited structural damage, allowing both new and existing facilities to customize station layouts according to their specific needs. Furthermore, given its proven ability to facilitate the rapid transport of a significant proportion of urgent items, pneumatic tube systems have achieved widespread adoption in hospitals.

According to a physician from the Department of Laboratory Medicine at Chongqing Kanghua Zhonglian Cardiovascular Hospital, the facility is a private hospital with a relatively small campus, where the outpatient department, inpatient ward, and laboratory are all housed within a single building. The Swisslog pneumatic tube system has proven highly convenient in operation, handling the rapid transport of the majority of specimens and documents for the laboratory. With the exception of stool and urine specimens and blood bags from the blood bank, all other specimens are transported within the hospital via the pneumatic tube system. Additionally, some solid medications are also delivered through this system, while injectables and infusion bags require manual delivery.

In the hospitals we interviewed, the pneumatic tube system is more likely to remain underutilized in larger campuses with multiple buildings or in large hospitals that installed such equipment early on. The system is prone to congestion during peak hours, often requiring circulating nurses to continue making frequent trips on foot.

Although fragile injectables and blood bags can be transported at low speeds via pneumatic tube systems, manual handling remains the standard practice in actual operations. Retrieving blood from hospital blood banks requires nurses or even physicians to be physically present to perform rigorous verification protocols (such as the “three checks and seven verifications”), rendering automated logistics systems unusable in these scenarios. Furthermore, high-speed transportation can induce physiological and chemical changes in blood, such as hemolysis. Consequently, fragile liquid preparations, including injectables and infusion bags, are also excluded from pneumatic tube transport.

Wang Zhiwei of Chuanshi Banruo introduced, “At present, pneumatic tube systems are highly prevalent in hospitals, particularly in Grade 3A hospitals. It is preliminarily estimated that more than 1,500 hospitals have installed pneumatic tube systems. However, half of these systems remain idle.”

Although the pneumatic tube system has a low payload capacity and can only handle 20% of in-hospital item transportation, its high transmission speed makes it quite suitable for transporting time-sensitive items such as emergency blood supplies, laboratory specimens, and medications. Why, then, is its downtime rate so high?

Upon investigation, the issue primarily stems from two factors. Wang Zhiwei explained to VCBeat that improper installation and maintenance of the equipment, along with incorrect usage by hospitals, are the main causes.

First, improper use, installation, and maintenance of the system have led to frequent blockages, errors, and losses of transport canisters. Poor scheme design, unreasonable station layout, and problematic pipeline installation are the primary reasons for the suboptimal performance of pneumatic tube systems. Additionally, system maintenance is critical; however, annual maintenance costs are relatively high, and some hospitals fail to perform timely maintenance, resulting in system failures. Second, insufficient training for relevant hospital staff has led to non-compliant operations, such as overloading or inadequate protection, causing spillage of specimens and medications, thereby increasing the risk of infection and contamination.

Lu Zijian, General Manager of Yin Yi Medical, believes that pneumatic tube systems can handle the hospital-wide transport of laboratory specimens and blood, provided that proper procedures and standards are followed. For instance, urine and stool specimens can be securely sealed according to protocol, and while blood transport is subject to strict verification protocols (such as the “three checks and seven verifications”), it can still be managed through processes like signed return confirmation slips. If hospitals exclude urine, stool, and blood from pneumatic transport, the value of the pneumatic tube system would be significantly diminished. Conversely, document transport is not an ideal application for pneumatic tube systems, as paperless office practices are becoming the norm in hospitals. Furthermore, Lu Zijian notes that pneumatic tube systems operate in both high-speed and low-speed modes, with the latter reducing the overall transport efficiency across the hospital. By using equipment with stable performance, safety concerns during high-speed transport can be addressed, thereby improving the overall efficiency of item transport throughout the hospital.

Rail-guided carts operate at relatively low speeds, typically 0.6 m/s laterally and 0.4 m/s longitudinally. They run quietly, without vibration, ensuring smooth movement. Their primary advantage lies in their ability to carry heavier and bulkier items, with each cart capable of transporting approximately 10 kg. Although rail-guided carts offer increased load capacity, they require rotation along the track; therefore, some carts are equipped with gyroscopic mechanisms to keep contents upright. Consequently, rail-guided carts provide greater reliability than pneumatic tube systems for the high-volume transport of liquids, specimens, and blood.

Due to significant limitations in installation, track-guided vehicles have not been widely adopted in hospitals, with currently over 100 hospitals using them. The major brands are Teledynamics from the United States and Swisslog. The penetration of track-guided vehicle systems in hospitals is far lower than that of pneumatic tube systems. In addition to their high cost, a key drawback is the stringent requirements they impose on hospital building structures; considerations for the central station space, track routing, and vehicle operating clearance must be integrated during the design phase.

Medium-sized box-type logistics systems offer high transmission capacity, low maintenance costs, affordable tote prices, and smooth transportation, making them an essential logistics infrastructure in newly constructed buildings. Although these systems still demand considerable building space, they can be designed using vertical shaft spaces after the main structure is completed. A drawback is their inability to handle inter-building transportation. However, when combined with pneumatic tube logistics as a supplementary system, their respective advantages and disadvantages complement each other, thereby addressing the vast majority of logistical transport needs.

Automated Guided Vehicle (AGV) robots represent a relatively novel logistics transportation model with strong load-bearing capacity. After simple modifications to the elevator control system, these robots can autonomously travel between floors and transport materials across buildings via connecting corridors. The main drawback is their high cost, and currently, only a small number of hospitals in China have adopted this technology.

None of these four logistics systems is perfect; each has its own advantages and disadvantages. In comparison, pneumatic tube systems are the most widely adopted, while AGV robots have the lowest penetration rate. When selecting a logistics system, hospitals should make comprehensive considerations based on their specific circumstances. Many hospitals have adopted solutions combining medium-sized box-type logistics systems with pneumatic tube systems as auxiliary support, or track-guided vehicles supplemented by pneumatic tube systems.

Another point is that when we compile statistics on logistics system products from various companies, it becomes evident that many enterprises are capable of offering multiple solutions to their clients. These solutions also encompass intelligent pharmacies, automated warehousing equipment, and the automatic collection of waste and soiled linens. In other words, hospital automation logistics comprises three key stages: warehousing, distribution, and retrieval.

As previously mentioned, this article primarily focuses on the in-hospital SPD (Supply, Processing, and Distribution) delivery segment; therefore, we did not explore the warehousing component. However, only with the support of intelligent warehouse management and automated logistics can refined management be achieved for inventory status, logistics transportation, and procurement.

In addition, the reverse logistics for waste and linen collection is also an important component of in-hospital logistics. Among the 27 companies, seven have corresponding waste and linen recycling systems. VCBeat learned through interviews that traditional hospitals generally outsource waste and linen collection to third-party contractors, resulting in low enthusiasm for automation in this area. However, due to considerations of safety, hygiene, and convenience, attention to waste and linen recycling systems in hospitals is gradually increasing.

VCBeat compiled the winning bid data related to hospital automated logistics from the Chinese Government Procurement Bidding Network for the one-year period between August 2018 and August 2019, revealing only 13 records in total. Although the public data on the Chinese Government Procurement Bidding Network is significantly lower than the actual market deployment volume, a search conducted last year on the same platform for winning bids related to hospital informatization procurement from February to August 2018 yielded as many as 442 records, with a total winning bid amount of RMB 930 million. This comparison indicates that the development of the hospital automated logistics market is indeed not progressing rapidly, and its market potential is far smaller than that of medical informatization. However, does this also suggest that an immature market presents greater opportunities?

In terms of newly procured project types, the adoption ratio for pneumatic tube systems, track-based trolley systems, medium-sized box-type logistics systems, and AGV robots stands at 7:2:4:1. Although the sample size available for statistical analysis is relatively small, the procurement proportions align closely with market insights previously gathered through interviews. Pneumatic tube systems exhibit the highest penetration rate; medium-sized box-type logistics systems are being prioritized in newly built hospitals and hospital buildings; while the deployment of AGV robots remains limited. However, given that each individual logistics system has distinct advantages and disadvantages, composite solutions integrating multiple logistics systems have become the mainstream approach. Most facilities adopt a solution primarily based on medium-sized box-type logistics, supplemented by pneumatic tube systems.

The winning bid price for automated logistics systems is primarily correlated with the number of hospital stations. For instance, even within pneumatic tube transport systems, there is a significant price disparity between a 40-station system and a 60-station system. Additionally, whether steel tracks are used and whether infection-control stations are selected are also major factors contributing to price differences. According to our data, the total winning bid price for a comprehensive solution comprising a medium-sized box-type logistics system supplemented by pneumatic tube transport at a hospital typically ranges from RMB 14 million to RMB 17 million.

In terms of maintenance, the annual service cost for the pneumatic tube system at Qilu Hospital of Shandong University is RMB 147,600, while the winning bid price for the maintenance of the track-guided cart system at Shenzhen Hospital of Southern Medical University is RMB 1.785 million. This demonstrates that the maintenance costs of automated logistics systems are also very high.

According to surveys conducted by VCBeat among enterprises and hospitals, while automated logistics systems are relatively easy to build, they are difficult to operate. Various issues arising during installation, usage, and maintenance have prevented hospitals from achieving commensurate returns despite significant capital investment. The primary reasons for this discrepancy are inadequate logistics planning, delayed planning milestones, and unscientific equipment selection. As the industry matures, it is expected that these challenges will be gradually resolved.

Modern hospitals feature centralized architectural structures, high-rise buildings, large floor areas, and a high number of beds, imposing particularly stringent requirements on logistics transportation. Automated logistics systems, by integrating with Hospital Information Systems (HIS), enable real-time monitoring and traceability of logistics information, making them an inevitable choice for modern hospitals. The annual increase in the number of “modern hospitals” will determine the market potential for automated logistics systems. Therefore, the adoption of automated logistics systems primarily occurs in procurement for new construction projects and upgrades of existing hospital campuses.

According to data from the "Yearbook of Health and Health Statistics," China had a total of 24,709 hospitals in 2013, which increased to 31,056 by 2017, with more than 1,000 new hospitals added annually. Although the number of newly established hospitals appears substantial, suggesting significant market potential, the majority are secondary-level hospitals. There are few tertiary-level hospitals that have both the willingness and the capability to adopt automated logistics systems. Furthermore, the annual increase in tertiary hospitals is fewer than 100. When considering also the expansion and renovation projects of existing large traditional hospitals, including new buildings and campuses, the market space for automated logistics projects remains limited.

Based on an estimated annual procurement by approximately 200 hospitals, with a procurement volume of RMB 15 million each, the market size for in-hospital automated logistics systems is roughly RMB 3 billion per year. When including the annual maintenance fees for hospitals that have already implemented logistics systems, the total market amounts to approximately RMB 3.5 billion. Companies specializing in automated logistics systems will compete to capture their share within this limited market.