The Outsiders

There’s nothing in the book that says hiring someone from outside the healthcare industry will improve your supply chain. But it’s almost guaranteed to bring a pair of fresh eyes to what’s going on.

What employer – you included – isn’t looking for the ideal hire? Perhaps you have identified a strong candidate from within your organization, either in your department or another, and you’ve decided to invest time and money in her advancement. And why not? She’s smart, she knows the players, she knows your processes, she knows where your organization is headed, and she’s got leadership skills.

But, increasingly, perhaps because of the uncertainties of healthcare reform, IDNs are taking their chances on candidates from outside the industry. They may come from the military, food service, law, banking, hospitality, automotive, finance, express delivery, or even the roller coaster industry.

“It’s true that [someone from outside the industry] can bring a different way of looking at problems and asking questions,” says Andy Brailo, group vice president, Premier. That’s a good thing, he says.

But the newcomer may have to take a deep breath when he or she enters the world of healthcare delivery, according to those who spoke to the Journal of Healthcare Contracting. Someone from the automotive industry, for example, might look at the myriad of products used in the typical hospital and think, “What gives? We didn’t buy 10 different brackets to build our cars.”

And there’s a learning curve. Newcomers might not be aware of the critical nature of supply chain’s relationship with clinicians, says Brailo. “If you come from outside healthcare, your tendency may be to jump into your work without understanding how relationships work.” Successful supply chain professionals know that multidisciplinary teams, which can look at problems from 360 degrees, often yield the best results. “They know they’ll never be able to understand products more than the doctor, but they can align resources to help everyone get to a unanimous decision.”

Lack of controls
It was the lack of controls in healthcare, starting with inventory, that gave Joel Meckley pause when he came into the industry in 2001. It wasn’t what he had been used to as business manager of Great Coasters International, a Sunbury, Pa.-based maker of wooden roller coasters. Meckley is associate vice president, procurement services, Geisinger Health System, Danville, Pa.

A graduate of Old Dominion University, Meckley took the job with Great Coasters in 1994, just as it had finished building its first ride at Hersheypark and was in the process of signing an agreement with Six Flags. As business manager for the young company, he wore many hats. He handled bidding and purchasing, accounting and financial functions, as well as project management. Designing and building a wooden roller coaster can take as long as a year, depending on the size and complexity of the ride.

Today, Great Coasters International is a thriving business, with a presence not only in the United States, but Europe as well. But the amusement industry ebbs and flows, says Meckley. In 2001, as he and his wife were starting their family, Meckley sought something more predictable. That’s when the opportunity in the purchasing/sourcing area at Geisinger opened up.

Under the leadership of Deb Templeton, a licensed pharmacist, supply chain services at Geisinger was undergoing change, says Meckley. The goal was to make supply chain services a strategic part of Geisinger’s mission. But there were challenges.

“Think about the retail lumber industry,” he says. “At Lowe’s or Home Depot, you’ll find a bar code at the end of each board. They’ve found value in controlling items to that level, and putting standards in place to do that.” Not so in healthcare. Is it any wonder, then, that healthcare providers have a difficult time controlling inventory?

As a novice in healthcare, Meckley also couldn’t help but notice some misplaced emphases. In the roller coaster industry, valuable assets – motors, sprockets, controls and timber – are closely controlled. “We watched them like a hawk,” he says. That’s partly because of their expense, and partly because of the long lead time in obtaining them. Yet, in healthcare, Meckley discovered that traditionally, the most closely monitored inventory – often found in the central storeroom – is often the lowest in value. High-cost items, such as those used in the OR or cath lab, could benefit from additional oversight.

Things have changed at Geisinger. “Supply chain expertise is integrated into product-intensive areas such as the OR, pharmacy and cath lab,” says Meckley.

“This expertise, combined with clinical utilization knowledge and software tools to provide inventory visibility, has enabled enhanced oversight of such inventories.”

Templeton’s leadership has been key, says Meckley. But he also notes that the Geisinger supply chain team has a healthy mix of supply chain expertise and traditional clinical expertise, as well as people from outside healthcare, including electronics, food service and retail clothing. “That’s made the difference. When you put the right mix of folks together, you can do a lot of good things.”

Absolutely, positively
Faith Regional Health Services in Norfolk, Neb., serves a population of about 100,000 people within a 100-mile radius in the northeastern part of the state. Director of Materials Management Paul Burbach can drive to the west side of Omaha in about an hour and 40 minutes. And you can be sure Burbach has the route down pat, given his 16 years experience with FedEx.

Burbach, who joined Faith Regional in February 2012, worked at FedEx while getting his degree from the University of Omaha – Nebraska. After graduation, he went to work for the company full-time in Minneapolis. There, he was exposed to many facets of the overnight delivery business, including running sorts, managing and scheduling drivers, engineering routes, implementing safety programs, and serving as the intermediary between the IT folks and the field as the company implemented a new communications system. Ultimately, he served as a senior station manager in Spencer, Iowa, and then Norfolk.

But after 16 years with the company, and committed to staying in Norfolk, Burbach sought a new career. When the position at Faith Regional became available, he took it.

Though he lacked experience in purchasing and procurement, Burbach has brought logistics expertise to his new position. Healthcare is challenging, in that the variables change so often, he points out. But he looks forward to incorporating technology and building relationships with suppliers that are flexible and based on mutual understanding.

“The supply chain has to be more connected from end user all the way back to manufacturer,” he says. Just as he did at FedEx, Burbach looks forward to streamlining the supply chain and building more transparency into it. “That’s part of building relationships with suppliers – making sure we understand where each other is at, and understanding the needs and challenges each of us have.”

People, process, technology
Larry Bramble had about 20 years of experience across multiple industries prior to joining VHA as vice president, Supply Chain Performance Services, in 2011. He worked in the automotive industry (Ford) and the apparel industry (Nike), before spending about 10 years consulting in a variety of industries, including food service, consumer packaged goods, banking, utilities and home
products (doors).

Bramble is convinced that supply chain principles – including value analysis, supplier relationship management and strategic sourcing – are consistent across many industries. And while he has witnessed some success stories among healthcare IDNs, he has seen some gaps and inefficiencies within the area of supply chain operations.

For example, industry is diligent in managing and monitoring its contracts and relationships with vendors after contracts have been signed, says Bramble. Companies typically assign scorecard benchmarks to the relationship, monitor service level agreements, track compliance and continuously review terms and pricing to make sure they are optimal. Healthcare would do well to borrow some of these techniques, he says.

Industry also tends to look at the big picture. “Within the Nike apparel division, when we worked on our auto replenishment program, we looked across the overall supply chain – transportation, order management, warehouse management and demand planning. And we did it all at one time,” he says.

That end-to-end perspective sometimes eludes those in the healthcare supply chain, who tend to focus on perfecting one or two processes but neglect ancillary ones. “Two or three years later, because they didn’t adopt a consistent approach across the entire supply chain or integrate with ancillary functions, the system has broken down, or they find themselves working on a project right next to [the one they worked on previously], because they failed to take other components of the supply chain into consideration,” he says.

Bramble advocates the “old school” approach to better systems – people, process, technology. “My background implementing transformation programs across seven major industries has taught me that you must focus on all three components equally in order to ensure a successful and sustainable outcome,” he says.

“Upon successfully mapping the process, you must collaborate with leaders, supply chain team resources and internal and external customer resources in order to effectively align resources and technologies.”
Visionary leadership is necessary in order to transform “people, process and technology” issues across the supply chain, he says. Not only must the supply chain leader have broad capabilities, but he or she must have strong C suite support. Without it, supply chain priorities can get bumped aside in all the competing priorities IDNs face, the most important being quality patient care.

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