How some of the largest IDN supply chain teams have become more strategic, and less transactional, while increasing their value to the organizations they serve.
By Daniel Beaird
October 2023- The Journal of Healthcare Contracting
Since the pandemic, the healthcare supply chain has become recognized as vital to the functioning of hospitals and IDNs. Quality, safety, resiliency and health equity are front and center for IDN supply chains as they are the critical link between their clinical teams and suppliers.
John Strong, co-founder and chief consulting officer of Access Strategy Partners, moderated a panel with supply chain executives from three “supertanker” IDNs at The Journal of Healthcare Contracting’s IDN Insights East event this summer in Philadelphia. The panelists participating were:
- Ed Hisscock, Senior Vice President of Supply Chain, Trinity Health
- Jake Groenewold, Vice President and Chief Supply Chain Officer, Froedtert Health
- Bruce Mairose, Division Chair of Supply Chain Management – Sourcing and Networks, Mayo Clinic
Driving quality with clinicians
“We’ve partnered with our chief clinical officer, who has built out our clinical excellence capability,” said Ed Hisscock, senior vice president of supply chain for Livonia, Mich.-based Trinity Health. “Supply chain is on the agenda each time one of our clinical excellence councils meet. They are chaired by a practicing surgeon or clinician and there are several of them. The premise of each is to take out waste and unwarranted variation in care.”
Trinity Health’s clinicians are at the forefront of determining care quality and product quality. Hisscock says the Michigan-
based IDN’s stakeholders define the quality of products.
Trinity Health was the fifth largest IDN in the U.S. in 2022 by net patient revenue, according to Definitive Healthcare, at more than $20 billion.
In Wisconsin, Froedtert Health includes eight hospitals in the state with Milwaukee’s 702-bed Froedtert Hospital serving as a Level I trauma center. The hospital is affiliated with the Medical College of Wisconsin (MCW).
Froedtert Health measures its physician outcomes for quality and cost. For example, is one orthopedic surgeon using robotics while another is not? And what’s the net outcome of using those supplies?
“We bring those results to our physicians to help make decisions about the right direction to go,” said Jake Groenewold, vice president and chief supply chain officer for Froedtert Health. “Suppliers can help drive clinical outcomes by providing us with the true value proposition their organization and products can bring.”
The Wisconsin-based IDN also appointed a medical director of supply chain in 2022 and Groenewold says that was a big step because it is supported from the top down, and it helps how supply chain interacts with clinicians across the Froedtert Health enterprise. He added that an academic medical center like Froedtert must include clinicians early in product decisions because they have feedback on certain products for teaching future clinicians.
“We understand that and if it means better clinical care, we’ll take a look at it,” he said. “But clinical chairs will always challenge it from a cost perspective as we intertwine research and education into our entire process of approving certain products or not.”
Shifting the way are is delivered
Mayo Clinic’s Bruce Mairose, division chair of supply chain management – sourcing and networks, says clinicians in Mayo Clinic’s cardiology department like to have supply chain at the table.
“We now have the ability to establish supply cost at the procedure level which allows us to target things like open/unused or product waste,” Mairose said. “Several departments share and discuss the information unblinded, which facilitates the clinical practice to better understand potential variations in supply utilization. And it has opened up conversations on how we can get common procedures to an average as a baseline, and the average keeps going down.”
Hisscock says different specialties act differently. “It’s interesting how they interact with each other or not,” he said. “We can present the same data with the same process and get completely different interactions. It depends on the specialty as to how to best engage with them.”
These subtleties can include presenting some data blinded versus presenting other data with physicians’ names on it in order to drive a successful outcome.
“A human being is the greatest variable on the planet,” Hisscock said. “We’re all going to respond differently. Then, you throw in the product, caregiver, before care, after care and nutrition, and isolating a supply that’s going to have a meaningful difference and outcome is a monumental task.”
“If something improves patient experience or drives a better outcome, then we’re absolutely helping the clinical practice to look at it,” Mairose added. “Is it bells and whistles or does it have the ability to take it up a notch clinically?”
Groenewold agrees and says if it is a value proposition a supplier provides that can really make a difference, Froedtert Health is all over it.
Trinity Health and Froedtert Health are in the process of building data management systems to help evaluate and compare products. Mayo Clinic analyzes products in the lab space particularly, according to Mairose, and says there is not much difference in many of the products used.
Standardization and conservation for safety
“We have to be careful and guard against too much variation,” Hisscock said. “The purpose of our clinical excellence councils is to root out unwarranted variation because it has both a safety and quality connotation.”
Standardization helps drive safety for these IDNs through their data management systems.
“We codified data in our master data management system and labeled sharps, for example,” Hisscock added. “If a sharps device shows up in the system for the first time, an alert is automatically sent to the safety leader to ensure proper in-servicing.”
Safety is also about conservation.
“If we have a critical item that doesn’t have an easy alternative and will impact therapeutics or surgical intervention, we start with conservation,” Mairose said. “How can we use less?”
He adds that Mayo Clinic has a system that immediately elevates these issues to the highest levels of the clinical practice. “We haven’t had a shortage that has impacted patient care but we’re still having thousands of back orders a month at Mayo Clinic,” he said.
Groenewold says Froedtert Health made it through the contrast media shortage crisis in 2022 without canceling or rescheduling cases because of conservation. Other providers sent patients to Froedtert for scans, and it had to monitor how many patients it could handle.
“When we went into conservation on three products that had short supply, we never went back to our original volume of purchases,” Groenewold said. “When conservation and utilization is in place with sound clinical practice, there are times it doesn’t come back. So, there are risks to suppliers associated with an outage that go well beyond just frustrated supply chain people.”
Trinity Health’s value analysis team has been hit by shortage after shortage, Hisscock says, and they are the tip of the spear on those when they should be working on other things. “We’re a faith-based, not-for-profit organization and we have a lot of expense management protocols in place,” he added.
As a smaller organization than Trinity Health or Mayo Clinic, Froedtert Health has some flexibility and hasn’t put a moratorium on items. “To claw back our margin, we’re looking at any opportunity and it goes to the clinical council for a yes or no,” Groenewold said.
“Mayo Clinic is not known for putting moratoriums in place because you need to remain flexible to meet patient care and operational needs,” Mairose added. “Everything is negotiable.”
Mairose says Mayo Clinic is still struggling to get products in the commodities and generic product categories as well as the clinical preference product categories. “We’re doing more research and pursuing additional value in the implantable space, but we don’t have much time to do that in those other categories,” he said. “We’re too busy looking for alternative products.”
Resiliency and key suppliers
“You could argue that resiliency is safety,” Hisscock said. “It’s all related. There’s tremendous waste in the way we work with suppliers which can create errors that lead to product disruptions. It’s nobody’s fault. It’s just how this industry has evolved.”
Hisscock says IDNs and suppliers need to think more broadly about how they work together.
“We worked with a supplier, and we were expressing over 40 orders at their distribution center every day, on average,” he said. “So, 40 times each day a picker went around their warehouse, picked a product, put it in a box and put it on a FedEx or UPS truck. And, we have 40 receipts, unboxing events, deliveries, and invoices. But now, we’re placing one order whenever we can fill a truckload (about once a month) and sending it to our warehouse. Then, we’ll add the items to the daily orders we are already picking for our hospitals. Think of the savings and the reduced opportunity for errors.”
“It gets back to resiliency because every touch and communication is an opportunity for error. The most efficient way to work together is also likely the most resilient,” he said.
Groenewold says Froedtert Health identified 13 key suppliers for its supply partner council that meets three times a year to share what’s happening across the industry. “We share our financials with them,” he said. “They know our vision and why we’re doing it.”
He says a discussion around packaging came out of one of the last meetings. “We talked about how one of the suppliers didn’t have efficient packaging – that’s the way to get to the fundamentals of pulling costs out of the supply chain,” he said.
Mairose says IDNs come in all sizes, and that concepts and processes that work for one IDN may not apply to other organizations because they do not have the funds or the opportunities to train for a more sophisticated approach or solutions. “Suppliers need to help the medium and smaller organizations they work with,” he said. “They’ll have a more loyal customer and a higher margin over time.”
Supplier diversity and local purchasing to help the communities IDNs serve
Trinity Health, Froedtert Health and Mayo Clinic are focused on determinants of health through supplier diversity and local purchasing.
“Health equity is a big input for us at Froedtert,” Groenewold said. “Understanding the implications around health equity and what we can do as a health system to help grow awareness is important. We are passionate about the communities we serve.”
Mayo Clinic has a mentoring program for small and diverse suppliers. Mairose says it helps suppliers understand how to approach healthcare organizations. “As a large organization, we have a responsibility and desire to do the things we’ve been talking about,” he said. “Funding programs to recruit and hire more diverse employees, and improve the health of our communities.”
Trinity Health is a member of the Healthcare Anchor Network, a growing national collaboration of health systems aiming to build more inclusive and sustainable local economies.
“We call it citizenship,” Hisscock said. “It’s helping organizations that are meaningful in the communities we serve and helping raise the socio-economic circumstances of our communities. If we award business to a local supplier and they hire another shift to take care of the Trinity business, then it raises the economic situation and, per the social determinates of health, improves the health and well-being of the community.”
The Journal of Healthcare Contracting would like to thank Premier and Allergan Aesthetics for sponsoring IDN Insights East.