Kaiser’s Mary Beth Lang and Ije Nwosu discuss supply chain resiliency and best practices amid a pandemic.
Editor’s Note: Mary Beth Lang, Chief Supply Chain and Procurement with Kaiser Permanente, and Ije Nwosu, Head of Impact Spending with Kaiser Permanente, recently joined John Pritchard, Publisher of The Journal of Healthcare Contracting, for the Learning from Leaders Webinar Series with ANAE, the Association of National Account Executives. They discussed topics around Kaiser Permanente’s focus on impact spending and its supply chain resiliency and transparency through the pandemic.
No. 1: Kaiser Permanente’s Impact Spending Drives Diversity, Sustainability and Affordability
Long before the global pandemic and social consciousness of 2020, Kaiser Permanente (KP) used its clout through its purchasing power to implement its impact spending goals. It created community influence, environmental viability and broader affordability through three primary drivers: supplier diversity, sustainability and economic impact.
The events of this past year only intensified its efforts.
“The past 15 months have been a challenge for the world around us,” said Nwosu. “And we are committed to our impact spending amidst it all. We have a commitment to driving equity and inclusion in the communities we serve.”
No. 2: Diverse spend and upstream indicators of health
KP achieved $2.56 billion in diverse spend in 2020 and more than 400 jobs were created during the pandemic because of KP’s impact spending.
“We’re looking at driving health upstream and spend, as well as care delivery, has everything to do with that,” Nwosu said. “About 70% of upstream indicators of health are connected to access to food, opportunities and jobs. They have nothing to do with physically going into a healthcare facility and receiving care.”
KP has more than 12 million community members that it serves with over 70 million people in those community footprints.
“We feel an obligation to have the healthiest communities,” Nwosu said. “We’re thinking about those 70 million people in a holistic mindset through mind, body and spirit. If they’re getting access to the front door of healthcare, then we’re not treating them on the back end through emergency rooms or urgent care. It’s a win-win across the board.”
KP leverages its economic resources to collaborate with community anchors and large-scale purchasers to optimize collective impact. It aims to provide capacity-building opportunities for diverse and local entrepreneurs in its footprint to create wealth and employment. And it targets local spending to bolster local markets.
KP’s impact spending tackles challenges in physical environments like air and water quality, housing, and transportation. It also undertakes social and economic factors like education, jobs and income, and social support. Behaviors like diet and exercise, smoking, and substance abuse are being aimed at, as well as clinical care through access and quality of care.
“We’re making sure the social determinants of health are addressed in our communities,” said Lang. “It’s a very different and integrated model than you might see across the country.”
No. 3: Kaiser Permanente becomes the first U.S. healthcare system to go carbon neutral
This past fall, KP became the first healthcare system in the U.S. to become carbon neutral.
“Where we live and what we breathe all impacts our health,” Nwosu said. “Achieving carbon neutrality was important to addressing the conditions that lead to poor health.”
“We have a strong focus on safer products and by the end of this year, we’re driving toward 23% of all products procured at KP meeting safer product standards with no chemicals of concern,” Nwosu emphasized.
KP provides minority, women, veteran, disabled and LTBTQ+ owned businesses, as well as environmentally conscious businesses, the opportunity to be included in its contracting and subcontracting activities through its impact spending.
“It has to become a part of how you do business,” Nwosu said. “We have an expectation of large suppliers to be aligned with us, including in our contract language. We want to know if they’re working on their carbon footprint and mentoring or coaching minority organizations.”
Nwosu said most are very willing and it’s a conversation of customizing the process to individual organizations.
No. 4: Buy to Pay Teams and Supply Chain Resiliency through the Pandemic
KP’s Impact Spending team is part of its sourcing and pay operations in its Buy to Pay teams. These teams encompass sourcing, procurement, delivery and logistics, supply chain management, and travel and expense.
More than 2,600 staff members make up KP’s Buy to Pay teams, including Medical Center Supply Chain Operations, Supply Chain Services & Point of Use, Demand and Inventory Management, and National Warehousing and Logistics in its Supply Chain teams.
“Through the pandemic, we had to stand up our own quality team,” Lang said. “We had to quickly learn how to look at product authenticity and certification requirements, and that work continues today.”
Lang said it became critical during the pandemic to understand not only KP’s supply chain but also its suppliers’ supply chains and sourcing strategies through better transparency.
“It changed the way we asked questions during the RFP process,” Lang said. “We asked about on shore or near shore inventories in addition to the basics of price and delivery. Suppliers working under a spot buy had more problems during the pandemic than others that had locked in our volumes and needs throughout the term of our agreements.”
“It has also become crucial to have alternatives,” Lang continued. “The industry has struggled to think of comparable and alternative products. We’re willing to have more comparable databases and better integration of data in the same way pharmaceuticals has their generic equivalents. We need better category management that looks at higher level metrics and more global indices that let us respond quickly to another big event.”
Lang added that understanding where suppliers’ raw materials come from, and the lag times are integral to supply chain resiliency in the future. She also added that KP has started to work with other health systems around how impact spending can help supply chain resiliency through local, diverse and sustainable practices.
“This year, we’re looking at all of the carbon emissions from our suppliers and their supply chains,” Lang said. “There’s a commitment to more transparency in emissions across supply chains and discovering what suppliers are doing from a sustainability standpoint and what they’re doing to create new relationships.”
No. 5: Virtual Care and the Continual Supply Chain
The flexibility and resiliency extend to virtual care. “It was the preferred method for patients during the pandemic and beyond,” Lang said. “So, supply chain now extends to the patients’ homes. It is continual and no longer begins and ends in the brick-and-mortar medical center.”
KP will seek more services and opportunities to provide care at its members’ homes, including acute care services, in the future.
“I think we’re better off now as an industry because of better transparency and understanding across buyer-supplier relationships,” Lang said. “There’s greater visibility now through difficult, but needed, conversations that make relationships stronger.”
Lang emphasized that there’s a stronger understanding to have a clinically driven supply chain.
“Healthcare supply chains are very unique versus supply chains in other industries,” Lang said. “We must think about the impact that procurement or purchasing commitments have and look at smart sustainability. We’re more open to new relationships and conversations than prior to the pandemic.”