Editor’s note: This story is the first installment of a series on the tactics healthcare executives are using to address supply chain challenges.
It’s one thing to have supply chain experts sitting at their desks and talking with suppliers. It’s another to be in the room when supplies are being used, and evaluating what is truly needed.
Allina Health, a major metropolitan healthcare system in Minnesota and Wisconsin, is putting supply chain procedure specialists in the operating room and other procedure-based settings, like catheter labs. With that kind of in-person presence, the not-for-profit’s procurement and operations staff can better understand how physicians are using products on their preference cards, and how to encourage and rethink potential changes.
Thomas Lubotsky, Allina Health’s vice president of supply chain, told Supply Chain Dive these procedure specialists can provide the physicians with data about supply cost, how much they’re using — or wasting — on the card, what their peers use for the same procedures, and the cost differences.
The tactic is one of several ways the healthcare executive hopes to use procurement expertise and processes to drive supply chain innovation at Allina Health.
Allina Health: By the numbers
Number of hospital campuses
Surgical procedures in 2022
Private clinics plus same-day and urgent care centers
Urgent care and clinic visits in 2022
How embedding supply chain staff can save costs
Lubotsky hopes physicians will increasingly use the data from supply chain procedure specialists to refine their product choices.
For surgical procedures, the supplies must be available as needed, though some are used less frequently. This affects stocking and pricing, which are more complicated when surgical supplies are not standardized.
Lubotsky would like the doctors to reconsider their supply requests, potentially reducing product variation and taking advantage of preferred agreements with better pricing. The supply chain team is working with an emerging technology company to create scale and efficiency to share this information real-time with physicians, eliminating the need for procurement staff involvement.
While the current focus is reducing cost, Lubotsky eventually wants to expand to clinical outcome comparisons, like reduced infection rates or improved functionality. This next phase would include outcomes, reliability and safety benchmarks.
Using data transparency to improve supply chain workflows
In addition to focusing on data transparency with clinicians, Allina Health is also doing so with its distributor and suppliers.
Lubotsky’s goal is to redesign the supply chain workflow so that ordering and cash flow are more reliable and efficient. “I think there’s downstream benefits for all of us, based on this data transparency,” he said.
The staff is creating a data lake to analyze several key product categories that use direct shipments and consignment. Historically, the healthcare system has not had operational integration between providers and suppliers.
Allina Health is also working to control non-labor spend, and labor spend in the supply chain. With personnel shortages nationally, the healthcare system is contracting with agencies through Lubotsky’s purchased services oversight. Controlling that lever will make a big financial difference, and many in the organization are working to shape the labor strategy and direction to recruit and retain critical staff members.
As for non-labor spend, inflationary pressures are causing the supply chain staff to look for creative ways to delay unit price spending and to assess and rethink variation of products, supplies and services, particularly in procedurally-based areas.
Leveraging group purchasing to diversify suppliers
Lubotsky said that they’ve made a greater commitment in the last 12 to 18 months toward sourcing diverse and local vendors.
In 2022, they purchased close to $7.5 million from DEI suppliers and Allina Health is targeting $20 million for 2023. By April of this year, they had already spent $9.8 million in this category.
To do so, Allina Health is working with community organizations and with other large Minnesota corporations, including Target and 3M. The companies share resources with each other to advance spending in that market.
The healthcare company has also teamed up with Vizient, a group purchasing organization, on a community-based program Vizient is bringing to market. Vizient’s supplier portal will register Allina Health’s diverse suppliers, and the group purchasing organization commits to working with the healthcare system to engage these suppliers. Allina Health also recently hired its first manager for sustainability and diversity.
Lubotsky credits his staff for these successful efforts. “Culture, training and development are all linked together,” he said. “We know we have to continue to focus clearly around those areas to build the right kind of culture to support all the work that we’re addressing.”