Seven White-Hot Topics (in Healthcare Supply Chain)
Over the last couple months, I've been privileged to serve as a keynote speaker at numerous events, to support inspiring coaching clients, to cultivate commercial growth for supplier organizations and to facilitate education events. Overwhelmingly, the question I keep getting asked is "what keeps you up at night?"
Our healthcare supply chain is at a crossroads, facing an unprecedented convergence of circumstances. Are we progressing or regressing?
Below are seven "front burner" topics consuming my attention credits:
Merger Mania: Companies often buy each other for a few specific reasons: economies of scale, economies of scope, customer/market share growth, population health risk pool viability, diversification or synergies. The real challenging work begins post merger when the integration activities consume both organizations for period of time. Many mega-mergers make perfect strategic sense. Others should cause us to pause and invite curiosity about the motive, strategic justification and conviction to integrate. Let's not forget that if IDNs were publicly traded companies, the Fortune 500 list would be reconfigured to include many hospital systems (pre-merger).
Strategic Misalignment: The CDC reports 86% of nation's $2.7 trillion annual health care expenditures are for people with chronic and mental health conditions. Why does the C-Suite task service line leaders and supply chain leaders to reduce supply expense when they could be collaborating to fundamentally change the care model across the ? Why is supply chain taking goals and initiatives rather than sitting at the table (as part of C-Suite) and influencing/setting the goals and initiatives? If 50% of a hospital's cost structure is non-labor, then when is supply chain going to step up and earn the seat at the table next to the COO, CFO, CIO, CHRO and CMO?
Executive Talent: There have been more than 25 vacant VP/Chief Supply Chain Officer roles since January. More astounding than the actual number of openings is the harsh reality that these organizations did not have a clear successor ready to assume the role (or unfortunately did not have enough confidence in the qualified emerging leader in their own organization). Through my coaching and mentoring business, I've been exposed to number of uniquely-talented emerging leaders, each of whom are already ready for top-spot roles. Who is fostering their development, advocating for them and coaching them to their fullest potential? Many feel isolated, trapped and discouraged even though our future is in their hands.
Leadership Development: Possibly related to the Executive Talent topic above, the healthcare supply chain is under investing in its leadership talent. Supply Chain Sherpas is about to issue the industry's first Supply Chain Talent survey. Early polling responses already indicate we are not adequately elevating the leadership competencies of our incumbent executive leaders, our emerging leaders or our next general leaders. Improving supply chain influence and impact is a function of leadership competency much more than technical competency.
Benchmarking: We continue to misuse benchmarking for prices and for practices. Benchmarking is a great starting point on a value continuum, which supply chain should be creating over time as illustrated below. We are too often stuck at phase 1.1 in a perpetual loop of benchmarking prices with each other rather than advancing each expense category to incremental forms of value towards population health. Benchmarking alone may also create an artificial price floor for our industry. Why would any supplier provide lower an IDN lower prices if they expected that price to show up in an industry-wide benchmarking database (even if de-identified)? From a practice benchmarking perspective, we have a bit of impostor syndrome in that we limit benchmarking people, process and technology to healthcare peers. Imagine the breakthrough potential if healthcare supply chain leaders began benchmarking their people investments to Proctor & Gamble or Apple rather than to each other.
Ripe Fruit on the Ground: Why do walk over ripe fruit on the ground to climb trees to the highest branches, out on thin limbs to get what we believe to be the last bits of fruit? Many hospital systems continue to explore creative ways of eliminating choices for physicians so they can rationalize suppliers and implants to create negotiating leverage with suppliers. Meanwhile, there are still hundreds of unaddressed Purchased Services expense categories throughout Construction/Facilities, Finance, IT, Human Resources, Marketing, Clinical Operations and others. We also fight over the acquisition price of equipment only to forgo 20-30% of its value at the end of its useful life. We still cost-shift through price haggling rather than creating value by addressing the 30-40% waste in the shared supply chain between the supplier and the hospital. I'm committed to creating a movement around these important topics. Look for articles, videos and whitepapers and maybe even some mastermind groups in the near future.
Innovation: Excluding academic hospitals, its rare for an IDN to have an R&D budget. Suppliers are therefore a tremendous source for meaningful innovation. Progressive IDNs already consider their best suppliers to be an extension of their teams. However, there is an overwhelming sense of discouragement from supplier organizations that their ideas, concepts and relationship are trapped in the bottleneck of the healthcare supply chain. I invite each of us to embrace important lessons learned from RTI's journey, which is highlighted in the film Puncture (click here for a summary of the film). How many meaningful innovations are not making it to the point of care because of breakdowns in our healthcare supply chain? How does a company making a single breakthrough device get the attention of supply chain? How does a company offering tech solutions to supply chain itself get the attention of supply chain? How does the supply chain leader know how and where to allocate their limited attention credits, when they are already overworked, undervalued and misunderstood? Providers and suppliers are both struggling while meaningful innovation comes to a halt.
These topics are white-hot in our healthcare supply chain today. They are relevant, important and urgent. These topics understandably shape the battleground for my provider and supplier clients. I invest significant time digging into solutions around these areas since I'm not a fan of admiring problems. Supply Chain Sherpas is centered around these topics and we will continue to adapt to the ever changing needs of our clients.
With that said, these are not necessarily the topics that keep me up at night. I have found myself consumed by our country's mental health epidemic. The CDC just released a long term study, highlighting a 25.4% increase in suicide rates (nationwide) between 1999 and 2016. Click Here for the study. I don't yet know what this means to me, but something is clearly pulling my attention towards a meaningful purpose.