Bellwether League, Inc.Carol S. Stone

Carol S. Stone
Healthcare/Supply Chain Management Experience:

In the 1980s, long before the industry recognized the critical importance of standards, Carol served as a member of the American National Standards Institute (ANSI) committee (at the time, a 10-person team made up of suppliers and providers), which pioneered the development of the foundational EDI transaction sets that make eCommerce in healthcare possible, including 810s (electronic invoices), 850s (purchase orders) and 855s (purchase order confirmations).

Carol and other members of the ANSI committee spent countless hours looking at actual manual orders and discussing the industry's problems with pricing. They leveraged transaction sets used in other industries (electrical, food, etc.) and modified them for healthcare. The level of detail required was significant, e.g., determining exactly what data would be needed – and not needed – in standard format, whether or not data should be held at the header or line-item level, what was in outer envelopes and labels and how to define an organization in a transaction.

Carol was also one of the earliest advocates for the adoption of data standards for product and organization identification and greater use of bar codes in the healthcare supply chain. In the 1980s, long before GS1 or its predecessor (UCC) was involved in healthcare, Carol was active in what was then known as the Healthcare Industry Barcode Council (HIBCC). Then, when GS1 entered healthcare, Carol was once again on the leading edge, as a founding member of the Healthcare Supply Chain Standards Coalition (HSCSC), which later merged with GS1 US.

Carol was one of the first proponents of increased use of barcoding in the healthcare supply chain. While those early efforts were not able to overcome many of the challenges related to packaging changes, Carol was part of the movement that first introduced the benefits of accurately identifying products to better track them across the supply chain. Carol was promoting the concept of UDI decades before the landmark legislation and regulation was on the minds of Congress or the FDA.

In 1985, Carol successfully led the effort to bring one of the first eCommerce solutions to the healthcare supply chain. At the time, the technology that was widely used was the Baxter ASAP teletype system, which when introduced was groundbreaking, but to make it work, individual (one-off) communication protocols had to be created for each trading partner pair. Once again a champion of standards, Carol convinced her employer at the time, J&J, to invest in ESI, the first computer-to-computer system for transmitting orders using ASII protocols. As a result, J&J became one of the first medical device manufacturers to provide EDI capabilities to its customers, including hospitals and later distributors.

Fifteen years later, Carol broadened the availability of eCommerce to the healthcare industry, as one of the founding board members of Global Healthcare Exchange (GHX). During her 14-year tenure on the board (the longest of any board member), she helped guide GHX from one of dozens of era start-ups to become the world's largest ecommerce exchange dedicated to healthcare. To this day, she plays an active role advising GHX on how to prioritize product development to best meet the needs of trading partners, as opposed to just what her company or manufacturers need.

Recognizing the need to eliminate healthcare supply chain costs rather than shift them from one business partner to another, Carol has advocated for business partner collaboration throughout her career, leading initiatives to build trust and improve processes between manufacturers, providers and distributors.

She was a founding member of Strategic Marketplace Initiative (SMI), as well as its precursor, the Network of Networks, which was created to break down barriers between trading partners. Today, she serves as an officer of the organization, which is increasingly recognized as one of the leading forces for the advancement of collaboration in the healthcare supply chain. In addition to her duties as treasurer, she is active in many of the organization's initiatives, which engage senior supply chain leaders to develop tools and best practices that can be adopted across the healthcare industry. For example, Carol has been deeply involved in SMI’s Low-Cost Trading Partner Initiative, which is focused on identifying and reducing activities that increase costs and burden for both providers and suppliers. Her group is looking at whether the proliferation of RFPs is delivering better value or just greater costs – and if there is a way to help achieve the intended benefits but at a lower, overall expense.

With SMI, Carol has also launched a series of pilots where providers and suppliers are working together to measure the level of trust between trading partners and to identify what factors promote or degrade trust. With Carol's help, Bard is an active participant in one of those pilots with Yale-New Haven and New England Purchasing Coalition.

With Carol's encouragement, J&J became one of the first manufacturers to offer vendor-managed inventory (VMI) to customers. Carol recognized the value to buyers and sellers of eliminating the need to place an order and instead have orders automatically generated when inventory levels hit a certain level. Building on her experience with ANSI 85, 855, and 810 transactions, Carol helped adapt VMI transaction used in other industries to healthcare, but she also knew it would require process change. She led her team in working with customers to determine the appropriate PAR levels and how much to replenish.

Industry impact:

Carol’s contributions to the healthcare supply chain have positively impacted her employers, J&J and C.R. Bard, but she also recognized early in her career that the supply chain is a system and any improvements must deliver value to buyers as well as sellers, not to mention the healthcare industry as a whole.

When J&J introduced the ESI system and an OR scheduling system under the name COACT, Carol led teams across the country responsible for implementing the systems for customers, setting up their item masters, cleansing their data, pulling preference lists and training both OR and supply chain staff. This hands-on work with providers helped her understand the level of variation in databases and in practices and how to help providers benefit through process and data standardization and automation. For example, she helped customers move from scheduling on white boards to automated systems on computer screens.

Due to these contributions, Carol delivers quantifiable value on multiple levels. During her tenure on the GHX board, the eCommerce exchange launched an effort to develop and use a validated return on investment model to document the savings hospitals and suppliers can achieve through automation, standards adoption and better visibility and accuracy in transactions. Using a model validated by PRTM (now PwC) and more recently by Forrester, providers and suppliers have documented more than $6 billion in savings since 2010, with the majority of those savings on the provider side.

More specifically, Bard has increased the number of purchase orders (POs) it receives electronically from 2 to 88 percent. In 2014, based on the Forrester validated lower cost to transact an electronic vs. manual PO, Bard saved more than $6 million, while Bard customers reaped savings of $7.5 million. Using a similar approach, Bard saved more than $1.2 million by processing invoices electronically, while providers saved more than $1 million as a result of Bard's efforts in this area. Bard increased the percentage of electronic Advance Ship notices (ASNs) in 2014 five-fold. ASNs help providers save in a variety of ways. For example, with earlier visibility into backorders, providers can take proactive steps to find alternative products on contract and avoid paying retail prices, incurring rush charges and overnight delivery costs. Bard continues to bring automation to more of its trading partners. Recently, the company was trading electronically with more than 9,000 customers.

Carol’s work to improve adoption of data standards and create visibility to contract pricing has been key to reducing price discrepancies, which are the biggest contributors to PO exceptions. Beyond moving from manual to electronic, purchase orders are also less expensive (about 70 percent) to transact when there are no discrepancies. Bard continues to reduce its exception rates year over year, achieving less than 8 percent in the last quarter of 2014.

Carol has also been a leader in tackling one of healthcare's most complex problems: Contract price alignment, which creates costly rework for all members of the healthcare supply chain – providers, distributors, manufacturers and group purchasing organization. According to GHX data, providers face seven-to-10 times more price errors than UOM errors, two-to-three times more price errors than backorders and three-to-five times price errors than SKU errors. With better contract price visibility and alignment, providers can realize 1 to 3 percent savings on total contract spend, while all parties improve efficiencies.

Working on the SMI Low-Cost Trading Partner Initiative, Carol helped quantify the costs associated with requests for proposals (RFPs). Industry research has shown it can cost a supplier $25,000 per proposal, costs that ultimately are shared by all members of the healthcare system. Carol’s efforts on this committee are working to find better ways to achieve the intended benefits without the high costs.

As treasurer of SMI, Carol has also helped deliver economic benefits to the organization and its members. Under her stewardship, the organization has amassed a cumulative surplus that equals almost nine months of expenses. Carol played a major role in achieving that level of sustainability for the organization, which enables it to invest in the creation of more thought leadership papers and industry tools that it makes available at no charge to the industry at large.

Commitment to ethical standards, honesty and integrity:

Carol’s long tenure with both of her employers – Johnson & Johnson (15 years) and C.R. Bard (20 years) – is evidence of her high ethical standards and commitment to excellence. Executives at both companies recognized Carol’s trustworthiness and, in turn, granted her increasing levels of responsibility for business-critical operations, including supply chain, marketing, technology and finance and purchasing.

Carol’s ethics are also evident in her work as an Executive Board Member for the Strategic Marketplace Initiative (SMI), GHX, ESI and the Independent College Fund of New Jersey. More than nice additions to a resume, Carol takes her responsibilities seriously. As treasurer for SMI during the past six years, Carol has maintained strict and thorough management of the organization’s finances, enabling it to pass its yearly CPA audits with flying colors.

Carol lives, breathes and speaks integrity. Ask anyone and he or she will tell you, “Carol says what she means and does what she says.” Whether working on a company project or an industry initiative, Carol is never a “seat warmer.” When she takes part in a project she gives it her all, bringing her knowledge and energy to the table as a primary contributor. She is not afraid to push the envelope, challenging others to shatter the status quo and enact true change, no matter how daunting it may appear to be. While she may raise difficult issues and will let you know when she disagrees, she is always open to constructive dialogue to help move the conversation and the industry forward.

Commitment to mentoring, education, and/or advocacy: 

While Carol takes on a tremendous level of responsibility both within C.R. Bard and across her executive board membership positions, Carol always makes time to answer questions, offer advice and lend a helping hand to others in the industry.

As an executive board member for The Strategic Marketplace Initiative (SMI), Carol participates in the organization’s “onboarding program.” SMI has found the more it engages members over the first year of membership, the more willing they are to stay and participate. Carol frequently serves as a mentor to new SMI members, helping them understand how the organization works, its objectives, how it operates and why its work is important to the greater healthcare supply chain industry.

When she was helping hospitals adopt e-commerce in the early years, she took a very hands-on approach. She recounts a story about how the J&J IT team was using remote technology to help a customer set up EDI. When the customer did not respond to instructions typed on the computer screen, Carol called to check in. The customer explained that she had been speaking (literally) to the computer, not realizing that communication needed to be handled via the keyboard and screen. It was truly the beginning of huge process change and learning for all involved. Carol was there, every step of the way, learning and teaching.

Demonstrations of leadership:

During her tenure at J&J, Carol was instrumental in leading several key initiatives, including:

Upon joining C.R. Bard, Stone delivered similar transformation:

In the industry, Carol has held numerous leadership positions as well:

Degree of professional influence:

Those who have had the opportunity to work with Carol recognize her for her passion, no-nonsense approach and deep level of commitment to making the healthcare supply chain better. But those who have known her for many years, recognize her as the “First Lady of eCommerce” in healthcare. The work she began more than 30 years ago laid the groundwork for the automation and standardization that is transforming how business is done between manufacturers, distributors and hospitals and healthcare systems today. Without those efforts, much of what has become today's standard operating procedure would not be possible. Along the way, Carol has been a true champion of creating greater understanding among trading partners, which she says is the foundation for better trust and collaboration to improve efficiencies and quality for all involved. Her work
has not only been only groundbreaking and visionary, it is foundational to achieving many of the quality demands of value-based healthcare.

Application of Hall of Fame-level of knowledge and experience:

Carol’s level of knowledge spans the entire healthcare supply chain – not just for manufacturers, but for all parties, including distributors, customers and GPOs. In these roles and in her work with industry associations/organizations, Carol’s supply chain knowledge has extended beyond the four walls of the manufacturer to provider and distributor organizations as well. Working closely with providers, Carol has developed a deep working knowledge of their supply chain processes and issues, including procurement, inventory management, distribution and value analysis. When a provider is facing issues in one or more of these areas, Carol knows how to bring together the knowledge and talent within her organization and the provider’s organization to overcome challenges and produce mutual benefit.

This same knowledge extends to distributor organizations as well. During her tenure at J&J, she actively engaged distributors to determine how they could support the needs of mutual provider customers. This resulted in the establishment of a distributor marketing organization. Under Stone’s leadership, J&J became one of the first healthcare manufacturers to engage with distributors on supply chain advancements such as EDI, scheduled shipments, automatic invoicing and the use of barcodes to track products.

Proof of her broad knowledge of manufacturer operations is evident in the many roles she has played from marketing, to technology, to sales, but all with a keen eye on supply chain as the connecting factor and underlying strategic competency. Her work has touched numerous aspects, including eCommerce, contract management, distribution, manufacturing, logistics management, purchasing and inventory management.

Professional worthiness

Carol is known for being direct and outspoken but always in a manner intended to make things better and drive constructive, and at times disruptive, innovation. She is the first to participate in any effort she believes will make a difference in the industry and is not afraid to push the envelope, challenging others to shatter the status quo and enact true change, no matter how daunting it may appear. During her career, Carol has already left a legacy, creating the foundation for today’s successes, while continually envisioning and building the capabilities for the supply chain of the future. Along the way, she has benefited not only her company and its customers but also the industry has a whole, which, in turn, has documented billions in savings through increased automation and efficiencies, better data quality, standardization and transparency, and removal of waste and distrust from the system.

Carol’s accomplishments speak volumes. While she speaks her mind, she does not sing her praises near enough.

In Her Own Words…

What do you think about Bellwether League Inc.’s mission and philosophy and how do you feel about becoming an Honoree?

I am thrilled and humbled at being selected as an honoree. To be considered to be in the company of such an elite and outstanding group of executives is overwhelming! I think the mission and philosophy of this organization is extremely important to shine a light on the growing importance and influence that Supply Chain can have on the improvement of cost, quality and outcomes.

What attracted and motivated you to join the healthcare supply chain management field when you did?

One of my earliest experiences with Supply Chain was when I got involved with HIBCC and realized the benefits of the use of standards. I also realized the unfortunate lack of use and adoption in the industry at that time. As I began to work directly with hospitals and began to understand the challenges they faced working with their suppliers, I really saw the opportunity to not only strive to adopt the uses of standards to address many of the issues, and to improve collaboration among trading partners.

For what one contribution would you like to be most remembered?

Helping to drive the adoption of EDI in this industry on both the supplier and the provider sides. I think EDI was an area that people could point to as an example of success in adoption could help improve costs and efficiency in the market, and this helped shine a light on the fact that there were also other opportunities through the use of similar technologies and processes. 

If you were to encourage people – either outside of healthcare or just out of school – to enter healthcare supply chain management and strive to be a future Bellwether League Inc. Honoree, what would you tell them?

Improving costs, quality and outcomes in healthcare ultimately impacts the lives of all human beings globally. The challenges that we face in the U.S. with the cost and quality of healthcare are not unique to the U.S. These challenges are systemic and broad reaching. We are at a critical tipping point in that we can no longer afford the ever increasing costs in healthcare, which impacts the global economy. The opportunity to improve the quality of life for every patient and family member, regardless of country, age, gender, income or education level is a noble undertaking. I cannot think of a more rewarding career. 

What is the one industry challenge you would like to see solved during your lifetime?

Coordination of care – the lack of which is staggering and concerning and what I believe to be the single highest driver of cost, errors, frustration and lack of quality care. It is also probably one of the most perplexing problems to overcome.

How important is effective and innovative supply chain management during tough economic times?

Given the cost of healthcare as a percentage of GNP, and the contribution that Supply Chain represents in this equation, this is extremely important!

In two sentences or less, what defines healthcare supply chain leadership?

Vision for what is possible and commitment and dedication to driving this vision.

If you traveled back in time to when you just started in healthcare what would you tell yourself?

Take risks, try things. Incremental improvement, if sustained can make a huge difference. Don’t be frustrated if the change you contribute to is not big, sexy, all-encompassing or news worthy – improvement, however small, is worth the effort particularly as it is additive over time.