Skating between reality and perception
Where does the healthcare supply chain reside?

In the cosmic cotton candy array that can be classified as a healthcare supply chain career, perceptions can make or break the performance of a department, a leader, a professional or even an outlook.

Three prominent thinkers outside of healthcare supply chain each offered distinct perspectives on the promise of perception.

In “Thoughts on Art and Life,” Leonardo da Vinci penned, “All our knowledge is the offspring of our perceptions.”

With a nod to variety, Virginia Woolf writes in “Three Guineas,” that “Though we see the same world, we see it through different eyes.”

In “The Doors of Perception,” Aldous Huxley approaches the “Twilight Zone” via “The Outer Limits” with his observation, “There are things known and there are things unknown, and in between are the doors of perception.”

Spooky.

Leaders & Luminaries pondered how the healthcare industry views supply chain operations and asked experts and leaders how they thought Supply Chain was perceived within organizations and how that perception could be changed. Three Hall of Famers have passed since this interview was conducted, but their insights still resonate and remain valuable as part of their enduring legacy and are included here.

L&L: If you could change one public perception of Supply Chain within your organization what would it be and why?

“That we are not dynamic enough to have more than one public perception. Seriously! We are a multi-dimensional bunch. We love to count and move boxes to be sure, but we care deeply about customer service, patient outcomes, beating our competitors, passionate about profession and care deeply for our staff. These are characteristics supposedly owned by other areas but not by Supply Chain. I respectfully disagree, but if Supply Chain is going to change the perception that we are one-dimensional then we need to actively and unapologetically take our seat at the table.”
Ed Hardin, Bellwether Class of 2020, Vice President and Supply Chain Officer, Froedtert Health, Bronze Sustaining Sponsor

“Supply Chain is not just a basement function! In fact, Supply Chain should be positioned by administration as a strategic competitive advantage. Why? Most healthcare providers are facing a narrowing of the line between labor costs and supply/pharmacy costs. Soon the line will intersect which would limit the providers competitive advantage in the marketplace.”
Tom Hughes, Bellwether Class of 2012

“Generally speaking, Supply Chain people are seen to be focused on ‘lowest cost’ and not ‘greatest value.’ Many in our field have contributed to this perception by our own actions, and by the lack of a correct, complete and current method for evaluating purchases/projects in terms of total lifecycle cost – including directs and indirects.
Br. Ned Gerber, Bellwether Class of 2010

“That we are just cost mongers, only concerned about the cheapest products.”
Brent Johnson, Bellwether Class of 2014

“[Supply Chain Management] is one of the few, if not the only, component of providing healthcare that can reduce costs without any compromise in the quality of that care. Optimum operating supply chains can increase the bottom line at a rate that far exceeds that which increasing revenue can achieve.

“SCM is misunderstood or not understood at all and most – possibly any – consideration of reducing costs are immediately perceived as reducing quality of care. Improving this understanding will reduce fear and resistance by physicians and clinicians.”
Jamie Kowalski, Bellwether Class of 2017, Bellwether League Foundation Co-Founder and Board Secretary, Bellwether League Inc. Co-Founder and Founding Chairman, 2007-2013

“Well, I don’t have ‘an organization,’ but if I could put myself back into my old job, it would be that most people really still think of Supply Chain as interested in saving money (almost at any cost). So while we do have that goal, and it’s way up there on our list of things to accomplish, it is still only one of a few that drives what we do. And it’s truly more than just saving money by buying less expensive products. I would rather Supply Chain be thought of as a true partner with clinicians to drive for the best product for the patient. If we truly can do that, we will be doing the most cost-effective thing for our organization in the end. I just don’t think we have broken through that barrier yet – try as we might to preach that gospel to our organizations.”
John Gaida, Bellwether Class of 2018, Board Secretary 2010-2012 and Chairman 2013-2016, Bellwether League Inc.

“If I am a senior Supply Chain leader, it would be to change the long-held view, by far too many systems, that Supply Chain is a necessary evil, instead of a strategic opportunity to improve the efficient and effective delivery of care.”
Carl Meyer, Bellwether Class of 2019

“Consider Supply Chain as a ‘strategic asset.’ Today, Supply Chain is commonly perceived only as a function that needs to help address the reduction of supply costs given the tough reimbursement climate facing healthcare systems today. Yet, Supply Chain also can contribute by improving patient outcomes of care through better product/technology selective review, avoiding serious safety events through daily product performance vigilance and better demand planning; by becoming a clinical partner in optimal utilization management; by achieving higher associate engagement scores by improving its reliability of products and elevating corresponding patient satisfaction scores; and by improving growth by generating new sources of revenues by commercializing its supply chain offerings.

“As consumerism demands increase, Supply Chain also will play a critical role by digitizing its capabilities further to offer more convenience among accessing and using evidence-based evaluated products/services in the home as well other retail/outpatient settings. Finally, when Supply Chain partners with its suppliers beyond the transactional model, it can deliver solutions to a healthcare system’s most challenging problems and strategic imperatives.”
Tom Lubotsky, Vice President, Supply Chain, Allina Health, Bronze Sustaining Sponsor

“The most important thing to change would be the perceptions regarding clinical integration linkages with the supply chain. Most senior administrative personnel now recognize the importance that Supply Chain Management must be tied into the clinical care processes to ensure that the right items are provided for efficient and effective patient care at the right quantity and the right quality. This is all part of the AHRMM CQO initiative highlighting the impacts of Supply Chain Management on Costs Quality and Outcomes. 

“In addition. this need for clinical integration to the Supply Chain includes consideration of the Unique Device Identification (UDI) Rule from the [Food and Drug Administration] for both product production information (PI) and the detailed specific device information (DI). As the use of UDI increases for different medical devices, the UDI will become a key information element linking specific items used for patient care into systems to enable data analysis related to CQO.  This is a key role for Supply Chain Management to participate in with clinical care personnel.”
Dick Perrin, Bellwether Class of 2014

“The simplistic and short-sighted perception of Supply Chain’s role is that it’s limited to selling and delivering a product from point A to point B. In fact, Supply Chain connects trading partners’ understanding of product identification, the location and movement of goods, and the master data that supports that entire framework, including every transaction along the way.

“You can look at Supply Chain in two different ways – tactically or strategically. Tactically, you can check the box if your supply chain helps customers figure out what product to buy, then enables order fulfillment and shipping. Whereas a strategically managed supply chain can yield many bottom-line benefits and efficiencies for your business. It can be used as a framework to gain customer insights, help them find you, earn their trust and facilitate product purchase. It can provide critical information for product traceability and safety: How quickly and safely can we get that product to that customer?

Utilizing GS1 Standards creates visibility throughout the healthcare supply chain, in addition to enabling interoperable product identification to meet regulatory requirements including the U.S. Drug Supply Chain Security Act (DSCSA) and U.S. Unique Device Identification (UDI) Rule. Standards support the supply chain’s ability to serve as the core fulfillment engine in meeting your customer’s needs and gaining their loyalty.”
Siobhan O’Bara, Senior Vice President, Community Engagement, GS1 US, Silver Sustaining Sponsor

“I would want to change perceptions so that people could understand that Supply Chain needs to be more than just the price of the product you pay. The intersection of cost and quality and a truly integrated supply chain also can yield service line market share optimization. Supply Chain needs to be integrated with quality and market growth.”
Rand Ballard, Chief Customer Officer, Vizient, Founding Sustaining Sponsor

“Advanced supply chains that are focused on continuous operational and financial improvements are often viewed incorrectly as the ‘owner and sole decision maker’ when it comes to making changes with a product, technology or purchased service. As a result, supply chains are often blamed for less than optimal outcomes related to the quality of a product or service.

“The reality is that well-run supply chains don’t make decisions in a vacuum. We would never tell a physician what to use. To be successful it has to be a collaborative practice, a fact-based decision and one that is driven by the clinical practice that is focused on meeting the best needs of the patient. Supply chains viewed as a trusted partner and a close collaborator with the clinical practice have much to contribute to greater affordability and higher-value healthcare.” 
Jim Francis, Bellwether Class of 2017

“In my experience, one of the greatest challenges that Supply Chain leaders must overcome – whether they are employed within a health system or a manufacturer – is that they are only interested in obtaining the lowest cost for a widget. As a result, too many are ‘left out of the discussion’ with clinical (health system) or commercial (manufacturers) leaders. The very best Supply Chain leaders are in the discussion because they are highly competent at capturing their counterparts clinical and commercial needs, while delivering high levels of efficiency and availability. A lower-cost product that extends patient stays or that slows the clinical process is worth far less than a product that may carry a higher unit price.”
Mark Van Sumeren, Bellwether League Inc. Board Member, 2014-2019

“It would be [to] expand the concept to encompass all non-labor expenditures. Currently, pharmacy, dietary and other expenses are dispersed to various C-suite executives. With 50+ percent of every hospital dollar expended being non-labor the supply chain should be expense chain with a seat at the C-suit table.”
Bill McFaul, Bellwether Class of 2008

“We are a medical/surgical distributor. We know that continued improvement of the medical supply chain now requires that we look at the last hundred yards, from the bedside back to the receiving dock, in order to improve in a meaningful way. This will require a level of trust with our provider partners that transcends their view of us as mere vendors. We need to convince them that we are experts in logistics and that our desire to help is sincere and legitimate.”
Ted Almon, Bellwether Class of 2010

“The public perception I would like to change about Supply Chain extends beyond my organization to encompass all those who are actively working to achieve a value-based healthcare system. Since definitions matter (which is why so many under-estimate the full range and potential of supply chain), I subscribe to the definition of value-based healthcare as one that optimizes health (for people, patients and populations) relative to the costs to deliver it. 

“The pursuit of value is perhaps most pronounced in the United States due to the complexity of our payment systems and the highly charged political environment around healthcare reform, but it is a truly global pursuit. It is also one that I would define as a supply and demand challenge. No matter where you live, or how the healthcare system is financed, there are finite resources (the supply) available to meet the growing needs (the demand) of people, patients and populations. 

“At its core, Supply Chain is about helping ensure the right resources are available at the right time and place and at the optimum cost to deliver those resources. Where a broader role for Supply Chain can help is in delivering far more than clinical supplies in the acute care setting, even beyond the delivery of products into the non-acute delivery space. Supply Chain can support the work of those who recognize that social, economic and environmental needs have more of an impact on health than what occurs in the clinical setting. Just as the traditional role of supply chain in hospitals has been to source, acquire, deliver and pay for supplies (the procure to pay model), supply chain can support the growing number of programs being implemented by health systems to address the social determinants of health.

“Rather than treating those programs as yet another responsibility the hospital must take on, system leaders can leverage the existing supply chain infrastructure. Whether it’s contracting for food to address food insecurity or managing the logistics of getting patients to their appointments or clinicians or products to patients’ homes, these are fundamental supply chain skills that are underutilized and under-appreciated in the expanding pursuit of value-based healthcare.”
Karen Conway, Bellwether League Foundation Advisory Council Member, 2021, Bellwether League Inc. Board Member, 2018-2020, Vice President, Healthcare Value, GHX, Gold Sustaining Sponsor

“That supply chain makes all decisions on products, independently. We have teams of physicians, nurses and other clinicians that vote on the decisions, and they have not been over-ruled in over 10 years. We may ask them to reconsider a decision, but we have not changed their decisions.”
Jim Olsen, Bellwether Class of 2015

“I would change the overall perception in many organizations that the supply chain’s primary purpose is to move boxes and always look for the lowest price available. Changing the supply chain’s perception to be a more integral part of the care delivery process is paramount. Being able to develop a supply chain team that has the skills and competencies to measure the true value of products and services by collaborating with clinicians is the key to changing perceptions. Always being sensitive and sensible to the wants and needs of the patients served is another critical factor to elevating the overall perception of the supply chain.”
Nick Toscano, Bellwether Class of 2018, Bellwether League Foundation Advisory Council member, 2021, Bellwether League Inc. Board Member 2020

“One perception to change would include that supply expense control is not solely owned by Supply Chain. The most effective approach to supply expense control is to have a strong relationship with clinical partners to inform utilization best practice and collaborate on contract negotiations. Also, Supply Chain can lend expertise on inventory and logistics needs.”
Deborah Templeton, R.Ph., Bellwether League Foundation Chairman, Bellwether League Inc. Treasurer, 2016-2020

“Supply chain work can have a broad impact on factors beyond just cost savings. In addition to the transactional supply-related work and cost savings initiatives routinely led by these professionals, the work of supply chain can impact patient, employee and physician satisfaction as well as contribute to strategies around community investment, eliminating human trafficking, reducing environmental impact and other mission related work.”
Mary Starr, Bellwether Class of 2018, Bellwether League Inc. Board Treasurer, 2012-2016

“Supplies are overpriced and not managed effectively in the healthcare environment. I think it is important for the patient/public to feel like they are receiving good value from the healthcare providers and specifically around supplies.”
Joe Pleasant, Bellwether Class of 2014