JHC February 2024 by BOC design Inc

February 2024 Vol. 20 • No. 1

The Long Game Banner Health’s Doug Bowen has been a lifelong student of supply chain and created a lasting legacy that’s benefited both his organization and the industry at large.

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CONTENTS F E B R UA RY 2 0 24 11 Oak Street Health Could Add up to 60 More Centers in 2024 Primary care provider focused on seniors sees growth after CVS Health acquisition.

12 Humana’s CenterWell Seeks Bold Growth

CenterWell Senior Primary Care treats over 270,000 seniors in 12 states and plans to open 50 more centers by 2025.

16 ChenMed Well-Positioned in Healthcare Market

The Miami-based primary care company’s focus on senior care has it sought after by at least one major retailer.

28 Forming Partnerships and Driving Value

Supply chain leaders discuss keys to successful industry partnerships, challenges in 2024 and beyond.

32 Long-Term Supply Chain Preparedness

Leading health systems partner with consumer-focused platform for selfinsured employers to expand access to patients.

35 The Dangers of Sepsis

Sepsis has a substantial impact on U.S. hospitals. How can healthcare providers better safeguard their patients?

Feature

The Long Game Banner Health’s Doug Bowen has been a lifelong student of supply chain and created a lasting legacy that’s benefited both his organization and the industry at large.  pg 18

2 Publisher’s Letter: Strong Work!

6 Henry Ford Health’s CSC Strategy

38 The Value of the GPO Sourcing and Contracting Process 40 Banding Together

How a recently formed hospital alliance aims to expand access and improve outcomes – while reducing costs – in a rural setting.

42 Making Your Case to Manufacturers: Why Work with Your Prime Vendor? 44

Respiratory Season

Supply Chain By the Numbers

High density items, and physician preference items, priorities at major IDN facility.

4 Drones and Prescription Drugs

Cleveland Clinic to use Zipline’s P2 to deliver medications to patients at home.

10 Senior-Focused CHPs

Senior care presents a huge growth opportunity for market disruptors.

How healthcare providers and the population at large have fared this fall and winter.

48 Industry News

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The Journal of Healthcare Contracting | February 2024

PUBLISHER’S LETTER

JOHN PRITCHARD

Strong Work! The Journal of Healthcare Contracting

When you see lists of the leading U.S. healthcare supply chain teams in the country, Banner Health is always at or near the top. And rightfully so – the organization successfully completed an ambitious 20-year plan across all departments, including supply chain, that saw it go from fixing internal problems, to growing, to being a leader in clinical quality and supply chain expertise. Today the IDN has more than 52,000 team members providing services in facilities across Arizona, California, Colorado, Nebraska, Nevada and Wyoming. Their consolidated service center has proven incredibly valuable in helping to mitigate disruptions, and as a real estate asset when the organization needed to use it as such. Doug Bowen, senior vice president of supply chain services and chief supply chain officer at Banner Health – and this year’s Contracting Professional of the Year – credits his team’s success to just that – the team. Great strategies and great products do not make a great supply chain, he said. Great people make a great supply chain. “The people that run your supply chain are important,” he said. “Every member of my team has created our success. Every achievement that we’ve ever made was the result of a team effort.” The SCS Leaders strive to create positive relationships with all their team members, ensuring they know they belong, and they are appreciated, Bowen said. “These

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efforts help us to hang onto the team members we have and retain them while they are on their Banner Journey.” As today’s supply chain leaders know, retention of top talent is key. Bowen said about 90% of Banner Health’s supply chain leaders are promoted from within. That’s a healthy sign that the organization is already investing in its next 20 years of growth. We chronicle Bowen’s four-decade journey through supply chain in this issue. We hope you enjoy reading about how he has navigated marketplace changes, the pandemic, and encouraging the next generation of supply chain leaders. It’s “Strong Work!” indeed.

The Journal of Healthcare Contracting (ISSN 1548-4165) is published monthly by Share Moving Media, 350 Town Center Ave, Ste 201, Suwanee, GA 30024-6914. Copyright 2024 by Share Moving Media. All rights reserved. If you would like to subscribe or notify us of address changes, please contact us at the above numbers or address. POSTMASTER: Send address changes to Share Moving Media, 350 Town Center Ave, Ste 201, Suwanee, GA 30024-6914. Please note: The acceptance of advertising or products mentioned by contributing authors does not constitute endorsement by the publisher. Publisher cannot accept responsibility for the correctness of an opinion expressed by contributing authors.

February 2024 | The Journal of Healthcare Contracting

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MODEL OF THE FUTURE

Drones and Prescription Drugs Cleveland Clinic to use Zipline’s P2 to deliver medications to patients at home.

Zipline introduced its Platform 2 (P2) drone system in March 2023. It’s a next-generation aircraft designed to carry twice the weight of its Platform 1 system. The company’s drones have delivered whole blood, platelets, frozen plasma and cryoprecipitate along with medical products, including vaccines, infusions and common medical commodities for eight years while operating in seven countries. Its P2 system is optimal for home deliveries, and multiple U.S. health systems nationwide are taking advantage of localized delivery to patients for medications and medical devices. Cleveland Clinic recently announced its plans to begin using drones to deliver certain medications to patients’ homes starting in 2025 with Zipline’s P2 system, which can complete precise deliveries to dense urban areas and completes a 10-mile delivery in about 10 minutes.

February 2024 | The Journal of Healthcare Contracting

Cleveland Clinic’s plan for drones, docks and loading portals

over 25 years by investing in air mobility

more use cases, we’ll roll into phases II

infrastructure and technologies, including

and III in 2026.”

15,000 new jobs, $2.5 billion in local, state

Cleveland Clinic thought Zipline’s

Docks for the drones and loading portals

and federal tax revenues, and 1.6% GDP

experience with healthcare worldwide

will be added at several of Cleveland

growth through 2045.

provided the best partnership and its next

Clinic’s facilities in Northeast Ohio. After

Cleveland Clinic will begin work with

generation P2 drone system helped make

a drone is loaded with a prescription, it

government officials in 2024 to ensure

the difference. “We felt their offerings and

will autonomously undock, fly at 300 feet

compliance with all safety and techni-

current platform delivering blood prod-

to a patient’s home and deploy an autono-

cal requirements for drone delivery and

ucts in Ghana, as well as their work in the

mous delivery droid that steers to the cor-

will start to install the docks and loading

U.S., will help enable us to bring this to

rect location and drops off its package to

portals for the drone system. The system

our patients,” Gates said. “We spent time

areas as small as a patio table or the front

and aircraft are designed with multiple

with them developing and refining our

steps of a home. The drone will then fly

layers of safety, including preflight

use cases and our direct-to-patient home

back and dock itself.

inspections and real-time monitoring by

deliveries and some deliveries in between

operations teams.

our facilities.”

“This technology will help us achieve our goal to expand our pharmacy home delivery program and provide easier, quicker access to prescribed medications in our communities,” said Geoff Gates, senior director of supply chain management for Cleveland Clinic. “We’ve targeted about 20 locations in Northeast Ohio that will have the capability to send out a drone,” he said.

Advanced Air Mobility (AAM) is being empowered around Cleveland and throughout the state of Ohio as it increases modality options, improving transportation resiliency and efficiency.

“That will be the docking and charging stations on a hub and spoke network.

Phase I focused on pharmacy delivery

At-home care a major driver

away, it will stop at one of the designated locations to charge and then keep

Phase I of the drone program for Cleve-

healthcare is the move to at-home care.

going on its trip before arriving at its

land Clinic will be focused on pharmacy

“As we do more with patients there, the

final destination.”

delivery in 2025. Gates says there are

efficiency and timeliness of being able

If a drone needs to go 30 to 40 miles

A major driver of drone usage in

opportunities to include other possibili-

to take anything, whether it’s a prescrip-

being empowered around Cleveland

ties like food delivery from Cleveland

tion, lab test or any type of at-home

and throughout the state of Ohio as it

Clinic’s Food as Medicine Project and

care, and move it in a timely manner be-

increases modality options, improving

opportunities to send products to

tween locations or to a patient’s home is

transportation resiliency and efficiency.

patients from Cleveland Clinic’s Sleep

critical,” Gates said.

It can also increase safety as newer

Disorders Center. Potential lab deliveries

Gates says having a tool that allows

aircraft are designed with redundancy

between the health system’s facilities and

Cleveland Clinic to rapidly deploy product

in mind.

movement of medical supplies as needed

is key to internal deliveries too. “We’re

is also being explored.

starting to aggregate inventory into single

Advanced Air Mobility (AAM) is

The Ohio UAS Center collaborated with ODOT’s Research Program to study

“We’re fine tuning what it will look

locations, so not having to worry about

the state’s economic impact from advance

like in our system with testing in 2024

traffic and being able to better predict

air mobility. It concluded that Ohio could

and deployment in 2025,” he said. “As we

when something is arriving will help us be

expect a $13 billion economic impact

get more comfortable with it and identify

more strategic in our stock,” he said.

The Journal of Healthcare Contracting | February 2024

SUPPLY CHAIN

Henry Ford Health’s CSC Strategy High density items, and physician preference items, priorities at major IDN facility.

Some advantages of a strong CSC strategy include the reduction of supply chain complexity and streamlining operations. Viewed as a strategic asset to health systems, it can leverage operational and logistical scale, minimize risk and help deliver effective patient care.

Henry Ford CSC Team

February 2024 | The Journal of Healthcare Contracting

SUPPLY CHAIN

Henry Ford Health’s mission is to

through its resiliency efforts. Its supply

provide quality healthcare by placing

chain operations team collaborates

“each patient first,” serving metropoli-

with its strategic sourcing, supplier

tan Detroit and southeast Michigan. It

relationship management, and supply

opened its 45,000-square-foot CSC this

chain systems and analytics teams

past September with an aim toward high

to ensure compliance to its supply

density items and physician preference

chain policies.

items (PPIs).

Henry Ford Health signed an agree-

“What we’ve done uniquely with

ment with Ascension Michigan this

physician preference items is driving

past October to enter a joint venture

additional value through reduced PAR

to bring together Ascension’s south-

levels within our hospitals, reduced

east Michigan and Genesys healthcare

prevalence of product expiry and

facilities and assets with Henry Ford

greater resiliency by reducing supply

Health’s facilities and assets. If the

disruption,” said Joe Pettinato, vice

joint venture is approved, Henry Ford

president, supply chain operations for Henry Ford Health.

Health will be the largest healthcare

Joe Pettinato

provider in metropolitan Detroit. The

From a resiliency perspective, Pettinato said Henry Ford Health is able to better prepare for known or expected supply disruptions at a much lower cost and more reliably than before, while also eliminating the prevalence of substitute product that is typically at higher cost than its contracted standards. Henry Ford Health’s CSC has five full-time employees and will ramp up as

The CSC includes PPIs on the first floor and pharmaceutical distribution on the second floor with an additional 45,000 square feet. It’s smaller than other health system CSCs but aims to drive value through its unique design and resiliency strategy.

business and volume grows. “Our business practices are established, and it’s gone exceptionally well since we started,”

value through its unique design and

health system is a champion of increas-

Pettinato said.

resiliency strategy.

ing diversity spend in the communities

“It gives us more options for our

“One of the key stocking criteria

vendors and helps reduce their cost

of the CSC is the items must be on

departments from across Henry Ford

structure too,” Pettinato continued.

agreement and approved through our

Health to increase diversity spend in

“Shipping larger quantities into a sin-

value analysis teams (VATs) with a

different areas that have targets for

gular facility benefits vendors by having

set amount of inventory assurance,”

growth. Sourcing diverse and local

the ability to participate in a bulk buy

Pettinato added. “That’s all tied into

suppliers is critically important to the

program or agreement that decrease

our clinical partners through our clini-

health system.

their transactional costs.”

it serves. Its supply chain connects with

cal VATs and committees further driv-

“Domestic manufacturing not only

The CSC includes PPIs on the first

ing compliance and reducing costs.”

helps to derisk the supply chain, but also

floor and pharmaceutical distribution

He said Henry Ford Health wants

on the second floor with an additional

to increase its SKU count and inven-

health equity,” Bill Moir, senior vice presi-

45,000 square feet. It’s smaller than other

tory throughput to drive revenue and

dent, supply chain management for Henry

health system CSCs but aims to drive

savings and decrease its stockouts

Ford Health, told JHC last year.

helps to create jobs, which is huge for

February 2024 | The Journal of Healthcare Contracting

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COMMERCIAL HEALTHCARE PROVIDERS

SeniorFocused CHPs Senior care presents a huge growth opportunity for market disruptors.

With an aging population to take care of, organizations across the healthcare industry are acquiring and investing in providers in response to changing patient demographics and preferences. The IDN Directory defines these entities as Commercial Healthcare Providers (CHPs), organizations formed to address patient populations outside the traditional Hospital and Health System network. CHPs have formed as a result of the shift from fee-for-service to fee-for-value reimbursement models, physician shortages, consumerism and digital disruption. The following articles examine several senior-focused CHPs and their plans for growth in 2024 and beyond

February 2024 | The Journal of Healthcare Contracting

Oak Street Health Could Add up to 60 More Centers in 2024 Primary care provider focused on seniors sees growth after CVS Health acquisition. BY DANIEL BEAIRD

CVS Health acquired Oak Street Health last May for approximately $10.6 billion

that when you increase primary care access,

and Oak Street continues to operate as a multi-payor primary care provider as part of

good things happen,” Dr. Chaguturu added.

CVS Health. Its care model specializes in providing older adults comprehensive preven-

Oak Street is a Medicare-focused

tive care, including personalized wellness plans, integrated health services, and educa-

primary care provider that addresses

tional and social activities to support overall health and well-being.

senior patients, of which over 50% have a housing, food or isolation risk factor that impacts their access to quality care. In ad-

With plans to expand to 25 states,

dition to Signify Health, a home health-

the primary care provider for seniors

care provider also recently acquired by

currently employs about 600 clinicians

CVS Health, Oak Street increases access

at over 170 medical centers with plans

to care for older adults.

to add up to 60 more centers in 2024. Karen Lynch, CEO for CVS Health,

drive higher patient growth will continue

Health services segment for CVS sees increase in third quarter

to increase as Oak Street expands to

CVS Health’s health services segment,

additional geographies.

including both Oak Street and Signify,

told analysts and investors on an earnings call in 2023 that opportunities to

increased total revenues by 8.4% in the third

“We will open new Oak Street clinics co-located with CVS pharmacies this year

about healthcare and community support

quarter of 2023 compared to the prior year

and have already identified additional loca-

for older adults, according to a poll from

driven by pharmacy drug mix, growth in

tions for 2024,” she said. By 2026, Oak Street

the Associated Press (AP) and the NORC

specialty pharmacy, brand inflation and the

will have more than 300 centers, according

Center for Public Affairs Research.

acquisitions of Oak Street and Signify. Dur-

“When we think about primary care,

to CVS Health, “each of which has the

ing its third quarter earnings call, Lynch said

potential to contribute $7 million of Oak

it is the foundation of how we deliver

CVS Health is scaling capabilities to acceler-

Street Health Adjusted EBITDA at maturity.”

healthcare in this country,” said Dr. Sree

ate growth at both Oak Street and Signify.

Few Americans feel healthcare is handled very well in U.S., especially for older adults

Chaguturu, executive vice president

“Oak Street’s clinical model continues

and CMO for CVS Health, in a state-

to demonstrate exceptional performance,”

ment. “It’s that trusted relationship that

said Tom Cowhey, interim CFO for CVS

helps you navigate the complexity of the

Health, during the earnings call. He said

American healthcare system.”

Oak Street was among the top 5% of

Just 12% of Americans think healthcare in

CVS says value-based care aims to

ACO REACH program participants in

general is handled extremely well or very

increase the focus on primary care by

the CMS 2022 savings performance, gen-

well in the U.S., and fewer think the same

improving the quality of care. “We know

erating a gross savings rate of 21%.

The Journal of Healthcare Contracting | February 2024

COMMERCIAL HEALTHCARE PROVIDERS

Humana’s CenterWell Seeks Bold Growth CenterWell Senior Primary Care treats over 270,000 seniors in 12 states and plans to open 50 more centers by 2025. BY DANIEL BEAIRD

Humana introduced CenterWell in 2021 as the new brand for a range of its

Humana’s Erica Savage-Jeter, MD, divi-

payor-agnostic healthcare services offerings. The senior-focused “Partners in Primary Care”

sion chief medical officer, told the Fierce

and “Family Physicians Group” came together as “CenterWell Senior Primary Care.”

Health Payer Summit in October that

Additional Humana healthcare services transitioned to the CenterWell brand over time.

Humana plans to open 50 new seniorfocused primary care centers by 2025. CenterWell Senior Primary Care is one

It transitioned its Kindred at Home’s home health division to the CenterWell Home Health brand a year later, fully integrating home health operations into

Humana. It acquired Kindred at Home in

of the largest, fastest-growing senior-

August 2021.

focused, value-based care providers in

Now, it eyes aggressive growth for senior-focused primary care centers.

the country, Humana said. Together with its sister brand Conviva Care Center, the businesses make up Humana’s Primary Care Organization, delivering care to 285,000 seniors in nearly 300 centers as of Sept. 30, 2023. Centers are now open in 15 states. Its CenterWell Primary Care Anywhere program was launched in August in Georgia and Louisiana for in-home primary care for seniors, mobilizing the capabilities of Heal, a home-based primary care and telehealth company recently acquired by Humana. Patients receive services in the home that are traditionally performed in a doctor’s office as Primary Care Anywhere sends a team of clinicians to the home.

Automation, tech, AI and readmission rates Automation, consolidation, technology and AI solutions will be deployed across

February 2024 | The Journal of Healthcare Contracting

The The Thestakes stakes stakeshave have havechanged. changed. changed. It’s It’s It’stime time timeto to toraise raise raisethe the thebar. bar. bar. In this post-pandemic world, uncertainty is the new normal. Being resilient and In In this this post-pandemic post-pandemic world, world, uncertainty uncertainty is istable the new new normal. normal. Being Being and ever-ready have moved from aspirational tothe stakes. And nowresilient —resilient more and ever-ready ever-ready have have moved moved from from aspirational aspirational to to table table stakes. stakes. And And now now — — more more than ever — you need a reliable partner to support you and your patients every than than ever ever — you you need need a why reliable a reliable partner partner to to support support you you and and your your patients patients every every step of the—way. That’s we’re redefining supply chain expectations. step step of of the the way. way. That’s That’s why why we’re we’re redefining redefining supply supply chain chain expectations. expectations. From physician offices to surgery centers and patients’ homes, we tailor our From From physician physician offices offices to to surgery surgery centers centers and and patients’ patients’ homes, homes, wewe tailor our our breadth of offerings to create a unique roadmap that helps you build atailor resilient, breadth breadth of of offerings offerings to to create create a unique a unique roadmap roadmap that that helps helps you you build build a resilient, a resilient, high-performing supply chain. high-performing high-performing supply supply chain. chain.

Redefining Redefining Redefining partnerships partnerships partnerships

We’re relentless about building We’re We’re relentless relentless about about building building trusted partnerships that trusted trusted partnerships partnerships that that make supply chain excellence make make supply supply chain chain excellence excellence and better health possible. and and better better health health possible. possible.

Redefining Redefining Redefining patient-focused solutions patient-focused patient-focused solutions solutions We build customized solutions We We build build customized solutions solutions to help youcustomized improve operational, to to help help you you improve improve operational, operational, financial and clinical outcomes financial financial and and clinical clinical outcomes outcomes — efficiently, effectively — — efficiently, efficiently, effectively effectively and on budget — so you can and and onon budget budget —— soso you you can can deliver better patient care. deliver deliver better better patient patient care. care.

Raising Supply Chain Expectations, Raising Supply Supply Chain Chain Expectations, Expectations, soRaising you can deliver care – anywhere. soso you you can can deliver deliver care care –– anywhere. anywhere.

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Redefining Redefining Redefining world-class distribution world-class world-class distribution distribution We’re ready for the future — We’re We’re ready ready forfor the the future future —— today. From global distribution today. today. From From global global distribution distribution to logistics services, we help you to to logistics logistics services, services, wewe help help you you improve operational efficiencies improve improve operational operational efficiencies across hundreds ofefficiencies micro across across hundreds hundreds of of micro micro supply chains, so you’re ready supply supply chains, chains, so so you’re you’re ready ready to take on any challenge. to to take take onon any any challenge. challenge.

COMMERCIAL HEALTHCARE PROVIDERS

hundreds of branches of CenterWell

digital wound management tool. “This has

representing an increase of over 200%

Home Health, according to Humana

been instrumental in clinical decision-mak-

year-over-year.

CEO Bruce Broussard on the company’s

ing contributing to an accelerated wound

According to the Kaiser Family

third quarter earnings call. “This will min-

healing time by 35%,” Broussard said.

Foundation, over 28 million people were

imize administrative caps while improving

CenterWell Home Health emergency

clinician productivity – including optimiz-

room and hospital readmission rates in

in 2022, or 48% of the eligible Medicare

ing their schedule,” he said. “We believe

North Carolina and Virginia were more

population and $427 billion of total fed-

these initiatives will ultimately streamline

than 150 basis points lower than other

eral Medicare spending. Medicare Advan-

our operations and lead to increased clini-

providers, according to Broussard. And

tage plans are a large part of Humana’s

cian productivity and satisfaction.”

home solutions cover more than 800,000

business and contract with the federal

Medicare Advantage members, driven by

government to provide extra benefits and

expansion in North Carolina and Virginia,

services to seniors.

CenterWell has reported an improvement in visit efficiency using a new AI

enrolled in a Medicare Advantage plan

Humana releases value-based care report Value-based care is smarter healthcare that lowers costs and keeps Medicare Advantage members healthier, according to the tenth annual Value-Based Care Report released from Humana Inc. The 2023 report shows that Medicare Advantage (MA) patients receiving care under value-based arrangements spent more time with their primary care physician and were more likely to receive preventive care, with fewer hospitalizations. Meanwhile, physicians working under the value-based model are more empowered and better positioned to coordinate care while prioritizing outcomes over the quantity of services. Based on data from Humana’s report, VBC enables: ` A team-based holistic approach to patient care, quarterbacked by their physician with greater support from a multi-disciplinary team including nurses, medical assistants, pharmacists, social workers, and others. ` Coordination across transitions in care, such as after hospital discharge, and collaborating closely with patients and their care team to minimize the risk of ending up back in the hospital. ` Technology and data usage to help catch and eliminate “gaps in care,” and make sure patients’ needs do not fall through the cracks or get lost or forgotten. ` More resources and incentives to manage health-related social needs, such as transportation benefits and community support programs.

Other key findings from the report: ` Patients receiving health care under value-based care arrangements grew by 2.3 million over the past decade. ` 2022 showed a record 70% of Individual Medicare Advantage patients aligned with value-based care providers. ` Value-based care patients were less likely to spend time in the hospital. There were 30.1% fewer in-patient admissions for value-based care patients compared with Original Medicare beneficiaries in 2022. ` Value-based care patients were more likely to receive preventive care. Specifically, value-based care patients completed preventive screenings at a 14.6% higher rate than Medicare Advantage members not in a value-based care arrangement.

“The data are clear: Value-based care works,” said Dr. Kate Goodrich, Chief Medical Officer at Humana. “As our report shows, this smarter healthcare model improves outcomes for Medicare Advantage members and allows primary care physicians to practice medicine at the top of their license and develop meaningful relationships with patients. At Humana, we are proud to lead the way on value-based care for our Medicare Advantage members, and we will continue to look for ways to expand this approach into other lines of business.”

February 2024 | The Journal of Healthcare Contracting

SUPPLIER OR PARTNER?

WE GO BEYOND

How do you strengthen your supply chain resiliency by rethinking your supplier partnerships? Ansell has put together a Supply Chain Guide to help you uncover the gaps and plan for the long term to meet your business objectives.

ansell.com/wegobeyond

Scan the QR code to get your copy of the Supply Chain Guide

COMMERCIAL HEALTHCARE PROVIDERS

ChenMed Well-Positioned in Healthcare Market The Miami-based primary care company’s focus on senior care has it sought after by at least one major retailer. BY DANIEL BEAIRD

ChenMed is a Miami-based primary care company that runs 125 clinics led by

business nationally, and driving efforts

physicians focused on providing services to moderate- to low-income seniors with com-

that increased employee engagement and

plex chronic conditions. It’s been named one of Fortune’s “Change the World” compa-

customer satisfaction.

nies, a “Most Loved Workplace” by Newsweek and a certified Great Place to Work by the ®

Great Place to Work Institute.

“I’m honored to help lead this organization and to pursue a founder-inspired strategy to steer and grow the company toward a distinctive future,” said Nelson in a release. “The Chen family’s vision and goals have already improved the lives of thousands of seniors who had never experienced the quality of primary and coordinated health care that they deserve. We intend to build on and expand the reach of the exceptional health outcomes and experiences the Chen family has delivered to its patients, while offering the best possible environment for our teams, and achieving sustainable business results.” ChenMed includes Chen Senior Medical Centers, Dedicated Senior Medical Centers, IntuneHealth and JenCare Senior Medical Centers. It also owns Curity, a technology company which was named a “Best Place to Work

In July, the company appointed

JenCare Senior Medical Centers. Prior to

former UnitedHealthcare CEO Steve

joining ChenMed, Nelson served as Co-

Nelson as president to lead the day-to-

Chairman and CEO of Duly Health and

day management and operations. Chris

Care, one of the largest multispecialty

Possible retail suitors

Chen, MD, serves as ChenMed CEO

independent provider groups in the

In September, Bloomberg reported that

but has stepped back to supply support,

U.S. Earlier in his career, he led United-

Walmart was interested in buying majority

guidance and board governance. Nelson

Healthcare as CEO, contributing to its

ownership in ChenMed. The potential

was hired in 2022 to lead ChenMed’s

status as the largest Medicare Advantage

deal was valued at several billion dollars

in IT” by Computerworld.

February 2024 | The Journal of Healthcare Contracting

in the healthcare sector. Retailers like

Scaling ChenMed’s technology platform

ChenMed extended its relationship with Humana in 2023

Walmart are positioning themselves for

ChenMed has signed a multi-year agreement

ChenMed extended its longstanding relation-

the shift to value-based care to treat

with Thoughtworks, a global technology

ship with Humana in 2023, signing a new

Medicare patients. For example, CVS

consultancy, to maximize the speed and

five-year agreement supplying in-network

Health bought Oak Street Health for

agility of its core operating system on AWS

care for Humana’s Medicare Advantage

$10.6 billion, and Amazon’s One Medical

to support growth. ChenMed and Thought-

members at all its locations. Humana and

has almost 50 clinics for older adults.

works are working in stream-aligned

ChenMed first partnered in the 1990s in

and would be Walmart’s biggest purchase

product teams, using an event-driven

South Florida and strengthened the part-

Medicare Advantage provider that has

microservices architecture and a cloud-

nership in 2011 with the formation of joint

not sold to a major retailer, according to

native developer experience platform.

venture JenCare Senior Medical Centers.

ChenMed is the last scaled, multi-state

“We’re thrilled to bring Thought-

Rebecca Springer, a healthcare analyst for PitchBook.

“ChenMed and our partners at Humana

works’ scaling capabilities to ChenMed

understand seniors, and together we have

Meanwhile, Walmart signed a 10-year

as it continues to innovate with resolute

deep experience delivering on the spec-

deal with UnitedHealth Group in 2022 to

focus on helping healthcare providers

trum of their primary care needs,” said

treat its customers with Medicare Advan-

deliver the best preventive primary care

Michael Redmond, CFO for ChenMed, in

tage, the plan that ChenMed is focused

and value-based health outcomes for their

a statement. “This agreement guarantees

on. Springer views Walmart as the best fit

patients,” said Tim Cochran, head of

our patients will continue to have access to

buyer but calls ChenMed a prize asset that

digital scaleups for Thoughtworks North

Humana’s leading health plans, along with the

other potential bidders could bid on.

America, in a statement.

personalized, high touch care we provide.”

ChenMed announces new coordinated care program ChenMed recently announced it has implemented an “ambitious” program to provide each of its patients with access to the services of a coordinated care team, across its more than 130 senior medical centers in 15 states throughout the country. This company-wide integration coincides with the federal government’s unwinding of the Public Health Emergency it established during the COVID-19 pandemic, a process that now requires all Medicaid recipients to re-enroll in the program within state-by-state deadlines, or risk losing Medicaid benefits to which they might be entitled, according to a release. Medicaid-eligible older adults are particularly vulnerable to this prospect, ChenMed said, citing a recent West HealthGallup survey that found a sizable proportion of the older adult population in the U.S. skips treatments and cuts back on basic and essential needs due to healthcare costs. Twelve percent of those 65 and older say they or a member of their household had a health problem in the last year that they

The Journal of Healthcare Contracting | February 2024

did not seek treatment for due to cost. The survey found 11% of Americans in this age group report that they or a family member skipped prescribed pills to save money. ChenMed’s patients are generally 65 and older and many live in underserved areas. By ensuring that those who are eligible for Medicaid successfully re-enroll within their particular state’s deadline, ChenMed’s care teams enable them to retain a variety of vital resources to support their health and wellness needs. “We provide this service to supplement the unwinding efforts that are now underway and to make it as convenient as possible for the Medicaid-eligible seniors we serve to maintain their insurance,” said Dr. Say Salomon, ChenMed national chief medical officer, hospital and community care. “Without it, they run the risk of facing unaffordable medical bills and losing access to programs they need to stay healthy and secure.”

Doug Bowen

February 2024 | The Journal of Healthcare Contracting

BY GRAHAM GARRISON

The Long Game Banner Health’s Doug Bowen has been a lifelong student of supply chain and created a lasting legacy that’s benefited both his organization and the industry at large.

Never underestimate the power of a compliment. Doug Bowen began his career in 1985, working at a local hospital while attending college. A few months into the job, he was restocking supplies for the emergency room when a physician ran in. The physician was obviously in a rush and asked Bowen for a certain product. Bowen was able to find the product and put it in the ER physician’s hand. Bowen will never forget what happened next. The physician looked him in the eye and said, “Strong Work!” Bowen decided then and there that he wanted to care for our nation’s caregivers through a career in supply chain. “Mark Twain said he could live for two months on a good compliment,” he said, “but I tell everybody I made an entire career out of a good compliment.” The U.S. healthcare supply chain is always changing. There are new products that come along, new processes, software, and systems. Bowen has never had a day of work where he was bored or disengaged. “It’s always been challenging and there has always been something new for me to learn.” He once had a boss who told him that his operations and department would never get better until he got better. “So, from that day on, I’ve always thought that I need to be a lifelong student of supply chain and really try to learn all I can to be as good as I can, so that we can have improved operating results for the department.” Bowen, now senior vice president of supply chain services and chief supply chain officer at Banner Health, is used to working at what he calls “the long game.” He is this year’s JHC Contracting Professional of the Year.

The Journal of Healthcare Contracting | February 2024

CONTRACTING PROFESSIONAL OF THE YEAR

Pivotal moments

While at HCA Information Services,

to do their own internal distribution and

Bowen’s first supply chain job (then

he worked with David Welch, Ed Jones,

buy directly from the manufacturers so

known as Materials Management) was at

and others to create a strategy for the

that they could take advantage of those

a local HCA hospital, stocking shelves

future supply chain at HCA. The resulting

relationships. The money that we were

while attending school in Utah. After

strategy could be summarized by one

spending with those manufacturers would

finishing college and grad school, he

word, “disintermediation,” the removal of

be a direct discussion, as opposed to hav-

stayed in supply chain working with

intermediaries in the supply chain or “cut-

ing somebody that might take advantage

HCA and HealthTrust (which spun off

ting out the middlemen,” he said.

of what’s going on in the middle.”

from HCA).

Bowen took the position of supply chain

HCA implemented the strategy in

Bowen relocated to Nashville (HCA’s

officer for the HCA North Texas Division

11 different markets around the country.

headquarters) in 1991 to become a busi-

to implement the disintermediation strategy:

Bowen led the efforts in Dallas for the

ness analyst for the supply chain system.

to buy direct from manufacturers, eliminate

HCA North Texas division by creating a

A few years later, he became manager

distributors, and provide internal distribution

consolidated service center. The CSC had

of supply chain systems and led a team

from a Consolidated Service Center (CSC).

centralized distribution, procurement, and

“In the early ’90s, just about every-

accounts payable all out of one building. “It

that designed HCA’s automated Supply Management and Resource Tracking

body was buying from distributors,”

was an opportunity to show that you could

(SMART) system.

Bowen said. “The strategy from HCA was

take the individual hospitals and migrate

February 2024 | The Journal of Healthcare Contracting

CONTRACTING PROFESSIONAL OF THE YEAR

them to a centralized high performing

to implement the same CSC strategy at

during Bowen’s first meeting with Ron Bun-

service center and be successful.”

Banner Health.

nell that he got the surprise of his career. In

Upon interviewing for the position, he came away impressed with the organiza-

that meeting, Banner Health’s CFO shared the organization’s 20-year strategic plan.

Banner Health’s 20-year plan

tion’s leadership. Longtime CEO Peter Fine

“People make plans, and a lot of times

In 2002, Bowen moved to Phoenix as

spoke Bowen’s language with an emphasis

you go a totally different direction,” Bowen

the VP of Supply Chain for Banner

on being data driven, disciplined in cost

said. “I looked at Ron and said, ‘You’re kid-

Health. He immediately went to work

controls, and results oriented. But it was

ding me, right? And he said, ‘No, I’m not.’

February 2024 | The Journal of Healthcare Contracting

2000-2002. “The Fix It phase started out when the company was first formed, it was losing money,” Bowen said. “They had to go through a process of just trying to sell some assets, decide which assets were going to remain, and then create some strategies around the markets that Banner Health was still in and turn the organization around.”

` Performance. Banner Health team members called this the “Do It” phase from 2003-2006. “Here we had to prove to everybody that we could reliably perform as an acute care hospital company and produce reliable results.”

` Growth. The “Grow It” phase lasted from 2007-2010. “A real focus on growth, and that was both acquiring hospitals and building hospitals.”

` Innovation. The “Change It” phase happened from 2011-2015. Banner doubled down on computerized physician order entry during this time and increased the quality of care significantly at every hospital.

` Industry Leadership. The “Lead It” phase covered 2016-2020, right up to the pandemic. “Banner Health worked to establish itself as a leader in the industry, not only in clinical quality, but also in supply chain and other facets of non-acute care and the successful introduction of a health plan – BannerAetna, which hastened Banner’s transition from fee-for-service revenue Bunnell shared a quote from Peter

Indeed, Bunnell’s statement turned out

to value-based care with income based

Drucker, “The best way to predict your

to be true, as Banner Health meticulously

on covered lives and a focus on keeping

future is to create it.”

followed the strategic plan over the next

people healthy.

Bowen responded: “Well, I must

two decades – and actually achieved it.

admit that the idea of a 20-year strategic plan is … bizarre.” “It’s not bizarre,” Bunnell replied,

Within each of those organizational The corporate strategy involved five phases:

phases were supply chain objectives to

` Turnaround. This was considered

meet. For supply chain, the “Fix It” phase

“It’s brilliant.”

The Journal of Healthcare Contracting | February 2024

the “Fix It” phase and occurred from

involved shifting from siloed goals to

CONTRACTING PROFESSIONAL OF THE YEAR

centralization, followed by employing IT

Did growth only happen in the three

meeting to review what we’d achieved and

tools and educating stakeholders during

years designated by the plan? No, Bowen

what we still had left to go on each stair

the “Do It” phase. Engaging physicians

said. Did the “Fix It” phase only last two

step. We were able to plot our progress.”

for standardization at scale came in the

years? No. But the idea was that whether

“Grow It” phase. Creating a culture of

it went two years, five years or even lon-

supply chain being everyone’s business

ger, everybody was focused on the next

Proof of concept for a CSC

happened in the “Change It” phase. And

step. “The whole organization knew what

Although Bowen had experience in get-

finally, enterprise-wide optimization and

was coming next,” he said. “So that’s what

ting a consolidated service center strategy

network value creation became the norm

I thought was most powerful about this

up and running, he and the leadership

in the “Lead It” phase.

strategy. We’d have an annual leadership

team at Banner Health wanted to execute theirs with a crawl, walk, run mindset. “The deal I made with our CFO was that we’d do a proof of concept,” Bowen said. In 2004, Banner Health leased 50,000 square feet of a 200,000-square-foot building. Their return on investment proved good in a few short years and they leased the entire building in 2007. Banner Health soon added a pharmacy distribution and a compounding center. When the real estate market crashed in 2009, Bowen saw the opportunity for Banner Health to buy the building. His boss agreed and they negotiated a favorable price for it. Owning the building was advantageous about a decade later when hospitals nationwide were facing a financial crisis. Banner Health added surgical kit packing manufacturing in 2011 through American Contract Systems, which was later acquired by Owens & Minor. They provide the people and operations for kit packing for Banner Health, manufacturing more than 5,000 packs a week and over 260,000 packs a year. “The reason we wanted to get into this business was to control all the raw materials,” Bowen said. “We control everything that goes into our surgical packs and we’re able to make changes on the fly as things happen with recalls. We were able to control all the components, and we’ve been able to keep our costs flat.”

February 2024 | The Journal of Healthcare Contracting

CONTRACTING PROFESSIONAL OF THE YEAR

In 2012, Banner Health added a phar-

“We took advantage of buying

“Now that we have experienced the pan-

macy robot to fill prescriptions. All of

low and selling high, and we sold the

demic, we have put off any thoughts of a

their Banner and Aetna insurance custom-

warehouse at the opportune time,” said

LUM program,” he said. “We’ve purpose-

ers, plus all employees, get prescriptions

Bowen. “We never had that as part of our

fully chosen to stock more products at

through this mail order program.

business plan, but it turned out to be a

our CSC to help mitigate the disruptions.

In 2015, they added high-density

very fortunate event because the money

A lot of people think that the supply

pallet storage with automated shuttle

that we were able to make from the sale

chain has recovered, but it really hasn’t.

capabilities to their CSC.

took Banner from a year-end loss to a

We still have supply chain disruptions happening every day.”

The CSC proved to be a “superior”

year-end gain. It was exciting to be able to

asset during the pandemic, Bowen said,

have supply chain come to the financial

allowing Banner Health to hold enough

rescue of the organization.”

Even in late 2023, there were typically more than 3,000 items on back order

inventory to mitigate outages and disrup-

Last summer, Banner Health Sup-

tions, resulting in a 100% success rate for

ply Chain Services (SCS) added a second

It’s been that way ever since the

procedures to be completed with zero

distribution center and 100,000 square

pandemic, Bowen said. Banner Health is

cancelled due to lack of a supply item.

feet, allowing SCS to expand the number

stocking more products and moving to

every single day.

more multi-source agreements. “Having

The IDN has moved to more domestic source products, more investments in domestic suppliers, and is pre-planning for substitutes. “We’ve had so many products go on back order, we have a playbook for every product about what are the substitutes,” Bowen said. “We have the ability to jump right into action as problems happen.”

a sole source agreement, and then the sole source can’t provide product, you automatically have to go out to the market and find more,” he said. “So, we’ve decided to move to more multi-source agreements as part of our strategy. We’ve also decided to have more self-reliance and double down on our own consolidated service center capabilities.” The IDN has moved to more domestic source products, more investments in domestic suppliers, and is pre-planning for substitutes. “We’ve had so many

The CSC has benefited the IDN in

of SKUs and the amount of each product

products go on back order, we have a

more ways than just distributing supplies.

managed through the internal distribution

playbook for every product about what

The investment itself turned out to be

center network.

are the substitutes,” Bowen said. “We

fortuitous for the organization. Follow-

have the ability to jump right into action

ing the pandemic, a lot of health systems

as problems happen.”

were losing money, including Banner

Post-pandemic operations

Health. In the latter part of 2022, the

In a post-pandemic world, Banner Health

members, has created a program designed

head of real estate approached Bowen

continues to focus on three traditional pil-

to promote domestic and geographi-

and the CFO about selling the CSC

lars: Cost, Quality, and Outcomes, while

cally diverse manufacturing and ensure

building to an investor and leasing it back.

adding a fourth: Preparedness.

a robust and resilient supply chain for

Premier, in partnership with its

Prior to the pandemic, Bowen said

essential medical products. The program

due to an increase in shipping from

Banner Health was very fortunate to have

is intended to provide a means to invest

online retailers and with the building sale,

a CSC to allow for more inventory and

in or partner with businesses that can

Banner Health put more than $50 million

not operate a LUM program, giving a

supply shortage products, co-fund the

back into operations.

cushion for all supply chain disruptions.

development of affordable products that

Warehouse real estate was in high demand

February 2024 | The Journal of Healthcare Contracting

address specific market needs and create

how many things you’ve done well in the

strategic sourcing contracts to ensure

past, you’ve still got to figure out how to

The supply chain team often repeats

continuous supply for Premier members

solve today’s problems,” he said. “Always

a phrase from Banner Health CEO Peter

and customers. “The program continues

be on high alert.”

Fine: “Leadership matters!”

typically outperforms the benchmarks.”

to be successful through investments or

Indeed, great strategies and great

To this end, Banner Health has a pro-

long-term purchasing commitments on

products do not make a great supply

gram in place to create a career path and

these initiatives,” Bowen said.

chain, he said. Great people make a

journey for its employees. About 90% of

The Prestige relationship has been

great supply chain. “The people that

Banner Health’s supply chain leaders are

extremely successful in giving Banner

run your supply chain are important,”

promoted from within. “It’s been one of

a domestic mask source that is com-

he said. “Every member of my team

the things that’s been attractive for people

petitively priced, Bowen said. “Banner

has created our success. Every achieve-

to want to join Banner supply chain is

has made Prestige our formulary mask

ment that we’ve ever made was the

they know they’ve got a journey ahead of

and in doing so we have significantly

result of a team effort.”

them that they can grow with us.”

outperformed based on our initial commitment. Within the exam glove category, we are in the process of moving to a domestic product for a portion of our exam glove utilization. Overall, we continue to explore several categories for domestic options that provide for a high-quality cost-effective option.” Banner Health was recently awarded the 2023 Corporate PSWMSDC Spend – Regional and 2023 Corporate Total MBE Spend – Regional awards by the Pacific Southwest Minority Supplier Develop-

The SCS Leaders work to “ensure supply chain services is a great place to work” and they measure their progress and results by using an employee survey called “The VOICE Survey” which improves employee engagement and satisfaction. “The SCS turnover rate has always been better than the benchmarks and the supply chain department also typically outperforms the benchmarks.”

ment Council (PSWMSDC). These awards recognize Banner Health’s commitment and contributions to supplier

The SCS Leaders strive to create posi-

Bowen wants for them what he has

diversity and inclusion and the economic

tive relationships with all their team mem-

been able to enjoy in his four decades

development of the communities we

bers, ensuring they know they belong, and

in the industry – a satisfying, exciting

serve. This is the second time Ban-

they are appreciated, Bowen said. “These

environment to solve real-world

ner Health has been recognized by the

efforts help us to hang onto the team

problems for our nation’s clinicians.

PSWMSDC. Banner Health also received

members we have and retain them while

And he’s more than happy to be the

the 2022 Corporate Total MBE Spend –

they are on their Banner Journey.”

one giving a compliment or two that

The SCS Leaders work to “ensure

Regional award.

supply chain services is a great place to work” and they measure their progress

may jumpstart the next great supply chain leader career. “I dedicated my career to supply chain

The makings of a great team

and results by using an employee survey

based on one good compliment almost

Bowen believes in the motto that you’re

called “The VOICE Survey” which

40 years ago,” he said. “To this day, if any

only as good as your last day’s work. One

improves employee engagement and

one of my team members gets a ‘Strong

day you may have favorable market con-

satisfaction. “The SCS turnover rate has

Work!’ from me, they know they are

ditions, but the next day you may not.

always been better than the benchmarks

receiving my highest possible compliment

“It’s humbling to know that no matter

and the supply chain department also

and sincere appreciation.”

The Journal of Healthcare Contracting | February 2024

IDN INSIGHTS

Forming Partnerships and Driving Value Supply chain leaders discuss keys to successful industry partnerships, challenges in 2024 and beyond. BY PETE MERCER

The beauty and challenge of the healthcare supply industry is that it’s built almost entirely off of relationships. The upside to this is that by building these relationships between suppliers, manufacturers, distributors, and IDNs, you can partner together to facilitate better business arrangements and, most importantly, create better outcomes for patients. The challenge is that it can be hard to build these relationships without an “in”, especially when you’re trying to connect with IDNs.

February 2024 | The Journal of Healthcare Contracting

In November 2023, The Journal of

segments are looking for. It’s important

to ensure that money is wisely spent

Healthcare Contracting hosted IDN Insights

to remember that segmentation shouldn’t

across the organization.

West in Marina Del Rey, California, high-

be based on sales or the total patient size

lighting some of the most progressive,

– segmentation should only be informed

team took the time to review some

largest healthcare systems in the West

by really specific parameters related to the

mission statements of popular IDNs

region of the United State. Sponsored by

business of your customers.

in an effort to get to the heart of what

During the presentation, the Vizient

Allergan Aesthetics, speakers at this event

Uman said, “Segmentation really

covered how large health systems measure

helps you answer three broad ques-

Common responses include: “Improve

successful contracts, the challenges these

tions. One is, which customers should

human welfare, advance the world of

health systems are dealing with, what

I be going after? The second question

health, shaping healthcare, profoundly

successful supplier/provider relationships

is for customers that I should be going

shaping the trajectory of health for

look like, and how to best partner with a

after, how do I group those customers

humanity, driven by passion to help

GPO. These are some of the highlights

into common attributes that tells me

patients, making better health possible

from the sessions at IDN Insights West.

something about how they prioritize,

for people around the world, uniting to

how they make purchasing decisions or

save and sustain lives.”

these networks are really looking for.

some sort of key insight that can help

What’s the common denomina-

Driving value

orient your value proposition around?

tor in all those mission statements?

In the United States, there are ap-

And it’s really the third question that

A patient. At the end of one of your

proximately 1,100 Integrated Delivery

segmentation helps answer. What value

devices is a patient. Think about that

Networks (IDNs), 6,100 hospitals, 8,500

proposition should I be delivering to

the next time that you’re having a

ambulatory surgery centers, 15,000

those unique segments? And within

conversation with somebody in an

skilled nursing facilities, 123,000 physi-

those segments, how might that value

organization. The end of every device

cian groups and 1,000,000 physicians.

proposition change depending on who

is a patient, and that’s why you want to

How can you make it so that your value

I’m talking to?”

become a healthcare company.

proposition captures the attention of just a fraction of these entities? It’s all about driving value. Igor Uman, Associate Principal, Sg2, Consulting, Vizient, held a workshop where he walked all the attendees through the value of segmenting and prioritizing your distinct customer base. Additionally, the Vizient team walked through various demonstrations for how you can better

We’ve seen a big shift towards outpatient volumes. We try to make sure that our folks in the hospitals and that our members understand that too. It’s always a two-way street between the vendor relations and the hospitals.

deliver value propositions and manage these relationships. to driving value within your distinct

way to drive value for your customers

Putting COVID in the rearview mirror

customer base by helping you to pri-

and the industry at large. You cannot

Even though we are almost four years

oritize and group customers based on

drive value without providing value,

removed from the onset of the

similar attributes. From there, you can

which is where the value analysis team

COVID-19 pandemic, the ripple

develop segment-specific messaging and

comes in. With value analysis, hospitals

effects and ramifications are still being

value propositions for your solutions that

are working to better understand the

felt in the healthcare industry today.

will be tailored to what those customer

value of each product that is purchased

Staffing shortages and burnout are only

Segmentation is a critical component

This is an incredibly useful and viable

The Journal of Healthcare Contracting | February 2024

IDN INSIGHTS

some of the effects still felt by the hu-

our suppliers in and start talking about

sure that you’re honoring your commit-

man resource of the healthcare supply

different ways in which to partner.

ment and sending products.”

chain – but what other ways are orga-

Because we haven’t been able to have

Others are looking at what can be

nizations still grappling with the effects

those conversations strategically these

added and drive value for the whole

of the pandemic?

past few years due to our teams efforts

system. Efficiency is such an important

were focused on supporting patient care

component of healthcare, and anyone

ply Chain Optimization at HealthTrust

during a global pandemic. Now that

who can provide tools and resources

Performance Group, said, “This is

we’ve been able to clear up the supply

that make a hospital more efficient is a

just the new normal now. We’re deal-

disruptions, we can focus on our cost

valuable partner. Hozouri said, “We’re

ing with labor shortages, raw material

reduction and reimagine initiatives with

looking at what it is that’s going to make

shortages, labor cost increases, volumes

our partners.”

us more efficient. It is not only about the

Issam Abouzahr, Sr. Director, Sup-

have changed significantly. We’ve seen a big shift towards outpatient volumes. We try to make sure that our folks in the hospitals and that our members understand that too. It’s always a twoway street between the vendor relations and the hospitals. I think everybody’s feeling the pain from this and we’re trying to get creative about how we can support costs.”

Others are looking at what can be added and drive value for the whole system. Efficiency is such an important component of healthcare, and anyone who can provide tools and resources that make a hospital more efficient is a valuable partner.

One of the opportunities that an event like the pandemic has afforded IDNs is the potential to renegotiate

Developing partnerships

lowest cost item. It’s critical we need to

contracts. Nestor Jarquin, Supply Chain

The most important skill for success in

be finding ways for our supply chain to

Services, Strategic Sourcing, Manager

healthcare is your ability to build rela-

be more efficient and resilient.”

Surgical at Kaiser Permanente said,

tionships and develop partnerships.

“We’re saying that pandemic events are

The challenge with building relation-

an organization that they can build a

no longer an act of God. It’s going to

ships in the healthcare industry is access

genuine partnership with – an organi-

happen. Here’s what you need to do in

to the right people. Several of the ses-

zation where the number one priority

terms of pandemic events. So again,

sions at IDN West 2023 were all about

matches up with the IDN. At the end

learnings from the supply chain and how

what those IDNs are looking for in

of the day, it’s all about patient care.

we are adjusting and how we see the sup-

their partnerships and how vendors

Abouzahr said, “For our public and

ply chain with the market today.”

and distributors can successfully

private partnerships – as we look at

approach and build relationships with

self-distribution, as we look at working

these networks.

with our local and government entities,

Part of the challenge of being in the post-COVID era is that it can still be

Finally, many IDNs are looking for

hard to plan ahead and move forward

Transparency and honesty are a key

it’s no longer just a siloed operation.

with all of the chaos that the world just

part of the equation, especially for orga-

We all must work together. We’ve seen

endured. For Cecile Hozouri, VP of

nizations like Kaiser Permanente. Jarquin

a lot of mergers and acquisitions across

Supply Chain at Scripps Health, 2023

said, “When you’re working with Kaiser

the industry, both within the hospitals,

was all about cleaning up from the pan-

Permanente and you have a contract

regional GPOs, consulting services, all

demic. She said, “This coming year we

with us and you have a supply chain back

those things partnering to try and make

need to reimagine; we need to get back

order, we’re going to ask you for transpar-

the best ultimate solution to support

on our innovation track. We need to get

ency. There’s reciprocity there in making

patient care.”

February 2024 | The Journal of Healthcare Contracting

THE VALUE OF OUR PORTFOLIO

In Plastic Surgery and Regenerative Medicine

Supplier Resiliency Dependable Delivery Versatile Stocking Customer Service Excellence Healthcare systems value the role of supply chain more than ever, and working with a dependable supplier is critical to success. Allergan Aesthetics continues to deliver dependability and the value that you expect from an industry leader.

Reference: 1. Data on file, Allergan Aesthetics, August 2022; Allergan Corporate Healthcare PRM Value Deck. © 2023 AbbVie. All rights reserved. All trademarks are the property of their respective owners. MBD162493 05/23 023859

IDN INSIGHTS

Long-Term Supply Chain Preparedness After the challenges that healthcare has faced in the last few years, it’s more important than ever to prepare for the future. At IDN Insights West, sponsored by Allergan Aesthetics, John Bain, Director, Health Systems – Strategic Accounts at Umano Medical hosted a panel that included Justin Freed, VP of Adventist Health, Shireen Ahmad, Interim VP, SSRM Strategy and Finance at CommonSpirit Health, and Brittany Schumacker, National VP, Business Development at Premier Inc., to discuss the state of the health supply chain operations since the pandemic and their key supply chain initiatives going into 2024.

John Bain

Justin Freed

Shireen Ahmad

Brittany Schumacker

February 2024 | The Journal of Healthcare Contracting

John Bain: How is your supply chain operation different since the pandemic?

when it comes to our labor structure,

compete against contracted suppliers,

which has forced us to restructure our

it’s just to give some diversification. We

organization model, we’ve become much

know that based on Premier’s 2023 sup-

Shireen Ahmad: There are many events

more efficient with how we manage the

ply resiliency survey three out of four

in addition to the pandemic that have in-

work itself.

supply chain executives are going to care

fluenced or have impacted CommonSpirit’s

I’ve hired some Lean Six Sigma lead-

about risk mitigation strategies, including

supply chain over the last few years.

ers that have brought their capabilities to

more diverse and domestic manufactur-

Throughout 2019 and early 2020, one of

our organization, and we sorely needed

ing and sources of supply.

the biggest challenges we faced was the

it. It’s been a challenge, but at the same

When and where does the product

merger. We were actively transitioning

time we’ve really overcome a lot of the

come from? Where does the API come

GPOs at the onset of the pandemic. It

labor obstacles to become more efficient

from? Where does it get stored? We want

was a bit of a shock, when in March of

and effective at what we do.

to make sure that it can be sustainable.

2020, we were sitting in a room trying to figure out how we were going to convert to one GPO and in the next week, the pandemic shut down the country and we had to scramble to procure PPE to support our 145 hospitals and staff. At the time, we had two strategic partnerships with distributors that we’ve maintained since. In part of the partnerships with both, we were probably one

Another capability that we built throughout the pandemic is a route to directly source from China and other manufacturers. We were able to directly source some of our PPE, which was a huge advantage when others were racked with supply shortages.

of the few IDNs with a steady supply of Another capability that we built

benefit from that was I was able to har-

throughout the pandemic is a route to

ness a lot of critical relationships that I

Bain: What are your key initiatives in supply chain sourcing moving into 2024?

directly source from China and other

didn’t have going into my job. It forced

Freed: A year ago, we had Dee Donatelli

manufacturers. We were able to directly

that. And now that we’re past that, it’s

come out and spend a day with us in our

source some of our PPE, which was a

almost like going through a war and

strategic planning meeting with all my

huge advantage when others were racked

you’re in the foxholes and you can talk

leaders about how to look at value analysis.

with supply shortages. These two capabili-

to your CMO and PCEs or clinical nurse

More than a process or a council, it’s like a

ties enabled us to leverage our size to be

executives and there’s a trust, there’s a

state of mind. We’ve tried to continue that

able to buy a lot of products directly at

camaraderie. And there’s not as much

engagement into 2023. We’ve established

reasonable terms.

knee jerk reaction to what’s going on.

some critical service line councils, ortho-

They know what we’re capable of and

pedic spine ... We’re kicking off a nursing

Justin Freed: For us, the last two years

that goes a long way when you’re trying

council. We are attempting to get closer

coming out of the fog of the pandemic,

to solve problems.

with our clinical stakeholders that make

PPE for our physicians.

The pandemic taught us a lot. The

some of these decisions.

because of the financial crisis that a lot of health organizations have had the

Brittany Schumacker: We’ve got to

The better we get at that, the more we’re

past few years, we’ve had to cut 10%

have some more geographic diversifi-

able to take feedback and proposals and do

to 15% staffing across the board. It’s

cation of our manufacturers. That’s

something about it. Obviously, analytics is

affected our ops, logistics teams, sourc-

definitely a space that Premier has been

critical. Without that visibility of what’s

ing, value analysis, accounts payable, etc.

focused on before, during and after

happening in the supply driver world, you

We’ve had to tighten the belt significantly

the pandemic. The intention is not to

are flying blind. We’re going off kind of

The Journal of Healthcare Contracting | February 2024

IDN INSIGHTS

the Excel spreadsheets into the more Tableau business intelligence platforms. And that’s really been a game changer for us. And it’s not just looking at the data. We’ve created governance at every single hospital to go through that data systematically the same way. We have stakeholders from pharmacy, cath lab, periop, nursing lab, and we sit around and go through budget versus actual performance. Ahmad: We have a lot of initiatives in the pipeline and are building out two- to three-year roadmaps around sourcing and contracting. There aren’t just a few but several in many different areas. What I can share is that we are focus-

As we look at how we improve our

provider data AT THE POINT OF USE.

vendor relationships, I think vendors

If you’re looking to streamline your in-

ing on several fundamentals, which in-

should know one thing – don’t be upset

ventory, our solution can forecast demand

cludes taking a pause and working on how

if we don’t choose you this round.

for product 13 months in advance with

to recharge our workforce. How do we get

We might choose you in a future one.

better accuracy because we see the whole

everyone engaged again? We’ve spent the

It has been an issue when we moved

market demand, not just your sales. If you

last three months looking internally. We’ve

away from a couple of vendors, who

are looking at decreasing inventory rates

had a lot of restructuring within Com-

ultimately took it very personally. Don’t

and your fill rate drops by 1%, what actual

monSpirit and our supply chain leadership.

take it personally. We want to work with

impact does that have?

It’s difficult because we are mostly remote

vendors or companies that are willing to

and geographically spread apart, so we’ve

work with us.

We can quantify that for you in dollars. We can quantify that for you in terms

been making an effort to truly engage our

of the market share that you may have

workforce and bring them closer together.

Schumacker: Key initiatives for 2024,

lost. And we can help you predict how

The other thing I would say is we

2025 and beyond ... I’m going to focus

to use that information to right-size your

are making an investment in data and

on one that I think is really exciting and

inventory and build greater resiliency.

analytics. We realize that we are a huge

it’s around our technology development.

If you’re a smaller supplier, I think that

organization, to be able to provide

Here’s why I’m excited about it: What

that has a huge implication, because you

actionable insights is critical for many

we’re trying to do is enable both provid-

can make a better margin by ensuring

areas but one in particular is making

ers and suppliers to see the market in a

availability when market competitors

sure that we’re meeting compliance,

very unique way. It’s a technology solution

have issues. Your pricing can be market

another is through scorecards, so that

that can predict backorders and product

competitive as a way to optimize margin

we identify which vendors really support

shortages with 90% accuracy six weeks

and compete with the bigger vendors. I

our endeavors and where we see a lot of

ahead of time and also establish better

think for the big vendors and suppliers

room for improvement.

short and mid-term forecasts based on

out there, it’s even more impactful.

The Journal of Healthcare Contracting would like to thank Allergan Aesthetics for sponsoring IDN Insights West.

February 2024 | The Journal of Healthcare Contracting

TRENDS

The Dangers of Sepsis Sepsis has a substantial impact on U.S. hospitals. How can healthcare providers better safeguard their patients?

Sepsis is not a contagious disease and can’t be transmitted to other patients. Instead, infections that lead to sepsis often start in the lungs, urinary and gastrointestinal tract, and skin, according to the CDC. Symptoms of sepsis include a heightened high heart rate, confusion, extreme pain and discomfort, fever, shortness of breath, clammy skin, and more. Anyone can develop sepsis, but risk factors such as being 65 or older, being a child under the age of one, having a weakened immune system, having chronic medical conditions including diabetes or kidney disease, or having recently been hospitalized, make the chances of developing it much higher according to the World Health Organization (WHO).

Sepsis within U.S. hospitals According to the CDC, one in three people that die in the hospital had sepsis during the hospitalization. Many infections can resolve on their own, but for some individuals with a severe infection, that is not the case, and they go on to develop sepsis. “When a patient develops a worsening The body’s extreme response to infection, including sepsis, are life-threatening

infection, whether the initial infection is

medical emergencies. Yet, despite the seriousness of sepsis, large numbers of patients

viral or bacterial, or starts in the skin, lung,

develop it within hospitals. At least 1.7 million adults in America develop a sepsis infection

urinary tract, or anywhere else, the patient

each year, and nearly 350,000 adults die from sepsis yearly, according to the Centers for

may continue growing sicker, and ultimate-

Disease Control and Prevention (CDC). Sepsis occurs when almost any infection that a

ly develop sepsis,” said Akin Demehin,

patient already has (such as influenza, COVID-19, pneumonia, etc.) triggers a further

Senior Director of Quality and Patient

reaction in the body.

Safety, American Hospital Association.

The Journal of Healthcare Contracting | February 2024

TRENDS

Sepsis acquired in healthcare settings is a frequent adverse event during care

and improve the outcomes of patients

Hospital-specific programs may focus on

with sepsis.

sepsis only, or they could be part of a broader

delivery, affecting hundreds of millions of

According to the CDC, the key

initiative that addresses multiple areas of

patients worldwide every year, according

elements of the sepsis control program

quality improvement throughout the hospital.

to the WHO. Sepsis is also a burden on

include leadership commitment, which

The program’s goals may be specific to a single

the U.S. healthcare system, as the condi-

dedicates the necessary human, financial,

hospital or span entire healthcare systems.

tion often leads to hospital readmissions

and IT resources toward sepsis manage-

and longer hospital stays, according to

ment; accountability, or appointing a

structuring a sepsis program that rapidly

statistical brief (#168) from The Health-

leader responsible for setting program

identifies effective care for patients with

care Cost and Utilization Project1.

goals; multi-professional expertise, which

sepsis. The CDC Sepsis Core Elements

engages key partners in the organiza-

are designed to guide medical leaders in

tients, sepsis is an important health focus

tion; action, which implements processes

organizing staff and help with increasing

because the condition is also a burden to

to identify, manage, and help patients

sepsis-related survival rates.

healthcare systems,” said Angela Craig,

recover from sepsis.

“In addition to its impact on pa-

Medical Science Liaison and Clinical

These core elements guide hospitals in

“Sepsis is a complex disease and

The next steps of the program include

there is no one-size-fits-all approach

Nurse Specialist in Critical Care, Baxter.

monitoring sepsis to reduce disease inci-

to preventing, identifying, treating, and

“Sepsis is the number one cause of hos-

dence. This includes close tracking, which

measuring it. That is one reason why the

pital readmissions2, sepsis patients usually

measures sepsis epidemiology, progress

CDC’s new Sepsis Core Elements offer

have a longer hospital stay , and sepsis

toward goals; reporting, which provides

a broad, evidence-based foundation of

is the most expensive reason for hospi-

usable information on sepsis treatment and

practices. From this scaffolding, hospitals

talization, costing more than $53 billion

outcomes to relative partners; and finally,

and healthcare professionals can build the

annually in the U.S. ”

education, which provides crucial sepsis

program they need to best support their

4, 5

own, unique communities,” said Demehin. For hospitals that are just beginning

Hospital-specific programs may focus on sepsis only, or they could be part of a broader initiative that addresses multiple areas of quality improvement throughout the hospital.

their sepsis program with limited resources, they should first identify a sepsis program leader or co-leader, secure support from hospital leadership, conduct a needs analysis to order sets and supplies, be aware of any regulations, and obtain necessary data to begin establishing the initial goals for a successful sepsis program.

CDC’s sepsis response

information to healthcare professionals

The CDC launched the Hospital Sepsis

during onboarding and annually.

Core Elements program to support

Physicians play a role

“The CDC’s Hospital Sepsis Pro-

U.S. hospitals in ensuring that effective

gram Core Elements effort is a resource

For hospital patients that have been

resources are in place to identify sepsis

that helps providers identify sepsis more

diagnosed with sepsis, it is important to

quickly and accurately. The resource

quickly, and provides tools to implement,

recognize that physicians and healthcare

allows staff to identify routine practices

monitor, and help optimize their sepsis

providers play a critical role in monitoring

and leadership structures that assist

programs,” said Craig.

fluids and treatment as patients transi-

in managing sepsis rates in hospitals.

The CDC framework is beneficial

tion between care. Physicians should act

The CDC recommends that hospitals

because hospital systems can use it as a

quickly and know how to identify the

integrate a multi-disciplinary system

guide, tailoring the program in a way that

signs of sepsis, as it can make a significant

within their sepsis programs to monitor

works best for their healthcare procedures.

difference in the survival of a patient.

February 2024 | The Journal of Healthcare Contracting

“One essential step in sepsis monitor-

Sepsis can be a full-body reaction to a

Many studies are currently under-

ing is to bring together relevant experts

previous illness, requiring external sup-

way to find more effective methods to

inside a hospital to provide a multi-disci-

port such as ventilators, dialysis, main-

identify patients who have sepsis, how

plinary approach to the rapid identifica-

tenance of blood pressure, and more,

the disease impacts each individual, and

tion and treatment of sepsis. Leadership

according to the Society of Critical Care

possible biomarkers that could identify

commitment to supporting that team’s

and Medicine. Many patients who do

the disease, according to the Society of

work also helps encourage implementa-

survive experience ongoing complications

Critical Care Medicine.

tion of the standard processes and pro-

after a sepsis infection, such as physical

tocols used to rapidly identify and treat

and cognitive issues that linger.

Said Craig, “At Baxter, our mission is to save and sustain lives. For sepsis, that

patients at risk for sepsis,” said Demehin. Following the CDC’s guidelines, and establishing a clear leader in infection prevention efforts, can assist a hospital in properly managing each patient’s sepsis infection. “Patients hospitalized with sepsis often receive IV fluids, and proper fluid management may improve a patient’s

“ Artificial intelligence can be used in hospital settings to review digital records in real-time to help doctors, nurses and advanced practice providers identify patients at risk of sepsis even earlier.”

clinical outcomes. Increasing awareness among healthcare teams of early detection of the condition and appropriate fluid

“Everything we know about sepsis

comes to life by helping to bring aware-

management tools that provide accurate

tells us that early diagnosis and appro-

ness to the condition, early detection, and

and precise data such as the Starling Fluid

priate rapid treatment with antibiotics

treatment including the critical role that

Management Monitoring System can help

saves lives. But sepsis may present very

fluid management can play.”

make an important impact,” said Craig.

differently in different populations. For

“We are fortunate to live in an age

example, the early signs of sepsis in a

of technological transformation with

premature newborn can look very dif-

real-time analytics, machine learning

Future of sepsis care

ferent than those of a trauma patient

and natural language processing that are

The overall impact of sepsis in hospitals

coming out of surgery or an elderly

helpful tools for clinicians in predict-

became more evident during the hospital

patient being transferred from a nursing

ing, identifying and responding to sepsis.

admittance surges during the COVID-19

home,” said Demehin. “Moreover, for

Artificial intelligence can be used in

pandemic, according to a study titled

people struggling to cope with multiple

hospital settings to review digital records

“Sepsis: New Challenges and Future Per-

chronic conditions, the early symptoms

in real-time to help doctors, nurses and

spectives for an Evolving Disease” from

of sepsis can mimic those of any number

advanced practice providers identify

the National Library of Medicine.

of other conditions. As a result, hospitals

patients at risk of sepsis even earlier,” said

frequently implement programs that focus

Demehin. “We must continue to resource

is the variety of reactions to treatment

on the rapid identification and treatment

these kinds of innovative approaches as

experienced on a patient-by-patient basis.

of sepsis.”

we strive to stamp out sepsis.”

A notable challenge in treating sepsis

Sources: 1 https://www.ncbi.nlm.nih.gov/books/NBK179289/ 2 Chang DW, Tseng CH, Shapiro MF. Rehospitalizations following sepsis: common and costly. Crit Care Med. 2015;43(10):2085-2093. 3 Latham HE, Bengtson CD, Satterwhite L, et al. Stroke volume guided resuscitation in severe sepsis and septic shock improves outcomes. J Crit Care. 2017;42:42-46 4 Buchman, T. G., Simpson, S. Q., Sciarretta, K. L., Finne, K. P., Sowers, N., Collier, M., ... & Wax, M. (2020b). Sepsis Among Medicare Beneficiaries: 3. The Methods, Models, and Forecasts of Sepsis, 2012–2018. Critical Care Medicine, 48(3), 302. 5 Torio, C. M., & Moore, B. J. (2016). National inpatient hospital costs: the most expensive conditions by payer, 2013: statistical brief# 204. Healthcare cost and utilization project (HCUP) statistical briefs, 2006-2016.

The Journal of Healthcare Contracting | February 2024

HSCA

The Value of the GPO Sourcing and Contracting Process Healthcare providers initially formed GPOs in the early 1900s as an efficient means to aggregate purchasing volume, drive competition among suppliers, and reduce healthcare costs. Today, traditional healthcare GPOs serve as the sourcing and contracting partners to hospitals, long-term care facilities, surgery centers, clinics, and other healthcare providers across the country. GPOs secure high-quality medical products at fair prices for the benefit of patients, providers, Medicare, Medicaid, and taxpayers. Both independent and industry funded studies confirm the effectiveness and tremendous value of GPOs, finding that GPOs deliver annual cost savings of 12-18%.1, 2 Through their comprehensive sourcing and contracting process, GPOs allow smaller providers to obtain critical supplies at the same value as large providers while allowing all healthcare providers to focus on their core mission: providing first-class patient care.

By Todd Ebert, R.Ph., President and CEO of the Healthcare Supply Chain Association (HSCA)

February 2024 | The Journal of Healthcare Contracting

collectively aggregate purchasing power.

products certain manufacturers make

proach to sourcing and contract-

GPOs provide a range of services, includ-

are beneficial to the overall supply chain

ing that not only accounts for the

ing broad clinical feedback and providing

process. GPOs evaluate the quality of

competitive price offered, but also

supply chain analytics, which are espe-

a manufacturer’s facilities and the raw

the quality, reliability, and stability

cially important in rural and underserved

materials they use during the sourcing

of supply. The GPO business model is

areas. Individual practices and community

and contracting process, to ensure that

voluntary, flexible, and clinically driven.

hospitals do not have the resources, scale,

their healthcare provider members can

GPOs work in close collaboration with

and expertise to perform themselves.

receive the best products, devices, and

GPOs take a comprehensive ap-

member hospitals and healthcare providers to develop sourcing policies and contract award decisions. GPOs recognize that market conditions change, and when they do, work with suppliers to adjust contracts. GPOs work diligently to ensure member hospitals and providers

GPOs recognize and reward quality while encouraging a healthy market. GPOs also identify and support alternative sources and clinically appropriate substitutes.

can select the products they need to care for their communities and patients most effectively and provide clinical resources

GPOs routinely evaluate drug sup-

medications they need to be able to ef-

across their network of providers.

pliers. GPOs take a multifaceted ap-

fectively help their communities.

proach to their contracting and sourcGPOs help create a fair, open, and

ing process that involves evaluating

GPOs identify and source high-quality

competitive marketplace. With a

drug suppliers. Suppliers are evaluated

products. GPOs identify and source high-

fair, open, and competitive marketplace,

on the consistency of product avail-

quality products at the best value with infor-

GPOs compete for business based on a

ability, fill rates, recall frequency and

mation that is available and provided during

variety of factors including, but not lim-

management, disaster preparedness,

the sourcing process, providing stability

ited to, supplier product pricing, strength

secondary supply lines, and manufac-

and savings across the industry, and work

of GPO supplier contract terms,

turing transparency. GPOs recognize

diligently to ensure a robust, competitive,

breadth of contract portfolio, supply

and reward quality while encouraging a

market for healthcare products by expand-

chain and clinical analytical assistance,

healthy market. GPOs also identify and

ing the number of suppliers of essential

and customer service. GPOs encourage

support alternative sources and clini-

products and life-saving medications.

competition among suppliers, work to

cally appropriate substitutes.

expand the number of suppliers in the

The Healthcare Supply Chain Associa-

market and incentivize them to continue

GPOs evaluate manufacturer value

tion (HSCA) and its member GPOs are

producing essential products and life-

propositions. A manufacturer’s value

committed to meeting the needs of their

saving medications.

proposition is integral to the GPO

healthcare provider members and their

sourcing and contracting process. If a

patients across the country, and through

Health systems depend on GPOs.

manufacturer’s value proposition only

their comprehensive sourcing and con-

Many health systems and independent

focuses on FDA approval of their

tracting process, will continue to deliver

physician offices often depend on GPOs

products and price, it does not provide

the highest-quality products at the best

for much more than their ability to

an additional explanation as to why the

value to their members.

urns, Lawton R, and J Andrew Lee. “Hospital purchasing alliances: utilization, services, and performance.” Health care management review vol. 33, no. 3, 2008, pp.203-15 2008: B 203-15. doi:10.1097/01.HMR.0000324906.04025.33 2 Dobson, Allen, and Joan DaVanzo, “A 2018 Update of Cost Savings and Marketplace Analysis of the Health Care Group Purchasing Industry,” Dobson DaVanzo & Associates, LLC, Apr. 2019. 1

The Journal of Healthcare Contracting | February 2024

TRENDS

Banding Together How a recently formed hospital alliance aims to expand access and improve outcomes – while reducing costs – in a rural setting.

of care in communities across the state of North Dakota. “The Rough Rider Network consists of 23 hospitals that came together to capitalize on the economies of scale that they all represent in unison. The goal is a triple aim of improving access to care, quality of care, and reducing the cost of healthcare,” said Alfred Sams, president, Rough Rider HighValue Network. “Those goals rely on being able to tackle all of the barriers in being an independent hospital, but also coming together and being able to pool resources with other hospitals while maintaining independence.” The Rough Rider Network is committed to enhancing the sustainability of rural healthcare throughout North Dakota. Uniting a network of critical access hospitals and clinics, the alliance aims to combine resources while Value-based care is a highly sought after goal – yet often an elusive one – for

remaining independent.

healthcare providers of all shapes and sizes. No where is this more evident than the

“Independence is an important

rural setting, where large geographic distances, reduced access to services, rising costs

aspect for all of our members,” said

and lack of scale all come into play for providers.

Nathan White, CEO, Rough Rider High-Value Network. “Members, however, also must focus on surviving in

To tackle those challenges, an alliance

its formation at the end of 2023 as a

their current environment, both clini-

of 23 rural hospitals in North Dakota

collaboration between individual and

cally and financially. The alliance offers

recently announced the formation of the

independent critical access hospitals that

two benefits to members, investment in

Rough Rider High-Value Network.

all collaborate to address rural health chal-

services, and then, on the clinical inte-

lenges and enhance community health.

gration side of things, each individual

The network, based in Cando, N.D., was formed to strengthen rural healthcare

The hospitals work together on clini-

hospital being able to take advantage of

for providers and patients through-

cal and operational initiatives to strength-

the pooling of their resources. The abil-

out the state. The network announced

en the availability, affordability, and quality

ity to dive into value-based healthcare

February 2024 | The Journal of Healthcare Contracting

and reduce the risks from a collective

principle that independent rural hos-

perspective is critical.”

pitals can come together to meet these

and discuss pertinent topics, quality mea-

challenges and emerge stronger while

sures, best practices, and help the system

remaining independent.”

take on a unified approach to patient care

The rural setting

forth a member and they come together

and best practices,” according to Sams.

For hospitals and health systems in rural areas, focusing foremost on local cases and

Benefits of a health alliance

community health is critical. An alliance

Through the Rough Rider Network’s clin-

Future

allows rural hospitals to broaden their

ically integrated network (CIN), member

The Rough Rider Network received state

resource availability and more effectively de-

hospitals will collaborate to support new

funding of $3.5 million to assist with

liver healthcare to communities by investing

specialty programs including surgery, oph-

facilitating its goals, and to support North

in medical advances, controlling the rising

thalmology, obstetrics, and mental health,

Dakota patients and hospitals in the

costs of providing care, and enhancing care

which would be difficult for individual

value-based care transition, according to

coordination, according to the network.

hospitals to support on their own. The

the network.

“The geographic isolation in the

CIN also aims to reduce administrative

“We tackle the challenges that are

North Dakota area presents challenges

burdens and streamline measuring quality,

the hospital’s most demonstrated needs,”

for hospitals, especially during inclement

according to the network.

White said. “If the majority of our mem-

weather,” said Sams. “It is often frozen

Additionally, the Clinical Integration

bers are interested in a particular shared

here for five months with ice and snow,

Committee (CIC), with a medical provider

service, we will try to negotiate that for

and so we have a geographic boundary

on the committee from each member

our members. If 70% of the members are

that isolates some of our facilities. We

hospital, will oversee clinical and quality

interested in a different solution, we will

also have hurdles in attracting and main-

initiatives within the alliance. The Rough

move forward with that change.”

taining our work staff such as doctors,

Rider CIN will collaborate with payers

The Rough Rider High-Value Net-

specialists, and nurses.”

on value-based insurance products that

work plans to integrate a menu of shared

White adds: “Access inequities can

will enable patients, providers, and payers

services between hospitals that will

present a tremendous challenge for in-

to succeed by enhancing the patient and

promote more efficient operations going

dependent rural hospitals. Older popula-

provider experience.

forward. These shared services would

“Managed IT solutions, aggregated

include pharmacy, laboratory, telehealth,

and independent hospitals lack scale

accounting solutions, mobile radiology,

information technology, health informa-

and suffer from price disadvantages and

imaging reads, and more, are all services

tion exchange, clinical staffing, supply

service disadvantages.”

that can be integrated through the

chain, and more.

tions have disparities in health outcomes,

Expanded healthcare capabilities are

alliance that enhance the ability to focus

“The reality is that many payers are

necessary for rural and independent pro-

on patients and provide better care,”

moving their financial incentives toward

viders, such as systems for controlling the

according to Sams.

value-based care arrangements. That

rising costs of healthcare and enhancing

The Business Integration Committee,

is happening with Medicaid expansion

care coordination. These goals are often

with operations leaders from each of the

in North Dakota, too. So, we knew at

difficult to achieve as an independent

joined hospitals, will oversee the develop-

Rough Rider that there was a lot of

provider alone.

ment and operation of shared service

financial and clinical gain from moving

“Interdependence drives inde-

offerings. The committee also provides

towards value-based care models,” said

pendence,” said Ben Bucher, CEO

a forum for leaders to discuss business

White. “By coming together, hospitals

of Towner County Medical Center in

challenges and develop solutions.

are aggregating the base of their covered

Cando, N.D., and chair of the Rough

“Within our network, every facility

lives while also investing in shared solu-

Rider HVN board. “The Rough Rider

has a clinical representative on the clinical

tions to manage challenges and improve

High-Value Network is built on the

integration committee. Each hospital puts

population health.”

The Journal of Healthcare Contracting | February 2024

HIDA PRIME VENDOR

Making Your Case to Manufacturers: Why Work with Your Prime Vendor? One of the easiest paths to efficiency is to get more of the products your health system needs onto the same truck. That’s why many providers partner with a prime vendor distributor to manage the acquisition and distribution of countless medical products from a variety of manufacturers. Using a prime vendor can create significant efficiencies for a healthcare provider – such as fewer purchase orders, more predictable deliveries, shorter lead times, and higher fill rates.

However, some manufacturers resist this ap-

your team. You can reassure them you’ll still

proach, and want to handle the distribution of their

depend on their sales reps for their clinical

own products. They may view the prime vendor dis-

guidance – after all, you don’t buy from the

tributor as a barrier between their sales team and the

delivery driver on the loading dock. In fact, the

customer. Here are some helpful points to reassure

manufacturer that partners with distribution

manufacturers that distributors are useful partners for

will be able to spend more time educating your

both ends of the medical supply chain – providers

team about their products, because they are

and manufacturers alike.

relieved of the non-sales responsibilities that

By Elizabeth Hilla, Senior Vice President, Health Industry Distributors Association

distributors handle like tracking down deliveries

` TELL MANUFACTURERS WHY YOU USE

and handling returns.

A DISTRIBUTOR. Most likely, you picked a prime vendor distributor so that you could

` RECOGNIZE THAT NOT EVERY PRODUCT

order, receive, and pay for products from

WILL BE A GOOD FIT. As much as you might

many different manufacturers all through a

like to drive more of your purchases through your

single relationship. Fewer purchase orders, less

prime vendor, some products just won’t work. For

receiving time, and fewer invoices to process.

frequently-purchased products, distribution is a no-

Your distributor may also be doing kitting or low

brainer. On the other hand, large capital equipment

unit of measure (LUM) services for you. Some

and some infrequently-purchased complex

manufacturer personnel may not fully appreciate

medical devices are usually too costly to hold in a

how much staff time – and storage space – a

distributor warehouse and you’ll likely buy them

provider saves by funneling purchases through

direct from the manufacturer.

their distributor. If that’s the case, you may need to educate them.

HIDA’s new white paper, Distribution Channel Considerations For Medical Products Manufacturers, may

` SHOW MANUFACTURERS THE UPSIDE FOR THEM. Manufacturers want access to you and

aid in these conversations. The paper is available on the HIDA.org website.

February 2024 | The Journal of Healthcare Contracting

The only publication dedicated solely to the healthcare supply chain.

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I read The Journal of Healthcare Contracting because the articles are short and condensed, saving time but still giving me all the relative insight. The print vs online issue is preferred since most of the content I keep up with is online. It is nice not having to stare at monitor to get information. Reading what peers are doing is insightful and on most occasions the insight confirms what I believe is critical now and what longer term strategies may need developed. — Mark Welch, Senior Vice President, Novant Health

JHC PUBLISHES YEAR-ROUND • 6 PRINT EDITIONS • 6 DIGITAL EDITIONS VISIT US ONLINE AT JHCONLINE.COM TO READ MORE EDITIONS OR FOR MORE INFORMATION

HEALTH

Respiratory Season How healthcare providers and the population at large have fared this fall and winter.

CDC respiratory disease season outlook

season, multiple respiratory disease peaks

prior to COVID-19 pandemic. With

happening at the same time, or the emer-

the incidence of widespread illness and

The Centers for Disease Control (CDC)

gence of a new coronavirus variant that

healthcare system strain, this year’s hospi-

have been continuing to monitor statistics

causes severe illness.

talizations from COVID-19, flu, and RSV

and data during respiratory season, for

As of mid-January, the CDC continued

may even be higher.

signs that respiratory disease season could

to expect that the 2024 respiratory season

According to the CDC, vaccination

be worse than expected. The CDC tracks

will likely have a similar number of total

is best way to protect yourself against

numerous factors in relation to respira-

hospitalizations as last year. In 2023/2022,

severe disease. Vaccination is especially

tory disease, including data indicating the

the number of hospitalizations remained

important for people who are at higher

possibility of an unusually severe influenza

higher than previous respiratory seasons

risk of developing serious complications.

February 2024 | The Journal of Healthcare Contracting

Getting COVID-19 and flu vaccines at the same time is safe

Respiratory illness and coinfection risk

to public health beyond that of other

As the respiratory season reaches its peak,

The 2023/2024 respiratory season has

New hospitalizations from COVID-19 are

the CDC recommends that everyone five

looked much different this year than in the

about one-third of what they were around

years and older receive one dose of the

past. COVID-19, the flu, and RSV numbers

the 2022 holidays. Weekly deaths dropped

“updated vaccine.” A person who has never

have continued to rise across the United

slightly at the end of 2023, and are also

received a COVID-19 vaccine in the past

States. Last winter, flu and RSV infections

substantially below levels from a year ago.

can still get the protective benefit of the

were already declining by the time hospital-

Symptoms of the COVID variants

one updated shot, according to the CDC.

izations from the omicron virus started to

currently circulating are likely familiar, in-

According to UCLA Health, it is safe

spike in December 2022. With the high num-

cluding a runny nose, sore throat, cough,

and convenient for an individual to get both

ber of respiratory illnesses circulating, how

fatigue, fever, and muscle aches. If you feel

the flu and COVID vaccine at the same

worried should an individual be about getting

sick, the CDC recommends staying home,

time. With COVID and flu seasons both

multiple at the same time, or coinfection?

resting, and testing for COVID-19.

currently underway, it is more important

Fortunately, while it is possible to be

than ever to get vaccinated. The vaccines

infected with multiple viruses at the same

both lower an individual’s risk of getting

time, the risk isn’t the same for everyone,

sick and protects against severe disease.

according to a report from NPR. Viral

recent variants,” according to the CDC.

interference, a phenomenon where infec-

Pediatric cases of RSV lead to more hospitalizations than omicron, flu

tion with one virus ramps up the body’s

This year’s respiratory season has seen

immune system, can make it less likely to

increased cases of respiratory syncytial virus

get infected with another virus. According

(RSV) nationally. Young children are at an

to an NBC News article, while respiratory

increased risk for developing severe cases

disease is on the rise, physicians are not

of RSV. According to a study published

seeing notably increased rates of patients

in late 2023 in The Journal of The Ameri-

with both the flu and COVID.

can Medical Association (JAMA), pediatric cases of respiratory syncytial virus have led to more emergency hospitalizations than the

Cases of new COVID-19 variant tick up

omicron variant of COVID-19 and the flu.

It has been nearly four years since the

over 500,000 patients (under 18) who were

pandemic emerged, and the winter respira-

hospitalized with the virus between August

tory season has brought on a new variant

2021 and September 2022. It was found that

of the disease. There has been an increase

the hospitalization rate for children who

nationally in emergency room visits and

tested positive for RSV was 81.7% while

hospitalizations for COVID-19, the flu,

the rate was 31.5% for omicron and 27.7%

and RSV, which began mid- December

for the flu. RSV is a common respiratory

and has been continuing throughout early

virus that causes mild, cold-like symptoms,

2024, according to KFF Health News.

according to the CDC, but can progress to

The newest variant circulating is known

JAMA researchers analyzed data from

severe and fatal in infants and older adults.

as JN.1, a descendant of omicron. It is

Parents should take precautions to prevent

rapidly spreading, and represents between

severe illness in children, including RSV

39% to half of the cases, according to stats

vaccination, keeping children home when

from the CDC. Fortunately, the variant

sick, washing hands often, and encouraging

“does not appear to pose additional risks

kids to cover coughs and sneezes.

The Journal of Healthcare Contracting | February 2024

Frontiers

of the HEALTHCARE SUPPLY CHAIN

Contributed by

Supply Chain By the Numbers BY JOHN STRONG, CO-FOUNDER AND CHIEF CONSULTING OFFICER, ACCESS STRATEGY PARTNERS INC

Shift in distributor use?

Container spot rates rising (again)

An October 2023 report from Kaufman Hall based on responses from

After a dramatic slump in container rates post-pandemic,

106 hospitals found that

the spot rates for containers are again rising.

38% of respondents were moving to

55% increase in rates from Asia to North America’s east

direct purchasing as opposed to relying on distribution partners1. This could be due to

71% of respondents saying they were

coast starting mid-January3.

dealing with distribution delays in their supply chain2.

Here’s a change: Supply cost increases exceed that of drugs4 Year to date in 2023 versus 2022 there was continuing increases of expenses. Year-Over-Year 2023 vs. 2022 Supply Expense Increase per Calendar Day

11%

2023 vs. 2022 Drug Expense Increase per Calendar Day

10%

2023 vs. 2022 Purchased Services Expense per Calendar Day

3-Year Average

2023 vs. 2020 Supply Expense Increase per Calendar Day

24%

2023 vs. 2020 Drug Expense Increase per Calendar Day

22%

7.33%

2023 vs. 2020 Purchased Services Expense per Calendar Day

19%

6.33%

Drug shortages in 2023 (data through Sept ‘23) remain high or plateau 5 National drug shortages remained high in 2023 but plateaued a bit during the year. This is a small comfort for patients and their families who continue to see delays in treatment, rationing of medicines and less than optimal outcomes because of these shortages.

National Drug Shortages: Active Shortages by Quarter – 10 Year Trend 350

320

300

295 301

301 276 282

265

250

219

200

224

238

251

265 264

276

263 265 260 271 236

202 190 185 195 191 183 174 176 176 174 174

246 242

309 305

264 260

220

150 100 50 0

-1

-2

February 2024 | The Journal of Healthcare Contracting

Resilience still an issue heading into 2024 The healthcare supply chain has a long history of transactional supplier relationships, fostered in part by a desire to get the best possible price. In addition, there has always been pressure to keep inventory low, which gave birth to “Just-in-Time” (JIT) and “low-unit-of-measure” (LUM) strategies to manage inventory, among others.

“The concept of resilience shouldn’t assume that you won’t fail, but rather that you should be able to get back up fast.” — Deepak Mavatoor, Managing Partner, Tata Consultancy Services6

57%

As noted earlier, according to the Kaufman Hall Survey, of the 106 hospital respondents indicated that they were increasing inventory levels to mitigate supply chain disruptions7. While this is likely an advisable strategy, depending on the types of inventories that are being increased it is also important to remember that no one could have stocked enough PPE to cover their needs during the pandemic. Having the right inventory on hand at the right time is the name of the game, but the logistics and manufacturing challenges keep arising in an uncertain world.

So … what’s changed in the past 19 years?

Recycling PVC is possible Baxter announced on December 148 that it had successfully completed the first phase of its IV Bag recycling program pilot with Northwestern Medicine in Chicago. The results?

I came across an article from 20059 recently that suggested there are many barriers to healthcare supply chain suc-

170,000 IV bags were recycled 6 tons of materials were recycled

cess. For those of you who have been in the industry for that long, and even those who have not, here’s a checklist of some

Northwestern is planning to continue implementing the program. The recycled waste will be used for floor mats, dock bumpers and other materials, keeping these bags out of landfills.

of the barriers to success as you execute on your 2024 supply chain strategic plan.

ʯ Lack of executive support ʯ Misaligned or conflicting incentives* ʯ Need for data collection and performance measurement

Five big ASC chains to watch Here’s a chart of five of the largest ASC chains in the country as we head into 2024,

ʯ Limited education on supply chain ʯ Inconsistent relationships with GPOs

showing number of ASC sites10:

and/or other supply chain partners

Number of ASCs

*I might add an over-reliance on low-

AmSurg

hanging price reductions versus the effective

HCA Healthcare

use of value analysis techniques, using more

SCA Health

total cost of ownership (TCO) analysis, and revising what constitutes “value” beyond price in performance goals and objectives.

Surgery Partners

256 480

127

150 320

USPI

Kaufman Hall and Associates, LLC, “2023 State of Healthcare Performance Improvement: Signs of Stabilization Emerge”, October 2023, p.19. Southwick, Ron, “Hospitals continue to wrestle with supply chain challenges,” Chief Healthcare Executive, January 4, 2024. Bloomberg News, “Container Spot Rates Soar on Red Sea Threats,” January 4, 2024. 4 Adopted from Kaufman Hall and Associates, LLC, “National Hospital Flash Report”, November 2023, p. 11. 5 https://www.ashp.org/drug-shortages/shortage-resources/drug-shortages-statistics. 6 https://assets.appian.com/uploads/ebook-supply-chain-outlook_EN.pdf, Accessed January 7, 2024. 7 Kaufman Hall and Associates, Op. Cit. p.19. 8 Baxter press release, December 14, 2023, at www.baxter.com. 9 McKone-Sweet, K., Hamilton, P., and Willis, S., “The Ailing Healthcare Supply Chain: A Perspective for Change”, first published March 24, 2005, at https://doi,org/10.1111/j.1745-493X.2005.tb00180.x. 10 Riz Hatton, “Where 5 ASC giants stand in 2024,” Becker’s ASC Review, January 3, 2024 1 2 3

The Journal of Healthcare Contracting | February 2024

accessstrategypartners.com

NEWS

Industry News SMI completes first cohort of advancing women leaders program and celebrates 9 executive leaders

this first of its kind program, which

renamed, including SoutheastHEALTH

includes one-on-one mentoring, network-

Foundation. The foundation is now

ing, peer-to-peer learning, workshops, and

named Mercy Health Foundation South-

self-assessment tools.

east. All donations to the foundation

SMI launched Cohort 2 for the

will continue to remain local, just as they

Advancing Women Leaders program

always have been, to support patients in

in October. Sixteen mentees were an-

southeast Missouri.

nounced at the SMI Fall Forum and will now embark on this 12-month program along with their Mentor and Sponsor. See the list of Cohort 2 Mentees. SMI®, a non-profit, community of health-

Intermountain Health names new president for healthcare operations

To learn more about SMI, its pro-

Intermountain Health

care supply chain organizations, con-

grams, and its community of members,

has named Jim Sheets

gratulated its first cohort of Mentees for

visit: www.smisupplychain.com

as the president for

completing their ground-breaking leader-

healthcare operations

ship program called Advancing Women

Mercy acquires SoutheastHEALTH

Leaders (AWL). This 12-month program

SoutheastHEALTH has joined Mercy

brings together a Mentor, Sponsor, and

after receiving all necessary third-party

Mentee pairing from SMI member orga-

regulatory approvals. The first noticeable

Sheets first joined Intermountain

nizations for the advancement of women

change for patients and the community

Health in 2007 and brings more than 16

into senior level executive roles. SMI

of these organizations moving forward

years of Intermountain leadership experi-

celebrated the first cohort of 9 Mentees

together started in January with the place-

ence to this role. He spent the last nine

at the SMI Fall 2023 Forum in Nashville.

ment of new Mercy signage at locations

months serving as the group president

across southeast Missouri.

for 10 CommonSpirit Health hospitals in

SMI’s Advancing Women Leaders (AWL) program intends to close the gender

in Colorado, Montana, Jim Sheets

Kansas, Wyoming, and New Mexico.

The two health care systems signed

Colorado and Utah.

gap in Senior Executive Positions by guiding

a definitive agreement in August for

aspiring women to leverage their networks,

SoutheastHEALTH to become a member

he will report to Chief Operating Officer

work alongside a Sponsor and Mentor in

of the Mercy system strengthening health

Nannette Berensen and will officially

unison, thus creating a more diverse health-

care delivery across southeast Missouri

start January 15. Sheets plans to visit each

care supply chain. SMI members nominate

through increased patient access to high

care site during his first 90 days to meet

a mentee, an emerging leader from their

quality care.

caregivers in person.

organization, and as their Sponsor, advo-

In his new role with Intermountain,

Co-workers with SoutheastHEALTH

Sheets earned both an MHA and an

cate for the Mentee within their organiza-

are now Mercy co-workers. Southeast

MBA from the University of Minnesota

tion. Mentees are paired with a Mentor

Hospital in Cape Girardeau is now called

and a BS in business management from

– a senior healthcare supply chain leader

Mercy Hospital Southeast, while South-

the University of Utah. He is an adjunct

from SMI’s membership – who provides

east Health Center of Stoddard is now

professor in the Eccles School of Busi-

guidance for career advancement.

Mercy Hospital Stoddard.

ness at the University of Utah and has

SMI has partnered with the McGuckin Group, a talent-innovation firm, to develop

Other former SoutheastHEALTH facilities and services have also been

served on the Board of Directors for the Utah Hospital Association.

February 2024 | The Journal of Healthcare Contracting

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