Building Resiliency in the Healthcare Supply Chain: Q&A with Joe Walsh of Supply Chain Sherpas
By Korina Fischer
I recently attended the Fall 2022 IDN Summit & Reverse Expo, where I had the opportunity to meet with some of the most innovative thought leaders in supply chain today. Among them was Joe Walsh, founder of Supply Chain Sherpas. As an executive coach, mentor and advisor to commercial sales teams and supply chain leaders throughout healthcare, Joe is well-known as an outspoken advocate for changing relationships between suppliers and providers to move the supply chain forward.
With more than 20 years of supply chain leadership experience across diverse industries, Joe is a frequent speaker on supply chain innovation, including his presentation at a Supplier Strategies Track at the recent IDN Summit. I had the pleasure of chatting with him to discuss the challenges and opportunities he sees within the future of supply chain. I found our conversation to be very insightful, and I have provided key excepts from the discussion below.
Q: Given that value-based care is an important revenue source for U.S. health systems, what do you consider to be supply chain’s role in value-based initiatives and outcomes?
A: Value-based care is redefining the healthcare delivery model. Value-based care connects provider reimbursement to patient health outcomes, whereas fee-for-service reimburses providers (retroactively) for performing services. This new model creates powerful incentives to improve clinical outcomes, reduce or prevent long-term disease, and keep populations healthier.
The impact on supply chain is profound. In a fee-for-service model, supply chain is most often asked to manage supply assurance, and to help reduce the unit cost of supplies in the acute care setting. This won’t be sufficient in a value-based care environment, in which supply chain is expected to (a) help reduce readmission rates, (b) improve clinical effectiveness, safety, HCAHPS scores and patient engagement (in their own care), and (c) support a wide range of other clinically integrated goals. The organization must monitor, analyze and manage the profitability and effectiveness of its clinical protocols by disease state and by service line. The days of supply chain, clinical operations, revenue cycle, finance and IT teams operating in silos are over – especially as supply chain is expected to also create (and support) the non-acute supply chain as the care settings rapidly evolve.
Q: What advice do you have for supply chain leaders to help them be essential drivers of value-based care models?
A: There are several megatrends directly impacting the healthcare supply chain, including:
- Supporting the shift to value-based care
- Building a resilient supply chain
- Bending the cost curve to support the financial crisis
- Talent/labor crisis within supply chain and beyond
It’s essential that we have a strong vision for what we need to do in supply chain when navigating these significant changes. It’s also essential that we have clear blueprints comprising strategies, tactics, processes, technology and resources. Our industry is quite good at collaborating to create blueprints for execution once we align on the big megatrends. For example, the Strategic Marketing Initiative (SMI), Gartner, and the Healthcare Industry Resilience Collaborative (HIRC) have already put together very robust blueprints to help providers and suppliers with a roadmap to a more resilient supply chain.
As an industry, we tend to overestimate the impact of defining the “Summit” and the “Strategies” while underestimating and underinvesting in the two most important elements of leading change – “Skills” and “Stories.” It’s imperative to invest in our skill sets as leaders and in the skill sets of our teams. This includes new technical and leadership skills, which shouldn’t be confused as being the same things. We also need to get intentional with the Stories we tell ourselves as leaders. Specifically, dig into the work to redefine the relationship with our inner critic that often holds us back from our true leadership potential. The best Summit and Strategies will only get us as far as our leadership preparedness.
For this reason, we recommend that leaders consider each dimension of the 4-S Leadership Model when navigating change:
- Process / Methods
- Skill Sets:
- Business acumen
- Technical and leadership
Q: Supply chain professionals are under ever-mounting pressure to meet savings targets and reduce waste. What’s the best path forward for those types of cost management goals?
A: Let’s face it, the supply chain fractured in a big way during the pandemic. It’s worth noting that the supply chain perfectly delivered what it was designed to do. I’ve often looked at myself in the mirror and acknowledged the harsh truth that I over-calibrated on cost reduction at the expense of resiliency. We have to learn from our painful chapter with Covid and never again allow supply chain to be relegated to only a cost savings function. Cost management will always be part of the supply chain agenda, but we must get more strategic by expanding our value proposition. We help our provider clients reposition themselves as C-suite peers who can deliver a wide range of configurable value to the organization. We call this SCORE value:
- Strategic: Innovation, diversity/inclusion, sustainability, brand/reputation
- Clinical: Care effectiveness, mortality, readmissions, safety, timeliness
- Operational: Labor productivity, length of stay, bed utilization rates, OR turnover, supply assurance
- Relationship: Patient experience, employee experience, supplier experience
- Economic: Cost reduction, cost prevention, waste reduction, revenue capture
Q: What can supply chain leaders do to become more resilient?
A: This has been a loaded topic over the past few years, and for good reason. The upside is that the industry has come together, and some very good assessment tools and maturity models are available to those who want to dig in. For example, SMI facilitated a process among its members and collaborators to define a four-stage supply chain resiliency maturity model with a self-assessment tool. It’s a very useful resource as the criteria reflected in the model represent the critical elements of a resilient supply chain.
Critical elements of a more resilient supply chain include:
- Product criticality segmentation: Determining the criticality of specific items based on the type of potential disruption. This informs which products you must have under which disruption scenarios.
- Response plan: Pre-defining what to do to mitigate risk in the event of a disruption scenario.
- Risk assessment: Probability of various disruption scenarios happening and pre-determining variable levels of mitigation interventions.
- Product pedigree: Knowledge of tier 2 and tier 3 manufacturers and countries of origin for critical supplies.
- Demand management: Demand sensing at the point of procedure, translated to supply demand forecasts, shared upstream with supplier partners
- Transparency: Real-time visibility to inventory levels of critical products at every stage of the supply chain and throughout the network.
- Event tracking: Insights to globally track real-time events that could impact raw materials or the future availability of finished goods – such disruptive events can include weather, geopolitical developments, labor issues and more.
“Cost management will always be part of the supply chain agenda, but we must get more strategic by expanding our value proposition.” – Joe Walsh, Supply Chain Sherpas
Q: What do you see as the most pressing challenges facing the health system supply chain today – and what are the best opportunities for health systems to solve them?
A: The talent crisis is real. Supply chain folks are fatigued from a very challenging Covid chapter and what likely feels like an endless whack-a-mole session with back-to-back crises. We must remember that the global supply chain struggled through Covid, and many other industries are now making massive investments in their supply chain talent. We are competing for talent while also needing more talent than ever in critical positions, such as sourcing and logistics. This creates a perfect storm, which has led to regrettable turnover, unfilled positions and overworked teams. At a time when teams need to bolster their skills to support new activity sets, we haven’t given them time for training and development. I don’t know when we will reach the breaking point. My hope is that we will slow down, so we can accelerate together.
In other words, it’s time to double down on leadership preparedness. For years we have underinvested in supply chain leaders, putting them under enormous pressure to deliver increasingly better results in an increasingly complex environment without any investment or time to put into their own skills and resources. Let’s give them the time, space and investment to learn and grow. Then, they can lead from the front and open development pathways for their teams.
In normal times, and especially when we’re under time pressure, we do a disservice in preparing leaders to succeed. We take our highest technical specialists and then promote them into people leadership or organizational leadership roles. We don’t give them space or resources to learn leadership. Unfortunately, we too often assume that what made them great at inventory management, sourcing or purchasing will magically turn them into great leaders. In reality, it doesn’t often translate like that. Then we blame the recently promoted leader, and the team suffers while the leader learns on the job. Ouch. My hope is that senior leaders will slow down and give people a chance to catch up to the skill sets needed to do the jobs of yesterday, today and tomorrow.
Another underlying challenge is data chaos. The data infrastructure in hospital systems today has come a long way in the last 5-10 years, but not far enough – the data supply chains are working with is still disconnected and muddy, even inaccurate and unavailable in some cases.
Q: Let’s dive a little further into each of those two challenges, starting with leadership. How can system leaders enable supply chain leaders to become strategic pillars for the organization and contribute to enterprise-wide strategies?
A: I love this question – it’s very important. The answer lies in proper alignment. Too often, supply chain is delegated to the financial pillar, reporting somewhere within the finance function with an inherent bias toward the financial agenda. If you stack yourself under the CMO instead of the CFO, now you’ve got a clinical agenda. If you stack yourself under the COO, you have an operational agenda. The whole ‘stacking under’ approach is problematic. Especially after what we learned with COVID, it’s hard to understand how the chief supply chain officer role is not positioned right next to every one of these C-suite roles.
If you think about one of supply chain’s jobs, the problem with having any bias in the conversation is that we have to make the best decision on a product we don’t actually use. Aside from office supplies or forklifts used in a warehouse, supply chain people are not using the products they’re making decisions about, and that’s an important distinction because supply chain has no technical knowledge of the products themselves. But the entire stakeholder community does, so it’s supply chain’s job to pull all those people together in a value-analysis committee. From there, the organization can make the best fact-based decision on what products to use. Value-based care can’t happen without this. And it’s not about what clinically performs best. It’s also considering what the operational needs are, balanced with what performs the best and what is best financially for the organization. We must bring all those stakeholders to the table and allow ourselves to make the best possible decision.
Q: And to your point about data chaos, how would you describe the current realities of supply chain decision-making, and what could it look like with better data analysis technologies?
A: It’s getting better. I think most are getting to a point where descriptive analytics is possible. Next-generation AI and machine learning technologies like MUUTAA’s have the power to bring order to the current data chaos. And yet, so many healthcare systems are falling behind with the data that would inform that technology. For example, could we have predicted the shortages with PPE? Maybe not, and if we could have, there would still be the issue of storing all that product prior to a pandemic that is a once-in-a-century event. But that’s a supply-side problem, a demand-driven problem. What we’re currently seeing are secondary shortages due to manufacturing shutdowns. We have a supply shortage, not a demand change. These are products we’ve been using all along. The demand hasn’t changed at all, but the supply has.
With technology and descriptive analytics, I think we are getting to a higher form of reliability. How much did we spend with Vendor XYZ last year? What about in the previous five years? What does the trend look like? Those types of descriptive insights are becoming far better, and we’re still surprised by a lot of what we’re finding out. In many cases, the kind of predictive quality that other industries have in their data and insights – we don’t have that yet in our healthcare supply chain. We still need technology that can fundamentally change things. Not small improvements – what’s needed now is game-changing innovation. I think technology like MUUTAA’s can make that happen – it just takes creative approaches for funding models and competencies to ramp up adoption and utilization of these smart, data-driven technologies.
About MUUTAA and DemandAMP+
MUUTAA is leading the way forward for clinically integrated supply chains. In addition to optimizing the purchasing process through patient-driven demand, our AI-driven technologies enhance micro and macro-level understanding of real-world protocol and medication adherence. Powered by our machine learning platform, DemandAMP+ collects and analyzes all relevant data sources to improve demand sensing and predictive capabilities while eliminating manual data collection and analysis from your workflow. Contact MUUTAA today for more information.
Korina Fischer is the Chief Executive Officer and Cofounder of MUUTAA, a healthcare AI company focused on patient-driven demand for clinically integrated supply chains. She is a forward-thinking entrepreneur with 20+ years’ proven leadership in health IT ecosystems, pharmaceutical and medical device supply chains, clinical workflow, and relationship management. To contact Korina, email firstname.lastname@example.org.