Challenges and Trends in the Healthcare Supply Chain | E. 99

The Healthcare Leadership Experience

After labor, the supply chain is healthcare’s biggest expense. Randy Subramany, Director of Supply Chain at New York Presbyterian Hospital, shares insights into 2024 trends and innovations with Jim Cagliostro.

Episode Introduction

Randy explains why there’s more to his role than ‘’bandages and gauzes’’, why people are the most important element of the ‘’three-legged supply chain barstool,’’ and highlights why patient care, decision-making and retaining talent are the top supply chain challenges. He also explains why it takes an eco-system to keep people healthy and how tapping into the power of technology can improve slim hospital margins.

Show Topics

• A day in the life of a Hospital Supply Chain Director

• Caring for patients with complex health needs

• Challenges in retaining and growing talent

• The impact of digital transformation on healthcare

• Utilizing technology to promote a sustainable economy

• Supply chain management: improving margins

• Leadership tip: Going to the Gemba

02:26 A day in the life of a Hospital Supply Chain Director

Randy explained the far-reaching impact of the role and his team.

‘’People think about supplies in a hospital, I'm sure the basics, whether it's through a TV show or just walking through a hospital, you'll see the fundamentals, you'll see gloves, you'll see gowns, you'll see all the different forms of PPE, people think bandages and gauzes, but let's move beyond that now because that's some of the basic things. As a supply chain director, my team is also responsible for pacemakers, for skin tissue that we purchase for a patient that has a severe burn and needs to have emergency surgery, for all of the accessories used in robotic surgeries as well, for grafts and stents and meshes that are used throughout all different sorts of vascular cases. And to give everyone those numbers, to give a number, my team, on a daily basis, is managing 15 to 20,000 case-dependent, unique supplies. To take you through my day, fundamentally, I have 135 wonderful human beings who are responsible for all elements of supply reordering, replenishment, distribution, logistics, triaging, back orders, and really, anything disposable, and some reusable, but mostly disposable that's used on a patient is touching a member of our team. So as I'm sure you can imagine, as I'm sure anyone who's familiar with the hospital can imagine, as I'm sure anyone who's not familiar with the hospital can imagine, the role itself, it's quite impactful.’’

08:52 Caring for patients with complex healthcare needs

Randy said that caring for patients with complicated illnesses was the primary challenge.

‘’But I think the primary challenge that we have, that we will have as an academic institution, is we're seeing patients with the most complicated illnesses and diseases that require, although state-of-the-art and groundbreaking, the most complicated treatments and the most complicated processes and procedures to care successfully for these patients. Of course, fundamentally, in a hospital setting, you're never going to be 100% ever. You're never going to cure anyone 100%. Sometimes care is more important than the cure itself. But putting that aside, I think we're what they call a tertiary coronary academic medical center, which means that we encounter the sickest patients in the world that come to us. So I think the first challenge is we are caring for humans who have very complicated illnesses and diseases.’’

11:43 Challenges in retaining and growing talent

Randy said he expects to lose up to 40% of his experienced team members in the next five years.

‘’From my direct lens internally, I think the main challenge is retaining talent and growing the talent. I say that from two lenses, I'll say that from the lens of 30 to 40% of my team members are within five years of retirement, 30 to 40% are within the first five years of their career. I think there's a gap. And we're noticing, universally, putting aside the supply chain industry, that talent is leaving the work environment or leaving the market because it's time for people to live on to their golden years and pursue other adventures. But for me, it's like how do I bridge the gap with that talent in X number of years from now where the majority of our workforce or my team will be relatively, it's wrong to say inexperienced, but will not have the same levels of experience as those who just have that anecdotal information of they know that this unit uses this supply. It's not something you directly can teach, it's just something that people learn.’’

17:08 The impact of digital transformation on healthcare

Randy said moving to cloud-based systems will be vital for effective supply chain management.

‘’Why is that? I think it's because we think of, historically, ERP systems as transactional systems, systems that you use to order, sometimes to manage inventory, but as we move to the cloud, there is going to be this recognition. Cloud-based systems are built as well to be more of analytical tools that can offer forecasting services, that can truly offer inventory management visibility that get into a lot of those key metrics and KPIs that supply chain leaders such as myself look for. In the current ERP systems, at least the primary ones used in healthcare, like Infor, Oracle, and Workday, the non-cloud based systems I can tell you from firsthand experience, aren't there yet. And I'm not by any means saying anything negative about the products, they serve a key function of getting supply orders to our vendor partners and getting supplies in our doors. But moving towards cloud-based systems, which I think will be the centerpiece of this digital transformation for hospitals, is of the utmost of importance for supply chain leaders.’’

24:17 Utilizing technology to promote a sustainable economy

Randy explained how a sustainable approach can also help to create a healthier society.

‘’The last trend I'll say it's really around what we term the circular economy or the sustainable economy. I think when we think of... In the world of disposable supply, it's hard to kind of connect that to being sustainable because disposable, you associate with using once and then throwing away…. but the trend of using technology to accomplish the key tenets of forecasting more accurately to ensuring that what we have on the shelf is exactly what we need….creates a more sustainable environment because we're not over-ordering and we're not producing waste. One of the key things in healthcare we're focused on from a patient safety perspective, of course, is ensuring that an expired supply is not used on a patient for care. Having technology as an enabler helps us to track expiration dates as an example, and by doing so, we'd be better able to make better decisions about what we order, about what our warehouses, whether it's our own, whether it's our distributor, what's being stored in the right quantities, which in the end creates a more sustainable environment for everyone. Of course, we have a lot of great vendor partners who are working on state-of-the-art packaging techniques that utilize recyclable materials. But just to bring in full circle, these trends of utilizing your talent and creating an environment, digital supply chain, one that incorporates elements of artificial intelligence and big data can not only just drive us towards being more sustainable, but in the end, it makes people healthier….. having a healthier world just creates a better place for everyone. … it takes an ecosystem, and it takes a lot of external parties as well to help us get there, but these trends are essential to keeping people healthy.’’

31:50 Supply chain management: improving margins

Randy explained the importance of what hospitals buy and why they buy it

‘’….when you look at the expense bucket, you have staffing, which is the primary expense, you have the best talent. Hard bucket to touch. The second-biggest bucket though is the supplies and all the efforts that a supply chain management team is involved in. And what I would say is how... Of course, by no means am I advocating for buying the cheapest stuff to reduce the margins, that's not the investment way to think about it. But I think one thing I will say is thinking of a supply chain team as an investment is the right approach to help build bigger margins. Now I say that from the lens of, coming back to my example of spine surgery, sure, we may buy a spine implant at a greater cost, could it yield a better outcome for our patient that reduces their chance of readmissions, which... And I'm not trying to get into the insurance world, which hospitals then get reimbursed less at a basic level if a patient's readmitted. So there are factors that tie to that strategic thought process that requires so many different parties from the revenue cycle, from finance, from clinical care, to be involved and from the billing and coding, all of that ties into the supply chain. So I think thinking about supply chain from that operational lens as an investment, it's like, "What do we actually buy. And why are we buying it?" And of course, economies of scale come into play. If you can standardize, and you know this, Jim, if you can have your physician and clinical teams on board with utilizing as much stuff from one supplier or one vendor over another, it naturally will just yield the economies of scale and reduced rates. ‘’

35:47: Leadership tip: Going to the Gemba

Randy said going to the source and engaging with people is a pillar of success.

‘’So what I would say is a lesson I try to embody and carry every day, it's centered around this theme of going to the source. So when I say that, and I mean, like literally or geographically, if there's an issue on a unit and a hospital, going to the unit, engaging with my team who's there to maybe help resolve supply chain need, engaging with the clinical team, again, as human beings, are there to help care for a human. But also, when in critical emergencies, as humans, we can't help but feel you have a variety of different emotions that go into the care of caring for others. So I would say as leadership lessons is going to the source and engaging with people. I think fundamentally it's working with people, that is the pillar of my success, or I dare to say, my success is being able to work with others. And when there's a moment to praise someone, when an opportunity arises to improve something, going to that source. My source just so happens to be a clinical unit in a hospital. And you know what? Going to the source, it's more often than not gratifying because then you really get to see, hey, my team orders this product, here's how it's used to help make life better for this person who's receiving care. So I think Toyota coined it as going to the Gemba, so I'll leave our listeners with go to the Gemba.’’

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You’ll also hear:

A focus on the ‘’three-legged bar stool’’ of people, processes, and tools: ‘’People is the most important bucket of what the supply chain does here.’’

Why decision-making in patient care can be a challenge: ‘’….we need to have the right people per se at the metaphorical table or the virtual table to make those decisions. But getting everyone to one direction is not always easy.’’

Supply chain is at a tipping point: ‘’But I think we're approaching this tipping point in supply chain, specifically in the healthcare and even in the hospital sector where innovation and technology as an enabler is going to come to the forefront.’’

The impact of AI on payment systems and profit margins: ‘’Many operate at less than 3% (margin). So when you think of being able to pay your partners, your suppliers or vendors quicker, but to get a greater discount, it just directly connects to the bottom line.’’

Successful change management incorporates listening to feedback: ‘’….allowing the team to be heard with their feedback, even if their feedback upfront is resistance, finding some layers of compromise. … team members are rational and they will understand why the new process, one that uses technology more, will make things more efficient. And they realized that the process became 30% shorter per se, approximately 30% shorter, minutes-wise, which gave them time back to assist with other responsibilities that were directed to patient care.’’

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