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Becker’s Healthcare Podcast
From Reactive to Resilient: Transforming the Health System Supply Chain
00:23:36
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- [00:00]
Erica Spicer Mason
Hello everyone. This is Erica Spicer Mason with Becker's Healthcare. Thank you so much for joining us for the podcast today. So in today's episode we're going to explore how leading health systems are transforming their supply chains for greater resilience and proactivity, leveraging strategic shifts and emerging technologies to stay ahead of future challenges and leading us through this conversation we have with us Regine Villain of Ochsner Health, Tom Labotsky of Allina Health and Steve Liu of Clarium Regine. Tom, Steve, thank you so much again for joining us. Before we get into our conversation, would love to have each of you share just 30 seconds about yourself, your organization, whatever you think would be helpful for our listeners to know. Regine, if you could get us started, that would be great. Sure.
- [00:47]
Regine Villain
Good afternoon Erika. Thank you so much for this intro. Looking forward to the conversation. My name is Regine Vilain and I am the chief Supply Chain and support Services officer at Oxna Health. And Ochsner Health is the leading not for profit health system in the Gulf south and we have in excess of 47 facilities and that's not counting all of the clinics and off site clinics that we have also in multiple states. We're primarily in the state of Louisiana, but also we have some facilities in the neighboring states in Mississippi and small facility and also in Alabama. And I'm happy to be here. Looking forward to the conversation.
- [01:34]
Erica Spicer Mason
So happy to have you with us. Thank you Regine. Tom, how about you? Next.
- [01:39]
Tom Labatsky
Good afternoon everyone. I'm Tom Labatsky, I'm the Vice President Chief Supply Chain Officer at Allina Health based up in Minneapolis. ALINA is a 12 hospital based system with 100 plus outpatient clinics and other kinds of surgical centers. And we're primarily based in Minnesota, but also have presence in Western Wisconsin. Distinctively, we're really known for our three areas of distinct centers of excellence in oncology, neurosciences and cardiovascular medicine. And really happy to be here and address really key topic here that we'll be discussing around resiliency. So thanks for having me Erica. Appreciate it.
- [02:24]
Erica Spicer Mason
Thank you so much Tom and appreciate you teeing up our theme of resiliency today. Fantastic. Steve, how about you next?
- [02:32]
Steve Liu
Yeah, sure thing Erica. Great to be on this podcast with you all. My name is Steve Liu, Founder and CEO of Clarium. We are an AI powered command center for hospitals and health systems and we have over a dozen leading health systems on our platform, really helping them to identify and achieve an annual of 10 million in savings annually. We recently also just announced A brand new 27 million Series A fundraise that's allowing us to dramatically scale up our company and scale up to the 5,000 plus hospitals across the country. And prior to this I spent over 16 years as a healthcare investor working at a few large hedge funds and also in venture capital. So really excited to be here today.
- [03:13]
Erica Spicer Mason
Thrilled to have you on the line with us, Steve. I think you're going to offer such fantastic broad perspective on what you're seeing in the supply chain space in healthcare. So thank you for joining the conversation. And I wanted to get our discussion started with Regine because Regine, I know you created the first provider owned PPE manufacturing facility during the COVID 19 pandemic and you've also been recognized as a supply chain innovator in this space. So can you talk to us about the strategic shifts that you've implemented that you've realized have had the biggest impact on ochsioners resilience Erika, thank you for this question.
- [03:53]
Regine Villain
You're taking me back to a time that feels like it was a long time ago in many ways, but also just the other day, this was a transformational and a pivotal time for us in healthcare and certainly in supply chain. I don't have to tell you how much supply chain came into the light during that time. And we found ourselves solutioning for things that we never thought that we would be doing. And so in that vein, as we were going through all of the issues and all of the stresses and all of the challenges, especially during COVID then we found ourselves having to think a little bit differently. So let me just take a step back here a little bit. When we had our first case in Louisiana, I never forgot this. This was literally two weeks after Mardi Gras. If any of you know anything about New Orleans, New Orle does Mardi Gras like nobody else. And so we had a confluence of people coming from all over the world that came here to celebrate and we started surging and seeing our first cases really two weeks, just two weeks after Mardi Gras and surging at the same time that New York was also surging. New York was also a big story during COVID unfortunately. And so we were competing with New York and a little bit with also the state of Washington, which was really where the first case started. We were a little bit early in that, having to really compete with everybody else, trying to figure out how to make sure that we were securing the right resources and the right supplies and the right solutions for the organization. At some point during that, you know, the question came and I Think at a moment of frustration, I just said, you know, would it be nice, wouldn't it be nice if we were able to just, you know, make our own? Because we could not rely on what was being told to us as to when we would be getting our supplies, when we would be getting our shipments. It was a continuous shifting of timelines and frankly putting us in a position where we were not quite sure what we were going to be able to do the following day or the following week. And being put in that position certainly provided clarity and, you know, wanted to really overtake the actual command of the supply chain in a way that perhaps had not been done before. And so I'm fortunate to also work for an organization, Ochsner Health, that is also very, very innovative. And you know, we think out of the box and we're not afraid to take risk when it to doing the right thing for our patients. Because at the end of the day, what I had said as a supply chain leader and backed by the organization is that our patients would not go without. During that time, even though there was a lot of uncertainty, I made a promise to myself, to my team, to the organization, that we would proceed and we would do everything and turn earth and sky to make sure that we had what we needed. And so the organization supported that crazy idea that, hey, what about pulling together the right folks and then bringing manufacturing near us and something that we could also control. So we were fortunate to have all of the right folks around us available. We were fortunate to find great manufacturing partners and, and also great supporters in the community inside the organization, on our board. And everybody just went along and we just started to go down that path. So what I thought was really important is a true vertical integration of the supply chain where truly we would have control of the product all the way to the consumption, which in our case is the patient bedside. Being able to have control over that PPE manufacturing facility was something that was really important. Again, we became a partner with our manufacturing partners in order to put this project together. And I have to say we went at this pretty quickly. In the span of a year, we went from dirt to building really a facility that is still considered today a state of the art facility. What it really afforded us is, like I said, the ability to have a more vertically integrated supply chain and to also be able to have a little bit more of that near shoring and that domestic production that was so important to a lot of folks. That means we could respond quickly to surges in demand and avoid the pain of really waiting weeks for the overseas shipments. I mean, at one point, we were. It was taking over almost like two months to get anything from Asia or anything in that area into our hands. And so that really was not a very reliable way of doing things. But one of the things that also we were very proud of is the job creation that it afforded as well in the area and the economic impact that it had on the communities around where we built that facility outside of Lafayette, Louisiana. And that really became an economic boom for that area and strengthen the local economy, supporting the workforce over there. The other thing that was also an important byproduct of this, it also aligned with some of the ESG priorities that generally we've been looking at. When we're looking at putting that facility here and avoiding really all of the carbon emissions from global shipping and ensuring, you know, ethical production standards, aligning with, you know, our goals. Really, I want to say the last thing, and really the first thing was to make sure that we had high quality standards as well for our customers and that reliability. I'm sure you guys know of many stories of products that came during that time that really were less than in terms of quality or even not even the product that people were requesting. So for us, you know, it was a win, win, win. It was certainly risky to go in that direction, and certainly we were first to think about that. No one had really thought about this idea, and certainly not a provider, not a provider led projects like that. But, you know, we got to a point where it was very important for us to shift from being a passive purchaser, and I'm doing the air quote here, to having something closer to being an active manufacturer and supplier. And it has really transformed our ability to protect our patients, to protect the communities that we serve, and to really put everything in our hands versus having to wait for somebody else to do this. So I'm going to stop here and hopefully I've addressed your questions.
- [11:38]
Erica Spicer Mason
Oh, you've certainly addressed my question, Regine. I really appreciate you highlighting, really, this case study of innovation that Ochsner went through. I mean, the phrase high risk, high reward really kept coming to mind as you were describing this. You know, a risky endeavor at the time, but at the same time, the rewards included, you know, you were able to respond more quickly to those demand surges, fewer weights from manufacturers, you created jobs in the local area which had, you know, stimulated the economy, had an impact there. And also aligning with ESG priorities at the same time, I mean, really remarkable example of swift innovation. I'm still stuck on that metric you shared about going from, I think you said dirt to production, something like that, in terms of or in the span of a year, which is really impressive. So thank you so much for really highlighting what that kind of, that level of innovation can really produce. And I want to be sure to also hear from Tom next and how innovation is looking at Allina Health. You know, Tom, I know in the introduction you, you referenced this concept of resiliency a few times, and we've seen that Allyna Health has jumped 12 spots in Gartner's supply chain ranking. So can you walk us through that process and what other hospital executives should really be thinking about when they're evaluating investments like a resiliency program such as yours?
- [13:04]
Tom Labatsky
Yeah. So, Erica, I mean, everyone's on a different maturity path. And it's, it's what you, we just heard from Regine is incredible story about the vertical integration around reducing the risk, right of access to clear, critical products that we need to take care of patients on a daily basis. So everyone's on a different maturity path. For us at Allina, we've really been working towards building out our program planning and what that should look like in terms of advancing this work. Meanwhile, we haven't remained idle on this topic. Of course. We, you know, we've made some incredible headways around making sure 85% of our item master has got approved products. So that should we get into an unstable position with products, you know, we have some agility obviously to respond, but it's not enough. And we know that. So the thing I would recommend is we all go down this journey around advancing the cause. And the reason to invest in this area of resiliency is to make sure that people understand that. Well, integration, like Regene's focus on manufacturing, obviously has to have a business case and return on investment for the most part, when we're trying to address a key area of concern around making sure we avoid disruptions and make sure that we keep a coordinated effort across all departments, suppliers and our supply chain to make sure that we're all aligned and making sure that products are delivered on time and in full, which is kind of the true north around how we measure it is on time, in full, but really investing into the resources. Think about it as an insurance policy. And that was my stance to the executive team, was saying, I'm not here to give you a return on investment. I am here to tell you that there are choices we have to make about how to run a clinical enterprise. And this is one that I feel strong about that we should not be taken a risk on and that it's essential that we think about it in terms of the context of risk and we look at it as a policy that we want to take out and make sure that we address. So all the things that we need in terms of the programmatic leadership is really key here in terms of dedicated leadership to continue to lay out the programmatic plan and approach. But also, as Steve will probably allude to, is the platforms that we need of technology to help us look at the ways in which transparency of insight is going to become important around our data and what's it speaking to in terms of where the triggers or the alarms be going off around trends that might, you know, allow us to obviously look deeper here and make sure that you're set up in case that the disruption becomes real. So avoidance is really key, but technology and being able to really look at ways that we can react to the market before it becomes proactively, before it becomes a reactive session for us or exercise is not, is something that we have to invest in. So that really has been the approach that we've made. And so program leadership, the demand planning is capabilities, analytical support, technology platforms are all kind of the required investment that I put forward in terms of our executive team to endorse the resiliency investment as we go forward.
- [16:53]
Erica Spicer Mason
Tom, thank you so much. I think it's so helpful for leaders who are listening in to better understand how you framed this resiliency program to your leadership team. Thinking of it as an insurance policy sounds like a really a smart way to ensure that the whole idea of it resonates with your organization. And then also I appreciate how you elaborated that beyond viewing it as an insurance policy, it does take additional supports, platforms, technology to make sure you can keep a close eye on those important insights and trends to react to swiftly. So really appreciate you sharing all of that. And Steve, as I'm hearing Regine and Tom describe what their vision is for a proactive supply chain, I'd love to get kind of your take take as you know, a partner in the space, a technology provider, you know, what capabilities in Clarium's tech are proving most transformative in helping systems achieve some of these goals that we've outlined.
- [17:53]
Steve Liu
Yeah, absolutely, Erica, it's a great question. I think Tom's point was spot on. Which is really the number one question that we get from executives today is we know we need a resiliency program. How do we justify to our executive team that's asking us for the ROI here to justify investing in this. And it's exactly what Tom said, which is that there's really a massive hidden cost behind supply disruptions that really isn't talked about. Right? We're talking about millions of dollars that are spent annually on managing and resolving disruptions, scrambling to procure substitutes, excess and overnight freight shipping, right? To do that, having procedures delayed or canceled and ultimately impacting patient care to not having particular item to treat them. And what is that cost to our health system into our overall community from that disruption that ultimately led us to not be able to properly care for the patient. Right. That's what's most important. And so, you know, Tom also talked about, right, the need to invest in platforms that can really enable resiliency. And that's been our laser focus at Clarium the last five years. We've been extremely lucky to partner with innovative leaders like Regine, like Tom, and really co develop these solutions together. We've relied on partnering with health systems like Yale, Geisinger, Ochsner, Cleveland Clinic, Kaiser Sutter, St. Luke's Boston Children's, just to name a few, that have been hugely influential in helping shape our platform. And what our platform fundamentally does is we believe in the power of crowdsourcing data to help the entire community. And part of why healthcare supply chain is so different and unique than other industries in the world. When you look at retail or consumer supply chain, historically in those industries there's been significant data sharing and real time data sharing between providers or companies and their suppliers and that just hasn't existed in healthcare. And so really our mission five years ago was how do we become this unbiased trusted intermediary between providers and suppliers and really enable and unlock that real time data sharing? And that's exactly how it works in Clarium, right? We unify all this disparate data from all these different systems of record at the hospitals and health systems and then we go and we set up similar data feeds with leading suppliers with GPOs, with PBMs, with EDI vendors, with the FDA shipping and logistics vendors, and really bring all this data together into a massive unified data ecosystem. And how it works in practice in Clarium is, for example, when one health system in our network approves a clinically equivalent substitute. Right now this is a quite manual and tedious process that can take weeks or months for a health system, for their value analysis team team to engage with clinicians, validate that this item is clinically equivalent, get it approved and now in use, there's all this tribal knowledge spread across all these health systems right in the country. And for us, we've taken the approach of a give to get model. Share with us your health systems clinically approved substitute list and get access to everyone else's. So now you can see, hey, I'm struggling to get this item and I need a clinically equivalent substitute. Why don't I leverage Clarium to see what a dozen other health systems across the country have approved and are using that's been clinically validated by their clinicians. And so that's one example where crowdsourcing can help everyone. Same thing with disruptions. A health system in the Northeast might see that this item is currently on recall or it's on back order and I can't get it anymore. But a health system across the country right in California or in Texas might have no idea because they haven't gotten that data point yet. Clarium's approach to this is to take all of those data points in real time and surface them to the entire network so that now a health system on the west coast can be informed in real time of what another is seeing and vice versa. Right. Again, this idea that we can share data across health systems and with suppliers that can benefit the entire community. And so that's the fundamental approach that we've taken that we think will really unlock this, this truly resilient ecosystem.
- [22:15]
Erica Spicer Mason
Steve, thank you so much for really giving some rich context behind what it means when you say that the aim is to crowdsour data to help the entire community. I really appreciate how you spelled spelled out that process and what it looks like in action and to hear how technology like this has helped to fuel, you know, resiliency programs at Alina Health, this PPE initiative at Ochsner Health, it's. I just can't tell you all enough how much I've appreciated this conversation today and learning from you. I feel like we almost need a part two to dig into more specifics, but Regine, Tom and Steve just want to thank you again for your time and your insights today.
- [22:57]
Regine Villain
Absolutely. It was our pleasure. It was my pleasure and I agree with you. We probably can have a part two, three and four.
- [23:04]
Tom Labatsky
I would, I would love this time. I would love to explore further with both Steve and Regina exactly their responses. So certainly would entertain that.
- [23:13]
Steve Liu
Yes, same here. Thanks so much, Erica. This is great.
- [23:17]
Erica Spicer Mason
Yeah, thank you all again. And of course we'd also like to thank Clarium for sponsoring today's session. So, listeners, we invite you to tune into more podcasts from Becker's Healthcare. You can visit our podcast page@beckershospitalreview.com have a wonderful rest of your day. Thank you all again.