I interviewed Howard Mann who discussed Supply Chain Process in Healthcare.
Today we're speaking with Howard Mann. We are going to discuss supply chain process in healthcare. Howard, it's great to speak with you today. Can you first provide a brief background of yourself?
Certainly, Dustin. My name is Howard Mann, and I'm a vice president of supply chain with a company here in the United States that works in the healthcare arena. I've worked with the supply chain and information technology in healthcare for the past 35 years. I've worked in hospitals, integrated delivery networks, which are multiple hospitals. I've worked with very small hospitals, and I've worked with non-acute care providers, which is something I'm doing now. So I have a fairly broad experience and past experience, and I spent six years working with hospital information technology groups. So that gives me a little bit stronger technology perspective with supply chain.
Can you talk a little bit about what is supply chain process in healthcare? What's involved?
Healthcare in the United States is regulated by the fact that hospitals are seen as a community provider, and therefore, under our laws, they're governed by what's called Safe Harbors. On the supply chain side, we're not allowed to collaborate with other independent hospitals to set or fix pricing with supplies, products, services, things like that.So, on the supply chain side, from a purchasing perspective, it makes contract negotiations somewhat of a challenge.
Hospitals, over the years, were allowed, under legal laws called Safe Harbors, to work with or collaborate with an independent group purchasing organizations in which there are between 12 and 14 in the United States. There's been consolidation across those. And those organizations contract, and then we can participate with them and utilize their contracts. So that does put an extra layer between us and our supplier partners and our distributor partners to try to help us continue the flow of particular products but also equipment and services.
So that, along with consolidations across hospitals across the United States, when market consolidation brings more opportunity to contract, and then we also do not want to bypass or challenge our non-taxable status, not for profits, or our ability to negotiate the for-profits. So there is a lot of that has to be done of the supply chain side that isn't typically the same as the manufacturing or for retail markets.
Supply chain on the hospital side tends to focus on some fundamental things that are taken for granted on the retailer or the manufacturing side. It makes for a little bit different challenge, although all of the other aspects are exactly the same as manufacturing and/or retails. We do acquisitions, distribution of products. We warehouse. We have [inaudible 3:45] freight. We have to deal with invoicing and billing. They are the same things, some of the same functions of retail manufacturing. So there's commonality, and there's disparity.
Can you talk about how it's done effectively?
Well, the effectiveness is the continued ability to contract nationally. In addition, one of the things that we try to pursue in healthcare, basically, our mission is to provide excellent healthcare to all of our patients and provide a good working place for our clinicians and physicians. When you have an environment like that, it is a little bit different than manufacturing where you're projecting towards a market for sales and then you're making sure that parts and pieces are assembled in order to create a product or a service that will sell.
So those are our prospective healthcare systems. They're driven by analyzing their market and managing to their stock prices and that kind of organization.
Healthcare is providing a general, assumed level of care for their communities. We have to basically be prepared at all times in order to be able to provide that service. That makes the forecast a little more challenging. In healthcare, there are continual efforts to try to accomplish that, and that makes the supply chain have to be a little more reactive as being prospective on the manufacturing and retails side. So those are challenges that we face.
Do you have any success stories or examples you could share?
There is constant improvement across the healthcare supply chain. There is the fact that initially supply chain was focused on purchasing. It was the acquisition phase of the cycle of materials that healthcare needed. And that has dramatically changed over the years, particularly through legislation where we have things that are driving us, like safety for our patients, is now creating a federal mandate to create a unique device identifier for all the products that are used in taking care of our patients. And that's going to give us information that will help us move closer to the ability to forecast what needs to be bought. There are tremendous efforts going on now throughout healthcare to continually move us towards a more technologically savvy supply chain. And a lot of the people that are coming into healthcare supply chain, there are a number of them that came from industry, from manufacturing, from retail, that are bringing tactics and aspects of retail and manufacturing into healthcare supply chain, where they're trying to move that forward.
We're also working much more closely with our customers within our system, not only our patients but also our physicians and practitioners, in how to make quality-based decisions around the supplies, devices, equipment, and services that are purchased or acquired, which helps us negotiate more effectively.
So there are many, many exciting things going on in the healthcare arena today that is going to move us to where we need to be in the supply chain.
Thanks, Howard, for sharing today on this topic of supply chain process in healthcare.
About Howard Mann
Vice President, Supply Chain Management at Cardiovascular Care Group