Welcome to the Journal of Healthcare Contracting’s third annual listing of people to watch in healthcare contracting, each of whom was selected based on suggestions received from readers and industry sources.
Their stories are about change: the changing relationships of contracting professionals with clinicians, co-workers, department directors, staff and national GPOs. They talk about facing the need for change and then responding swiftly, all the while learning from mistakes and empowering others to help move the ship forward.
Enjoy meeting this year’s interesting, dynamic healthcare contracting professionals:
| » Lou Fierens Trinity Health» Jack Fleischer New York-Presbyterian Hospital » Kenneth Grant » George Hersch » Brent Johnson |
» Chris Meyers Janda Fairview Health Services» Ken Peterson Aurora Health Care » Ed Robinson » Alan Wilde Jr. » Dave Zimba |
Lou Fierens
Senior VP, Supply Chain and Capital Projects Management
Trinity Health
Novi, Mich.
Before joining Trinity Health in 2001, Lou Fierens spent 15 years at General Motors Corp. His last job there was serving as director of GMSupplyPower.com, the auto maker’s global supply chain management portal. The first challenge he encountered at Trinity Health was the lack of a common materials management information system among the IDN’s facilities. Each had different systems, with unique item and vendor masters. As a result, the corporate office had no way of measuring the IDN’s utilization and compliance patterns. Fierens embarked on a multiyear project to convert Trinity Health to one materials information system. That project is scheduled to be finished in the 2008 fiscal year.
Sponsored by Catholic Health Ministries, Trinity Health operates 45 hospitals (30 owned, 15 managed), more than 380 outpatient facilities, and a number of long-term-care facilities, home health offices and hospice programs.
JHC: What’s the most challenging project you’ve worked on over the past 12 months? Lou Fierens: Implementing a common item and vendor file. That’s challenging no matter what industry you’re in. But when you’re starting with 40-plus different item files, as we did, the work involved in getting that down to one is large. The thing that makes it more difficult in healthcare is the lack of institutional control over changing item numbers and descriptions. All of that is done on the vendor side, without any approval by the provider. That is unlike any other industry. Even as large as Trinity Health is, if we were to stand up and say to our suppliers, “From now on, you have to get our approval before changing anything in your catalog,” that mandate would be unenforceable. Because as large as we are, we still [comprise] less than one-tenth of one percent of our suppliers’ business. That’s why changing this has to be an industry initiative.
As we have been implementing our common item and vendor file, it has been shocking – or should I say illuminating – how much variation exists across our enterprise. Our item file today stands at 94,000 items, in a non-standardized format. The percentage of items used in common across our organization stands at less than 5 percent. That is a reflection of how much variation exists in the process of delivering care. And if you look at the internationally accepted quality gurus, they consistently say that variation leads to poor quality.
JHC: What are you looking forward to implementing or working on in the next 12 months?
Fierens: One of our key focus areas in the next nine to 12 months will be measuring the benefit of supply standardization, and linking it with our Genesis CareExperience™ initiative. The intent of Genesis CareExperience is to improve the patient experience and outcomes by reducing variation not only in supplies, but in care delivery. Trinity Health’s objective with CareExperience is to embed improved patient care processes into our state-of-the-art electronic health record. This initiative will support and prompt our care providers so that patients are given the appropriate, evidence-based treatment 100 percent of the time in all Trinity Health hospitals.
As you begin to marry item-usage data with outcomes data, then embed that in your clinical order sets and protocols, you create an optimal process for delivering patient care. The supply piece is an important part of that. In fact, the supply component of quality is as important as the surgeon, the nurse, the radiology tech. All of these are important factors, and all need to be treated with the same amount of rigor. It would no different than a manufacturer of consumer electronics making a decision to go with a low-cost component that would increase its warranty expense. That manufacturer would have data to assess the impact of any component change it was contemplating, and it would test it rigorously before implementing the change. This is possible in healthcare, too, if there is a strong partnership between clinical operations improvement and supply chain operations.
As Trinity Health moves forward with our supply chain information system, we have a similar initiative on the clinical front. Without these two things happening parallel to each other, you can’t affect outcomes. My argument is this – and it has been proven over and over again: Cost and quality can move in the right direction simultaneously. Costs can go down while quality improves. That’s what we’re trying to focus on – both ends of that spectrum.
JHC: Name the most important lessons you’ve learned from your past professional experiences. How do they affect the way you approach your job and the industry today?
Fierens: People are really the engine that drives everything you do. When people are inspired, they can do great work. That’s the most gratifying thing I have experienced professionally in all my career experiences. The role for all of us in leadership positions, then, is to continue to inspire our people and let that inspiration turn into great work. And we have to align people around where we want to be, not where we are today. In fact, I’ve met very few people who are inspired by the vision of where they are today. Inevitably, people who are creative and achievement-oriented want to do better. You dream, you believe, you achieve.
Another lesson I’ve learned is that treating technology as an end in itself is a dead end. Instead, it is the careful application of technology – marrying business processes and technology – that yields results. I’m referring to both medical technology and information systems. With the pressures that we face in healthcare, we have to challenge ourselves to make decisions that have a very strong efficacy and outcomes component. And we have to do that with the end goal in mind.
JHC: In your opinion, what’s the major thing that’s right with healthcare (products) contracting today? What can be done to reinforce and improve on it?
Fierens: What’s right is that there are a lot of dedicated professionals working in the healthcare supply chain. They are extremely passionate about the work they’re doing.
JHC: In your opinion, what’s the major thing that’s wrong with healthcare (products) contracting today? What can be done to change it?
Fierens: The lack of data [informed] decision-making, and the amount of variation that is endemic in our industry today. This variation drives cost in the wrong direction, and, I would argue, drives quality in the wrong direction too.
JHC: Name one or two key directions in which healthcare contracting is headed and where you expect that trend to take the industry in five years.
Fierens: Trinity Health clearly is becoming more centralized in our thinking. I have seen that trend increasingly across healthcare, where larger systems are centralizing both procurement and requisition processing, as well as accounts payable. So really, it’s about taking a look at what are typically considered back office functions, and trying to consolidate them in a way that maximizes their efficiency. This is very common in other industries.
And as an industry, we are headed toward greater transparency and greater accountability. This is true for all parties in the supply chain. And it’s absolutely healthy. Good data is one of the cornerstones.
Jack Fleischer
VP, Strategic Sourcing
New York-Presbyterian Hospital
New York
Jack Fleischer’s career path is different from that of just about any healthcare contracting professional you can name. That’s because prior to joining New York-Presbyterian in March 2004, he spent the prior 29 years of his life working for just one employer – JCPenney.
New York-Presbyterian was formed in 1997 by the merger of two large New York hospitals: Presbyterian Hospital and New York Hospital. Today, the hospital comprises five major campuses: New York-Presbyterian/Weill Cornell Medical Center, New York Presbyterian/Columbia University Medical Center, The Allen Pavilion, the Morgan Stanley Children’s Hospital of New York-Presbyterian, and the Payne Whitney Westchester Division, which specializes in behavioral health. Total revenues are about $2.6 billion.
The hospital is part of the New York-Presbyterian Healthcare System, a group of affiliated facilities in New York, New Jersey, Connecticut and, most recently, The Methodist Hospital in Houston, Texas. (Fleischer is responsible for procurement for the five New York City facilities, only, but he does work on some projects with other facilities in the system.)
JHC: What’s the most challenging project you’ve worked on over the past 12 months?
Jack Fleischer: It’s hard to identify a single challenging project. But here are three. The first was spinal implants, because of the complexity of the project and the broad array of devices and procedures, and physicians and compliance factors. The second was the pharmacy distribution contract we just completed. Pharmacy distribution has many moving parts, which make it a complex project. The third is the upgrade of our Lawson procurement platform, which we went through in the second half of last year.
JHC: What are you looking forward to implementing or working on in the next 12 months?
Fleischer: While we will continue to focus our efforts on sourcing, we will focus on a couple of other major initiatives. One is logistics. My department is responsible for the movement of supplies in the hospitals – receiving, internal distribution, replenishment, shipping. We have hired a new director of logistics, and we will focus on how we process and replenish things internally, [with an eye toward] driving efficiencies in the process.
Second, New York-Presbyterian has a large capital building initiative underway for the next five years, including a new heart hospital, residential building, and complete new floor on our Greenberg Building. This will require a lot of work by our capital team – not so much the actual construction, but the equipment and furnishings.
JHC: Name the most important lessons you’ve learned from your past professional experiences. How do they affect the way you approach your job and the industry today?
Fleischer: The value of great people. I have a wonderful team that works for me. Six directors report to me. They are very talented. I hired some when I got here; others were already in place. That continues to be a very strong theme in my own personal experience.
Second is the value of communication. This is a very collaborative and democratic organization, with many different moving parts. Clear communication is so important.
Third, the value of leadership support. Senior leadership, from the president on down, has clearly and outwardly been 100 percent supportive of the Procurement and Strategic Sourcing Department.
JHC: In your opinion, what’s the major thing that’s right with healthcare (products) contracting today? What can be done to reinforce and improve on it?
Fleischer: The focus is on the patient. It would be very easy to get pumped up: “We’re going to save this money, cut these hospital expenses, leap tall buildings in a single bound, etc.” But what’s right with healthcare procurement, as I’ve seen it, is the focus on patient outcomes. What can we do better to improve patient satisfaction? I can go down a long list of projects – everything from deep clinical projects to new television sets for hospital rooms; everything is geared around patient satisfaction and clinical outcomes.
JHC: Name one or two key directions in which healthcare contracting is headed and where you expect that trend to take the industry in five years.
Fleischer: A lot will be driven by what happens in the regulatory and budgetary environment, and what happens with healthcare reimbursement. GPOs will continue to survive; they provide a service to both large and small hospitals. Many organizations will continue to offer competing services. For instance, many of the distributors will offer similar services that compete with GPOs – consulting services, data management services, inventory support services. There may be a blending of the services offered by these different groups, so that in the future, it may be a little bit harder to separate what’s a GPO, what’s a distributor, and what’s a consultant.
But in the brief two years I’ve been in healthcare, I’ve seen a real interest on the part of large hospitals, in particular, on focusing on sourcing and contracting as a true source of value-add for their institutions. I sit in a lot of conferences and groups; I hear more and more positive things about the contribution that procurement and strategic sourcing groups can add to the health of the healthcare institutions.
Kenneth Grant
VP of General Service,
Johns Hopkins Hospital
VP of supply chain management, Johns Hopkins Health System
Baltimore
Kenneth Grant’s healthcare career began in his hometown, New Orleans, where he served as a patient escort at Touro Infirmary. Over the course of 11 years, he worked his way up to manager of supply processing and distribution. Then he moved north, to work for ServiceMaster in the Chicago area, which had begun a venture into outsourced materials management. He served as a department director in a ServiceMaster account in Westchester, Pa., for a couple of years, then moved back to the corporate office, where he ultimately became division operations manager. In the mid-1980s, he left ServiceMaster to become director of materials and equipment management at Mercy Hospital on Chicago’s South Side. In 1992, he was recruited by Johns Hopkins as senior director of corporate materials management.
Today, Grant serves as VP of general services for Johns Hopkins Hospital as well as VP of supply chain management for Johns Hopkins Health System. As vice president of general services, he has responsibility for a variety of support functions, including environmental services, nutrition services, linen distribution, printing services, community health, mail services, etc. As supply chain executive, he has responsibility for materials management at two of the IDN’s acute care facilities (Johns Hopkins Hospital and Johns Hopkins Bayview Medical Center), Johns Hopkins Community Physicians (which has 15 physician office practices in the state of Maryland), and its 50,000-square-foot warehouse. (The IDN’s third acute-care facility, Howard County General Hospital, functions independently from a contracting and materials standpoint.).
JHC: What’s the most challenging project you’ve worked on over the past 12 months?
Kenneth Grant: Campus redevelopment. We are determined not to bring old, antiquated systems into our new buildings. We have been working very, very hard to identify best practices, so when we do open up new buildings, we can bring in the latest and greatest technology and practices, to ensure that our “service is equal to our science.” That’s a major goal of ours.
JHC: What are you looking forward to implementing or working on in the next 12 months?
Grant: We have so much work to do. Robotics is an exciting project. We had a great deal of excitement when we implemented our point-of-use technology (Pyxis).
JHC: Name the most important lessons you’ve learned from your past professional experiences. How do they affect the way you approach your job and the industry today?
Grant: I have learned that we have to do a better job of getting people prepared to do this kind of work. If they aren’t properly trained, achieving your service goals will always be difficult. Many institutions across the country have not been able to acquire state of the art logistics systems that will allow them to keep up with the increasing demand for their services. Therefore, it’s important that we keep up not only with the changes in medicine, but also with advances in technology on the logistics side.
JHC: In your opinion, what’s the major thing that’s right with healthcare (products) contracting today? What can be done to reinforce and improve on it?
Grant: Our challenge is, ‘How do we get our arms around all the requests for the latest and greatest in technology that our great physicians want to have, and still maintain some control?’ We’re talking about following in the footsteps of pharmacy, and developing a med/surg formulary as a means of giving us some control over how we introduce technology. We have a tremendous safety agenda to ensure that the products we introduce are safe, and that our staff have been trained on how to use them properly.
JHC: In your opinion, what’s the major thing that’s wrong with healthcare (products) contracting today? What can be done to change it?
Grant: Collaboration is an issue. We try to provide a welcoming environment for [sales] reps. However, at times we find ourselves in conflict with them when they go directly to our end users. Our job is to get them to understand what we’re trying to accomplish here; and to [ask them] not to overload us with new gadgets and widgets. They may be good, but they can also add to our costs as well as have the potential of creating safety issues for both our staff and patients.
JHC: Name one or two key directions in which healthcare contracting is headed and where you expect that trend to take the industry in five years.
Grant: One trend I see is contracting locally vs. nationally. I think we all want to be good citizens. We’re all looking for ways to ensure that our communities benefit from their relationship with us. [The question is], how do we take our procurement dollars and buying force to bring companies into the city who can then provide us with goods and services? It’s a delicate balance: You still want to get the best price and service. But if you think about supplies that come to us from [geographic areas] that are not in the Baltimore region, there isn’t much community benefit when it comes to creating jobs.
George Hersch
VP of Materials Management
Norton Healthcare
Louisville, Ky.
George Hersch began his career in 1977 as assistant director of materials management at Saint Anthony Medical Center in Columbus, Ohio. He later served as associate director of material management at UCLA Healthcare in Los Angeles, where he assessed technology and high-end devices, which were driving up the supply chain budget. After four years at UCLA, Hersch came to Norton Healthcare in 2000 as VP of materials management. At Norton, he created a technology assessment committee, one of four committees that report directly to the IDN’s medical executive committee. This, in turn, reports to the board quality committee.
Norton Healthcare is a five-hospital system located in the Louisville, Ky., area. The IDN also includes eight-urgent care centers and 31 physician practices. With 48 percent of the Louisville market share, the IDN is the largest comprehensive hospital system in Kentucky. In addition to operating the only freestanding children’s hospital in the state, Norton Healthcare offers such services as orthopedics, neurospine, cardiopulmonary, women’s health, bariatrics and cancer care.
JHC: What is the most challenging contracting project you’ve worked on in the past 12 months?
George Hersch: We have implemented a structured capital prioritization program that involves all stakeholders throughout our health system. Using Strata Software, we have initiated a system-wide program that can prioritize all capital needs. For the first time, everyone can see what their colleagues’ needs are. It took about six months to plan the program and another six months to implement it. The new program is a cultural change as to how we approach capitalization prioritization.
JHC: What contracting project(s) are you looking forward to working on in the next 12 months?
Hersch: We will refine our capital prioritization program as we move into the 2007 budget process. We also are looking at spinal procedures involving the use of [bone marrow transplantation]. We want to better understand the cost per procedure, as well as the clinical outcomes affected by the use of this technology. By balancing clinical outcomes and physician usage with the cost of these procedures and reimbursement, we hope to see what difference they make in patient outcomes. We plan to study spinal implant procedures for the next six months, because they are the fastest growing implants and they set a precedent for studying other high-cost procedures, particularly those involving new technology.
JHC: What important lessons have you learned from your past professional experiences, and how do they affect the way you approach your job and the industry today?
Hersch: We do not operate in a vacuum. We have to understand revenue implications and costs associated with new technologies. We must use resources where they will have the greatest impact on improving patient care and patient safety.
It is also important for each of us to have structured initiatives that are mutually supportive of one another. It’s difficult to have an effective technology assessment process without an effective vendor management initiative. You can’t expect suppliers to understand the process involved in introducing new technology unless you give them the tools for bringing that technology into an organization. I call this the “rule of business engagement.”
In the name of patient safety, we ensure that all vendors who visit our hospitals have TB tests and can interact properly with our clinical team. Our vendors must sign a waiver stating they understand the rules of business engagement. We can retrieve a computer profile of vendors showing they are trained and compliant with the hospital.
So, vendors must understand how to introduce new technology into our system. We want them to be successful.
JHC: In your opinion, what is the major thing right with healthcare (products) contracting today? What can be done to reinforce and improve it?
Hersch: I think hospitals and IDNs are doing a good job of gathering information and benchmarking costs to better understand the market. Some hospital systems already include language in their contracts that permits them to share data with their GPOs. I think IDNs will find a legal way around price-sharing restrictions.
JHC: In your opinion, what is the major thing wrong with healthcare (products) contracting today? What can be done to change it?
Hersch: I think the pendulum has swung too far [in one regard], that is, the belief that GPOs contracting with multiple vendors will obtain better prices. GPOs must refocus their efforts and work with fewer vendors and larger volumes. I believe the shift to multiple contracts has hurt their ability to get significantly reduced pricing. GPOs should offer contracts to fewer suppliers, on a pre-committed basis.
JHC: In which key directions is healthcare contracting headed, and where do you expect that trend to take the industry in five years?
Hersch: We will probably see IDNs band together, work in small groups and increase volume for better pricing. They will do this with or without GPOs. Also, as the Centers for Medicare and Medicaid Services continues to cut reimbursement, the introduction of new technologies will be based on documented outcomes, as well as cost and reimbursement. I think purchasing administrators will become more sophisticated about reimbursement. They will have to balance this with patient outcomes.
Brent Johnson
VP of Supply Chain and
Chief Purchasing Officer
Intermountain Healthcare
Salt Lake City
After working for over 20 years as a supply chain manager in the electric utility industry, and then providing supply chain consulting services in various industries, Brent Johnson joined Intermountain Healthcare a year ago as VP of supply chain and chief purchasing officer. Intermountain is comprised of 21 hospitals, with another one under construction. With over 170 clinics and 27,000 employees, the $2.4 billion IDN owns three major divisions: acute care, a medical group with over 600 physicians, and a health insurance company called Select Health.
JHC: What is the most challenging contracting project you’ve worked on in the past 12 months?
Brent Johnson: One of our challenges has been to build the foundation of a world class supply chain organization within Intermountain Healthcare. We have been working to change the company’s culture to one that is best prepared to manage the total cost of products, and improve quality and service. To do this we combined departments, added skills and resources and centralized all buying, system support, distribution and warehousing. It’s required strategy and communication.
JHC: What contracting project(s) are you looking forward to working on in the next 12 months?
Johnson: We are going to put into motion principles of strategic sourcing which include multiple “waves” of strategic sourcing. We plan to address many categories of clinical and non-clinical based upon a priority system that we have developed. To be successful with physician preference items, we must develop relationships with physicians in each clinical area. We’re still all about clinical excellence and saving lives. But, we can still apply supply chain management principles to reduce costs.
JHC: What important lessons have you learned from your past professional experiences, and how do they affect the way you approach your job and the industry today?
Johnson: Effective supply chain management involves teams and working closely with stakeholders. In every industry I’ve worked in, stakeholder involvement is a key component for success. Clinicians and physicians in this industry are some of the critical stakeholders. I’ve learned it’s important to provide information and education, and give physicians a “listening ear.” It’s important for them to know that we consider them critical stakeholders in healthcare. I’ve hired staff to help build relationships with physicians and other stakeholders within the company.
JHC: In your opinion, what is the major thing right with healthcare (products) contracting today? What can be done to reinforce and improve it?
Johnson: I think healthcare is becoming very aware of what it needs to do in applying supply chain management principles. IDNs need to practice better supply chain management while simultaneously optimizing relationships with GPOs. They must also manage their relationships with their suppliers more rigorously. Healthcare appears to be one of the last industries to practice supply chain management, but it’s doing a good job in catching up. [M]any organizations are aware of what they need to be doing, especially given the many challenges involved in healthcare. For example, the larger IDNs are starting to do their own contracting and strategically using their GPOs for the remaining sourcing, benchmarking, consulting and other value added services.
JHC: In your opinion, what is the major thing wrong with healthcare (products) contracting today? What can be done to change it?
Johnson: I believe price sharing and physician-preference items are two issues we must work through in healthcare. In other industries, it is unethical to share pricing information. This is not so in healthcare. But the better I understand the healthcare industry, the more I’ve come to realize that decision-makers need to know pricing in order to ensure their suppliers are honest. In other industries, it is easier to create a competitive bid environment. In healthcare, where suppliers position themselves between physicians and [non-clinical] decision-makers, this is more difficult. I understand why physicians work with suppliers for new technology to save lives, but many physicians don’t realize that working closely with suppliers also limits the ability of the supply chain organization to leverage volume and reduce costs.
I also think healthcare is behind the times in its use of technology and purchasing cards. In other industries companies have long used technology tools such as contract management systems, eRFQ, spend analysis tools, reverse auctioning and e-requisitioning. Many healthcare companies are still buried in low-dollar, non-critical transactions. The industry tends to be conservative, and processes tend to be manual. This lack of automation means supply chain organizations have less time to focus on bigger value-added activities, such as sourcing and developing strategic relationships with suppliers. So, we’re so busy dealing with so many purchases under $5,000, we can’t focus as well on larger purchases. At Intermountain, we are implementing a purchasing card system to eliminate 30 to 40 percent of the number of purchases we make.
JHC: In which key directions is healthcare contracting heading and where do you expect that trend to take the industry in five years?
Johnson: As supply chain activities demonstrate more cost containment successes, these principles will be adapted more widely. We will see more centralized decision-making in IDNs and the larger IDNs will do more of their own contracting. At the same time, I think they will work more closely with their GPOs and use them more strategically in the future.
Chris Meyers Janda
VP, Materials Management
Fairview Health Services
Minneapolis
Chris Meyers Janda is VP, materials management, for Minneapolis-based. Fairview Health Services. Fairview comprises seven hospitals, including an academic teaching hospital, children’s hospital and several community hospitals; as well as more than 50 primary care and specialty clinics, home care and hospice services. Meyers Janda is physically located at the corporate offices in Minneapolis, and has responsibility for all supply chain functions for the metropolitan hospitals, including product selection and specification (with clinical teams), purchasing, contracting, purchased-services contracting, receiving, accounts payable, inventory and equipment management. Supply Chain also has responsibility for Fairview’s centralized sterile processing operation, which serves the five sites in the Twin Cities; and it collaborates with Fairview’s Office of Clinical Affairs to coordinate the IDN’s technology assessment committee.
JHC: What’s the most challenging project you’ve worked on over the past 12 months?
Chris Meyers Janda: Getting the service line assessment ramped up and completed at Fairview Southdale Hospital, then completing the spine assessment at the University of Minnesota Medical Center.
As we implement this new method and approach, we have significant financial challenges too. We have 120 [supply-chain-related] cost-savings projects going on as an organization, [at the same time] trying to modify our approach. So you have to ‘keep the shop open’ and achieve project-by-project savings while changing our approach for the future.
JHC: What are you looking forward to implementing or working on in the next 12 months?
Meyers Janda: A different approach with our physician leaders in controlling how new products come into the organization; In January of this year, we launched a new, physician-led technology assessment committee. That committee reviews technology that costs $1,000 or more in incremental expense and capital greater than $100,000.
In the next 12 months, we will begin working with physician leaders on technology that costs less than $1,000. We want to figure out how to manage this technology and, quite frankly, how to accelerate [the introduction of] items that will make a clinical difference, while keeping out those things that won’t. We’re in our infancy, seeking to understand how products can drive to a different clinical outcome.
We’re more than willing to accelerate the acquisition of equipment and devices that will help us do that. But the evidence out there is pretty slim, and most clinical studies are sponsored primarily by suppliers – not disinterested third parties. We’re hoping we can help create more dialogue in the marketplace, so we can hold suppliers accountable for helping us understand how their products drive us to a different clinical outcome.
JHC: Name the most important lessons that you’ve learned from your past professional experiences. How do they affect the way you approach your job and the industry today?
Meyers Janda: I had the pleasure of reporting to a hospital president who had been a chief financial officer. At an early time in my career, I learned what it meant to be fiscally accountable, and to understand … the business aspects of healthcare. It was, to some extent, a painful experience. But it positioned me well, as I try to help people in the supply chain understand what it means to be accountable, and how to