Health Industry Distributors Association
Ed Hardin
CHRISTUS Health is a diverse healthcare organization, spread across five states, three countries, and consisting of nearly 350 care sites and services. Ed Hardin, Senior Vice President of Supply Chain, is responsible for centralizing and consolidating his system’s purchasing under one organizational umbrella – no small task, since CHRISTUS uses one prime vendor for all of its acute care purchasing and a different national distributor for its non-acute business.
Throughout CHRISTUS’s rapid expansion over the past five years, Hardin has learned some helpful insights about the value of distribution and keys for staying disciplined in your vendor relationships:
- Expand the scope of products your distributor carries for you. “We believe a lot of PPI vendors need to get out of the distribution space and align with our distributors as closely as possible,” says Hardin. What frustrates him is the fact that some manufacturers don’t always embrace distribution, which wastes time and money for CHRISTUS. “We try to put as many items through distribution as possible because we find the costs to us are usually three to four times higher than when we don’t.” Hardin recommends suppliers dedicate their focus to working with distributors in order to improve their services and see this as an opportunity to improve their revenue streams.
- Use scorecards wherever possible. Hardin is a firm believer of the benefits of distribution, but he admits that even the best distributor can fall short of efficiency targets if they partner with poorly-performing suppliers. While providers should already be measuring their distribution partners’ performance on a regular basis, Hardin suggests taking this one step higher up the supply chain by measuring manufacturer-supplier performance. “We evaluate all of our suppliers on a balanced scorecard approach, using the same performance scorecard our distributors use to evaluate themselves and their potential trading partners,” says Hardin. “This method is important to us because if our distributor is incurring unnecessary costs from inefficient vendors, it can eventually trickle down to us.”
- Capture your data and consult it often. “The ability to understand your data is crucial, especially when determining whether you’re hitting par activity targets,” explains Hardin. With multiple sites dispersed over a wide geographic area, purchasing habits unique to one CHRISTUS location or care specialty can easily lead to ordering inefficiencies without close monitoring. “We measure ourselves on a monthly basis but can drill down on ordering anomalies within 24 to 48 hours, in part by adopting a proactive approach and by working with proactive vendors.” CHRISTUS holds purchasing managers accountable for inventories by requiring all product requests to have a substantiated, pre-approved purchase order attached to it. “Working with McKesson Medical-Surgical, our contract and formulary compliance rates have increased significantly thanks to good governance and by staying vigilant,” says Hardin, “And we’ve eliminated nearly all instances of maverick purchasing across our non-acute facilities as a result.”
Hardin’s team – both internal and external – fully understands the importance of contract and formulary adherence when it comes to vendor purchasing, particularly as CHRISTUS Health seeks out future expansion opportunities that fit the organization’s mission and strategic vision. “We think distributors can help advance our efforts for a more efficient supply chain with fewer human touches, and we value and support those who are willing to align with our high standards.”