David Hargraves’ decision to leave the University of Pittsburgh Medical Center to join Premier Inc. might have been a surprise to many in the industry … except those who know him.
Throughout his professional career, Hargraves has focused on learning new skills and moving things forward. Joining Premier in March 2015 was simply more of the same.
“The driving force behind my decision to leave University of Pittsburgh Medical Center and join Premier was along the same lines as when I previously decided to leave the manufacturing industry and join UPMC more than a decade ago,” he says. “The impetus for the decision lies in helping to bolster the healthcare supply chain industry to be recognized as one of the most elite and respected supply chain sectors.” Hargraves is group vice president at Premier.
Industry supply chain
Hargraves brought a wealth of knowledge and experience to UPMC in February 2006. He has an associate degree in biomedical engineering technology from Penn State University, a bachelor of science in organizational leadership from Duquesne University, and an MBA with a concentration in healthcare administration from Waynesburg University. He served as a biomedical equipment technician for the U.S. Navy, held marketing and sales positions with Newark Electronics and Dynatech Nevada, and served as director of global category knowledge for SAP Ariba before joining UPMC, where he served as vice president of clinical supply chain.
“The single biggest lesson I’ve learned from working in supply chain across multiple industries is, we’re all more alike than we are different,” he says. “Every industry shares a set of common supply chain problems, including invoicing, controlling costs and securing buy-in from key internal stakeholders. However, each industry has supply chain problems that are unique.”
For example, healthcare suppliers and providers have a more difficult time maintaining trust, transparency and collaboration than those in other industries, he says. “Looking at other industries, buyers encourage co-innovation with their suppliers. These buyers trust their suppliers and collaborate with them to develop new solutions for their mutual customers. This trust is often based on full transparency with respect to the cost of manufacturing the products or delivering the services that are necessary. Our industry is moving in this direction, and Premier is one of the companies on the forefront, working together with our members and suppliers to drive transparency in terms of costs and quality.”
Another skill practiced in other industries far more often than in healthcare is strategic sourcing, says Hargraves.
“Strategic sourcing emerged as a term that was intended to highlight a more formalized, multi-phase sourcing process that’s comprehensive and goes beyond pricing and delivery,” he says. “Done correctly, strategic sourcing within a group purchasing organization, a provider or even in a different industry should have very few differences. The key is to have a formalized sourcing process, supported by technology, which allows an organization to negotiate all major spend categories centered on a time-based bid calendar.”
Although common across most industries, strategic sourcing is rare in healthcare supply chain for one simple reason – resources, he adds. “It takes a significant amount of resources to develop a robust strategic sourcing program, and many facilities have neither the spend volume nor the staffing to properly support a program.”
Bigger scale
In many respects, Hargraves’ work at Premier parallels what he was doing at UPMC.
“In any given week, I negotiate with suppliers, train and support my employees, travel to hospitals to understand how our team can deliver more value, and participate in meetings with subject matter experts who vote to make contract award decisions – which aligns closely to the duties I had at UPMC,” he says.
“Working at Premier has provided the opportunity to continuously improve processes in total cost management with thousands of healthcare institutions. I look forward to continue serving others in my new role, raising the performance of our industry, and increasing visibility into the critical work done by healthcare supply chain professionals.”
At the same time, since joining Premier, he has come to understand some of the misperceptions of GPOs carried by some healthcare supply chain executives.
“I would say a big misperception is the idea that GPOs care more about their own profits than they do lowering costs for their members,” he says. “In my experience at Premier, this could not be further from the truth. In fact, when Premier won the Malcolm Baldrige National Quality Award [in 2006], one of the key highlights is that as part of every employee’s annual performance review, each individual had the goal to safely reduce members’ supply costs per adjusted discharge.
“Our employees are passionate about helping our members improve supply chain performance and reduce costs while improving or maintaining quality. It’s what we do.”
Supply chain leaders
The future is bright for healthcare supply chain leaders, Hargraves believes. “Now, with the urgent need to find and deliver even greater cost reductions in the era of alternative payment models, supply chain leaders are emerging as key players in this shift and are driving a permanent transformation that takes our industry to a higher level of achievement. The future involves significant provider consolidation. With this consolidation comes tremendous opportunities for supply chain executives to expand their responsibilities into non-traditional areas. The days of being responsible for just supply costs for one institution are fading, and the era of enterprise-wide responsibility for all non-labor expenses is looming.”
Advanced education and professional certification in supply chain are likely to become prerequisites for the next generation of healthcare supply chain executives, he says. “Today, we are seeing supply chain executives responsible for hundreds of employees and controlling billions of dollars in non-labor expenses, which requires increased education, skills, talent and professional acumen.”
GPOs will need to continually up their game as well, he says.
“GPOs need to evolve to keep pace with the increasing sophistication of our members and continuously improve our offered services as their needs evolve and responsibilities increase. With clinical data on nearly 40 percent of U.S. discharges and $48 billion in annual purchasing information, Premier’s unique provider alignment and data-driven intelligence platform allow us to help our health systems manage current challenges and build for the future — breaking down siloes and improving care with a focus on population health, specialty pharmacy and supply chain. Our recent significant expansions into non-traditional spend areas – including purchased services, construction and facilities and clinical engineering – are evidence of our commitment to work with members to effectively and innovatively manage costs.”
As for Hargraves, he hopes to deliver significantly greater value to the providers who use Premier’s services and who view Premier more as extension of their own supply chain organization. “They align strategically with us as opposed to being seen strictly as an external supplier. Focusing on this goal, I believe we will continue to help our members penetrate new opportunities to control spend, collaborate on innovation between our members and suppliers to bring new devices and solutions to market, develop and deploy technology to drive efficiency and sustainable reductions in cost, and execute against our vision of helping our members achieve transformation to high-quality, cost-effective healthcare.
“And as the only outcomes-based GPO, I hope to bring a unique perspective when it comes to developing new evidence-based programs and models that have a focus on clinical quality and safety.”
An example of this innovation is Premier’s Partnership for the Advancement of Comparative Effectiveness Review, or PACER, which brings together diverse health systems that strive to optimize healthcare delivery by transparently sharing usage, outcomes and spend data across integrated delivery networks with the objective to improve care delivery and reduce cost, says Hargraves. Premier member health systems participating within PACER have saved more than $8 million in two years on cardiac stents and surgical mesh, he adds.
“PACER participants collaborate on highly aligned objectives and unite each institution’s supply chain leaders and their expert clinicians to make informed decisions on clinical and/or physician preference items. And the results show how this initiative is working to reduce the influence of PPIs.”
Steps to a supply chain transformation
“UPMC is a tremendous organization and has implemented many processes and practices that foster excellence in terms of supply chain,” says David Hargraves, vice president, strategic sourcing, Premier. Newly forming integrated delivery networks should consider the key best practices UPMC used when implementing its multiyear supply chain transformation, he says:
- Set bold long-term goals supported by near-term tactical work plans with clear operational owners.
- Pursue the elimination of waste via process redesign.
- Deploy technology as a means to support great processes and not as a solution unto itself.
- Develop strong, clinical-lead value analysis teams with system-wide responsibility.
- Write system policies that empower supply chain and serve to rein in maverick spend.
- Develop an eye for talent and constantly recruit and develop the best possible supply chain professionals.
“It shouldn’t be surprising to note that most of the items listed above are common of any world-class supply chain organizations,” he says.