Tony Johnson
SVP, Chief Supply Chain Officer
Baylor Scott & White Health
Tony Johnson was close to retirement when Baylor Scott & White Health (Dallas, TX) provided him with one last adventure as SVP and Chief Supply Chain Officer in 2016. Today, he oversees the large Texas health system’s supply chain through the pandemic and beyond.
He was named the 2020 Contracting Professional of the Year by The Journal of Healthcare Contracting (JHC) and was recently the subject of an Association of National Accounts Executives (ANAE) and JHC webinar hosted by JHC Publisher John Pritchard. The following questions were used in his February 2020 JHC profile and the February 2021 webinar.
JHC/ANAE: Baylor Scott & White Health (BS&W) moved to a more strategic supply chain model and away from purchasing and payment decisions at the hospital level before the pandemic. Why did the supply chain team reevaluate its position?
Tony Johnson: We made a corporate decision to integrate the supply chain across the entire Baylor Scott & White enterprise and leverage our combined $1.5 billion annual purchasing power in the marketplace rather than continuing to fragment it at the hospital level. We shifted to system-wide contracts by product category. We were very careful to include our physician partners and other clinicians. They are the leaders of most of our contracting initiatives. These partnerships have resulted in over $300 mil in cost reductions over the past 4 years. These are real dollars that are reinvested into improving healthcare to the communities and patients we serve.
We faced different challenges with COVID-19. The world turned upside down for us. In hindsight, consolidating the supply chain, creating a central contracting group, a centralized distribution center, centralizing hospital supply operations, developing enterprise wide analytics, and by dramatically increasing our talent, we built the perfect foundation for delivering great support to Baylor Scott & White during the pandemic. Had we not made the changes, it would have been much more challenging to support the organization. At this point, things are going well.
JHC/ANAE: BS&W has revenues of more than $10 billion and 26 hospitals across Texas. How is the supply chain department organized?
Johnson: We are organized in five separate but integrated tiers. Four of them are led by executives and one by a senior-level director. We have a strategic sourcing group that is responsible for all the contracts for Baylor Scott & White. Our annual contract spend is roughly $1.5 billion. All contracting and transactional purchases are centralized and managed by our strategic sourcing executive.
Editor’s Note: BS&W’s tiers include Strategic Sourcing, Acute and Non-Acute Supply Operations, Logistics, Healthcare Technology (maintains over 150,000 pieces of equipment valued at $1.2 bil) and a Joint Venture supply department. BS&W distributes over $250 million of product annually from its distribution center to over 6,000 individual departments across the enterprise.
JHC/ANAE: What are your priorities now?
Johnson: Making sure the organization does not miss a step during the COVID-19 crisis. We are also shifting very hard to data analytics and creating tools to analyze everything that we do. We have spent a lot of resources on analyzing our practices, looking for opportunity and eliminating things that do not bring value to the organization.
JHC/ANAE: What is the biggest lesson learned about suppliers during the pandemic?
Johnson: We journeyed together over the last 15 to 20 years, purchasing as much offshore as we could. We all chased that last dollar trying to lower prices. In doing so, we inadvertently destroyed our national manufacturing base. I do not think any of us ever contemplated a crisis of the magnitude of Covid-19 that stressed the just-in-time supply chains that we all created. The big lesson was we need a reliable national manufacturing base for critical products.
This crisis created hundreds of new companies with absolutely no experience. These companies were making sales for inferior products or products they couldn’t deliver. Some suppliers were very creative in helping us. Suppliers also recognized that we had put ourselves in a predicament by destroying our manufacturing base. We need to think jointly and strategically about how to rebuild some national capability so we do not end up in the same place five years from now. Yes, it will cost more but I hope Covid19 has taught us that there is a cost for readiness.
JHC/ANAE: Which GPO is BS&W a part of and how do you decide when to use the GPO?
Johnson: We are members of Vizient. We self contract, however, we use the GPO for technical and product information for our service lines. They manage our EDI and provide continuous and invaluable analytics and insights.
The most valuable Vizient service to me Is their large IDN supply chain network. The have created a peer group of the 20 largest IDN’s within Vizient allowing us to work with our peers across the country to solve common and unique challenges. This is an extraordinary advantage Vizient provides us.