How Cleveland Clinic is using supply chain knowhow in traditional med/surg purchasing to rethink its food services operations.
November 2024 – The Journal of Healthcare Contracting
Over the last two decades, Cleveland Clinic has seen rapid growth. From 2020 to now, it’s almost doubled in size through acquisitions, particularly in Florida, said Laura Johns, Senior Director – Enterprise Food & Retail.
A restructuring was in order. Cleveland Clinic’s executive team went on a multi-year journey to restructure the organization into three main pillars: the institutes, which are clinical service lines; the markets, which operate each of the individual hospitals and are where the P&L sit; and the shared services, which are responsible for that standard of delivery across all the markets and institutes, whether that’s IT, finance or something like food services.
“So often when we brought hospitals on, we didn’t change a lot of what was there, so there were not clear owners of a shared service,” Johns said. “Everyone was trying to make it work together, but we didn’t have a decision-maker or know who the final decision-maker on certain points was. The restructuring was really around the ability to expedite decision-making, the ability to create accountability structures and continue to achieve our goals, with clarity of roles and responsibilities across the organization.”
Since July 2023, Johns has led the food service arm of the supply chain and support services team. It is mostly an outsourced model. Cleveland Clinic has four vendor partners (three in the U.S. and one in Great Britain) who support the enterprise. “I’m responsible for partnering across the whole book of business,” said Johns. This includes patient service operations, technology, and capital and asset acquisitions or maintenance across the enterprise (such as kitchen and retail services investments).
Before the restructuring, there was a mixed model where vendors might work directly with each local hospital or through the shared service when it came to food services contracts. Now, the process is much more standardized. “We don’t let people add or subtract places,” said Johns. “We all come together. We all agree on the financial targets, we all agree on the quality targets, the safety targets, and then my role is really to be able to hold both sides accountable.”
Johns’ team leverages the supply chain vendor management office for best practices and structure. The office also helps with some of the decentralized vendor partners. “They don’t just service food, though food is a big portion of how we’re working with those vendors,” Johns said. “They’re also involved in multiple other facets, whether that be on the clinical side or direct and other shared services. We utilize the supply chain vendor management office to have a full picture of what that vendor portfolio is so we can hold those vendors accountable and utilize that in strategic conversations.”
Coming over from the operations side of the supply chain team, Johns did a lot rounding and lots of hands-on activities in her new role to better understand the nuances, motions, lingo and clinical side of food services. “I will say that while it is different, I was surprised at how much coming from supply chain helped me understand and pick up on certain aspects of food quickly or just seeing opportunities,” she said. “At the end of the day, it really is a supply chain. There’s a production piece in the middle of it, and that’s really what we’re doing. We’re bringing products in, we’re preparing them, and we’re delivering them to the patient. So, it’s all a very similar flow of product.”
Johns and her team have examined ways to borrow from the traditional supply chain model in how they’re handling food services inventory management, such as utilizing two bin technology. “We’re asking, ‘how can food services utilize some of those same principles to help manage stock or help manage vending that’s congruent to our cafe spaces?’” she said. “We are re-evaluating those models to make them the most cost advantageous and structured.”
Market forces
Although every sector of the U.S. healthcare system has felt the pain of staff shortages, the food services sector has been hit harder than most. “The workforce shortages are very real,” she said. “Most hospitals struggle with attaining the right amount of staffing. And in the hospital environment, there are the regulatory requirements to work that are very different than going into a McDonald’s down the road or some other entity.”
Indeed, staffing is extremely competitive and difficult to come by. “In such a labor-intensive business, it is really making us think about how the patient side has to come first,” Johns said. “When we put out huge operations on the patient and retail side, how do we optimize and utilize technology to help overcome staffing? Some options we’re investigating are cashier-less checkout, order pay kiosks, and robotics.”
The cost of food continues to increase and puts pressure on how providers manage food purchases with quality. “Going through our vendor partners, we do rely on them pretty heavily and their GPOs to create that appropriate formulary where we can get the best pricing. How do we make sure we’re realizing that, because the cost has to be contained.”
The future of food services
Looking ahead, Johns said she and her team are experimenting with how they could utilize supply chain principles in floor stock (i.e. nourishment rooms or food that’s stocked in patient areas). “Today we do a lot of bento boxes or products that can expire quickly, so we’re looking at whether we could service those types of products direct from the kitchen,” she said. “Could we put food on a very similar system of control that we’re already doing with supplies, and could materials management help us with that?”
Cleveland Clinic is looking to pilot this concept at a couple of outpatient locations that don’t use food service management companies. “We’re pretty excited about what the opportunity could be there, the efficiencies, and then the higher delivery of service that we would be able to provide.”
In November, Cleveland Clinic will roll out a patient ordering app. “It’s a huge opportunity for patients to be able to see what they can have instantaneously on therapeutic diets,” Johns said. “A lot of what’s on our regular menu is potentially not available to patients on therapeutic diets. Especially when you’re on multiple therapeutic diets, that restriction can substantially impact what you can order when you call to place your order or you’re working with a menu specialist who comes to your bedside. It’s a lot of trial and error. We will be able to give them direct access to the food choices they want and be able to have family members or care takers order on their behalf as well while they’re in the hospital.”
The supply chain team is also exploring AI innovations in how their data is analyzed, and robotics in several retail settings. “There are so many robotics in the food service space, so we are starting to play around with where that might fit and give us some advantage, whether it’s in retail food delivery or the collection of dirty trays or even on the production side,” Johns said.