A rising tide lifts all boats. Chief Supply Chain Officer Charles Miceli believes in networking and long-term relationships with all healthcare industry stakeholders.
The supply chain word that came out of the COVID-19 pandemic is resilience. For good reason. But for Charles Miceli, network vice president and chief supply chain officer at the University of Vermont Health Network (UVHN), focusing on resilience is not a new concept. For him, the concept took hold in 2017, when Hurricane Maria upended the domestic healthcare supply chain.
"There are a substantial number of (healthcare) suppliers in Puerto Rico," he says, and he didn't realize the extent that UVHN, and other health systems, relied on the production there.
Miceli has overseen the UVHN supply chain since 2008, as it grew from one hospital to an integrated delivery network (IDN) with six hospitals, home health and hospice, and outpatient primary care services. The hospitals run the gamut: academic medical center, critical access, rural, and sole community hospitals. UVHN covers a population of one million in Vermont and northern New York. It began central contracting in 2014, though logistics and managed services are handled at the local level.
Resiliency requires tools
Miceli is a big believer in using tools to promote resiliency. He says UVHN was one of the first healthcare organizations to use Resilinc, an AI-based supply chain data monitoring service for risk management. After Hurricane Maria, "they became our observation post for disruption around the world," he says. The system shares supply chain vulnerabilities globally, providing a map detailing where the organization's supplies are produced, including tier 1 and tier 2 suppliers. Disruptions can include manufacturing shut-downs, strikes, government policies, pandemics, and natural disasters.
"If an incident occurs, we get a report. Supply chain risk leaders watch this." Miceli says that he was monitoring the Resilinc reports himself until UVHN created a supply chain risk manager role.
The chief supply chain officer uses other analytical tools to monitor supplier risk as well, "because you want to have different lenses," he says. The tools provide the same information about 90% of the time, Miceli says, but "I'm looking at the dissonance."
UVHN uses informatics tools and platforms to assess vendor financial risk and better understand its supply chain. SC Worx curates UVHN's item master, ensuring that the data elements and taxonomy are clear. The service identifies products in the FDA database, normalizing it in the electronic health record system.
UVHN uses Conductiv, which helps the health system look at purchased services spending and perform competitive market assessments. Rapid Ratings profiles UVHN's suppliers to help the health understand the financial health of vendors. UVHN works with Procurement Leaders, an organization covering many industries, to gain expertise in the procurement side of supply chain. "We were one of the first healthcare organizations to join," he says. And BroadJump analyzes UVHN's spend. "Analytic tools are core," he says. "Without that information, it's hard to ascertain where we stand."
UVHN also relies on information from ECRI, which Miceli describes as Consumer Reports for high tech medical equipment. And their toolbox includes Premier Connect ERP, with its procurement, accounting and inventory management functions, as well as reports and analytics. The tool is available even to those who do not use Premier as their group purchasing organization (GPO).
Analytical tools helped UVHN prepare for a recent shortage of crutches, as they received notifications about a bauxite disruption. Bauxite is used in aluminum production, and crutches are made with aluminum. Responding to that early warning, UVHN purchased what it needed before it became a problem. Another warning notified of a manufacturing fire at a plant making the resin used to manufacture sharps containers. "To have that surveillance and early warning allows us to prepare," he says, adding the information enables communication with suppliers, distributors, GPOs, and peers about problems.
Collaborating with other supply chain leaders
It is hard to monitor every supplier and it needs to be done in a standardized way. "That's why there are industry collaborations. We're working together to have that consolidated line of sight when something occurs," Miceli says.
Miceli believes in sharing information, not hoarding it, including information about pending shortages. "You have to buy rationally and reasonably," he says, "that's the whole purpose of collaboration." Also, distributors use allocation methods, so hoarding is more difficult.
Collaboration was helpful in January 2020, when supply chain leaders began seeing evidence of disruptions in Asia, tied to the newly emerging novel coronavirus. He learned from Medline, UVHN's distributor, that it was prepared with supplies for the seasonal flu, ordered in advance of the Chinese New Year. The product was already on boats, but the distributor said it would have a harder time supplying customers starting around May or June 2020.
Miceli began weekly discussions with Curtis Lancaster, Dartmouth-Hitchcock Health's vice president of supply chain, to share information about the continuity of the supply chain. He also worked with UVHN's GPO and suppliers, and Vermont Emergency Management to maintain supply chain preparedness in the face of disruptions.
Miceli serves as a board member of the nonprofit healthcare supply chain trade association Healthcare Industry Resilience Collaborative (HIRC), which meets twice monthly to share best practices and communicate about potential disruptions. He is also involved with the Strategic Market Initiative (SMI), another consortium of healthcare supply chain leaders, sharing information and tools to improve resiliency.
Supply chain leaders have always worked together, Miceli says, "but the crisis made us work closer together. We matured in the sense that we're not afraid to ask each other to help, or to share good things, and address risks and problems to collectively solve." Cost was always the top driver for the supply chain, "but resiliency is right up there now, for risk," he says.
Forming strategic supplier relationships
Though analytics play a big role in UVHN's supply chain, the department works closely with suppliers on a personal level. "They are strategic relationships we have to develop, and they go both ways," he says. The advent of so many digital transactions "forces us to be human again." While one might think that computer systems make things more transactional, it instead "gives us time to look at the relationship and develop the relationship, but have the transaction tools to become more efficient."
Miceli says that companies are in business to help; while there's an economic component, the companies are in business for the right reasons. UVHN develops high levels of trust with its GPO, suppliers and distributors. Especially in a changing environment, a mature and trusting relationship helps both parties.
One way UVHN solidifies these relationships is with long-term agreements. A typical distributor relationship is a three-year cycle, he says, with a two-year option to renew. He compares this type of shorter-term agreement to a presidential term. In the first year, the president is figuring out how things work. The next two years are spent doing the work, and then it's into reelection season. UVHN now uses an agreement that is at least seven years. "The longer we can work together, the better we get to know each other and help each other. It becomes more than just a transaction."
These longer relationships also help smaller companies, which in turn become big companies. This is part UVHN's strategy of having primary, secondary, and tertiary supplier relationships.
Miceli values the relationships inside and outside his organization. One reason he gets involved in regional and national organizations is to help with the industry's succession planning. "I'm in the twilight of my career," he says. "I need to be able to share with peers and those coming up who will be future leaders."
Deborah Abrams Kaplan is a contributing writer for HealthLeaders.
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