Cleveland Clinic has embarked on a new initiative aimed at helping other health systems free up resources for better care by adopting the best procurement and benchmarking practices from other industries to reduce indirect costs.
Becker's sat down with Cleveland Clinic's executive director of sourcing and vendor management, John Dockins, to chat about strategies for optimizing non-clinical procurements.
Questions: What challenges in non-clinical procurement do health systems commonly face?
John Dockins: Many health systems or hospitals don't yet have dedicated staff or subject matter experts on the indirect side of operations. This includes areas like facilities, IT services, and labor. It's not uncommon to find that the business unit within the hospital or health system is actually responsible for finding suppliers, negotiating contracts, and managing those agreements, sometimes without any involvement from the supply chain. You see this a lot in the IT space specifically.
There are a couple of challenges with this. One is that these systems are often not maximizing their resources. For example, an IT network manager is hired for their expertise in managing those systems, not for negotiating contracts or figuring out the best terms and pricing. Once a contract is signed, they also have to maintain the relationship, which is a lot to take on. That's where supply chain functions can help by taking that work off the business owners' plates and doing it in partnership with them, just like hospitals have been doing for years on the clinical side when working with clinicians.
When it comes to accountability, most hospitals or health systems don't have a single leader over the indirect side. You'll usually find one of two things: they might say they're responsible for some indirect sourcing and contracting, but it's layered into the role of someone who's also negotiating for clinical contracts (like spine or knee products), while trying to figure out a software contract. Or, they may rely on their group purchasing organization for what's available. If a hospital needs to buy cell phones, they might just call up their GPO and ask if there's an existing agreement they can activate because they don't have experts or know where to look for one.
Q: How do you envision your new partnership with LogicSource will address those pain points?
JD: We're envisioning a few ways this collaboration can work. At the highest level, the partnership is about leveraging Cleveland Clinic's nearly two decades of experience in indirect sourcing across different areas like elevator maintenance and office supplies. It's not industry-specific — Microsoft licensing, for instance, is the same whether it's for a hospital or a consumer goods company. LogicSource has expertise in indirect sourcing outside of healthcare, and we can leverage that.
For example, one of the problems we want to solve is assessing whether our window-washing agreement at a specific hospital is competitive. That's difficult because window washing is very geographically based. LogicSource brings that data so we can benchmark our pricing.
Q: What early success indicators will you be looking for?
JD: The value is in lowering the expense structure on the indirect side. I've talked to colleagues in the industry — some are doing this well, like Cleveland Clinic, while others haven't even started. There's a lot of focus on direct expenses like clinical supplies and pharmaceuticals, but not much on indirect costs like landscaping or paper shredding. Early success will look like LogicSource and Cleveland Clinic partnering with hospitals to understand their spending on the indirect side and helping them reduce it. Every dollar saved can be redirected to patient care, like new equipment.
Q: Looking beyond this collaboration, what future trends do you believe will shape vendor management and sourcing strategies for health systems?
JD: This all ties into risk mitigation, especially third-party risks such as cybersecurity. Today, with robotics and software in surgeries, there are more risks because these devices connect to hospital networks. Post-pandemic, there's been a lot of focus on supply chain resiliency and ensuring we have the products we need. We need to consider different types of risk — operational, brand, financial, legal — and work with partners like LogicSource to move the healthcare industry forward in risk management.