With "resiliency" being the latest buzzword circulating talks of healthcare supply chain efforts, most say diversifying supplier contracts is key. Jay Kirkpatrick, vice president of supply chain operations at Brentwood, Tenn.-based LifePoint Health, disagrees.
Mr. Kirkpatrick discussed his strategies in today's supply chain market with Becker's.
Editor's note: Responses were lightly edited for clarity and length.
Question: What is your system doing to add resilience to its supply chain sector?
Jay Kirkpatrick: There are really two general ways that I see folks in the industry handling this. I think there's one group that has a pretty robust sourcing team that's doing a lot of contracting and basically reinventing what the GPO should be doing for them. In my world, we're with HealthTrust. HealthTrust is a completely different animal from the others. What we're doing is integrating even deeper, further and stronger with HealthTrust and utilizing their skill sets and their ability to drive and really work on resiliency and sustainability and all the various areas of emphasis these days. They help us get out in front of any potential issues that they see coming down the pipeline.
Q: Which issues are coming down that pipeline?
JK: The two groups I listen to most are HealthTrust, and I'm on the group AHRMM [The AHA's Association for Health Care Resource & Materials Management] that Mike Schiller heads up and we have a call every other week where we talk through various things. When it comes to shortages, everyday is something new. It's kind of cliche, but it's like, "What's the soup of the day?" and there's always something new. I don't mean to pick on any specific companies or any specific products, but it's like a grocery store, frankly. When you go to the grocery store, you can never know from day-to-day what's going to be on a shelf and what's not. It's similar to procurement in healthcare today. You might find out today that there's an issue going on with Tyvek, for example. I mean, there's one, and Ethicon already signaled they're gonna have problems with their trocars. You just never know, and then you could have a weather event that could create problems in a sector you're not even contemplating right now. In my mind, you can only prepare so much, and there's only so much you can kind of control through preparation; the rest of it, you better be able to just pivot well.
Q: What are your go-to pivot steps? Do you go through the same process each time?
JK: If HealthTrust can get far enough ahead of it, we'll try and do some advanced buys to weather that storm. Other times, we'll have to rely on other strategic partnerships we've developed, whether that's McKesson or Owens & Minor. For acute care, we use Owens & Minor and for the non acute, we use McKesson. Over the last two-and-a-half years, they've probably been our two best companies in terms of just working with us, as the daily grind shows its ugly head and something else is now a problem.
Q: So you're not feeling any pressure or incentive to go outside of those two organizations for supplies?
JK: Well, if we have to, we have to. But, the clear majority of everything we've been able to manage in terms of disruption, we've done through the two of them for the most part. We've got other strategic relationships and you really have to develop those relationships today because being an average customer to everyone will get you nowhere. You better be a strategic partner with a smaller subset of suppliers that are reliable and if you get into a bind, they're going to maintain that strategic relationship first, as opposed to not fulfilling a product for what I would call the "average customer."
Q: What big shifts do you anticipate happening in the supply chain industry, whether it's murmurs from colleagues or mindsets that are kind of changing?
JK: For the longest time, we really never cared about the country of origin. [Now,] we're having to get so much deeper into the knowledge of the product and where it's coming from. With some of the latest legislation that's out there, we have to understand not just where it was produced but what products are going into it, how are we disposing of it, what type of labor was used to build the product. It's getting more and more complex. You have a lot of people who are having to build these armies of sourcing people to further segment because they gotta go deeper into the product knowledge. That's where I said, in my mind, it makes more sense to rely on your GPO and really integrate with your GPO on that piece. HealthTrust does a great job. We work with them to ensure we're meeting all the regulatory concerns and understanding not just country of origin, but we're understanding all the attributes and raw materials that went into these products and ensuring that they were produced in the right way.
Q: Of all the things you mentioned for labor and building up that army for every step along the way with your supply chain, how does that affect your day to day operations?
JK: We lean heavily on HealthTrust that they're doing the right things in terms of the companies they are contracting with so we can do the right things with the companies we buy from. From a day to day standpoint, it's still the blocking and tackling of, 'What's the supply chain disruption of the day? And how do we make sure that we're handling it?' I've got 62 hospitals and 32 inpatient rehab facilities we serve. It's making sure the facilities and our clinicians have the products they need to take care of our patients. If you go back to 2020, it was all about ensuring we had the protective gear to protect our staff, that was first and foremost. That's probably the most stable part of the supply chain today, what we would historically call personal protection equipment (PPE). The problem now is everything else. You just don't know what's coming down that next day. It's at the point now where trying to predict it gets a little crazy, so you have pivot well.
Q: Are there any supply chain issues that keep you up at night?
JK: Everything keeps me up at night. Every so often, we'll have someone who will throw a bit of a fit because they can't have the exact product they want. My typical response is, have you gone to the grocery store lately? A lot of times, if they're being irrational, it's because they haven't even been to the grocery store and they haven't ordered furniture. The other things we're dealing with are inflation. Our suppliers, I get it, they're faced with labor costs, energy costs, the ever-growing costs of producing their products. At the same time, we have the same pressures on our side. But I've seen lead times [the time between purchasing a product and receiving it] that are so far out there today. In the 30 years I've been in the industry, I've never seen the lead times this long. It creates a whole other layer of planning, whether you're doing construction or replenishment of some of your fleet, whether that's IV pumps, anesthesia machines, defibrillators. Historically, we've been able to turn around and get these pieces of equipment with a reasonable lead time. Today, those lead times can be over a year for some things. It just adds a whole other issue where if you've got equipment that's failing and you have to have it replaced, you just can't find some of the equipment out there.
Q: Whenever you're talking about the grocery store or the furniture store, it reminds me of a toddler not having their favorite toy packed in the bag whenever they go to the park. Then you're unloading everything else that's already in your bag in front of the child, but they're really hung up on that one thing. So it's just trying to maneuver around that, right?
JK: Most clinicians understand the lead times but it doesn't always make them happy when they can't have the exact product they want. That's when I usually pull out my favorite line that over the last couple years: COVID-19 killed the sacred cow. If you go back three, four years ago, people all had their little sacred cows they had to have, and if they couldn't have it, there were going to be all kinds of problems. That's shrunk a lot over the last couple of years simply because people are starting to understand that there's only so much you can do. My number one concern always is my staff and making sure we are protecting the team because if we're not protecting them, how can they care for the patients? Second is making sure we have high quality products so our clinicians can care for our patients. If that means that they have to do it with an alternate product, so be it. More and more people are starting to understand that. The days of those sacred cows are in the rearview mirror a little bit.