Supply Management Function Hits Home on Health Equity

September 14, 2021
By Karen Conway

The coronavirus has pandemic exposed the true costs, human and otherwise, of health-care disparities, as low-income and minority populations have suffered disproportionately. Blacks, Native Americans and Hispanics were 2 percent to 3.3 percent more likely to be hospitalized or die from COVID-19 compared to non-Hispanic Whites.

This was primarily due to higher prevalence of underlying disease states (like hypertension, obesity and Type 2 diabetes) caused by relative lack of access to many of the social determinants of health, including good-paying jobs, healthy food, safe housing and transportation.

As with so many aspects of the pandemic, supply chain management is front and center in the fight. And the function is also getting noticed in the executive suite, as the boards of trustees for America’s hospitals prioritize health equity in preparation for taking on more risk for the populations they serve under value-based reimbursement programs.

A few ways hospitals are making a difference: increasing diversity spend, partnering with community organizations and entering the manufacturing space to mitigate supply issues.

Bringing Diversity Home

Supply chain professionals have long sought to increase spend with diverse suppliers, defined as those that are women-, minority-, veteran- or LBGTQ-owned. That data is tracked and often used to support grant applications.

More recently, transparency around that spend is being mandated. In California, for example, Assembly Bill 962 requires all hospitals meeting a certain threshold to report their spend with diverse suppliers each year.

But for many health systems, diversity is not enough. They want to ensure their purchasing power supports the health and well-being of the local communities of their patients. Spending in local communities has a multiplier effect. For example, investing in a local business supports job creation; in turn, the wages for those employees (1) generate local tax dollars and (2) increase their ability to spend and generate wealth in their own communities. (For more, see “The Health-Care Supply Chain Balancing Act” in the September/October issue of Inside Supply Management®.)

Anchors as Partners

In many communities, large and small, hospitals are anchor institutions. Once built, they rarely move and are often the largest or one of the largest local employers. The Affordable Care Act requires nonprofit hospitals to assess and report on how they are meeting local needs.

At the same time, many hospitals are struggling financially in the wake of COVID-19 and do not have the staff nor the infrastructure to effectively address both clinical and social needs on their own. 

Organizations such as the Healthcare Anchor Network are supporting hospitals as they seek more opportunities to invest in local communities, as well as opportunities to partner with existing community service organizations as they seek to support the social determinants of health. 

Blurring the Lines

Some health-care systems are taking it a step further by investing in manufacturers or becoming manufacturers themselves. For example, Banner Health in Arizona partnered with a local manufacturer to produce reusable isolation gowns designed by the clinicians who use them. This addresses both supply continuity as well as sustainability objectives for the health system. 

Banner is also one of more than a dozen health systems that joined their group purchasing organization (GPO) to purchase a minority stake in a domestic manufacturer of personal protective equipment (PPE). The health systems have committed to buy a portion of their supplies from the manufacturer; they also have purchasing priority over the rest of the market. 

Ochsner Health in Louisiana entered a joint venture to build its own manufacturing facility. The move not only helps secure more reliable supply, but it will also create thousands of new jobs to support both the physical and financial well-being of the local population. 

With these steps, health-care supply chain leaders are demonstrating the ability to deliver value on multiple fronts. As it aligns with the highest objectives of their system leaders and boards of trustees, the supply management function continues to elevate its stature. Most importantly, the supply chain is supporting the redesign of our health-care system, from one focused on caring for the sick to one that helps prevent illness in the first place.

(Photo credit: Getty Images/SDI Productions) 

Karen Conway

Karen Conway is vice president, health-care value, for Global Healthcare Exchange (GHX), a health-care software and services company in Colorado Springs, Colorado.