Why transparency in a post-pandemic healthcare setting is foundational to a strong supply chain.
As a global medical products distributor, Cardinal Health approaches the topic of preparedness for any disruption with a focus on transparency, said Mary Byrne, vice president of Global Regional Planning for Cardinal Health’s Global Medical Products and Distribution business. “We take an open, all-cards-on-the-table approach specific to the needs of the customer and their portfolio of products.”
Byrne has led strategic initiatives and transformation in several industries, including healthcare, technology and defense. “We understand that every healthcare provider has products that are critical to care and their ability to maintain operations, and those products can differ widely based on the type of care and location of that particular provider. We prefer to work collaboratively with each customer and advise on an approach to preparedness that meets their unique needs.”
Transparency is an area of great focus at Cardinal Health. In 2023, the distributor received the HIRC Transparency Badge (and renewed it again in 2024), which acknowledges transparency as a foundational element of a strong supply chain, Bryne said. The badge is awarded by the Healthcare Industry Resilience Collaborative (HIRC), a nonprofit healthcare supply chain trade association focused on tackling resiliency issues for continuity of patient care. The renewal of the HIRC Transparency Badge demonstrates Cardinal Health’s continued dedication to the highest standards of transparency and resiliency in healthcare supply chain management, Byrne said. “We’re very proud of our team members who work every day to drive excellence within our supply chain for our customers and their patients.”
Additionally, earlier this year, Cardinal Health achieved the HIRC Resiliency Badge at the Diamond level, the highest award possible, indicating “outperforming” scores for Cardinal Health’s medical product distribution business in key areas critical to a resilient supply chain. “We are the first distributor to be recognized by HIRC for both supply chain resiliency and transparency,” Byrne said. “Through its comprehensive, multi-layered approach, the HIRC Resiliency Badge program enables distributors like Cardinal Health to better compete on the merits of supply chain resiliency and helps healthcare providers more readily select suppliers with demonstrated resiliency.”
The Diamond level is attained through a rigorous external assessment from either PwC or Accenture against HIRC’s standard – a 400-point maturity rubric that assesses resiliency and operational maturity, said HIRC Executive Director Jesse Schafer. It’s a two-month process, with one month of supplier readiness, where suppliers must upload artifacts that include key performance indicators, policy, procedure, self-assessment, and ultimately an interview. Then in month two, PwC or Accenture will crosswalk those artifacts versus the public facing rubric on HIRC’s website and make a maturity assessment. All those results are weighted.
Industry-wide standards
The number of healthcare providers using HIRC standards in sourcing continues to trend upward. Today, HIRC stands at more than 50 health systems using its standards, from Advent Health to Yale New Haven Health. The number of suppliers participating continues to grow.
“We need resiliency for continuity of patient care,” said Schafer. “There is a belief that a community approach through a nonprofit consortium with a collaborative culture is the right way to achieve it.”
The Resiliency Badge is a new incentive that’s creating the response HIRC organizers were hoping to see among industry stakeholders, said Schafer. The standards are intended to make resiliency a commercial differentiator and a win for sourcing and selection. “When providers say, ‘Do this, and you’ll more often receive juicy contracts from me,’ the industry reacts, and the reason we’re doing this is because our providers desperately want to select for resiliency in their sourcing process,” said Schafer.
“At Stanford Health Care, resiliency is non-negotiable,” said Katie Dean, vice president of Supply Chain, Stanford Health Care. “We helped build the Resiliency Badge program to better identify resiliency and to select for this capability in strategic relationships at an industry level.”
Tom Lubotsky, vice president of Supply Chain, Allina Health, said his organization
is fully committed to resiliency as key selection and performance criteria for purchasing products. “The evidence of a reliable environment to deliver products has clearly risen in its importance as we evaluate, select and monitor the performance of our suppliers.”
HIRC standards are also being used by other industry evaluators in their assessments. This past May, Gartner announced it was adding a quantitative risk management component to the Healthcare Supply Chain Top 25 for 2024 at a 5% weighting. This component of the ranking credits health systems for taking a leading role in their approach to risk management through increasing engagement with HIRC.
Gartner said it has been watching this space intently as an informal and formal industry collaborator since the founding of HIRC. “HIRC has made great strides as a consortium for patient-centric healthcare supply chain resiliency standards and best practices,” Gartner said in a release. “The group is a non-competitive, non-exclusive and member-driven organization where leaders in this space are convening to improve supply chain resiliency for the industry.”
For 2024, the allocation of this 5% weighting will be granted with increasing levels of engagement with HIRC standards. HIRC will provide Gartner data in categories, per their own internal guidelines communicated to their members:
- Resiliency Engaged is focused on being an engaged member of HIRC attending more than 50% of their meetings. This represents 30% of the available score for this component.
- Resiliency Accountable tracks health systems having dedicated resources for risk management activities. Gartner research shows that 56% of U.S. systems have such resources today. Along with this resource allocation, points will be awarded for having a formal supply chain business continuity plan and being able to report spend with HIRC transparency and resiliency badged suppliers. This represents 30% of the available score for this component.
- Resiliency Leader tracks health systems implementing resiliency standards with suppliers. For 2024, this is simply including HIRC resiliency standard term questions in competitive bids with suppliers. This represents 40% of the available score for this component.
“Like our journey on the quantitative capabilities around ESG partnering with the groups Healthcare Anchor Network and Practice Greenhealth, we view measuring health systems for risk management on a continuum,” Gartner said. “Over time, our hope is to modify these measures to be more comparative of how individual health systems are to each other. But, for now, membership, engagement and leadership are important enough to get started.”
HIRC also recently announced a long-term strategic partnership to co-develop transformative technology and data standards with Clarium, Inc., an AI-powered platform for healthcare supply chain, leveraging data sharing, crowd-sourcing, and intelligent automation to help hospitals and health systems achieve resiliency, best practices, and operational excellence.
The partnership’s first initiative is the development of Resiliency Monitor, a tool designed to provide real-time visibility into healthcare supply chain performance. Resiliency Monitor will offer providers and suppliers evidence-based requirements to more efficiently achieve badge award status and will offer the following features:
- Dynamic metrics at distributor, manufacturer, product category, and item levels
- Automated data sharing aligned with HIRC’s Transparency and Resiliency Badge
- At-a-glance performance assessments for providers and suppliers
Resiliency Monitor will be available to all HIRC members, with a premium tier subscription available that will provide additional insights and features.
“Our collaboration with HIRC represents a pivotal advancement in healthcare supply chain and in ensuring the continuity of patient care,” Clarium said in a release. “By integrating our AI-powered platform with HIRC’s industry expertise and best practices, we’re creating a comprehensive solution that goes well beyond traditional supply chain management. Our shared vision is to empower healthcare providers and suppliers with real-time insights, enabling them to proactively address challenges and optimize operations. This partnership isn’t just about building software together – it’s about transforming how the healthcare industry approaches supply chain resiliency and efficiency.”
Proactive planning
Even with new tools, technology and standards, planning still must happen at the relationship level between provider and supplier. As such, Cardinal Health proactively discusses supply chain resiliency with customers on a regular basis. “It’s baked into the DNA of our medical products distribution organization,” Byrne said. “The industry – especially providers – are interested in what we’re doing to drive an efficient and resilient supply chain so they can continuously count on us to deliver the products they need when they need them.”
There are several factors that Cardinal Health believes providers should be aware of when considering preparedness. First, healthcare providers need to know where their supply chains are most exposed or at-risk. It is important that providers acknowledge these exposures and then take a proactive approach to addressing them.
“You don’t want to have a conversation about risk when you’re in the middle of a crisis – you want to be prepared ahead of any major disruption,” said Byrne. “This brings us back to the importance of transparency. It helps tremendously when we can speak openly about factors that create better resiliency. Twenty years ago, resiliency was not a department or even a list of projects across most companies. Now, it’s simply the right way to do business. Cardinal Health has a dynamic, ongoing process to continually evaluate our operations and develop new and innovative ways of operating with consistent resiliency.”
Many provider organizations are already taking the right steps toward resiliency, engaging in conversations about implementing a full suite of preparedness tools, including multi-sourced supplies, multi-modal transportation, critical-to-care products, advanced planning approaches, near-shoring of products and more. It’s also important for providers to consider their local regulations, Byrne said. In California, for example, employers in hospital settings are required to have specific inventory levels of personal protective equipment (PPE) at all times.
Ideally, providers should consider collaborating with suppliers in an advanced model referred to as Collaborative Forecasting, Planning, and Replenishment (CPFR), Byrne said. CPFR is a recent addition to the healthcare industry, developed initially by VICS and further developed by Gartner. “We find that sharing this model and driving collaboration across the supply chain drives some of the best outcomes.”
Bryne said Cardinal Health also encourages healthcare providers to take advantage of industry partnerships such as HIRC and the Healthcare Industry Distributors Association (HIDA). These organizations are engaging across the healthcare industry and government agencies to implement meaningful change that is making a difference in preparedness and resiliency. Byrne cited recent examples like the advocacy for transportation “fast-passes” for medical products during emergencies, more transparency in data-sharing, and resiliency assessments for suppliers.
Cardinal Health continues to work with providers on developing a collaborative planning approach. This includes integrating the customer’s insights and data on the volume of products they need from the distributor to drive patient care. Cardinal Health also works closely with customers to segment their portfolios and identify their critical-to-care products.
“Our goal is to have a strong understanding of the customer’s needs, which requires an open dialogue and sharing of information. This helps us proactively identify potential substitute products to drive contingency plans in case of disruption,” said Byrne. “Customers tell us they appreciate this deeper level of collaboration and transparency, and we see the mutually beneficial results. Working hand-in-hand with our customers helps both sides be more strategic and prepared.”