A conversation on where we’ve been, where we are, and where we’re going as an industry.
Editor’s note: In a recent podcast, Repertoire Publisher Scott Adams hosted Brad Hilton, the 2024 HIDA Chairman of the Board and Matt Rowan, the president and CEO of HIDA, to discuss the state of the industry post-pandemic, legislative issues to watch, and more. The following are excerpts from their conversation.
Scott Adams: Brad, tell us a little bit about your dad (Herb Hilton) and his legacy. He spent well over 30 years working in the industry and with HIDA specifically. What did you learn from him as to the importance of working with the association and peers within the industry?
Brad Hilton: My dad talked about HIDA and his peers all the time. Some of the things that stick out were, first, the lifelong friendships he made.
Second, I think the work was enjoyable for my dad. There was the business side of it, but there was a lot of pleasure and social enjoyment to it. Back in his day, there weren’t big national companies. They were mostly small, local businesses. He would often say, “It kind of gets lonely in your own market. You are in your own little echo chamber.” So, HIDA was a chance to pull out of the daily grind and look more holistically at the business and the industry, share different ideas with peers and learn from them. It really gave him an opportunity to get a fresh, different perspective on his business. He always valued that.
Another thing he used to talk about was that as big as the industry is, it’s really small. He told us, “Don’t burn any bridges. You never know who your boss is going to be. You never know who your competitors are going to be, who your suppliers are going to be, or your customers. It is amazing how much people move around, but they don’t move very far.” He told us we would build lifelong connections and friendships, and to not miss that. Now, for me coming up on my 30th year, it’s shocking to see how true all of that still is.
Adams: As big as the industry is and as consolidated as it’s gotten, relationships still matter. I think Matt’s organization helps to bridge those relationships and keep people coming back together. Relationships still drive this business, as much as we think it’s IT or anything else.
During the pandemic, the amount of communication and collaboration within the industry was just unbelievable. I think about Project Airbridge and how McKesson, Cardinal, Owens & Minor, Henry Schein and on and on all worked together to help get products to the end users that were in need.
Matt, what are some of the things you’ve seen collaboratively in the industry post-pandemic, and where are you helping to work with distributors and manufacturers to foster more of that?
Matt Rowan: The collaboration between industry and government was strong during the pandemic, and has only gotten stronger since. We’re all committed equally to what we learned during COVID, to have solutions and plans in place for any future disruptions that we have or might encounter. For example, at our recent MedSupplyChain Conference in February, and our Pandemic Preparedness Conference held in DC in June of each year, we want to maintain those high levels of engagement between leaders in government and the private sector.
Back to your point about relationships, they matter between industry and government equally. Why do we build those relationships? Really, it’s the same reason you build commercial relationships. We want to build a relationship with the government so that we can perform at a high level, especially in the middle of a crisis. And we want to be able to innovate.
Project Airbridge was a great example of that. It was a tremendous success. It was developed at the height of the pandemic and was a success on its own. It really showed the government that they have a true partner in distribution.
But the other part is that today’s innovation is tomorrow’s tool. So fast forward a couple of years to when baby formula was in short supply. What was one of the first things the government did? They flew additional supplies over from Europe. Project Airbridge was a trailblazer and an innovator in that way.
The other big piece is the Supply Chain Control Tower. Early in the pandemic, distributors shared an unprecedented amount of very sensitive information, but they did so willingly and forged a trusted relationship with the government. The quid pro quo was that the government had the data and information they needed to make sound decisions during a very critical time. So, as rocky as it might’ve been, it might’ve been even rockier if the government didn’t have the confidence in the data and their situational awareness in real time, which they did. So, at the end of the day, we want distributors and manufacturers to be seen as subject matter experts and partners that the government can rely on.
Hilton: As Matt mentioned, at the MedSupplyChain Conference we had a planning session, and around the room were suppliers, distributors, and providers. You had state and local healthcare providers, and folks that were responsible for their counties. You had tech and government leaders. All of us were in the same room talking about what we needed, and what our goals looked like.
As you know, this is complicated. These issues aren’t getting solved in five minutes, and there is no silver bullet. But all of us in the room asked, “What is it that you’re looking for? What does it look like for you?” and then collaborated and tried to figure out the best way to advance. It’s not simple, but having the forum to have those discussions gets the relationships right. Whatever happens or doesn’t happen, you’ve got the trust and the partnerships to try to mitigate or minimize the impact.
Adams: What are some of the biggest challenges you are hearing in the industry that are going to face the med/surg specific community?
Hilton: We could go in a lot of different directions with this question. I’m sure Matt has some stuff to add. One of my mentors once told me, “Never forget to see how your customer gets paid.” So, how does your customer get paid? What is their financial health?
Our customers are under a tremendous amount of pressure right now. Some of it is because of inflation. Everything is more expensive. We say inflation is starting to come down a little bit, but prices aren’t coming down – they’re just not going up as fast as they were. Because of inflation and the tight labor market, customers are saying during business reviews that they’re having to limit their hours. It’s not that there are no patients to see. They have to limit the number of hours, because they can’t stay staffed long enough to actually see all the patients that have a need. And if you don’t believe that, try to get in with a specialist. They’ll tell you they can see you in six or eight months.
Our customers’ reimbursement is not going up. They’re not getting more margin for their services, and yet, all their costs are going up, and their labor is harder and harder to maintain. In many of these offices, they’ve got investors looking back at the COVID days wondering, “How do we get back there?” So, I think they’re under a lot of duress.
Adams: Matt, you have a perspective that neither Brad nor I do, because you get to see it from every angle daily with all of your members.
Rowan: Yeah, it’s interesting. As Brad said, in a lot of ways, the pandemic itself, the disease, is behind us, but the residual impact on the supply chain remains. If you look at certain categories, inventories are elevated, and they’re in an oversupply situation. But in other categories, we have back orders that are popping up randomly across the product portfolio.
The biggest challenge for distributors and manufacturers is, how do you provide value and solutions in the face of these continued disruptions, when economics for providers and patients are so tight from inflation and other factors? The number everybody is looking at right now is patient volume through these different settings of care. When are patients going to return? A lot of things have bounced back since COVID, but that last bit of patient volume hasn’t consistently come back in each of those major sites of care yet.
Adams: Matt, this one’s for you specifically. Talk about some of the key things HIDA is working on legislatively. I know the industry is interested in that.
Rowan: We’re looking at everything we do with the government, whether it’s Congress, regulatory agencies, or the White House. We want to make sure that, at the end of the day, they know the value that distributors and manufacturers bring to the table, and what unique value they provide during an emergency. We want to position our members as subject matter experts in the policy-making discussion so that results in sound policy that will be effective when we need it the most, particularly with emergency response.
There are two areas I would point out. The first is our FAST PASS legislation. This is legislation that’s going to speed and expedite medical products through ports and transportation systems during a healthcare emergency. It worked a little bit during the pandemic, just based on a cobbled together situation. But I think, looking forward, we need something that really has the potential to alleviate and be a part of the solution should (or when) we encounter another disruption the level of COVID.
The second part is advocating for an all-of-the-above approach. There’s a lot of discussion around U.S.-made vs. global sources, vs. China, etc. We’ve always advocated for an all-of-the-above approach. How do we link the strengths of all the sites of manufacture in a way that results in the most resilience, and the most prepared supply chain we can have for our country? The place where a lot of that focus is on domestic manufacturing or North American manufacturing, so we’re spending a lot of time on that with the government. Even last week, we did some focus groups for them on what does industry need to make for a sustainable industrial base in this country of key medical supplies?
We also have our pandemic preparedness conference in DC each year, where we bring leaders together to collaborate on things like the critical product list. At the conference we ask, “What are you going to stockpile? How much of it are you going to stockpile?” There is a communications protocol that our team has done with them so we stay aligned. How do we stay aligned just in communication between government and industry in any future pandemic? We’re going to release a resilient roadmap, which is a set of policy recommendations for the industry as a whole and government as well. Overall, we are trying to inject the industry’s thinking and expertise into the policymaking apparatus in DC across all the agencies, the White House, and Congress.
Adams: Brad, in your 1-year term as HIDA Chair, what are you most excited about working with Matt and his team?
Hilton: Two things jump out at me. One is kind of boring, but important – supply chain resiliency and working with our government partners, I think self-regulation is really important for an industry. Industries that don’t do a good job of governing themselves welcome regulators, and regulators love to regulate. Normally, good intentions go too far. It’s really in our best interest to put our best foot forward, work together, and collaborate the right ways to do the right thing by our great country. If not, we’re going to encourage people to come in and make our lives difficult. Good intentions will probably go bad, and lead to great inefficiency, frustration, headache, hurdles, etc. So, I think that’s an important part.
Something a little bit more enjoyable to talk about is how can we as an industry attract new talent? How do we attract new talent, where kids in college say, “I want to be in healthcare distribution”? The HIDA team quickly took that recommendation and ran with it. We sponsored 11 students to come to the MedSupplyChain Conference. These were college students, juniors, seniors, from around the country, that spent time with the government leaders, distributors and suppliers on hand. It was really cool to see where they got exposed to things that they never would have seen. So, how do we think about the next generation of talent? And how can we be a little bit more proactive, rather than reactive, on hoping that talent is in the industry?
Rowan: Having the students attend the MedSupplyChain Conference was really refreshing. They engaged with everybody. Some of them were fearless. At Q&A time, they would grab the mic and ask a few questions, and the questions were spot on. It was just a wonderful experience. We had Brad, Lisa Hohman from Concordance, and Paul Farnin and Pete Bennett from Cardinal do a one-on-one session with the students for an hour. So I think the workforce is a big part of it, and I think diversity is a part of the workforce. We had some HBCUs represented there, as well as some big national universities. All of it was great to see and something we will build on.