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AI For Healthcare Supply Chain · Taking The Supply Chain Pulse

• 0:03
  SPEAKER_00: Welcome back to another episode of Taking the Supply Chain Pulse.
• 0:07
  SPEAKER_00: I'm Joe Nemeth with St.
• 0:08
  SPEAKER_00: Orange Company, and today we're joined by Eric O'Daffer, Managing Director of Healthcare Advisory LLC and former head of healthcare at Gartner.
• 0:18
  SPEAKER_00: Eric brings decades of experience at the intersection of strategy, innovation, and healthcare leadership.
• 0:24
  SPEAKER_00: So let's dive in with your host, Fred Crantons.
• 0:27
  SPEAKER_00: Take it away, Freddie.
• 0:29
  SPEAKER_03: So, Eric, uh welcome.
• 0:31
  SPEAKER_03: Happy to have you on.
• 0:32
  SPEAKER_02: It's great to be here, Fred.
• 0:34
  SPEAKER_02: Looking forward to it.
• 0:36
  SPEAKER_03: You're out there in Seattle, right?
• 0:37
  SPEAKER_03: Is it raining?
• 0:39
  SPEAKER_02: It is going to rain.
• 0:41
  SPEAKER_02: Uh, you know, just drips.
• 0:42
  SPEAKER_02: Uh this is the time of year we call January here.
• 0:45
  SPEAKER_02: Uh the rest of the country gets summer, and we get uh, you know, 55 and rainy for the first couple weeks of June, but then it turns beautiful and is uh you know the greatest place on earth.
• 0:55
  SPEAKER_02: But uh the June, early June, not uh not our best foot forward.
• 1:00
  SPEAKER_03: It is a great place.
• 1:01
  SPEAKER_03: I I love it out there.
• 1:02
  SPEAKER_03: So what tell us, Eric, um what have you been doing since you left Gartner?
• 1:07
  SPEAKER_03: You you left what a couple years ago or a little over a year ago?
• 1:11
  SPEAKER_03: What have you been doing?
• 1:13
  SPEAKER_02: Yeah, well, it uh you're you're right.
• 1:15
  SPEAKER_02: It's been just a little over a year, uh I think April of uh 2025, and um you know I intended to retire um and uh kind of done what I could do at at Gartner, I felt that it had run its course for me.
• 1:29
  SPEAKER_02: Um still believe in in what they're doing over there, but uh for me it was it was time to to be done.
• 1:34
  SPEAKER_02: And then uh a few companies reached out as I did that and said, Hey, how about this?
• 1:39
  SPEAKER_02: And it was just kind of fortuitous that uh, you know, it caused me to have to think about, okay, well, what do you want to do in the last innings here, your your career?
• 1:49
  SPEAKER_02: Um, and uh, you know, kind of forced me to think about what what that guiding light was, what that true north was.
• 1:55
  SPEAKER_02: And uh I just I picked three companies to work with uh in areas that I thought would be uh thought would be interesting for me.
• 2:03
  SPEAKER_02: Well, what is that true north?
• 2:06
  SPEAKER_02: Well, the true north's helping advance healthcare supply chain.
• 2:09
  SPEAKER_02: Um so that that's the overriding uh piece of it.
• 2:13
  SPEAKER_02: Um and you know, out of the gate, I'm really doing it in three ways.
• 2:17
  SPEAKER_02: Uh one is is through AI and technology adoption.
• 2:21
  SPEAKER_02: Uh and in that realm, I'm supporting uh a company called Clarion.
• 2:24
  SPEAKER_02: Uh, it's an AI uh platform company.
• 2:27
  SPEAKER_02: Uh I'm working on indirect spend, right?
• 2:30
  SPEAKER_02: I watched uh the areas of supply chain, 40% of the total cost of supply chain if the health system is related to products that don't come and of services that don't come in a box.
• 2:39
  SPEAKER_02: Um, you know, 800 different categories of them.
• 2:42
  SPEAKER_02: I watched it, wrote research around it, and uh it just hadn't made a lot of progress.
• 2:46
  SPEAKER_02: So in that capacity, I'm an advisor for uh a new company to the industry called Logic Source.
• 2:52
  SPEAKER_02: They've been around in other industries with great success uh and are bringing that model to healthcare.
• 2:57
  SPEAKER_02: It's been uh it's been a great service so far.
• 3:00
  SPEAKER_02: Uh and then lastly, I work with Visiant on metrics and benchmarking.
• 3:04
  SPEAKER_02: Uh so uh the work that they have uh kind of looked at that and said, I'd done a lot of work around how systems think about their maturity and uh and and how they measure that, both quantitatively and quantit quantitatively, qualitatively and quantitatively, uh, and trying to use uh kind of determine that had a company that had data in an ecosystem uh was another interesting way to look at it uh to get you know a more definitive comparison of of what that looks like.
• 3:33
  SPEAKER_02: So I'm trying to help Vizn around that for their uh for their membership.
• 3:37
  SPEAKER_02: So you know, kind of maturity, AI and technology, and then you know, these areas of underdeveloped spend.
• 3:43
  SPEAKER_02: And uh I may at some point add to capital equipment.
• 3:46
  SPEAKER_02: It's another area that I find pretty interesting.
• 3:48
  SPEAKER_02: Uh it's a much bigger part of supply chain than most people think, uh, about 7% of the total spend uh and it gets underrepresented.
• 3:56
  SPEAKER_02: So I don't do anything there specifically, but uh I've got interest.
• 4:00
  SPEAKER_03: Well, you know, I I think uh when you talk about capital, you're sort of getting into another thing that I see, and that is as as IDNs uh grow and become uh continue to acquire and merge with other uh hospitals or systems, uh they're acquiring uh places that needed help or they probably wouldn't have failed to the point where they had to merge.
• 4:25
  SPEAKER_03: Is that fair to say?
• 4:26
  SPEAKER_03: And then if that is fair to say, then there's a whole area that they have probably ignored or done poorly, and that is capital equipment planning and and and uh and standardization and and the philosophy of of how to maintain that capital equipment.
• 4:45
  SPEAKER_03: I was at ARM a couple years ago and uh I was at a presentation by an Air Force colonel, and there were a whole bunch of senior officers in the in the background.
• 4:55
  SPEAKER_03: And when we got done, I asked one of the Air Force colonels, I said, you know, how come the defense budget is shot up to the point where it's nine hundred and seventy billion dollars now?
• 5:08
  SPEAKER_03: And he says because of the cost of uh of capital equipment, because of the cost of capital and uh weapons, and and uh he said it's not the people, it's the stuff.
• 5:19
  SPEAKER_03: And I think if that's true there, it's also true in healthcare.
• 5:22
  SPEAKER_03: But let's get into your three areas.
• 5:24
  SPEAKER_03: Um talk about this.
• 5:26
  SPEAKER_03: I noticed you had written to me about doubling investment in technology, uh AI and analytics.
• 5:32
  SPEAKER_03: Uh, how would you go about doubling investment in technology?
• 5:37
  SPEAKER_03: Where would you focus your efforts?
• 5:39
  SPEAKER_03: And just give us a little bit of your insights on that area.
• 5:43
  SPEAKER_02: Yeah.
• 5:44
  SPEAKER_02: In some of the benchmarking work uh, you know, that I'd done in the past, uh, we don't cover that, you know, this area just wasn't uh it was a small portion of the operating budget of supply chain.
• 5:56
  SPEAKER_02: Um, you know, and so I looked at it and a lot of it was tied to ERP investments, and then some of these kind of just I call them kind of episodic platforms that the that organizations had bought over the years.
• 6:06
  SPEAKER_02: And this is at the health system level.
• 6:08
  SPEAKER_02: Um and uh so I I just I think as you kind of come through this, we've invested a lot in you know, kind of capital assets and a lot of stuff around logistics and the movement of products, specifically MedSurge.
• 6:20
  SPEAKER_02: And I just think we need to shift some of this budget to thinking about how we get to these AI platforms that start to tie the data together on multiple different efforts and leverage and take out costs of uh employees through the use of agents uh and use that data in a different way to uh aid and assist in standardization, uh, ways to think about inventory and risk and resiliency.
• 6:44
  SPEAKER_02: So there's all these different kinds of roadmaps that these these companies uh that are building out these platforms have, um, and and health systems for whatever reason, I think some of it's just that they haven't been able to get investment in many cases, or at least the middle of our market hasn't been able to do that, should be leaning into these technologies, uh voting with their dollars to support them, uh picking a platform company that's got a roadmap that aligns to what they're doing, um, you know, and and then expect, uh, much like you'd buy a CSC and use that as a city on a hill to drive compliance and understanding a supply chain, these data and technology and AI investments to leverage and bring the value from the 40% of the health system budget that's tied to supply chain should just be something that that health systems are leaning into.
• 7:32
  SPEAKER_02: And for whatever reason, um, you know, we've we've we've looked at some of these vendors over the years as at kind of an arm's length, many, many have.
• 7:40
  SPEAKER_02: Um, and I think it's time to do what other industries have done, which is embrace them, uh, bring them into the fold, invest in them, uh, expect a lot out of them when you're doing it, but uh but uh but lean in a little bit more than we've done.
• 7:55
  SPEAKER_03: You know, you have a you have sort of a wide global view of of healthcare.
• 8:00
  SPEAKER_03: So your your experience spans you know uh a great gamut.
• 8:05
  SPEAKER_03: Uh is there anyone that is approaching the use of technology and AI?
• 8:10
  SPEAKER_03: And I don't say just AI, technology and AI uh well that you've seen that you could tell us about.
• 8:16
  SPEAKER_03: And uh what what areas of operations, either in supply chain or in just the healthcare uh organization itself, would you sort of earmark as places to start uh with the use of AI?
• 8:33
  SPEAKER_02: Yeah, I mean there's I view it as a haves and have nots.
• 8:37
  SPEAKER_02: Uh and you know, you can you can look to some of the more mature health systems uh in my old world at Gartner, uh the Mayo Clinics, the Cleveland Clinics, uh Intermountain, um, Stanford, uh, Advent Health.
• 8:51
  SPEAKER_02: I mean, some of these organizations have really invested in this and seen it as some of their um, you know, kind of core operations of their business.
• 8:58
  SPEAKER_02: And there's more uh, you know, that have have done that as well.
• 9:02
  SPEAKER_02: But uh, you know, those are good places to look and go, hey, how are they bringing these 30 to 60 different areas that have data for supply chain somehow touching it and bringing it to the market?
• 9:14
  SPEAKER_02: Um, you know, and to me it's not it's not that hard.
• 9:17
  SPEAKER_02: There's a risk and resiliency piece of this, a service piece that are being built out.
• 9:23
  SPEAKER_02: Uh, there's the ability to take uh, you know, and and use AI and the transaction to make sure that you're getting the right price, um, you know, in the in perfect order, um, you know, and and make sure you're capturing all the value in the financial transaction.
• 9:39
  SPEAKER_02: Um there's a lot of work uh that is being done that's really uh effective and cool in preference card clinical areas uh and the way that those are being managed and standardized in in a way that uh that brings new value.
• 9:53
  SPEAKER_02: Um, you know, and then there's there's leverage across other applications as well uh that sit in contract lifecycle management.
• 10:00
  SPEAKER_02: Uh there's ways to use AI in the way that indirect spend is being managed.
• 10:05
  SPEAKER_02: Um and so I think what you have to do is find those companies that are really employing it and not just words, word giving words to it, but showing and demonstrating resources that are out there.
• 10:15
  SPEAKER_02: And uh, you know, it it lends you to some of these companies that are, I mean, we don't have a lot of venture-backed organizations that are coming into the healthcare supply chain, but there are some uh that are that are out there that are bringing real dollars, real investment into the uh industry, and you know, we should be finding a way to support those.
• 10:33
  SPEAKER_02: And um, you know, if the incumbents are uh investing in those areas, we should be leaning into the solutions that they're bringing too.
• 10:40
  SPEAKER_03: Are there are there companies that uh you know the the the rapid rise in technology is so recent?
• 10:48
  SPEAKER_03: Are there uh companies out there that can show demonstrated ROIs for their for their uh offerings?
• 10:55
  SPEAKER_03: The measured ROIs that they actually have produced results, or is it still all a narrative under part?
• 11:01
  SPEAKER_02: No, there's companies that are that are doing it.
• 11:04
  SPEAKER_02: Um, you know, some of them, uh, you know, you've got to you've got to attribute some um you know soft dollars of value to it uh in a in a little bit.
• 11:14
  SPEAKER_02: You know, what's the value of resiliency uh, you know, and a predictable supply chain is tougher.
• 11:19
  SPEAKER_02: Some of the stuff that's around preference card management uh in the OR and some of the transactional pieces uh that go, hey, are we are we paying the same price?
• 11:27
  SPEAKER_02: Uh are we are we rationalizing uh you know and making sure we're taking advantage of all our terms systematically?
• 11:33
  SPEAKER_02: Uh are we thinking about our spend and categorizing it in the right way?
• 11:37
  SPEAKER_02: Some of those areas are showing some pretty clear ROI.
• 11:40
  SPEAKER_02: Um, you know, but as you mentioned, we're early, right?
• 11:43
  SPEAKER_02: This is, I don't know, inning two uh of a nine-inning game.
• 11:46
  SPEAKER_02: Um and so it's some of this is an evolving practice where leaders are are layering into these technologies and learning from each other.
• 11:55
  SPEAKER_02: Um, and so it's almost like a sandbox in a way that go, hey, let's learn from each other.
• 12:00
  SPEAKER_02: We're developing you know these solutions for um, you know, other health systems that uh that we may not be competitive with, and how do we learn from each other?
• 12:10
  SPEAKER_02: Um, you know, but you've got to at the end of it have investment in those resources to go after it.
• 12:16
  SPEAKER_02: And uh, you know, those are some of the companies that I'm trying to lean into where they've got those resources, they've got that platform, um, you know, and they're and they're coming at it from a a different angle, uh, you know, with that investment in uh in tow.
• 12:30
  SPEAKER_03: And and then you have the uh systems.
• 12:32
  SPEAKER_03: Are the systems eager to incorporate technology or are they desperate to incorporate technology?
• 12:41
  SPEAKER_02: Uh I'd say eager would be better.
• 12:44
  SPEAKER_02: Uh many of them just don't quite know, you know, kind of where to go, or they may pick a a place.
• 12:50
  SPEAKER_02: Uh, you know, they may be under pressure to reduce their staff.
• 12:53
  SPEAKER_02: That's still a um, you know, a pretty pressing issue, um, uh supply chain talent uh and staffing.
• 13:00
  SPEAKER_02: And so there's some folks that are very you know centered on the agent model and how they reduce labor through this.
• 13:06
  SPEAKER_02: I I think the bigger opportunities on the data uh and the way that you yield that data and tie those systems together and use AI to make better decisions uh and and and enable cost savings.
• 13:18
  SPEAKER_02: Um but I think most see it as an opportunity, it's kind of a carrot.
• 13:22
  SPEAKER_02: But there's also many, because you you know you talked about the ROI, um, where the ROI is is is out there, um, you know, they they don't want to go implement 20 different solutions.
• 13:33
  SPEAKER_02: Um so it's what's led me to this kind of platform concept, which is hey, pick a platform, uh, and there's there's multiple out there uh that's got a roadmap that you believe in.
• 13:42
  SPEAKER_02: Um get your organization to buy into, because most most of the health systems are saying, you know, they've got an AI strategy uh for the for the whole business.
• 13:50
  SPEAKER_02: Um and how do you incorporate and layer in this supply chain AI strategy that uh that that fits into that uh fits into that mold.
• 13:59
  SPEAKER_02: So I think you've got to look at it as an opportunistic way to yield benefits from multiple things without having to implement you know six different partners uh or 10 different partners or 12 different.
• 14:10
  SPEAKER_02: So I kind of view it's not necessarily best in class spot solution.
• 14:15
  SPEAKER_02: It is platform with an expectation that you're gonna go down the roadmap uh and spend more money and give more resources to those companies that are that are building out solutions that'll help you in aggregate across multiple different areas of your supply chain.
• 14:31
  SPEAKER_03: It's gonna take a lot of uh collaboration.
• 14:33
  SPEAKER_03: It's not just buy a box, plug it in, and uh see immediate uh measurable savings.
• 14:39
  SPEAKER_03: You're gonna have to you're gonna have to work back and forth with uh the supplier of this of this technology.
• 14:44
  SPEAKER_03: Is that fair to say?
• 14:47
  SPEAKER_02: Yeah.
• 14:48
  SPEAKER_02: I mean, uh particularly in these early days.
• 14:51
  SPEAKER_02: Um, you know, and I guess those are always the questions, right?
• 14:53
  SPEAKER_02: Are you an early adopter, are you a late adopter?
• 14:56
  SPEAKER_02: Um, you know, my my take is it's better for most folks to be an early adopter um, you know, and and and be part of the solution and and building it out, right?
• 15:04
  SPEAKER_02: It's a collaborative industry that's got a lot of good things going for it.
• 15:08
  SPEAKER_02: Um, you know, because if you wait for it to all be built out in a perfect, you know, hey, just go do this and implement it.
• 15:15
  SPEAKER_02: It's five years and you know, you're behind the uh you know, you're behind the curve of of value compared to your peers.
• 15:21
  SPEAKER_02: And you know, everything that we know from the financial pressure side says the next couple of years are gonna look a little rougher uh just because of the reimbursement and the big, beautiful bill and all the things that are are coming.
• 15:32
  SPEAKER_02: We'll see what actually comes from it.
• 15:33
  SPEAKER_02: But uh, you know, uh healthcare futurists that uh that I listen to are saying, hey, this is this is gonna come to roost.
• 15:40
  SPEAKER_02: And um, you know, those that are preparing and thinking about it, I think are gonna be ahead of it.
• 15:45
  SPEAKER_02: Um and my my strategy always for the chief supply chain officers is you're the CEO of supply chain, uh, you know, you gotta be thinking about the investments that you need to deliver it.
• 15:54
  SPEAKER_02: You're not necessarily an operator, you're somebody bringing resources to a problem to deliver value.
• 15:59
  SPEAKER_02: Um, and you know, AI, technology platforms, partners in a different way across different areas of spend that maybe you you don't have the capability or you haven't always been great at.
• 16:11
  SPEAKER_02: It's time to, it's time to get more aggressive on the partnering front than uh than maybe we've been in the in the past.
• 16:18
  SPEAKER_02: Uh and there's some men that are just leaning into it uh and they are leading the way and they're way ahead of me and kind of where I think.
• 16:24
  SPEAKER_02: Uh, but there's a lot in kind of the middle that are that are a little paralyzed.
• 16:28
  SPEAKER_02: And um, you know, I don't know how how to uh how to best help those folks because in many cases they don't have senior leadership that wakes up every morning understanding the value that supply chain can deliver, not only on the cost front, but on the whole alignment and integration into the fabric of of delivering care.
• 16:45
  SPEAKER_02: So we still have work to do there.
• 16:48
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• 16:53
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• 17:15
  SPEAKER_03: Okay, Eric, so we just finished talking about technology, and I would argue that technology's opportunities uh are new and increasing rapidly because of AI and and machine learning and all the other tools that are developing.
• 17:30
  SPEAKER_03: But the other two areas that you talk about addressing, which is the uh indirect spend and capital equipment, sort of fall under the category, in my mind's eye, of it's about time.
• 17:43
  SPEAKER_03: These opportunities have been around forever.
• 17:46
  SPEAKER_03: They've been overlooked either because no one thought about looking at them or it was too difficult.
• 17:52
  SPEAKER_03: Uh directors of areas where those opportunities exist would be very protective of their uh of their departments and not want any help or any input.
• 18:03
  SPEAKER_03: Uh and so uh we just kept trying to find better prices and get rid of people.
• 18:08
  SPEAKER_03: So tell it tell us uh what you're doing in indirect indirect spend and also after that into the areas of capital equipment.
• 18:18
  SPEAKER_02: Yeah, so indirect spend has just been one Fred, and you you hit the nail on the head, right?
• 18:22
  SPEAKER_02: It's just been it's been out there for a long time.
• 18:25
  SPEAKER_02: Uh I've written different pieces of research around it over the years uh around how to attack purchase services, the products that don't, the services that don't come in a box, uh right?
• 18:35
  SPEAKER_02: They're they're highly variable in um you know the service capabilities locally for these health systems, uh, and they don't kind of uh align super well to national contracting.
• 18:47
  SPEAKER_02: Um, you know, and then it's super amorphous, 800 different categories.
• 18:51
  SPEAKER_02: Uh and it's rare for health systems to kind of I don't know, level set uh the way that they approach that for the dollars that are spent in these areas uh with sourcing resources uh and the capabilities to listen to end users, set a specification for a service, uh, source it, and then hold the organization accountable.
• 19:10
  SPEAKER_02: Um so, you know, I'm a I'm an advisor for Logic Source.
• 19:14
  SPEAKER_02: Um, you know, they're a new approach to going after this spend.
• 19:19
  SPEAKER_02: Uh, and I've just kind of watched, you know, different consulting firms, the GPOs, some of these technology platform firms uh that have had promise, uh, but just still, for whatever reason, we haven't quite nailed it down.
• 19:33
  SPEAKER_02: And uh I guess I'd attribute some of it to governments, uh, just the right to come in and you know get access to the spend, marketing spend, benefits spend, uh legal spend, uh facilities spend, right?
• 19:47
  SPEAKER_02: These big categories uh of dollars uh that are equal or greater to uh what's spent in medical surgical, medical device, and even pharmaceuticals uh you know, uh kind of combined.
• 20:00
  SPEAKER_02: It's about equal in what's spent in these services, uh, and we've just under-resourced for it.
• 20:05
  SPEAKER_02: So I think there's got to be a different approach, and uh, and that's the one that I'm trying to support with Logic Source to come in and bring outside industry uh benchmarks uh and an approach uh using technology to uh uh and uh and resources to uh to to attack and address that spend.
• 20:22
  SPEAKER_03: Well, I know Logic Source has got some high-level uh people there with some real expertise.
• 20:29
  SPEAKER_03: My question is, how do you knock on the door of an organization and get them to crack it open and give you the opportunity to uh to you know to talk about what you might be able to do?
• 20:41
  SPEAKER_02: Yeah, and I'm not on the sales side.
• 20:43
  SPEAKER_02: I'm on the advisory side and uh on the, I don't know, advocating for a solution side.
• 20:48
  SPEAKER_02: Uh but but I do think as I've watched it, it it usually comes uh in the best case, it's led by a chief supply chain officer that goes, look, we haven't we haven't been able to address this uh effectively.
• 20:59
  SPEAKER_02: Uh we need more resources, uh, and it's a catalyst bringing somebody in like Logic Source to get those resources, to approach these areas of spend and kind of get governance.
• 21:09
  SPEAKER_02: It's the city on a hill.
• 21:10
  SPEAKER_02: I I I I liken it to the equivalent of having a CSC.
• 21:14
  SPEAKER_02: Uh CSC uh you know for medical, surgical, and devices doesn't necessarily uh mean you're gonna be the most mature health system, but the health system understands it across the enterprise when you've got the big building.
• 21:27
  SPEAKER_02: Uh so making an investment with a third party uh tends to, you know, kind of make everybody go, yep, okay, we're supporting this.
• 21:34
  SPEAKER_02: This is an initiative that we're going to.
• 21:36
  SPEAKER_02: But ultimately, typically the CFO, COO has to buy in and say, yep, hey, this is an area we're going to invest in uh in a different way and and go approach it.
• 21:46
  SPEAKER_02: Um, because you've got to get governance, there's got to be somebody that's got air cover to go, hey, these departments that have, as you mentioned, uh have historically kind of done their own thing, uh, been Maverick spenders.
• 21:58
  SPEAKER_02: Um, you know, we've we've Got to kind of align that under a professional supply chain service, and uh you know, we we can yield a benefit from it.
• 22:07
  SPEAKER_02: And the benefit's been great, uh, but you've got to have governance uh to go after it first.
• 22:12
  SPEAKER_02: It's the it's the uh you know, get uh get helicopters in the jail, uh in the jailbreak uh initiative.
• 22:19
  SPEAKER_02: Somebody's gotta, you know, uh has the has the tough one that they've got to capture.
• 22:23
  SPEAKER_03: Yeah, well, you know, with the given the fiscal challenges that everybody faces, uh I think mo all organizations are more willing to approach these opportunities.
• 22:33
  SPEAKER_03: And that brings us to the last one, the cap capital equipment planning.
• 22:38
  SPEAKER_03: I've w remember the 60 years I've been in healthcare, every year it used to be a free-for-all for the capital budget.
• 22:46
  SPEAKER_03: And that was when most places were standalone community hospitals.
• 22:50
  SPEAKER_03: Now you have systems with uh 10, 12, 15, 20 hospitals plus uh uh scores of other delivery areas and you have to capitalize those places and you have to come up with a plan.
• 23:02
  SPEAKER_03: Um how do you go about addressing that?
• 23:05
  SPEAKER_03: What what would you uh tell us tell us about the approach that people should be looking at for managing and handling those those uh things?
• 23:15
  SPEAKER_02: Well, I think first it's a recognition of just what how much of the spend it represents.
• 23:19
  SPEAKER_02: And it's not quite the equivalent of MedSurge in terms of dollars, but it's 70% of it.
• 23:26
  SPEAKER_02: Uh you know, it's big if you think about rolling capital and the hundreds of categories of of those uh products that are out there, um, you know, and the fact uh that many of them have also a utilization component of it, whereas you've bought them, uh you've got to standardize it on it, and then you've got those assets in different locations, and they may not be utilized uh as efficiently as they could be.
• 23:49
  SPEAKER_02: So it's really it's it I guess it's really just a resource allocation process and a governance process that says, yes, supply chain should own this, yes, there's a budgeting component of it, yes, there's a standardization across these growing health systems that have got you know more locations, uh, you know, and then there's an uptime uh and a life cycle to this equipment.
• 24:12
  SPEAKER_02: So today we see it managed still predominantly on spreadsheets, uh, you know, and sometimes with a clinical engineering biomedical company that comes along as a partner, uh, but still it's not necessarily tied directly to the budgeting, uh, it's not tied directly to new construction uh and the and the addition of facilities.
• 24:30
  SPEAKER_02: And for sure, it's not always, particularly with the MA activity, you know, standardized across the enterprise.
• 24:37
  SPEAKER_02: So really putting resources toward it would be my first thing, an owner uh of capital equipment as you know, seven to ten percent of the total spend of supply chain, um, enabling that with technology platform, uh, you know, and a partner on the uh biomedical clinical engineering side uh that just looks at you know everything from budgeting uh and and offer uh to sourcing uh to product lifecycle management to end-of-life uh process, uh, you know, to kind of uptime and allocation of the uh of the equipment.
• 25:11
  SPEAKER_02: It's a real opportunity.
• 25:13
  SPEAKER_02: Uh, and it's also got a cybersecurity component of it.
• 25:16
  SPEAKER_02: We're watching in some cases this getting now pushed to the the to the chief technology officer uh on the side in terms of ownership because of um you know the cybersecurity issues that that uh that that are exposed here.
• 25:29
  SPEAKER_02: So I think it's really a comprehensive look at the total expense, uh the risk of the organization, uh, and just you know how you how you best have uh that equipment in the right place for clinicians to do their job uh efficiently and effectively.
• 25:45
  SPEAKER_02: Uh there's partnership opportunities with the manufacturers, there's partnership opportunities with the biomedical companies, and there's really some growing great technology platform companies that are the foundation of this that uh I just think are under underinvested in.
• 26:01
  SPEAKER_03: Yeah, and the one commonality among all three of the areas that you've you're focusing on uh is you have to have strong leadership, you have to have visionary leadership, you have to have capable leadership uh at at uh the uh at all levels from uh from an administrative level, excuse me, to uh to uh um contracting level to to whatever.
• 26:26
  SPEAKER_03: And uh so you got you gotta want to do it.
• 26:30
  SPEAKER_03: If you want to bring process into uh an organization, you gotta be willing to commit to providing the correct the right resources and the support to get it done.
• 26:40
  SPEAKER_03: Is that fair?
• 26:41
  SPEAKER_02: It is.
• 26:42
  SPEAKER_02: And it, you know, as you point out, right?
• 26:44
  SPEAKER_02: It's a little bit like non-acute.
• 26:45
  SPEAKER_02: When we when when these health systems bought all the physician offices, uh a lot of health systems went down the path and said, Hey, I'm gonna take a really good uh up-and-coming person in my organization and put them in charge of non-acute.
• 26:58
  SPEAKER_02: Uh, it's the same thing for, it should be the same thing for capital, and it should be the same thing for indirect spend.
• 27:03
  SPEAKER_02: They're huge categories.
• 27:04
  SPEAKER_02: Uh, they deserve a leader that uh has a career path within it uh that can uh that can grow it.
• 27:10
  SPEAKER_02: You know, the number of health systems that I talk to that are you know three to five billion dollars that have a couple people kind of randomly doing capital equipment and uh you know, three or four that might be doing purchase services, indirect spend, uh they're just really under-resourced, both from a personnel standpoint.
• 27:25
  SPEAKER_02: And then if you hire the right leaders, that leader is gonna say, is effectively gonna go, look, I can't do my job without partners, without technology.
• 27:33
  SPEAKER_02: So it kind of rolls down, I think, like many things from that leadership.
• 27:37
  SPEAKER_02: And uh, but you've got to get resources to it, uh, and we've just under-resourced it.
• 27:42
  SPEAKER_03: Yeah, historically that's been uh that's been a uh symptom or uh of healthcare in general, supply chain in particular, under-resource.
• 27:52
  SPEAKER_03: Well, Eric, excuse me.
• 27:54
  SPEAKER_03: Um thanks for joining us.
• 27:56
  SPEAKER_03: And there are two areas that we've left out that I'd like to have a future discussion about.
• 28:01
  SPEAKER_03: Number one is the emerging supply chain leader, what what that person needs to look like, what that person's capabilities need to be, um what you see out there, uh who you've seen has done things well, what you would advocate.
• 28:19
  SPEAKER_03: And and uh the second part is is what I casually call benchmarking, but but measuring your operation to the point where you can measure yourself so that you can see how effective things that you've tried to implement are toward improvements.
• 28:37
  SPEAKER_03: And this is where your expertise has been in in benchmarking, and and I think that uh a lot of people would love to hear your insights on that.
• 28:45
  SPEAKER_03: So would it be possible to get you back for another uh episode sometime in the near future?
• 28:50
  SPEAKER_02: You bet, Fred.
• 28:51
  SPEAKER_02: Uh, you know, you're a bright light.
• 28:53
  SPEAKER_02: I love I love your voice in the industry and uh appreciate you having me on today.
• 28:57
  SPEAKER_02: And I'd love to talk about both those issues.
• 29:00
  SPEAKER_02: They're meaty and uh uh lots of things that are going on that are great, uh, but also you know, areas for for development as well.
• 29:07
  SPEAKER_03: Okay, well, Eric, thank you so much for joining us.
• 29:09
  SPEAKER_03: And I I appreciate, I know that we've had a couple stumbles here with technology ourselves as we've been trying to do this podcast, and I appreciate you for hanging in there and uh hope to talk to you again soon in the future.
• 29:22
  SPEAKER_02: Thanks, Fred.
• 29:23
  SPEAKER_02: Be good.
• 29:24
  SPEAKER_03: Take care.
• 29:27
  SPEAKER_01: Well, that's all for today.
• 29:29
  SPEAKER_01: Thanks so much for joining us.
• 29:31
  SPEAKER_01: And don't forget to hit that subscribe button and connect with us online so you'll never miss an episode and can catch up on all the ones you might have missed.
• 29:38
  SPEAKER_01: Got a topic you're fired up about, or maybe you want to be a guest on the show?
• 29:42
  SPEAKER_01: Fred would love to hear from you.
• 29:43
  SPEAKER_01: Just reach out at f c r n s at s tonge.com.
• 29:49
  SPEAKER_01: We'll see you next time.