The Exec: 'Right Now, It Is About Supply Resiliency'

The supply chain leader of Allegheny Health Network says it is important to manage expectations at this stage of the coronavirus pandemic.

At Allegheny Health Network (AHN), the top supply challenges include supply resiliency and inflation, the health system's senior vice president of supply chain says.

Alan Wilde, MBA, has been senior vice president of supply chain at AHN since June 2019. Previously, he served as interim senior vice president of supply chain at WellStar Health System, vice president of enterprise facilities management and supply chain at BayCare Health System, and vice president of supply chain at University Hospitals.

Wilde recently talked with HealthLeaders about a range of issues, including supply chain challenges at AHN, AHN's group purchasing organization, and involving clinicians in supply chain decision-making. The following transcript of that conversation has been edited for clarity and brevity.

HealthLeaders: What are the primary challenges of serving as the top supply chain officer at AHN?

Alan Wilde: Right now, it is about supply resiliency. Getting out of COVID, goods and labor for doing the things we need to do for the health system are key factors. We have had several inconsistencies in the supply chain during the coronavirus pandemic—we are trying to get out of that. Inflation is a challenge—a lot of our suppliers are saying they needed to raise wages for their labor that produces supplies for us. We have had pointed responses to them—we are not seeing increases in reimbursement from commercial insurance carriers as well as Medicare and Medicaid. So, we have no where to go.

Also, internally, I have been trying to manage expectations. There is a general feeling that COVID is over or significantly reduced. There is an expectation that we can get back to doing the things we were doing before the pandemic. I need to manage those expectations.

HL: What are the primary inconsistencies you have been experiencing in the supply chain?

Wilde: We are still on allocation for some supplies such as needles, syringes, and several plastic products. It is starting to fall off, but not as quickly as we would hope. We have made some switches to other suppliers because of the incumbents' inability to deliver for us. Some of our suppliers left us high and dry, so we have had some conversations about not going back to them.

HL: How is supply chain managed at AHN?

Wilde: We manage supply chain centrally. I have a corporate supply chain function. Within that is sourcing, procurement, our own warehouse and distribution function, our own pharmacy warehouse, and I have a group that does clinical integration—they help us work with physicians on product decisions and when we are going out to bid. The clinical integration team also helps us with standardization efforts and converting from one product to another. Our clinical integration team is our secret sauce—I have been able to hire some former sales reps, and they are adept at talking with physicians. They nurture relationships.

HL: How does your group purchasing organization function?

Wilde: We are a member of Vizient, so we use Vizient for most of our commodity items. For the physician preference items, we have created a local and regional GPO called Provider PPI. We have contracts for all of the different parts of the body. We also market those contracts to members in Delaware, Pennsylvania, and West Virginia. We have about 80 hospitals that are utilizing our contracts.

HL: How big of a challenge is it to have 80 hospitals utilizing your contracts?

Wilde: It is challenging. Most of our contracts are dual source or multi-source. And we are basically an a la carte kind of GPO. You can sign up for the orthopedic contract, you can sign up for shoulder implants—you do not have to sign up for pacemakers and defibrillators. You can pick and choose the contracts you sign up for. The challenge is whether we have the two or three orthopedic vendors on contract that hits the mix of another hospital. The other hospital may be a heavy user of Smith & Nephew, but we do not have Smith & Nephew on our contract.

Where there is a fit, we have seen a lot of traction. We have delivered a lot of savings to our members.

Alan Wilde, MBA, senior vice president of supply chain at Allegheny Health Network. Photo courtesy of Allegheny Health Network.

HL: What were the primary supply chain challenges AHN faced during the coronavirus pandemic?

Wilde: It was mainly about supply availability. There was not a lot of slack in the supply chain. There were a lot of just-in-time inventory practices. We were lucky that we had our own warehouse, which gave us about 20 days of buffer. That gave us an ability to go out and find new sources for products.

The other challenge we had was making decisions quickly. Traditionally, you would get samples of supplies and have your clinicians look at them. We would be told, "It's available. Buy it now or it is going to be gone in the next hour." So, we ended up having to take some leaps of faith with our clinicians.

There was a lot of fraud going on, which we got adept at figuring out. We had some suppliers who would take certifications from the Food and Drug Administration and slap them on their products—they would be certifications for another manufacturer. We ended up reaching out to law enforcement such as the FBI and educated them about some of the things that were going on.

HL: How did you rise to that fraud challenge?

Wilde: Before we would buy from a previously unknown supplier, we would ask for certifications. Then we used some tools—we would go to the FDA website and put in a manufacturer's number, and it would tell you where a product was manufactured, and we would compare that to what the supplier was telling us. If they did not match up, we had a pretty good idea that they were fraudulent.

I had some colleagues at other places and heard horror stories. It was a crisis. We started our day at 7 or 8 a.m. and ended at 7 p.m. It was just calling anybody and everybody. We were calling multiple suppliers for gloves and other supplies that we would have never thought of calling before.

We were lucky. There were a couple of times when I got worried that we were going to run out of supplies within a couple of days. But we were able to find those supplies quickly.

HL: How do you involve clinicians in supply chain decision-making?

Wilde: We will look at a category and benchmark it. We may get information from dealers about physician preference items. We will then engage our physicians in deciding how we are going to do a request for proposal. Are we using three vendors? Can we go down to two vendors? If we are using two vendors, can we go down to one? Are there other things in a category that we need to look at? For the physician preference items, beyond implants, is there instrumentation or other things that we can try to leverage?

Once we get buy-in from physicians, we will send out the bids. We will get the bids back. We will then share the results of those bids with the clinicians. We go through a process to reach the best decision. In some cases, we may include some of the physicians in the negotiation strategies, which can be helpful.

The clinical integration team is heavily involved in bid scenarios. Before we go out to bid, I may have them reach out to physicians and ask how their incumbent vendors are working out. They may ask physicians whether there is a new technology that needs to be incorporated in the bidding process.

HL: What are the primary keys to success in supply chain management?

Wilde: You need to always be open to change. You need to be open to new ideas. I have learned from vendors. I have learned from people in other industries.

You also need to look for opportunities to automate. How can you automate day-to-day activities that are routine and do not add a lot of value? You want to be able to take those people and have them do what I call knowledge work. I would rather be paying people for their brains than their ability to do data entry or other mundane tasks.

Another key to success is keeping your stakeholders involved. Whether that is clinicians, finance people, or operations people, you need to be thinking about keeping them involved.

You also need to be cognizant of the cost of doing change. We may save $100,000 with a change, but it may cost $200,000 to make the change.

There are two other things to consider from a finance perspective. You need to help your accounts payable department and manage the bills. You need to make sure that records are accurate and bills are getting paid on time, so you are not getting put on credit hold or shipping hold. You also need to look at your accruals—your purchase order accruals, your receiving accruals, and invoice accruals. You need to make sure those are accurate because you have a responsibility to make sure the financials of the organization are correct.

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