Stanford Health Care's Innovative Supply Chain Model

The shared services model empowers clinicians with data and tools to make the right supply chain decisions, along with a new resiliency effort adopted just prior to the coronavirus pandemic.

Amanda Chawla has worked in healthcare her entire 20-year career, but she does not come from a traditional supply chain background. Her work in for-profit and nonprofit organizations, clinical trials, private practice, frontline patient care, and the operating room, and in operations, managing clinical and nonclinical departments, prepared her for the varied responsibilities in supply chain. "I settled in the supply chain field because of the impact it really had in healthcare and in any organization," says Chawla, the chief supply chain officer and vice president at Stanford Health Care, Lucile Packard Children’s Hospital and Stanford-Valley Care.

This varied background "adds a level of appreciation and value when you’re managing an organization. You can understand different points of interest," she says.

While the three hospitals are independent legal entities, the organizations rely on central shared services. Stanford's supply chain department influences $2 billion annually in nonlabor expenses for the three hospitals, 96 clinics, and about 2.5 million outpatient visits.  

Focused on communications and relationships

Healthcare is a people business, she says, and "as supply chain leaders and executives, our job is to service our team members and ultimately the healing hands for the patients." The connection point is people, which is why communications is pivotal. "Communications is a fundamental pillar and a part of my strategy," Chawla says. Her team includes dedicated personnel whose primary job is to focus on communications, people development, and training.

The department publishes traditional newsletters, but also produces podcasts for the Stanford Health Care supply chain team. They’ve covered topics such as Stanford’s supply chain vision, what category managers do, what the receiving staff does, women leaders in supply chain, Black Lives Matter, and other topics impacting the workforce or society. "The response is overwhelmingly positive," she says. "When you think about the frontline staff member, at least in the warehouse, they may not have the time or ability to go online and read news articles or emails. This is another avenue in how we communicate with our team members." It’s one reason for the department’s high employee engagement scores, which are assessed quarterly, she says.

To foster good communications, Chawla meets regularly with other top executives at the three Stanford hospitals, the adult, pediatric, and community hospitals. With her peers, such as the chief medical officer, chief financial officer, and chief nursing officer at each organization, the informal agenda varies based on the stakeholder and supply chain needs. "They are my customers," she says. "It’s an equal opportunity to hear from colleagues about what is important to them, what keeps them up at night." Her staff conducts regular check-ins with their peers at the hospitals as well.

Developing a resiliency team

Just prior to COVID-19 hitting, Chawla's department began a risk matrix and disruption mapping process to anticipate possible bumps that could impact the healthcare supply chain. The pandemic accelerated that process and the creation of a resiliency program. The department developed a resiliency model that included traditional warehouses, strategic stockpiles, and a dedicated team to review market developments using internal and distributor data to understand supplier liabilities.

The resiliency program included a plan for a clinically integrated supply chain. The goal was to gather and analyze information proactively, to avoid needing to be reactive. The supply chain team often joins daily nursing or operating room huddles to understand the organization's day-to-day details.

For the resiliency program, Chawla formed two groups: a clinical equivalency work group and a clinical utilization practice work group.

The clinical equivalency group is cross-functional, proactively and reactively looking for acceptable alternative products for those that are disrupted. The clinical utilization practice group looks at products that are disrupted without good market alternatives; they develop alternate conservation and utilization practices. "It’s not like I get advanced notice that this product is going to run out in 60 days," she says, "so you have to have that part of your supply chain streamlined and continuously improved. We’ve done a lot of work with performance improvement of our business practices to make this part of the supply chain more agile and more responsive."

Amanda Chawla

The resiliency program now has two funded medical directors of supply chain, staffed by a surgeon and an interventional radiologist. They chair the committee providing value analysis for physicians. A nursing and ancillary central committee is run by the assistant chief nursing officers. "We want clinicians to be empowered to make the right decisions," Chawla says. "Our job in supply chain is to provide the research, the perspectives, the analytics, the tools, and the data to be able to make informed decisions."

The other clinical leadership unique to Stanford is the supply chain research group, she says. It sometimes engages residents and students to work on supply chain research projects such as a cost-savings initiative or operating room supplies effort.

Leaning on technology and data to optimize the supply chain

Another Stanford focus is accelerating technology transformation work that was not driven by the pandemic. Since opening the new adult hospital in 2019, Stanford has used robots to deliver products throughout the hospital. The department also introduced an radio frequency identification (RFID) system to monitor supply usage. The RFID readers are on the hospital floor cabinets and in the operating rooms. Rather than placing individual tags on commodities, the bins or Kanban cards are tagged, generating a reorder when the bins reach the midpoint of supply use. Nursing time for supplies is now only needed for quality control, rather than reordering.

The system gives the supply chain department location-based data to know the nursing unit experience for percentages and timing for products with empty bins. "We've got good data from a clinical user standpoint of what's going on there, with the RFID technology. This not only helps with automation, but it also gives us greater intelligence to be able to service our customers," Chawla says.

They are taking the technology to another level with clinical integration in the OR. Chawla uses the self-checkout at the grocery store analogy. The scanner in the operating room means the nurses can scan rather than transcribe product inventory numbers to charge them to a patient account.

With analytics, they are working on periodic automatic replenishment (PAR) health and PAR management, to actively adjust inventory levels based on hospital trends. "It's very hard. I don't think any hospital has necessarily figured out how to manage consumption of commodities," she says. Commodities aren’t charged to the patient, but rather to a floor or a cost center. This data is used for demand planning and forecasting, and the team is working on reports and tools to provide insights on not only inventory on hand, but also to project when the inventory will run out. By connecting that to the inventory coming in, this gives insights to the resiliency team and supply shortages team.

"We are very passionate about taking the hunting and gathering out of supply chain and being able to understand and automate the supply chain to make it easier for our frontline staff members," she says.