Hospital Supply Chain Series: Purchased Services Multi-Year Strategy with Luis Martinez | Ep.13

THLE Ep 13 Luis Martinez 1

 

In this episode, Lisa Miller and Rich Dormer from VIE Healthcare Consulting are joined by Luis Martinez, Vice President of Supply Chain at Cornerstone Healthcare Group.

Over the last five years, Luis manages and oversees the supply chain for eighteen hospitals across six states.

Luis shared his thoughts on today’s challenges with purchased services:

“I think one of the biggest challenges going from today and 18 months ago is that we put a lot of things off. And now you have to pick them back up and you have to pick up some of your 2021 initiatives. So if you think about purchased services, the end date didn’t change because of the pandemic, the contract still expires in 2021. If you did push the 2020 renewals out one year, now you have a higher value that you’re having to negotiate or manage.”

Today’s episode is sponsored by Invoice ROI™, the only patented purchased services and indirect spend technology to manage, monitor and benchmark line item details.

In this episode we discuss topics on the hospital supply chain:

  • How purchased services are unique
    • Purchased services are negotiated every three or five years, depending on the cycle, and so it’s less transactional. However, there is also more risk associated because you’re not only negotiating a line item, you’re negotiating an entire contract.
  • Purchased services benchmarking
    • The problem with purchased services is that there are so many variables, which means a benchmark could be misleading. It’s important to get all of the details to make sure you’re dealing with the right type of benchmark.
  • Negotiating purchased services contracts
    • It’s important to track the inventory and performance of the contract you just negotiated. This allows you to check on the vendor’s performance of the contract and prepare for the next contract negotiation.
  • Utilizing a multi-year purchased services strategy
    • Utilizing a multi-year strategy can help you when it comes time to renegotiate contracts.
  • How COVID has changed the landscape
    • One of the biggest challenges coming out of COVID is figuring out where you left off and where you pick up.

CLICK HERE TO DOWNLOAD THE PDF TRANSCRIPT

Connect with Luis:

📱https://www.linkedin.com/in/martinezluis/

Connect with Lisa:

🖥 https://viehealthcare.com

📱https://www.linkedin.com/in/lisamiller/

Check out this episodes sponsor:

🖥 https://viehealthcare.com/category/invoice-roi/

 

CLICK HERE TO OPEN THE FULL TRANSCRIPT

 

Intro (00:06):

Welcome to the Healthcare Leadership Experience, a place where healthcare leaders will share proven strategies and innovative approaches to leading the clinical and business side of healthcare. This show is sponsored by VIE Healthcare Consulting, who’s proudly helped hospitals save over $700 million in non-labor costs since 1999. Here’s your host, Lisa Miller, founder and CEO of VIE Healthcare.

Lisa Miller (00:29):

I have a new series on the healthcare supply chain where Rich Dormer and I will be discussing with industry experts on ways these leaders are improving, innovating, and planning for the future healthcare supply chain. Join us over the next several weeks where we are focusing on having deep and thoughtful conversations on the healthcare supply chain.

Luis Martinez (00:49):

So I think one of the biggest challenges going from today and 18 months ago, is that we put a lot of things off. And now you have to pick them back up and you have to pick up some of your 2021 initiatives, right? So if you think about purchase services, the end date didn’t change because of the pandemic. The contract still expires in 2021. If you did push the 2020 renewals out, you know, one year, now y- you have a higher volume, right, that you’re having to negotiate or manage.

Lisa Miller (01:17):

Welcome, Luis, I wanna thank you for being on the Healthcare Leadership Experience Podcast. Rich and I are super excited to talk with you. Do you mind just giving us a little bit of background on your career and what you’ve done and what you’re doing now? We would just love for everyone in the audience to get to know you a little better.

Luis Martinez (01:33):

Yeah. Thanks for having me. I am Luis Martinez. I’m Cornerstone’s Vice President of Supply Chain. Uh, I’ve been there for 5 years now, going on 6, about 5 ½. And, in my current role, I oversee all things that are kind of traditional supply chain, your materials management, your purchasing. We do the contracting for all purchased services. And then we do accounts payable, or accounts payable reports up the supply chain, I should say, at Cornerstone.

Uh, prior to, to joining Cornerstone, I was with MD Byline which has since been bought, so I think they go by Track Manager now. Or maybe Simpler. But when I was there, I really worked with all of our accounts and members that we had there, and met with all of the different leaders in supply chain really around all spin categories—whether it was capital, consumables or purchased services. So it was a- it was a great opportunity for me to be there and just meet peers and different ways to view supply chain, whether it’s for profit, not for profit, academic, rural, whatever it may be.

And prior to that I was the Director of Purchasing for a hospital system, mainly with the surgical, you know, specialties, if you will. So a lot of interactions in the ORs, of course, when you have those type of hospitals and with physicians. And then prior to that, most of my experience was in the capital space,  mainly equipment planning. I got a chance to be on some really neat projects, Stanford out in California and Cleveland Clinic when they opened their hospital. Gosh, it’s probably been 10, 15 years now. But I got a chance to learn a lot on the capital space around that hospital and some other projects that I was on.

So I’ve, I’ve had a good career that was pretty mixed. You know, I got a chance to see capital, disposables. I’ve been on the account management side. I’ve been on the provider side, more on the provider side. So I’ve gotten to see all the different views of the supply chain world.

 

Lisa Miller (03:18):

Thank you. I really appreciate you going into that detail because I think it’ll lay a nice foundation for our conversation. Because you’ve kind of been, like you said, more on the provider world. But you had then the opportunity to be a little bit on that MD Byline side and kind of, you know, see that world. So it gives you an interesting context when you’re looking to really put together a supply chain strategy for Cornerstone. I think that that’s given you a really well-positioned view of looking at the marketplace and seeing what’s best for you in the organization.

Lisa Miller (03:49):

So today we’re gonna talk about purchased services. And, you know, it is unique. And, I’d love to hear, you know, your definition of why it’s unique or maybe some of the challenges. But really kind of get an overview from you, Luis, on that, you know, purchased services space and how you see it.

Luis Martinez (04:08):

Yeah. It’s, it’s a different animal for supply chain, right? I mean, I think you- when you think about capital and you think about consumables, it’s transactional. It’s a line item that you purchase and you may just purchase it —if it’s capital— you may just purchase it once a year or once every five years. Consumables you do purchase it more frequently, you know, every few weeks, every day, depending, you know, the size of your organization. And- but purchased service is different. You get the services monthly or, or weekly, but you really only negotiate those every 5 years or 3 years, or whatever your cycle is. And so, you know, it’s less transactional. I guess there’s more risk, I should say, in a purchase services negotiation because you’re not negotiating a line item, you’re negotiating a contract. It’s just a completely different animal.

So, you know, there’s definitely the cost of services. Every delivery, you know, may have X cost. Or every pick up or every service that they provide if it’s clinical. But also tied into that, right, are, are late fees or environmental fees, overage fees, uh, waiting fees, right? It just- there’s all types of extra language and fine print in those purchase services contracts so it, it’s not the same as a transactional negotiation. And so because of that, you have to just approach it with an entirely different mindset.

Lisa Miller (05:26):

Yeah, absolutely. And it’s so true. It’s transactional. I like that, you know, it’s not transactional. I like that differentiation. Rich, did you have questions-

Rich Dormer (05:33):

No, I just — you mentioned the approach and I was just curious to find out how do you approach purchased service? So if you’re… well, all those different fees and different complicated contracts, what, what are your steps? You know, obviously, it doesn’t have to be a hundred steps but just curious your overall steps and then approach?

Luis Martinez (05:50):

Yeah. It’s a really good question. And I’ll take you back to the beginning of my time, right? My beginning of my time in, in negotiating purchased services contracts. I think step one is understanding the service and, and the language. Understanding the fees that I mentioned earlier. But you have to become an expert in what they’re discussing. And so whether you’re doing that through Google research, you know, where a lot of us start. Or you’re pulling in expertise within your organization, right? Maybe an end-user. Or if it’s a third-party group, right? That, that you’re bringing in to help you with that.

But I think, you know, step one is just understanding…really just picking apart the contract and understanding each section. And saying, okay, what is this section? What does this mean? And you have to do that, obviously, for tons of contracts. But it’s kind of breaking it down. ‘Cause as you start going and negotiating these, you know, over and over, whether it’s the same one or a different type of service, there are a lot of similarities, right, of the language. So, I mean, you start learning how to, to kind of pick it apart. And so understanding the structure of an agreement is, I think, probably step one. And then how you do that is, you know, there’s a different, you know, like I said, you could do it internally, you could do it yourself, you can get a third-party. You could hire a person solely for purchases services, which is what we see a lot now, right, so they have the time to do that.

Rich Dormer (07:07):

Just one follow-up question on the approach. So, you know, in the industry we’re seeing a lot of need for purchased services benchmarking which, obviously, we provide and we work with a lot of our clients with. But do you see…Where in your approach, where in the process, is the benchmarking? When is it required as opposed to just a blanket, uh, benchmarks that we’re seeing a lot in the marketplace?

Lisa Miller (07:29):

Right. And I just wanna …that’s a great question, Rich. And I wanna add a little to that, right? So we see a lot of this ratio benchmarking. Is it a starter? Is it non-starter? Comparisons between like-sized organizations with bed size or revenue. And is that useful? Is that not useful? And to Rich’s point, there’s some benchmarking that needs to be done locally or, you know, there’s great people doing—and hospitals doing great work. And sometimes they need some supplemental benchmarks-

Luis Martinez (07:57):

Yeah.

Lisa Miller (07:57):

That’s a great- that’s a great big question I just wanna throw, throw some more aspects your way on it. (laughs)

Luis Martinez (08:04):

So it is. You’re right. It’s a, it’s a big question. And it’s not an easy one to answer. Because I, I think, number one, you know, benchmarks have their place. And when we talk about capital and disposables, it’s a little closer, right? You get closer to a benchmark. And you say, okay, this is the exact same model. This is the exact same, you know, widget. And so they should, you know, be roughly the same price.

And so … But when you get to purchased services, kind of going back to, to what I was saying earlier, right, with all the different aspects of a contract, it becomes a little bit more challenging. And now it does have its place. It does provide some directional opportunity for whoever’s negotiating. And as a negotiator, you would wanna look at that, right? You really can add a, a landscaping contract though it, it’s not apples to apples, right? You know, the, the size of the property may be different, or it is different at every location, right? And so it becomes challenging in that sense. But there is a place for it.

Luis Martinez (08:58):

I think, Rich, one of the questions that you asked is when do you need it? And I think you probably … it’s helpful in the beginning to know if you’re, you know, what your opportunity is for negotiations or, uh, you know, how deep you wanna go. Or do you even wanna go out to bid, right? So it may give you some directional indicators in that sense. But then you use it again as you get deeper into the agreement, right, and the negotiations. So if you are able to kind of find a general benchmark that’s pretty similar, then you use that to your advantage.

The problem in purchase services is there’s so many variables. I don’t think you’ll ever get an exact, you know, benchmark, because of the some of the things that, that were said earlier. You know, hospital size, frequency of visits. It doesn’t mean it doesn’t exist, but it requires a deeper dive into the benchmark to make sure you’re looking at the right type of benchmark. ‘Cause it could be misleading, right?

Luis Martinez (09:50):
And the sales folks, you know, they become trained over the years, right, with, with the benchmark companies out there as to, to have the rebuttals, right? To say, you know, that’s a different size hospital. That’s a different region. It’s a different, you know, fill in the blank. And so if you just have a, kind of a blind benchmark, you have to be prepared, you know, for that.

So I, I’d go back, you know, I’ll use, you know, what I was saying earlier in these purchased services, all these different agreements, right, but if you, if you renegotiate a linen agreement and they have, you know, language in there that says, well, we need to recoup our dollars if you terminate early. But you’re up for renewal and you say, well, you’ve already made money. You know? You’ve gotten to your ROI. And you’ve hit your break-even point. So there’s some negotiation opportunity, I think, within there. Obviously, they’re replacing product as you go, but they also factor that into the cost. Um, so if your renewal language in a linen contract also states, hey, if you terminate early there’s a penalty. And if their rebuttal is the reason for that is we have to recoup our cost, well this is a renewal. You, you’ve already recouped that cost plus more, hopefully, that’s your business model, right? So it’s just thinking through that.

Luis Martinez (10:56):
So if you take that as an example, you know, the benchmark of a renewal versus a new agreement where they’re investing product or capital to…you know, those are two different factors. You know…has built-in tank into it. You know, that may be a little higher, right, than one that doesn’t have it, right? So it just, it, it could be misleading if you don’t have all the details behind it.

Lisa Miller (11:18):

Yeah, thank you. That was a great answer. And…benchmarking, I think you said it well. It’s complicated to figure out when to use to use it and how. You know, we recognize that it’s a very regional benchmarking exercise. And I think it’s, it’s… you mentioned it. I think it was greater than just the benchmarking is the expertise. And I really feel like hospitals have so much leverage on their own in the sense that, you know, you can go get some insights. But sometimes the leverage that they have within their own region is tremendous. I don’t know if they recognize their market power, even if they’re smaller. I think that sometimes we don’t talk enough about a hospital’s own leverage, market power, skill set, in what they can do, even if they’re stand alone or what have you. I, I think that we don’t have enough of those conversations.

But thank you. I think the benchmarking discussion probably could be a big discussion…Lisa Miller (12:10):

Something I wanna mention is, it’s funny because, you know, even platforms, you know, there’s a need sometimes for our fees and sometimes there’s need just to renegotiate. And I think you mentioned that as well.

And while hospitals are going through the RFPs, or we’re going through our platform or really kind of handing that off, it’s important to know who’s behind it. And, like, who’s the expert? Right? A platform can’t perform an RFP in purchased services. It’s not transactional. Like you have to have a thinking person with deep expertise that has done that category a number of times throughout the country that can really sort through everything. Right?

I mean, I’ll, I’ll give you a story someone shared with me. But before I do, I mean, you would agree, right, Luis? It’s this deep expertise that matters.

Luis Martinez (12:54):

Oh, for sure. You know, technology like benchmarking, right, it has its place. You need it. It’s a tool that you use. But to your point, you know, and this is what I said earlier, right, who’s the expert, right? You, you need some expert that understands each component of what you’re negotiating. And that’s difficult to pull out of a- one, out of a benchmark sometimes. Sometimes it’s there, sometimes it’s, it’s a little bit more complex. And it’s the same situation with technology. Sometimes it’s perfect for it. But a lot of times, it’s deeper that you need somebody who does it, has done it before or has taken the time to learn it, you know, so that they’re prepared for those negotiations.

Lisa Miller (13:36):

No, I like that too. It doesn’t always mean…you know, you can have somebody who’s very diligent, gonna take the time to go through it internally and really asking numerous questions. And there’s a lot of really talented people like- that could do that. We had one of our clients who had used a platform for one RFP for linen. And, you know, it was interesting because normally he’s very much involved. He’s a brilliant supply chain person. He just was just overwhelmed, a lot of different activities. Gave the RFP, uh, for linen out. And there were some good qualities, like you said. But the labor factor was not examined close enough. And once, uh, the contract was signed and, and then the new vendor came in, he ended up for the first month counting towels. (laughs)… supply chain. Because the labor component was not done accurately and, of course, they had to redo it.

But I just think that it, it speaks to really understanding, you said it so well, those sections. And I like that approach.

So I wanna jump to just another topic which I actually wanna give you 100% credit for this because you utilize a multi-year strategy for purchased services, right? So this is not doing an RFP or renegotiating an agreement and then waiting for renewal three or five years. You take this multi-year strategy and you really look at what’s in the middle. Now, you know, we won’t talk about what we do right now in that respect. But we believe in that. We believe what happens in the middle matters probably if not more important. But it’s your approach. And I’d like you to share with everyone that multi-year strategy because I think it’s brilliant.

 

Luis Martinez (15:12):

Yeah. And, and for us it’s, it’s … You know, for me, uh, with the capital background, right, which to any project, uh, whether it, it’s just ongoing capital or a construction project, but you kind of lay out, okay, we need to buy this at this time. And it’s gonna be- here’s our cash outlay. And it seems to lack a little bit in the purchased services space. And I know some folks are out there doing it. But a lot of folks – you know, will say my- you know, m- basically, their multi-year strategy is trying to keep up with the renewals and, and that’s their strategy, right? So they have a spreadsheet and they say, “Here’s my contract. Then here’s where it, where it begins and it ends.” And, and then hopefully they’re tracking it. It’s not a renewal or there’s a notification, things of that nature, in there. That’s definitely a great start, right?

But there, there’s something that happens that gets kind of lost. A- and that is, you know, once you sign an agreement, and as a supply chain leader, as a negotiator, you sign an agreement, you kind of walk away. Right? You say, okay, I’ve negotiated. I’m moving on to the next one. And I’ll focus on this one in three years when I come- when it, when it’s up for renewal, or five or whatever you decided to negotiate. And you move on and you don’t keep track of it. You know, whether it’s “are they hitting the marks that we said we were gonna hit when we, when we signed the agreement? Are they the correct contracted rates? You know, are we getting the right discounts?”.

Luis Martinez (16:26):

And so in between, that in between period, right, between the day you sign and the day you decide to renegotiate the renewal or take it out to bid, there’s a lot of action that happens in between there at a local level, right? At an end-user level, right? They’re delivering. They’re keeping track of inventory. And all of that’s data that should be captured in between. And the big reason why is one, that you wanna check the performance of the contract you just negotiated. It also preps you for your next renewal, right? So what data are we capturing out of year one? Do we have the line-item details of the invoices so that we could take it out to bid quickly? That just lacks a lot of times in folks’ strategy. They just kinda think “okay, I’ve negotiated. I’ll wait three years. I’ll negotiate it again.”

One of the first things that they do, especially if they’re going to bid, is like, okay, now I need to get all the invoice data because I need to create this analytics so that I could take it out to bid. So they know, you know, the quantities that were, you know, we’re asking for. We keep using linen as an example. Is, you know, how much do they have in inventory? How much gets delivered weekly? All those things. And so we’re not capturing anything in between. And so I think that’s a big part of anybody’s multi-year strategy is what are you doing in between?

‘Cause multi-year strategies, without an in-between is just a roadmap. It’s just saying, hey, this is year one, this is year two, year three. But a real strategy will include things that happen in-between. And I think that’s a big part of the challenge when you go out to bid. And I believe it’s a big enough obstacle that folks just say, “I renew. I’m just gonna renew because I don’t have the data. I don’t have the time. I don’t have the manpower to get those analytics. And so I’m just gonna move on to the next project and renew this one ’cause it’s the path of least resistance.”

And so I think the in-between strategy or that multi-year strategy is capturing the data. And like I said, just one, having it from an analytics standpoint and ready, really at a drop of a dime, to go negotiate. But also you need to check the performance of your service providers.

Lisa Miller (18:18):

Yeah. So I’m gonna dig in on this conversation because I loved when I hear you talking about this multi-year strategy. I actually wrote down something I heard you say. And you alluded to it now. But you’re better positioned when you renegotiate. And so what happens when you’re caring about the middle, l- like you said, you, you can…if you know the details that’s in your three-year agreement, you’re better positioned to then either perform an RFP or renegotiate.

And, you know, and I think the- what prohibits that probably is a couple things. There’s so many things supply chain’s working on. And then the invoice detail….on the invoices. But the front-line users need them. And, and it’s interesting in our work we see a couple things that happen if you’re not managing the contract performance. You can’t spot check it. And you can’t just look at the agreement. Or we love quarterly business reviews and that’s important. But what you’re missing if you’re not really looking at the line-tem details is the, uh, what’s off-contract.

And I- believe it or not, there’s quite a bit of purchase service then that falls off-contract in the term of agreement. And we don’t-

Luis Martinez (19:22):

Sure.

Lisa Miller (19:22):

… talk about that. Errors. Pricing errors. I mean, very difficult to do an AP audit in purchase services because it’s not transactional. So even those pricing errors rarely get picked up unless you’re tracking that or, or somebody’s really gonna be willing to commit, you know, go through those invoices. And I think the changes in—you just have at the services are performed or the amendments, all those things happen in the middle, in between. And what ends up happening is at renewal, at best, you’re getting back to where you were, sometimes a lot higher, um, because of increases and it’s just the contract gets out of hand. And I, I actually think that’s the message of this podcast, I’m hoping, is that what’s the multi-year strategy in one of those agreements? It’s not, I, I performed the renegotiation of the RFP. And now we’re gonna wait 3 or 5 years because that’s gonna be a recipe for increasing costs, right? And, um, I just think-

Lisa Miller (20:17):

… hospitals have to really put together what goes on in the middle. I don’t know if you wanna talk, you know, talk anything more about that or if Rich has a question but …

Luis Martinez (20:25):

Yeah. Well, let me just say this before I forget. Rich, before you get to your comments or question. But, you know, you, you brought up an example and it made me think of one, for us, where we did have a situation where we negotiated the contract. The end-user actually started adding things to the delivery. And so that was all off-contract. So by the time we caught it, which wasn’t too far, it was still within the agreement, but it had gone on maybe, I don’t know, 60, 90 days, is they added probably like 25% line-items to the agreement because they needed it. And so they weren’t doing it maliciously, right? The end-user is just trying to operate. And they say, hey, we need these things. And so they, of course, they delivered them. They were a good service provider. However, all that was, was not contracted.

Had we not did the work in between, we wouldn’t have seen it for 3 years, right? And then, you know, you could’ve had an instance where by the end of the agreement, the line items, you know, on that first service agreement, you know, were only a fraction of what you started with because everything had been changed. Now there should be action that takes place in-between there. Service provider should’ve got an amendment, things of that nature. A- and we would like to think that everybody does that. Right?

But the truth of the matter is, the delivery driver, inside sales rep, and the end-user, a lot of times they’re just trying to operate. And so they, they’re not thinking contract necessarily. Or amendment. So you could get situations just like what, you know, what you described where things go off-contract. And then that’s just, you know, it’s not, hey, I got disconnected and, and we put the wrong price in there. It’s hey, you’re ordering things now, or you’re getting services that you were not getting in the original agreement that is now, you know, “off contract.” But the reality is, is, you know, we, we just kind of made whatever change. We just don’t have it on the original agreement. And so we need to add it now.

Lisa Miller (22:07):

Yeah. And I love your example because regardless of different strategies out there, whether it’s benchmarking, dashboards, categorization, ratio benchmarking, RFP platforms, putting it on a GPO agreement, all these things, I think what’s the missing, missing, missing conversation is what’s going on in between? And-

Luis Martinez (22:07):

Yeah.

Lisa Miller (22:27):

… that’s the hardest thing. You know, 50% of a non-labor spend, essentially is in purchased services, and yet we don’t treat this spend like we would, like, implants or supplies and monitoring-

Luis Martinez (22:39):

That’s right.

Lisa Miller (22:39):

… on a monthly basis. So this is why, you know, you excel tremendously. I mean, you have 18 hospitals at Cornerstone. And that’s a lot of managing between. And frankly, catching at 60 or 90 days into it is remarkable. (laughs) Like I think that’s just remarkable that you did that. Um, so I encourage those listening that this is the conversation. Yes, it requires resources to do that. But I think that’s where the true, true cost savings are, is in the middle. So I appreciate you, you know, sharing that with me and us today.

Rich, did you have any questions?

Rich Dormer (23:15):

Yeah. I do- I, I really love the fact that you distinguish the multi-year roadmap to a multi-year strategy. Uh, I mean, it really just, it, it, it simplifies what really is necessary in the industry. And I know that, obviously, going over the past year with COVID, you know, we’ve been brought in by a number of clients that really why they chose us is because we do go out there and we do review mid-term agreements. Uh, we do identify opportunities and do it rapidly.

Uh, so just curious, you know, you know, obviously there’s been a shift in these types of thoughts and, and, and processes. But, you know, just people in the industry you know, just things that have happened over the last year with COVID. Purchased services or non-purchased services, just your thoughts on what is different now in, you know, June of 2021 versus, you know, 18 months ago prior to COVID and your thoughts.

Luis Martinez (24:05):

Yeah. I think COVID, this is not only in the professional setting, right, but in, in a personal setting, right? We lost a year. Things that we would’ve done in 2020, we had to put off because of the circumstances. So in a professional setting, anything that you may have been working on to second priority to COVID priority, right? Which was right, it was the right move, obviously, uh, for everyone, right?

And so I think for folks picking back up from where they left off after taking some time off to focus on the pandemic, it is even more challenging, right? And, uh, you know, we’ve had some conversions that we’ve put on hold in, you know, April, May, you know, early over the pandemic period that we’re picking up now that you’re scratching your head and you’re thinking okay, what was the plan again? Why- why were we doing this, right? And so, you know, you eventually get back there. You know, you figure it out.

Luis Martinez (24:54):

But if you think about purchased services, we had a couple that we just kicked the can. We said, you know, you know, a- actually, one was expiring March of 2020 that we said just extend it 6 months and then by then everything, you know, we’ll figure it out and then we c-. Well, obviously we didn’t. And we, we kicked the can again 6 more months. And then we signed an agreement that, you know, we took more time. And so you’re catching up.

And so I think one of the biggest challenges going from today and 18 months ago is that we put a lot of things off. And now you have to pick them back up. And you have to pick up some of your 2021 initiatives, right? So if you think about purchased services, the end date didn’t change because of the pandemic. The contract still expires in 2021. If you did push the 2020 renewals out, you know, one year, now you, you have a higher volume, right, that you’re having to negotiate or manage, right?

And so I’ve told Lisa before on conversations, you know, when I was at MD Byline and even now and even I say this, is, you know, when you walk into a supply chain office and you say, “What’s your biggest challenge?”

Luis Martinez (25:53):
And they say, “I don’t have enough people. Right? I don’t have enough people to get to … ” A, they could large IDNs or, or single, you know, hospital. They just- I just don’t have enough folks to tackle everything we’re trying to accomplish. And so I’m not different, right? I, I have to, you know, whether it’s, it’s your team or you know, GPO or just another department, I’ve used interns where you get folks to come in and help because you need the manpower, I think that’s gonna be a huge challenge going from 2020 to 2021. I think shifting your focus back to it is easy enough. But how do you actually tackle all of these problems? How do you get, I don’t know if problems is the right word, but initiatives and projects that you had, how do go after them now? And I think that’s the biggest, biggest challenge is reset.
And, you know, for some hospitals and systems, it’s reset and by the way, make up some of the lost savings opportunity that you would’ve had in 2020. I need you to make it up in 2021 as well. And so there’s that added pressure, that added metric—which isn’t uncommon for supply chain. A lot of supply chain individuals are measured on some sort of cost reduction. Not all of them and not solely on that metric. But that is a big part of it. And so supply chain is typically part of finance or operations. And it’s no secret that finance and operations, if there’s opportunities to reduce the run rate, you know, you go after it. That’s- that- it helps the business. Oh, let’s generate revenue and stabilize expenses or reduce expenses.

And so I think that’s the biggest challenge coming out of COVID is how do I pick up where I left off? How do I do it with the folks that I have? And what resources exist outside of my organization that could help me achieve those milestones or goals that we’re looking to do?

Lisa Miller (27:31):

Yeah. That’s a great question and a great answer. I, I think we’re gonna end it there (laughing) because, you know, it’s true. We have, like you said, a lot of resetting to do with COVID. And I think it’s a different landscape now. So Luis, thank you so much. I just appreciate you being on the show and the time. And you’re a great mentor to a lot of people in healthcare supply chain. You’re doing some great work at Cornerstone. So just thank you for carving out some time with us today. We appreciate it.

Luis Martinez (28:00):

No, thank you. I enjoy, uh, good conversations. And look forward to doing it again.

Lisa Miller (28:04):

Yeah. Absolutely.

Leah (28:06):

Hi, this is Leah. You are listening to my mom’s podcast, the Healthcare Leadership Experience.

Fernando (28:13):

Hi, this is Fernando. If you would like to speak my mom, just email her.

 

Subscribe to get the latest episodes
Share: Hospital Supply Chain Series: Purchased Services Multi-Year Strategy with Luis Martinez | Ep.13
Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on email
Email
Podcast Search
SUBSCRIBE TO GET THE LATEST EPISODES
BlueDownArrow
RECOMMENDED PODCASTS
BlueDownArrow