Taking The Supply Chain Pulse
St. Onge’s Healthcare Hall of Famer and industry icon, Fred Crans, chats with leaders from all areas of healthcare to discuss the issues of today's- threats, challenges and emerging trends and technologies in a lighthearted and engaging manner.
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Taking The Supply Chain Pulse
Military Discipline Meets Medical Logistics in Supply Chain with BJC's Tom Harvieux
Ever wondered how military precision could revolutionize healthcare supply chain management? Tom Harvieux, Chief Supply Chain Officer at BJC in St. Louis with an impressive 22-year background in military logistics, joins me, Fred Crans, to shed light on this fascinating intersection. Tom's transition into civilian healthcare demonstrates the profound impact that structured logistics and leadership can have on medical outcomes and operational efficiency.
This episode takes a deep look at the necessity for standardized systems within healthcare operations, drawing comparisons to the military's disciplined approach. As Tom and I unpack the challenges and potential solutions in creating a more resilient and efficient healthcare supply chain, we also acknowledge the human element—emphasizing the importance of mission-driven teams, especially during times as testing as a global pandemic. The discourse reveals how a unified workforce and standardized data systems are key ingredients for a more prepared and effective healthcare system.
Rounding off the conversation, we explore the innovations and strategic advancements at BJC HealthCare, including their integration with St. Luke's Health System, and how transparent cost management is changing the game for healthcare providers. Through Tom's lens, we get a unique perspective on how military logistics principles are shaping stronger, more reliable supply chain practices in healthcare. It's a compelling narrative that intertwines the rigor of military operations with the compassionate mission of patient care. Join us on "Taking the Supply Chain Pulse" for an episode that promises to both inform and inspire.
Hello again everybody. This is Fred Krantz from St Onge, and today we'll be taking the Supply Chain Pulse with Tom Harview from BJC in St Louis. Tom, we're so happy to have you on the show. I really appreciate you being here.
Speaker 2:Thanks, fred, I'm really excited to be here as well.
Speaker 1:And I realized that I live in Clevelandveland heights, ohio, and you're in st louis and schedule this meeting and, starting at 7 30, your time out there.
Speaker 2:So but then I I also thank people.
Speaker 1:We always start a little early before the chaos starts yep well, I saw in your, as I was looking over your career, that you spent 22 years in the military, so getting up at 7 30 shouldn't be a difficult thing for you to do we're happy to have you. Why don't you, why don't you tell us a little bit about your background, where you, where you came from and how you ended up where you are?
Speaker 2:I'm happy to. So yes, I did. Um, I did spend 22 years in the military. I was active in the national guard. So I supported the national guard full time for 22 years. I logistics. I started out in intelligence, moved into logistics, really loved it, progressed through my career from obviously from private up. I retired as a Sergeant Major of the Division Headquarters for the Logistics Function. It was a great career, learned a lot, had a lot of investment in me that I think was tangible to me growing as a person and growing as a leader across my career.
Speaker 2:When I retired in 2004, I had two job offers. I had one to go into contract landmine administration, so I could go into landmines, or I could go into healthcare logistics and I figured landmines probably wasn't a long-term career play. So I went into healthcare logistics, ran the logistics for a hospital at Fairview in Minneapolis and really enjoyed it. I was really blessed there because I had every aspect of healthcare supply chain. I had case card, I had sterile processing, I had linen, I had all of the receiving and inventory and all of the distribution functions that you would have. So I learned a lot in a very, very short period of time. But I also learned that I didn't know healthcare, so I had to trust and lean on my team to really leverage their expertise and not get in the weeds and try to micromanage their work because I didn't know the work.
Speaker 2:At about 2008, I realized I wanted a bigger role in healthcare so I had to take on the shared services side, which means the contracting, value analysis, analytics piece of the business. So I took a job at Sanford Health in the Dakotas and it was about a $1.2 billion health system but through mergers and acquisitions grew to about $5.5 billion health system by the time I I left, so a rapid growth over the 10 years that I was there. 2018 wasn't looking for work, um, and just ended up in st louis. It was just I got contacted. Nancy lemaster, a friend of ours, uh reached out to me and said there's a, there's a great organization here. I fell in love with the leadership team and the organization and then we made our move to St Louis in 2018, and we've been here ever since. So it's been a great ride. But a lot of the transition and the career is really just looking for opportunities to grow and then the work kind of finds you when you do that.
Speaker 1:Great. Well, your discussion about being in the military brought up a question for me and I want to get more about your military career. But this is completely apart from that. I was a corpsman. I was a Navy hospital corpsman, served with Marines in Vietnam as a combat medic and you said you had a chance to go into landmine work. You said you had a chance to go into landmine work. I want to know in the Army, do they have written on Claymore's this side toward enemy? Because they do in the Marine Corps and I thought it was because the Marine Corps needed to learn that. But I just wondered if the Army did the same thing.
Speaker 1:They're gracious enough to tell us what is the friendly end and the bad end of the Claymore mine. Well, the other thing is, when I was going through, looking at your background, you know there are a lot of us that came to supply chain from the military. Nick Gage, myself, Steve Kiewit, who had been at BJC before you, were there. Just Bob Simpson was an Army medic A lot of folks, but we were medics. We were not formally trained in supply chain.
Speaker 1:You spent 22 years working in actual logistics and the thing that I learned in Vietnam was you know, we had the fewest deaths from wounds of any war and everybody thought it was because we're rendering such great care and as a corpsman, I know it was because of logistics. We were able to get people on helicopters and get them out of there on a timely basis to the next correct place and after that to the next correct place. What did your military experience give you in your arsenal or your toolkit when you came into healthcare, Because healthcare is really not known for its operational expertise in the supply chain. How did your previous experience help you?
Speaker 2:I would say it's two things. I touched a little bit on the leadership development. You know the military is just really big on leadership development. So you know if you go from pre-NCO to NCO you go through a four-week course and then before you become an E6 to an E7, you're going through an eight to 10-week leadership course and before you become the next rank you're going through a 12-week leadership course. So you're always pulled out of rotation before between job assignments to take on leadership and development. I think that is really key because not many opportunities in civilian world that you have the time to really dedicate to becoming a better leader and focusing on the principles of leadership.
Speaker 2:Outside of that, I think the structure, everything is decided for you in the military. But what that means in logistics is how the forms are filled out, how you write your SOPs, how you write your doctorate. All of that stuff is very retrovented so you can scale it really quickly. And that translates really well to healthcare, because you think that everything is modular. I'll give you a very clear example that if you're going to talk about emergency preparedness, something the military would do is say I need a burn pack, that I need to address 10 patients if they require different dressings or solutions or whatever it is. But if you need 100, you just take 10 of those packs so you can create things that are very modular and very designed to be flexible.
Speaker 2:Because that's the one thing in the military logistics They've streamlined it significantly. So a single fuel battlefield, all the ammunition is the same across NATO because it needs to be interchangeable. You don't want to create complexity by having variation. The second thing is you need to plan, to make sure that every level of the organization is engaged in the planning. So there's a one-third, two-third rule. You take one-third of the time to plan what you're going to do and you give two-thirds of your time to the subordinates to do their planning. So giving teams time to react. So how that translates to healthcare is really understanding what the organization needs to do, where it needs to go and what are the systems and processes that you need to put in place to actually drive those results.
Speaker 1:Interesting. My next question sort of falls off that and I'll give you my experience first. The question is this what were the major differences between the two sectors? And I'll tell you a story that happened to me. I learned real quickly.
Speaker 1:I became the director of central processing and distribution at Baptist in Miami when I was like 27, 28 years old, just graduated from the university after coming back from Vietnam, and we had the precursor of value analysis, the product standardization committee, where we argued about everything each month and didn't very little. And we got talking about exam gloves not surgeon's gloves, but exam gloves and the doctors were just going back and forth and I made the mistake of saying you know, when I was in Vietnam, I didn't know who provided us with anything. All I saw was a package that said FSN, and then it had a dash, and then it had numbers and dash and more numbers, and more numbers, and one of the doctors looked back at me and said, son, you're not in Vietnam anymore. That's what I learned was one of the big differences between the private sector and the military. What differences did you see?
Speaker 2:Oh, I would say I would just touch on that. So if you look at, something we've been trying to do for over 20 years is data standards in healthcare and I'll just touch exactly what you're talking about. When you look at the military, there's a DODAC, which is a Department of Defense Address Activity Code. That's the same as the GLN number. That's a single post office box for your organization. Then when you look at the NSNs, like you talked about, that's very regimented.
Speaker 2:The first four characters tells you what class of supply it is. Next two tell what NATO class. It is Very regimented. We can't get to GTINs. We've been struggling to get to GTINs in healthcare for a long time.
Speaker 2:So to your point, the autonomy is the biggest difference, that people don't have to drive to a common standard, don't have to drive to a common outcome on the products and services. There's a lot of latitude and I think a lot of that good, bad or indifferent is because the way that the sourcing decisions are made so centrally in the military versus they're so decentralized in healthcare, meaning that we have sales people in our ORs, in our cath labs that are selling directly to the end user and they're helping influence those decisions versus doing the organization driving that alignment and that consistency. So I'd say standardization by far and away is the biggest difference and that autonomy to make independent decisions, not always with the best rationale. It's just my preference versus. Here's a very delineated state.
Speaker 2:But the other thing I would say is very common is the passion. That was something that drew me to. Healthcare is that cause bigger than yourself? And that it's more than a paycheck. It's about helping patients, it's about helping caregivers deliver care, it's about making our communities better. That is a really big draw and I see a lot of veterans really drawn to that because that sense of purpose is important, not just getting up and making the next quarterly earnings numbers.
Speaker 1:Yeah, you know this wasn't one of my questions, but I know that all of health care is challenged, especially since the pandemic just wore out a lot of people and there was a mass exodus of folks retiring earlier, just leaving the business because they were not prepared for what they had to deal with. How are you seeing that at BJC and how are you dealing with hiring, training and retaining and encouraging folks in what really is a mission driven, not monetary driven, career?
Speaker 2:Yeah, a lot of things. One is we're trying to really tie back to why we're here. We do a lot of work to reconnect what we do and why we do it. It's about the patient. So all the work that we do talks about patient care, care delivery, making our community better. That really resonates with the team.
Speaker 2:Secondly, we've created a lot of career ladders in our team that give people the opportunity to grow. So you don't come in at a coordinator level and then the next jump is to a senior manager level and there's really no path between those. So we've created ladders for people to be able to move through the organization and grow incrementally in their career and take opportunities to take on more responsibility. I think the other thing is there's been plenty of opportunities for some really once-in-a-lifetime projects that we've been able to do and really give to some of our high potential talent on our team and they've really just knocked it out of the park, whether it's been opening. We're building a laundry facility, a team's leading that, we're doing a lot of work with our physicians and standardization and doctor preference cards. The team is just taking a lot of really fun and exciting projects. That brings that challenge to work every day, versus just kind of going through the same thing day over day, same thing every day.
Speaker 1:That's great. I'm very concerned really about what happened with the pandemic. One of the statistics I saw was that women doctors tend to retire earlier than male doctors, and that was, I think, it's because they're smarter really.
Speaker 2:I don't know, yeah, there was a lot of stress. I mean, the burnout was, you can see it, we had a hangover, for we're just getting over it now. I think that we had a hangover for we're just getting over it now. I think that we had a hangover for a couple years. The old saying is it takes 21 days to form a new habit. You form a lot of new habits over a three-year pandemic that you have to unwind and undo, because it was literally, fred as you know, just firefighting. It was just firefighting for three years. So now we're having to go back to putting process in place, doing continuous improvement, looking at how we can start putting systems into practice.
Speaker 1:Well, that sort of transitions into what I know is one of your sweet spots. We use a lot of terms in healthcare, sort of in a cavalier fashion. One of those is resiliency, and I know that you're leading the charge with the Healthcare Industry Resiliency, collaborative. So could you tell me what does the term the resilient supply chain mean to you?
Speaker 2:Sure, it really means two things to me is do you have the capabilities to mitigate risk in your supply chain? So, are you able to move goods consistently? Are you able to store goods, pick and deliver goods, pay for goods? Do you have the capabilities in your supply chain to really mitigate risk? So, in that you're looking at, where am I sourcing? Do I have redundant transportation? Do I have backup inventory? Do I have backup inventory? Can I move product around my network? Can I do things that will mitigate risk?
Speaker 2:The second piece that we look heavily at is how do you respond to risk? So, when you have a disruption, are you nimble enough to respond to that and address that? And that really what I found throughout a lot of this work. It goes back to what we talked about in the very beginning, fred. It's about standardization, because when you all of our 28 hospitals at BJC are using the same products, yeah, there's risk that one supplier would have a disruption and we'll have a major disruption. But what happens is, when we're not standardized, if one hospital runs out, we can't move it across the street from another hospital because it's a different product. And so for us to be able to be unified in the products that we use.
Speaker 2:We have robust inventory locally in our warehouse. We have a strong relationship with our trading partner. We're focused on the products that the manufacturers want to make. Because're focused on the products that the manufacturers want to make, because there's tail end products that they don't really want to make but that we might be the only health system in the country using that product. That's a high risk item for us because that's the first thing they're going to shut off.
Speaker 2:If there's, if there's a disruption, they're going to want, they're going to want to run that line wide open with the products that most of their customers are using. So we start to look at not only what we want to use to your question about the physician but we want to look at what products should we be using? Are we aligned with the industry? And then, with all of that, we really then create capabilities in our team to see when a disruption is coming. We're using the same products. Then we can go to our caregiver and say we're going to have a problem in 28 days. We found a substitute. We're going to do education and training, we're going to get it rolled out methodically and we're going to give it to you ahead of time versus oh, we're out today. This is what you have to use as an alternative.
Speaker 1:Well, that's the old principle of heroic intervention. Well, that's the old principle of heroic intervention.
Speaker 2:That's how we all kept our jobs. There's also a saying that firefighters are really arsonists at heart.
Speaker 1:Yeah, yeah, we prayed we'd run out so we could show you how smart we were. But the other thing is forecasting in advance. You talked about that. One of the things that happened during Hurricane Maria is there may have been different names on the products, but they were all being produced in one factory in Puerto Rico, and that really caught everybody by surprise. That was a tough one, yeah we've had a couple of those.
Speaker 2:I mean, look at the whole world started by a mass at one time and there wasn't enough production and the limited production of the IV solutions in Puerto Rico. Look at the whole world started buying mass at one time and there wasn't enough production and the limited production of the IV solutions in Puerto Rico and that is happening more and more. And identifying auto substitutes. But there's a lot of challenges with this, as far as you know, because when the first house falls, everyone runs to the second house and that house of cards falls and it's just the market collapse because there really isn't enough capacity in the marketplace to address it. But how do we then look at what are alternative ways to drive care? And that's something that really came out of the pandemic that the organizations were very nimble and said, oh, we don't, we could do this. And they were really creative in the problem solving and how to deal with product shortages, which we don't want to do. But the organization really is more nimble than we give it credit sometimes.
Speaker 1:Yeah, you're. I think that there should have been a lesson learned, you're, there are like 6,132 hospitals in the country. Uh, 3,600 of them are in,100 IDNs, but pretty much it was every person for themselves when the pandemic hit, and there were folks in Illinois that were sending people down to Missouri with carloads of money to buy stuff that was probably not even decent product. It was. There should have been many lessons learned from that.
Speaker 2:Yeah, there was a lot. And you know one of the biggest lessons, back to your demand planning point, we were dumping demand into the system, unfettered demand. So we, if we needed a million masks, we were ordering 6 million masks. So I don't know how, even if there were a million masks, how anyone would have figured out how to allocate those out, because people were just dumping unfettered demand into the channel.
Speaker 1:Yeah, I like was people say well, we're going to have a 90 day uh supply on hand. Well, that's 90 day at current demand. What? What happens when demand is 10x? That's nine days. Right, literally one of the things that I heard, terms I heard and I don't know if you've ever heard this term, but it really made sense to me. I think it came from the auto industry where they have a plan for every part and you identify key mission critical items and then you create contingency plans for those in advance so you know how to deal with things when they happen. Yeah, exactly.
Speaker 2:Exactly.
Speaker 1:So what are you doing at BJc to create a resilient supply chain?
Speaker 2:uh, we're doing. We're doing quite a bit here. So one we started uh, we have our own self-distribution facility. We have a 412 000 square foot facility short term. Our goal long term isn't just to hold a bunch of inventory. But we knew short term we had to hold inventory locally. So we're holding about 60 days of inventory locally and that allows us now to work up the channel to actually build a more resilient supply chain by a couple different manners.
Speaker 2:So we're doing more planning directly with our supply chain. So we're connecting supply chains with supply chains. As you know, in healthcare and for until the recent last couple of years, supply chains talked to commercial teams and that really was an effective relationship. So now we have supply chains talking to supply chains. So we're planning up the channel to say are you going to be changing your plant, are you moving your sterilization, are you introducing change in our channel? That we have to address that risk. So we're actually proactively having those conversations around that. So if we're going to go through one of our manufacturers is going to go through a facility change or they're going to SAP or they're going to do something major, then we want to carry more inventory short term to make sure that we can address any hiccups that might happen. Then we'll ride that inventory back down.
Speaker 2:Secondly is we're starting to look at we're moving from the old business review where we come in, the supplier tells us about us for 10 minutes, we tell up about them for 10 minutes and we really do nothing other than exchange business cards. We're moving towards our relationship management. So we're talking about what are our key metrics that we need to move to make the business better, and then how do we set a project or two in the next quarter or the next six months to actually improve the working relationship in the business? Third is how do we start to work with our training partners to move the sales force? How do we make a bigger commitments to these training partners to say that, oh, we want to commit to you more aggressively, but then we want to repurpose some of your resources to help us educate, inform, bring value to the caregivers in the work that they're doing and repurpose those team members to really focus on patient experience, patient outcomes and that work.
Speaker 2:Obviously, we're working with HERC. Herc's been a big part of us because we think if we do our own thing and Mayo does their own thing and Cleveland does their own thing and CHOP does their own thing, then we're going to have all these disparate systems that we talked about in the very beginning, and then that will be a fragmented, confusing marketplace. So working with Herc really allows us to have a single standard. We don't have the Amazon or the Walmart in our industry, so Herc needs to make the standard. You know we don't have the Amazon or the Walmart in our industry, so HERC needs to make the standard. So we all are working on that, and what's nice about that is providers and suppliers are at the table and GPOs are at the table to do that collectively together.
Speaker 1:Yeah, there's two things. Number one we always talked about collaborating and collaboration and partnering, and our definition of partnering has always been it's all great as long as I win, and that's not what real collaboration is. And the second thing that you said and I think one of the most important things for people that are listening to this podcast to have heard is this Historically, we've always talked to the sales force for our suppliers. I've been a supply chain leader forever. I never knew anybody that worked in the supply chain. I was always talking to the guy that had stuff in his trunk that was going to go around me to get into the OR, to talk to the doctor, to be able to sell his next newest product without going through any process. And when you start to collaborate with the supply chains, you start to understand them, they start to understand you, and I think that's a very important thing that you pointed out. I just wanted to point it out again.
Speaker 2:Yeah, it's where automotive and all the other industry has been, so it's where we need to go.
Speaker 1:So what is BJC's current next big challenge?
Speaker 2:Oh boy, we have a bunch of them. So we're about month three of the integration with St Luke's Health System in Kansas City. So we're growing as a health system. We're about $10 billion health system now. So team integration working towards value capture goals is obviously a big priority every time you go through an M&A activity. We're looking at our ERP replacement. So we'll go through an ERP replacement and, as you know, you can't put technology in a bad process. So we'll spend a good amount of time over the next 18, 24 months doing business process redesign to make sure that we're really looking at our business processes so we can optimize the technology, versus trying to make our whole process fit new technology, which never works out well when you try to do that.
Speaker 2:Then we're focused heavily on becoming more clinically integrated. How do we align better to the business and how do we almost wrap around the business to say everything you need, from purchasing and accounts payable to utilization or value analysis to sourcing? How do you wrap around that service line and really deliver value to them, versus being a siloed organization that that they have to figure out how? Oh, I need capitalists. I have to talk to these six people and I have to talk to these people because I want to be able to understand this and then driving values by sharing utilization cost per case, providing more visibility to the caregivers on the cost of care, and that transparency has been wonderful for us.
Speaker 2:And the last thing is we're doing a couple of things. One, we want to ease the logistical burden on caregivers, so how do we move the work from the clinical team to the supply chain team? And then I mentioned we're also building a laundry, which is we're doing a cooperative with SSM in St Louis here and we're excited to do that. That's something that we're going to also help us solve a 20-year problem to really lock down laundry services for the organizations, because it's a key service, but also put a plant in the part of the community that's going to benefit St Louis.
Speaker 1:Great, Well, we're at the last question, and the last question that I have is a free throw. The question is what would you like to add that I didn't ask about?
Speaker 2:Sure, I would double down on a couple of things we talked about. One is focusing on the end-to-end supply chain. Before you know, literally a lot of people in the clinical space thought the supply chain started in the power room on the nursing floor. The supply chain goes back trans-Pacific multi-continent supply chain. So helping our teams understand the end, true end in supply chain. We've done a couple of fun things there. We worked with Cook Medical. We had a fellow. They hired a fellow for a year.
Speaker 2:We mapped the entire supply chain from raw goods all the way to the point of use and then we started to say, wow, that's crazy, I can't believe we do that. And collectively we started to look at those opportunities to really do that better. We talked about driving deeper trading relationships with our partners. So how do we get closer to our trading partners, actually work supply chain to supply chain, actually pull costs out across the entire continuum? Both of us win when we do that, addressing waste and costs.
Speaker 2:There's a lot of waste in healthcare. When you go into the OR, they're opening products up that never get used. We look at a lot of the products and how do we reduce waste, not only in motion activity but also anything non-value added that the customer just doesn't care if you do or you don't do. And the last thing is we're really focusing on the standardization and the reducing transactional events, because we found when you standardize, you become more reliable from supply chain. You have the products that you need, you're managing that critical real estate and hospital as effectively as you can, but it also wins because we have less deliveries, which is less carbon. We have less cardboard, which is good for the environment. It solves all of your goals across the entire continuum. Really, look at driving standardization. I don't think we'll get as far as the military does from standardization, but I think that we all recognize that this is the path forward.
Speaker 1:Well, tom, it's been a pleasure talking with you. I really like the insights from your military background. Do you know Gary Rakes, by any chance?
Speaker 2:Yeah, he's an old Navy guy.
Speaker 1:Yep, he's an old Navy Medical Service Corps officer and I always wanted to get him to help me write an article about managing SKUs, because the Navy had hospital ships and you can't have 68,000 SKUs on a hospital ship. You probably got maybe less than a thousand, I don't know how they did. That is important and I think the one thing that the military does extremely well is to standardize and and just control the whole movement process, and I I appreciate you being here. Thanks so much for getting up early in the morning and, uh, talking to somebody who forgot the difference in time, great to see you.
Speaker 2:I really appreciate the time and I want to also make sure I thank you for your service.
Speaker 1:I don't know if it's worth thanking me for it, but that's good. I appreciate that, and the same back to you, tom. Thanks very much, and everybody, we'll see you next time when we have another episode of Taking the Supply Chain Pulse. Thank you very much and talk to everyone later.
