Taking The Supply Chain Pulse

Transforming the Healthcare Supply Chain with Mark Van Sumeren

• St. Onge Company • Season 1 • Episode 18

Share episode

What happens when you blend decades of unmatched expertise with an unwavering commitment to revolutionizing healthcare supply chains? This episode, featuring Mark Van Sumeren, answers that question. A 2021 inductee into the Bellwether League's National Healthcare Supply Chain Hall of Fame, Mark shares his transformative 45-year journey, starting as a management engineer at the Detroit Medical Center and traveling through impactful roles at EY, Capgemini, and Owens & Minor. His invaluable insights into launching and advancing healthcare supply chain practices, along with his current role as a strategic advisor and board observer at Logisource, offer us a front-row seat to the intricacies of private equity-backed companies.
 
 We don't shy away from the tough topics either. Challenges in the healthcare supply chain, from financial discipline to organizational inertia, are dissected with honesty and a solutions-focused mindset. You'll hear about the importance of adopting practices from other industries to drive efficiency and innovation in healthcare. The conversation also navigates the evolving roles of GPOs and distributors, emphasizing the need for balance and specialization. As a cherry on top, we even touch on the careers of Michigan quarterbacks Brian Greasy and Tom Brady, offering a unique twist to our discussion. With Mark's wisdom steering us through, this episode is a must-listen for anyone dedicated to improving the healthcare supply chain landscape.

Send us a text

Fred Crans:

Hello again everybody. This is Fred Kranz from St Onge here today with another episode of Taking the Supply Chain Pulse. Today we are honored to have Mark VanSummeren, a man for all seasons and a man who has seen healthcare and the healthcare supply chain from many different perspectives supply chain from many different perspectives. Mark is a 2021 inductee in the Bellwether League's National Healthcare Supply Chain Hall of Fame and a former well, we weren't really colleagues. He was a big shot. I was just a little dude working at Capgemini. So, mark, good to see you. Thanks for coming.

Mark Van Sumeren:

Fred, thank you for the introduction. I have to tell you the honor is mine. When you reached out and asked if I would consider to do this, I think my answer couldn't come out quickly enough. It was certainly yes. I think you're doing a great thing and I've always enjoyed my interactions with you. You're a unique and treasured asset in this industry, so thank you.

Fred Crans:

Okay, the check will be there tomorrow. Okay, thank you. Anyway, mark, one of the things about your background and we should go through this usually my first question is tell us about who you are and how you got to where you are today. But we sort of can march through everything you've done from where you started to where you are today, because the one thing that I've tried to do with this podcast is introduce a lot of hardworking people that don't get to go to conferences and don't get to get out and meet really influential folks, to people that they might not be fortunate enough to meet and to see and experience different viewpoints from different places within the industry. And you really have a ton of bases covered. So why don't you tell us about how you started out, where you were along the way, what you did at each place, and there's one position title that I need you to explain and that is at Logisource. You're a strategic advisor and board observer. Is the board that bad that they have to be observed at Logisource?

Mark Van Sumeren:

No, that's an excellent point. Board observer is actually a formalized role in the probably in the public or privately funded world, and what it means is that you have all the rights and obligations and participation at a board level. You just don't have a vote, and it happens to be. It's a private equity backed company and they value, hopefully, my ideas and insight at the board level, but I don't get to take a vote on any of the governance matters.

Fred Crans:

I thought they were shady and needed someone to keep an eye on them.

Mark Van Sumeren:

No, not by any stretch.

Fred Crans:

So tell us about yourself and how you got to where you are today.

Mark Van Sumeren:

Okay, fred, some people might say it's that I'm just schizophrenic or, said in a different light, it's that I've got this insatiable appetite for learning and doing different things. So, over geez, really, what's been a 45 plus year career. I, you know I've been all over the healthcare industry and dealing with a lot of different. I've been all over the healthcare industry and dealing with a lot of different roles, organizations and that sort of thing. So, just in a nutshell, I started out of undergraduate as a management engineer at what is now the Detroit Medical Center. So I was doing nurse staffing, pharmacy unit, dose, productivity, type standards, so a lot of operation work. At the time I was finishing my MBA and once that was finished I joined what was then Ernst Winnie, which was the precursor to Ernst Young and then Capgemini Ernst Young where you and I met up. But I was hired there to do operations consulting. Again, it was a lot of productivity work, understaffing work and the like, and I did that for several years before getting ANSI again and became a market leader in the state of Wisconsin for the practice and really had oversight to everything that we're doing, whether it be finance, reimbursement, mergers and acquisitions. So it really gave me a flavor for a broader view of the health care industry and also that allowed me to stay engaged and meaningful and productive for 20 years.

Mark Van Sumeren:

When I went to E&W at the time I said I would do it for two years. I'd go back into hospital administration, which is what my passion was at the time, and every two years I kept finding a place of where I could deal with my customers and deal with smart people like you, fred, and the others that we had an opportunity to work with, and so I kept evolving in that role and as I moved up from senior consultant ultimately to partner in the firm, the last responsibility that I took charge of was to launch and then oversee our healthcare supply chain practice. E&y at the time had a tremendous supply chain practice outside of healthcare. I had a lot of great practitioners inside of healthcare and we organized it into a service line and grew it to. I think at one point we had a hundred people for it. When we're running that practice and those people are now you'll see them all across the industry in very meaningful roles, and so I take great pride in helping to launch and and build that practice but, more importantly, really launch and advance the careers of of dozens of really great people who are making an impact.

Mark Van Sumeren:

Uh well, from what was then Capgemini, after the sale of the practice to the French firm, I was recruited to join Owens Minor, first to start and build their consulting practice, but very quickly moved into a different role, one that was much more critical at that point in time, and that was to be the chief strategist and business intelligence officer of healthcare distribution and Owens Minor in particular, making the transition from being an acute med surg distributor serving only hospitals in the United States, to an international provider and manufacturer, and not only acute care but non-acute as well. So it was really launching that movement. Well, in 2000 and what would have been 2014, I decided that the career had gone on long enough and there was a convergence of several factors that said you know it's time to actors that said you know it's time to retire and let others kind of take the reign and enjoy life, as it were. Well, my wife said you're not sitting home for you know, five days a week, 24 hours a day, or seven days a week. She said you got to do something, and so quickly.

Mark Van Sumeren:

Thereafter I joined the board of a private equity backed company that was in the healthcare laundry business out of the Southeast Crown Healthcare Laundry, so that was 10 years ago. I joined that board, I continue on that board and through a sale from one private equity group to another and really have enjoyed that involvement. It led to joining a second board with that same private equity group and it's in the diagnostic imaging parts and services business and I continue to be the chair of that board. And then that led to LogicSource where I initially joined on as an advisor to help them move. This was a 15-year-old company serving indirect procurement outside of healthcare with companies like Lululemon and a lot of other retail businesses Titleist for the golfers in the room and they saw a need to move into healthcare. So I was helping facilitate that transition.

Mark Van Sumeren:

Due to an untimely passing of their healthcare leader, I was asked a year ago, march, to run that vertical for a period of time and I agreed to do it until we stabilized or got its it's really it's foot on the ground and then found a replacement, a full-time replacement, which we did on May 1st, which enabled me to step back into my strategic advisor role and at the same time take on the board observer role.

Mark Van Sumeren:

So, but through all of that and that was kind of a long-winded answer, but one of the things that I'm quite proud of is that it ranged from operations, productivity, finance, reimbursement, m&a, supply chain and governance, and dealing with not-for-profit healthcare organizational health systems to a partnership, to a French-owned partnership, to a public company, to a US-based public company, to now private equity-backed company. So I've really gotten an understanding of how the financial or the business model affects how people get things done, how decisions are made, and how it impacts their ability to work with customers and clients as well. So I'll stop there and catch a breath and allow you to ask another follow-up question there, brett.

Fred Crans:

Yeah. So, as you're in each of these different roles, there are a couple that I would be interested in seeing how manufacturers see health care in the supply chain. I'd be interested in seeing overall, with your experience in operations and mergers and acquisition, and productivity and supply chain and governance how do you see the health care industry as a whole compared to other industries? Okay, let me just for the folks out there. In 2022, the GDP for the United States was $25.43 trillion and healthcare comprised $4.4 trillion of that, which is what? 17%, which is a huge number Given all that. That's made up among a whole lot of sort of little guys compared to gigantic industries such as auto and some of the other stuff. So what's your overall view of healthcare as an industry, as the way it's led and the challenges or opportunities that are out there?

Mark Van Sumeren:

Okay, I'll preface my remarks with this comment and then, before I launch into the criticism of the industry, most, if not all, of us that have spent our careers in healthcare you, I, the audience, listening in the people we deal with every day elect to be in this industry by choice, and the choice is driven by a passion for helping people at times of their greatest need. There's something about the makeup of people in this industry that we are passionate about serving others and, as a result, I think we do a lot of great things in this industry. The downside of this is that I think we lose sight of the importance of discipline, of, you know, our fiduciary responsibility of doing things cost effectively and of being bold, and some of this comes back to. I mentioned that I've worked across all types of organizations, from for-profit to not-for-profit, to partnerships, et cetera, and criticize as much as you want of the capitalistic model that our country is built on, but one of the things that it does is it forces us to deal with scarce resource and how to make difficult choices. To a large degree not completely that doesn't does not exist at the same level as it does. Doesn't exist in health care at the same level as outside.

Mark Van Sumeren:

The ramifications that I see and I see this every day in dealing with my clients and dealing with my peers and dealing with organizations from the inside as well as the outside is that we are afraid to make tough choices sometime or we are slow to make those choices because we don't have that financial discipline to hone to the degree that it needs to be.

Mark Van Sumeren:

And it's a problem. I see customers day after day after day where you know, as outsiders often come in and say there are ways that money can be saved, where the response is one of you know we're afraid of our own shadow, in that I can't move too fast, I can't be too bold, I can't take a risk, even though that risk can be appropriately managed. And the financial health of not only the organization, the industry as a whole, depends on the ability to move further, faster than we've been able to go at this point in time under the current way of thinking and operating. That's a pretty severe condemnation and I apologize to the people that are offended, but I've seen it too many times that we need to get out of our own way or somebody's going to do it for us.

Fred Crans:

Yep, you know.

Fred Crans:

Just to get back to when we worked together at Capgemini and sort of to compare the difference with the type of projects that we did, which were, I would call, largely non-salary expense reduction projects, we did one in a large academic industry in the excuse me system in the south, where we were tasked with taking what $19.5 million out of the operating budget and we were called in by the CEO that was about to retire.

Fred Crans:

We were also interacting with the CFO and when we come in, it always seemed to me that every time I worked on a major project, we were called in by somebody who thought they were in trouble and needed immediate relief. And then when we walked in, all the people that were there were either frightened by us being there or wanted us out as quickly as possible because they didn't want us to find out what was going on. And we never always with seemingly very little effort were able to find the dollars quite quickly that they needed to take out of the budget. And my feeling then was that there are a lot of people in these places that had nice positions and were trying to skate to the finish line without, as you said about me one time, you spent 50 years and haven't been found out yet. But is that really? Is that a fair assumption, or not.

Mark Van Sumeren:

I think that's a fair assumption, that there are a lot of people that, and I don't necessarily blame the individual, I blame the system that rewards small steps, that rewards activity as opposed to progress and I want to reinforce that point in a minute or elaborate on it and it discourages risk-taking and I don't mean risk that put patients in harm's way, I'm talking about risk that you know we're going to have to try something because the status quo is not working for us. And what I see to elaborate on that point a little bit is I see people busier than they've ever been, making less progress. We just don't have a sense of urgency and an ability to move as fast as the nature of the challenge requires. That's why consultants are affected. Consultants come in and they cut through all of that and their incentive is to move quickly and to deliver at a pace and look for the big opportunities and hopefully deliver on them. They're almost hired to overcome the inertia that exists, and we've got to find a way to overcome inertia.

Mark Van Sumeren:

Here's the other thing is that you know, if you ask anyone in the audience, they'll say, yeah, healthcare is probably behind from a supply chain perspective, from other perspectives than many other industries and we'll all say that. And then the same people turn around and when you say here's an opportunity, they'll say, well, where else has it been done in healthcare? Or show me the healthcare benchmarks, yeah, okay. Well, if we're already saying the healthcare is behind, wouldn't you rather see the evidence and what we can learn from other industries that are doing the same thing and are further along and maybe have, because of the financial or organizational model behind them, have been more adept at delivering on those, and say you know, what can we learn from that?

Mark Van Sumeren:

Obviously, we need to put the understanding of the healthcare domain and the idiosyncrasies of this market behind it. But you know we deal a lot in, you know, the procurement of things that don't go into patient care. Well, those same things, whether it be marketing or IT or financial services or whatever it is, are also being procured by non-healthcare organizations. So what can we learn from them? Seems to me that that shouldn't be a barrier, that should be an advantage, and we're getting back to that inertia we go back to well, I want to see it. Where it's been done in healthcare. Well, that's great. If you want to set the bar low, let's set the bar high. We need to.

Fred Crans:

Yeah, you know, but traditionally the response for the old guys like me was always yeah, well, health care is different. Remember that we're different than those other industries. But here's the deal. I know that you I think you went to the University of Michigan, right?

Mark Van Sumeren:

I mean I don't know the other U of M for you, Fred.

Fred Crans:

I don't know what makes me think that If we were on camera today and this were a video as well as audio, there's more memorabilia up there than there is in baseball stuff in Cooperstown. But anyway, guys like me, the old folks we came in from the military, many of us, and we learned our way up. Today we're developing formally educated supply chain leaders. Can you talk about that a little bit?

Mark Van Sumeren:

Yeah, it's long overdue. This influx of supply chain talent that have been trained and educated in the discipline is long overdue in this in the discipline is long overdue in this industry. But we face a challenge and, by the way, there are some outstanding supply chain programs across the country that are building expertise that we should draw upon. I'll even speak of my friends across up the state here. Michigan State has one of the top, if not the top, supply chain programs Tennessee's great, arizona State's great, georgia Tech is great, and I could go on and on. Penn State has an outstanding program. I'm not leaving anybody out because there are a number of great ones.

Mark Van Sumeren:

The challenge we have as an industry is other industries have figured out how valuable those folks are and they're hiring them away.

Mark Van Sumeren:

And are we willing to reward and compensate those people at the same level that our brother and outside of healthcare are doing? And look at the high-flying companies over the last 10 or 20 years. What you really find is that they're high-flying because they figured out supply chain and how to build a business model around an effective, efficient, time-sensitive supply chain organization and are delivering just tremendous value as a result of it. You know we've come a long way in healthcare. Bringing supply chain back out of the materials management purchasing days in the basement where nobody knows who you are. You know, keep them in the dark corner to where you know at least there's in many cases there's a seat at the table. But we've got a long way to go still in terms of the strategic role of supply chain in the health care business decision making model and, you know, building supply chain organizations of the scale necessary to really make a difference in this industry of the scale necessary to really make a difference in this industry.

Fred Crans:

Yeah, you know that's true that we are making progress, but I've always thought that number one supply chain has operated on the principle of heroic intervention. We're at our best when something goes bad and we can pull a rabbit out of a hat and point to it for four years and then, immediately after that situation has passed, it's back to business as before, which is, lower your prices and get rid of people. Those are the two things that you hear, and we want to become strategic. But we have done this. I want you to respond to this. I don't think we, as supply chain folks, have demonstrated many of us that we are worthy of being considered that are strategic thinkers in this field.

Mark Van Sumeren:

And they're pushing the envelope and they're in the executive suite, they're part of the strategic thinking in the organization, but that it's not nearly at the level that it should be as the norm in this industry, and some of that is a lack of awareness and appreciation of the impact that true supply chain, strategic supply chain leadership can be Part of it is.

Mark Van Sumeren:

It goes back to the point you made, quite frankly, is that there are people that are that don't want to push that envelope, particularly late in their career. That's a big test. We need some people earlier in their career, younger, that have a voice, that think strategically, that think beyond lowest unit price and think about impact on the organization, think about strategic partnerships, that think about, you know, supply chain from the point of sourcing all the way through to delivery, but from a end-to-end view. And a lot of those you know are going to come out of industry, they're going to come out of academia or advanced training, but we're going to have to give them the authority, the responsibility, and the seat at the table are in those seats in the health system that you know are going to have to step aside and make room for these people to to take it beyond where we've been able to to this point yeah, and a couple things.

Fred Crans:

number one, uh, being active, as are you with the bellwether league, uh, we see a lot of the future famers and the young folks that are there that are really impressive and I know are going to take things further. A second thing that I think is a real possibility out there, and I think more organizations should think about it, is using us old folks in a different role mentors and interim transitionary leaders to identify people that are newcomers, that can be leading supply chains, and sort of hooking on to them for a year or two to get them to the point where they can take the reins. I think that'd be a role to get. We need to get out of the way of the younger folks that's my opinion, but we need to be able to help. We need to be able to help them too, you know.

Mark Van Sumeren:

Yeah, yeah, so there's. You know we're at an interesting point in the healthcare supply chain in that there are, you know, a lot of people that have carried. You know they carried the water for getting us from the days when we were. You know we're down in the basement Boy. Don't even think about getting involved with physician preference items. Remember that that. You know it was way too important to leave it to the procurement experts. You know we've come a long way.

Mark Van Sumeren:

This generation, our generation of supply chain leaders, have really accomplished a lot. There's a whole lot more to be accomplished and you know we probably don a whole lot more to be accomplished and you know we probably don't have the runway to do it. So let's mentor the people and give them the opportunities that you know those people that have the smarts they're a lot brighter than you and I are by long shot They've got the runway, they've got the political skills, in my view, to be able to pull off. They need some mentoring and they need some coaching and they they need some people like us to run interference and say it's OK to take some of these risks, or you really need to listen to these people and rethink the way that that we're doing these things.

Fred Crans:

Yeah, a lot of that is. They probably need some coaching in that 90 percent of the job that's political so that they can do the 50 that's operational, you know absolutely yeah well, hey, one one thing, uh, I wanted to uh before we go.

Fred Crans:

One one thing I wanted to ask you from your o m days um, you know there's a whole lot of folks the the larger idns are becoming pretty much uh legitimate standalone supply chains or they're doing partnerships with some of the distributors. What do you think is the transitioning role and challenge for traditional distributors such as O&M?

Mark Van Sumeren:

Well, like any organization, business models need to evolve with the times and traditional distribution grew up. Remember, there were 7,000 independent hospitals in this country when I started my career and the majority are part of larger systems that provide the geographic concentration that you can deliver the things that you needed, kind of a third party distribution, to accomplish. That doesn't mean, however, that every product needs to go direct from manufacturer to the receiving dock. The economics of that don't work either, um, but the organ, the, the distributors, um, need to continue to morph along the lines of where is the value that comes from? Um, uh, consolidating the, the logistics, as well as the information and providing predictability and service levels in that chain. And it doesn't. You know the model of everything comes bulk from the manufacturer and then gets repackaged, re allotted, if you will, to go back to the or to go to the health system. It just doesn't work that same way because the, the business, the needs have changed, so you've got to evolve with it.

Mark Van Sumeren:

I don't think the, the role of the, the intermediary, goes away. I think it changes. The same thing with the GPOs. The GPOs were formed to consolidate group purchasing power, you know, amongst these 7,000 hospitals. Well, you know the big systems have enough clout and, by the way, have a pretty substantial ability to commit to the volume that they commit to, unlike unrelated parties that are part of a GPO. Does that mean the GPO should all go away? Absolutely not. The model has to change to fit the times and I think we're living through that struggle with both of those types of intermediaries at this point in time. And you know the work's not done yet.

Fred Crans:

Yeah, interesting. So are you overall optimistic about healthcare supply chain future, or are you undecided?

Mark Van Sumeren:

Well, I'm by nature an optimist, so I'm going to take that side of it. But it comes with a challenge and that is you know what was the phrase I think was a book lead, follow or get out of the way. We need some leadership to affect the transition and to stop hanging on to the way we've always done things.

Mark Van Sumeren:

Yeah, that's the ultimate argument we always hear by the way and this gets back to the role of the health system, the supply chain vis-a-vis the intermediaries, you know well-run supply chain organizations and other industries. It's not a zero-sum game, it's not all us or all them, it's where do you find the appropriate balance and who is best qualified to perform what role in that chain? You know I've seen this pendulum go from. You know it should all be distribution due. It should all be in-house, because you know we're going to attach ourselves to that outrageous less than 1% profit margin that the distributors make. You know. No, I mean that's foolhardy. You know, do what you're best at and get really, really good at it. That does not mean that you should be doing everything.

Fred Crans:

Right. Well, mark, this has been really good. Now I have a question that's got nothing to do with what we talked about. I know that you're a proud Michigan alum and, as a University of Miami alumnus, you know Ohio State is my second favorite team too, with everyone else's number one. So I want to ask you this question 1997, michigan won a national championship. They had a guy named Brian Greasy playing quarterback. Uh, they had a guy named brian greasy playing quarterback. Subsequent to that, they had this other guy that was a walk-on, slow uh dude that was, uh, um, became quarterback, named tom something or tom brady. So who is, who is a better quarterback in college greasy or brady?

Mark Van Sumeren:

uh well, the? The answer to that is quite easy. First of all, as a corrective, b Greasy was the walk-on and Tom Brady was a scholarship.

Mark Van Sumeren:

Oh, really but he was fourth string on that team. Oh, okay, but in 1997, Brian Greasy was the best quarterback on that team and he deserved, he earned that role and he delivered on it. He deserved, he earned that role and he delivered on it. Now, Tom Brady, what he has been, he has said repeatedly since that time and you know he's a competitor, he's an uber competitor, as we all know. His reaction to that was to work harder to make himself better.

Mark Van Sumeren:

So tom brady became tom brady, and part of which, because he languished on the bench behind three other pretty darn good quarterbacks, brian greasy went and played, had a, you know, a decent nfl career, right, quite the same as tom brady, uh. But but brian greasy was better prepared to leave that lead that team in 1997, and it showed Now the postscript on that is that Tom Brady then fought Drew Henson for the starting position. A year later Drew Henson was the All-American out of high school in both baseball and football. He was the shiny object and Lloyd Card tried to give them both the opportunity and just about every time that Drew Henson started a game in 98, Tom Brady came in and cleaned up and won the games for them. So that year I would argue that Tom Brady was the best quarterback in the team, even though he was only a part-time starter.

Fred Crans:

Boy, that was a truly political answer I got to give you that I speak the truth.

Mark Van Sumeren:

I know, I know you do.

Fred Crans:

I know you do. Hey, mark, it's been great having you on and I want to thank you. You know it's always great to see and talk with you, and your insights are excellent and I think this has been good for everyone. So thanks for joining us and hope to have you on again sometime in the future.

Mark Van Sumeren:

Fred, it was my pleasure. Thank you for doing this, Thank you for inviting me to participate, and hopefully people take away a few good thoughts and weren't overly offended by my challenge to us as practitioners in the industry. We've got more we can do. We just we have to believe in ourselves and believe in those that are coming behind us.

Fred Crans:

Okay, I agree. I couldn't agree with you more. Okay, mark, thanks, have a great, have a great week and we'll see you at, maybe at Aram and, for certain, at the Bellwether League ceremonies in October.

Mark Van Sumeren:

Talk to you later. Thank you, Fred.

Fred Crans:

Bye.

People on this episode

Head Shot

Fred Crans

Host