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
Richard Bagley on Building Future Supply Chain Leaders
Discover the fascinating journey of Richard Bagley, VP of Supply Chain at UC Health, as he shares how his early experiences in the US Army laid the foundation for his influential role in healthcare supply chain management. Richard discusses the pivotal moment when a call from Brent Johnson opened the door to a new path, leading him to revolutionize strategies at major institutions like Intermountain Healthcare, Penn State, and UC Health.
Hello again everybody. This is Fred Kranz from St Onge here with another episode of Taking the Supply Chain Pulse. Today we're being joined by Richard Bagley, the VP of Supply Chain at UC Health. Richard, glad to have you here.
Speaker 2:Glad to be here, fred, excited to have a few moments with you and maybe talk about our journey and my journey.
Speaker 1:Yeah, I'm looking outside your windows here. Folks don't know, since this is an audio podcast, but we do a video. It looks like you have decent weather there. You're not being struck by any natural disaster at the moment, huh.
Speaker 2:Thank heavens no, and I feel bad for everybody that's in harm's way or has been in harm's way or has to clean up. But fortunately Colorado's been in pretty good shape. So we're in the mid-70s today, beautiful skies, so you know I can't complain.
Speaker 1:Looks perfect. Well, Richard, tell us about yourself and your career, how you got started and how you ended up where you are today.
Speaker 2:Yeah, I won't bore you with a ton of my background, but you know I am a seasoned professional. I guess that's what we call old people Been around a few blocks but started out in the military, actually at 17, in the US Army. You know, I thought it would be a good idea to go join the Army Corps of Engineers, did that for a bit, moved over to military intelligence I speak fluent Portuguese of all things Did that for a little bit and met my wife in the Army. So you know three kids and you know a lifetime ago. You know that was kind of where we started.
Speaker 2:So first job was at 3M working on informatics. I got actually a degree in computer science, minor in math. I went back and got a master's and MBA and ended up moving from developing software to managing it, from developing software to managing it. And then eventually I got a phone call from Brent Johnson when I was over at Intermountain Healthcare and he said, hey, you've done all these things, how would you like to manage it in supply chain? And I'm like supply what? So you know that was a couple decades ago. A few decades ago, never looked back and have totally enjoyed my career in supply chain, working at Intermountain, helping build that program for about 13, 14 years. Then got an opportunity to be the chief supply chain officer at Penn State, so led that organization for a number of years I want to say four or five and then had the opportunity to move over here to University of Colorado Health in Denver so well, aurora Colorado, so we're the largest health provider here in the state.
Speaker 1:So I'm going to resist the temptation to ask you any questions about Aurora right now because it's been in the news so much lately. But you know you touched on something I wanted to ask about. You worked with Brent Johnson and for folks who don't know, brent Johnson is one of the I think Brent and Tom Hughes have put the most people in the Bellwether League, the Healthcare Supply Chain Hall of Fame of anybody most people in the Bellwether League, the Healthcare Supply Chain Hall of Fame of anybody the two of them plus Bob Simpson. Brent was a guy who migrated into healthcare from industry, bringing a lot of industrial perspectives on healthcare, and you and Joe Walsh and several other just very, very well-respected leaders are sort of the spawn of Brent Johnson. What was it like working for him? What did you learn from him?
Speaker 2:Yeah, so Brent is an interesting guy, just like you, Fred Brent is very loud and a bit on the obnoxious side, to be honest, but a wonderful person. He came from power of all things, the lowest tech of the low tech. He came from a Pacific power, I believe, when he moved over for us. The thing I learned from Brent was the importance of talent and educating the talent on the right process. So you know, I was fortunate to be part of that talent acquisition that he built Intermountain, that he built at Intermountain and, frankly, I've used his model in Penn State and now at UC Health.
Speaker 2:In focusing on, you know, your number one priority is we don't make anything, we service. So do you have the quality talent in place, education, training, you know, support to really be effective? And if you do that right, you know you can have a high quality service. So I think that's something that Brent, and Joe for that matter, have really instilled in me is you know, it's good to have good, solid process and policy, but the game changer is talent solid process and policy, but the game changer is talent.
Speaker 1:Yeah, and Brent is. And I'm still reeling from the fact that you compared me to Brent and you said that Brent was loud and obnoxious. So that must mean that I'm loud and obnoxious.
Speaker 2:I got to work on that Big surprise right.
Speaker 1:Yeah, just overwhelm me there, you know, uh. But given that, given that, though, because brent is a guy that's, that's sure of himself and and uh, there's no, you know, he may be wrong, but he's seldom in doubt he may, you know, he's never in doubt how did that personality, uh, fit in that environment when he came from the outside end? Was it a tough fit for him at first, or for you guys, or not?
Speaker 2:Oh, I wouldn't comment on that. But what I learned to appreciate is he was able to sell the value of supply chain to senior leaders, the value of supply chain to senior leaders. He was also able to set a pretty good vision for those of us in there and you know, his emphasis on talent is, I think, a testimony to his legacy that you led in with with you know myself, craig. Many others have, you know, gone on to lead other major supply chains in the industry. So, regardless of his disruptive nature, I think you know he was able to establish a vision, get buy-in and change, and sometimes you need that change.
Speaker 1:Yeah, especially healthcare. But you know it's interesting because we're going to talk today about disruption and how you've dealt with it, and you know I mean the big topic today is Baxter can't get any IV stuff out. I guess they've gotten back to a point where they are, but we're reactive instead of a proactive discipline, if you will. And every time there's a crisis that we come through with what I? We have this power to come in and pull the rabbit out of the hat. You know the heroic intervention thing. And then we talk about how great we were for the next two years and how, all of a sudden, we're going to be part of the senior leadership, and they all the C-suite loves us and they don't of the senior leadership and they all the C-suite loves us and they don't.
Speaker 1:The only way you get to be part of the senior leadership as a supply chain leader is for the senior leadership to believe you deserve to be there, and that's what I always thought was Brent Johnson's big deal. He convinced them before he started that he needed to be there. The rest of you guys have all had to earn that respect and earn that elevation to a title. It's not given to you and I admire it. You know you had a good head start with a good teacher, but I admire the way you've been able to carry it on.
Speaker 1:I want to talk about at Penn State, because you were there during the pandemic and that's where you were at Penn State coming to there during the pandemic, and that's where you were at Penn State coming to Penn State just about the same time I came to St Onge and during that time at Penn State I believe correct me if I'm wrong, but Pennsylvania was divided into six sort of strategic operational areas and you at Penn State were in charge of one of those areas for coming up with collaborative strategies to provide key needed supplies for not just acute care places but non-acute care and smaller clinical areas. How did that work? Tell us about that. What were your challenges, who did you collaborate with, both within and outside of healthcare, and what did you learn from that?
Speaker 2:Yeah, you're digging in. It's hard to believe that that was in 2020, right, and we're only four years out from that Feels like a lifetime ago, or I'd like it to be a lifetime ago. But you know, as a new leader, I think, I joined Penn State in 2018. In 2019, it just, you know, like the gun went off and by 2020, we were in full swing. I remember and I mean no disrespect to any government or hardworking people in the counties and states that tried to make the situation as good as they can make it but the reality was, you know, we were going to fall flat on our face if we were relying on the, on the emergency infrastructure. I think our call out, one of my call outs, was like, hey, we're running a little short on PPE, can you all float us something from the state? They sent their shipment to us and it was one pallet, literally one pallet, and it was the gowns that were recalled that were a level three gown from a manufacturer that were recently recalled, six months prior and we were told to use those as gowns. But it was literally one pallet for a 650-bed academic medical center. So we knew that. You know we were on our own at that point I was fortunate that I had a big brother in town called Hershey Foods and very delighted that Jason over there opened up his warehouse and his team for me to use. Frankly, they stood up a warehouse that saved my bacon with the staff that used to run the staff that was not working because of the COVID restrictions in their employee Hershey World place, and they pivoted immediately. Within two weeks I was receiving and shipping products to my facilities.
Speaker 2:So you know, probably a lot of folks you know have their own personal stories of like. You know their local Amish or Mennonite communities that sewed masks for us. Or the Olympic store down the street that decided to sew masks for us. Or you know the manufacturer up the road that did face shields for us because they had the equipment and the university was amazing. You know they were able.
Speaker 2:Penn State has a whole engineering group, materials engineering group, and they were building all kinds of stuff for us. They built, you know, a box, they built masks, prototypes, they built stethoscopes for us. You know, good heavens, you know the whole community came together and rallied around us. You know, good heavens, you know the whole community came together and rallied around us. And even St Onge. You guys volunteered some time to help put together a network designed for us on how we could manage it. So I don't know how we would do it and I believe I'm not the only place in the nation that was able to get all of that collaboration and thank heavens for the people in the small communities that really stepped up and saved us yeah, um, there was a, there was a harry chapin uh was a singer.
Speaker 1:He sang, uh, sort of a folk singer, and he did this thing one time about um, if in school, you know, every year in school you have a food drive at Thanksgiving and at the end of the week the principal comes in and says students, you know we had a wonderful response this year we fed more people than ever before. Now I'm going to close the door and we're going to discuss this question. What are we going to do next week? And my point is that, like every, I tend to be cynical because I'm old, sort of like Brent, but there have been so many of these crises in the past and immediately after the crisis passes we go back to the way we were before. So, to expand on this, much of what was done across the country during the pandemic was reactionary. People needed to find stuff to survive. But you know two questions what happened when the crisis ended? Ended did?
Speaker 2:you start developing plans that you could implement so that the next crisis was manageable before it happened, rather than improvising as it happened. Yeah, and I would probably pivot to what we've done here at UC, very similar to what I did at Penn State I was fortunate enough to have a predecessor really be focused on supply operations, which is pretty under. You know, a lot of effort goes into the sourcing piece, but you still need to invest a fair amount in the operations piece. But we have supply planners, so I've got three of them at UC Health and their mission in life is to make sure we have product where it's supposed to be in par areas as well, as you know, being shipped in and managed from our distributor. That really helps us in many ways. We also have three I wouldn't call them warehouses, but three regional large stock areas that we decided early on what are based on the pandemic Right. We figured out what our critical items are at a high level and we call those our A items. We have B and C items and the A items we intentionally built inventory around is a safety stock. So that safety stock, you know, here at UC we're looking at 30 days of additional safety stock on A items in addition to the LUM areas, which has about 14 in the facilities, 14 days on hand, 14 in the facilities, 14 days on hand, and then, by contract, our distributor is supposed to carry 45 days on hand of the products they distribute for us. Now that's the ideal world, as we all know.
Speaker 2:When this new Baxter let's give that example when this happened, you know, thankfully we had a little bit of a window, a little buffer to react. Now I wish I had that all 45 days plus 30 days plus 14 days, but we had about half of that. So what that gave us is a little bit of a breathing room or an on-ramp to start pivoting on the crisis and make sure that we have coverage. So, compared to peers, I think I'm weathering it a little bit better than most because of that forethought on inventory planning and investment in supply ops. It's still a bit of a letdown when you look at the network, because we didn't start with 45 days in the distribution center. So that's a little scary, you know, when you start peeling it back and you're assuming things and you're finding the assumptions are wrong, not to say they aren't a good partner, but I think they struggled with just the volume that was going through.
Speaker 1:Sure, sure, absolutely, you know. So when the dust clears on this particular type of disaster, will you have at least an outline of a playbook in place that you can work on over time with your staff to develop a more detailed plan for it? I mean I went on. You know, I'm looking up who are there used to be in 1972, there was a crisis where I mean I'm old Next year is 60 years in healthcare for me.
Speaker 1:okay, in 1972, abbott had about 95 percent of the iv business in the country and they had a. They had an accident at their lake forest, uh um manufacturing place where, um, there was just a whole bunch of contamination and virtually overnight people had to find alternative distributors and that's where baxterTravenol got its windfall start. And the other day I said, okay, who are the other IV manufacturers right now that make the kinds of IVs we're looking at? I didn't know, and I should. I'm in the business but you know, like everyone else else, you rely on the big guy. Uh, I would think that strategies such as maybe uh getting alternative agreements where you might let someone have 20 of the business to keep them uh on cue so that if uh bat a, a manufacturer a goes down, manufacturer b can be put in seamlessly, might be something you might looking at at in some of those plans, and I don't know if people are doing that.
Speaker 2:Yeah and I think, fred, the reality is this happened in 2017 already. So in 2017, hurricane Maria, I believe, decimated Puerto Rico and Baxter and others were affected by that, because it was more than Baxter that was there and their mini bags and many things just all went short. I think Baxter did a great job rethinking their network design and supply and their solution was open a US manufacturer in North Carolina, a US manufacturer in North Carolina. Now it's just unfortunate that you know, here we are in 2024 and Mother Nature decided to take out the you know alternative. That was the contingency plan. So I'm hoping and praying that Baxter, you know, gets the a little deeper. You know, I appreciate them as a supplier.
Speaker 2:I can only imagine that nobody could have planned this right, and I would go back to I think, fred, we've got a framework with inventory planning, with A items and stocking strategies. The question would be do I need to include fluids in that? And I'm probably going to land on. Yeah, I probably need to sort out to include fluids in that and I'm probably going to land on. Yeah, I probably need to sort out. How am I going to include fluids in that strategy? That really wasn't in it, and I think that's where these punches in the face happen is you know you think you've relearned your lesson here. You go back and rework your plan and you think you've got it, only to realize you've got this other area. And when you're managing 14,000 suppliers and three and a half billion dollars of, you know, outside spend, you know you can't really plan for everything. Right, but you can have a process in place, which is what we do Like.
Speaker 2:How do you respond to the crisis? My value analysis team immediately steps in, looks at the clinical ramifications. A value analysis team immediately steps in, looks at the clinical ramifications, they start working, getting subs or alternatives identified and then working on conservation strategies. I mean that play we hit every time that we need to go to it. The sourcing team immediately kicks in and starts doing a market search. So in this case, alternate third parties that have solutions. The contact them to see if they can take us on fully or partially by Bbron Hospiro, which is ICU Medical now, or Fresenius you know those are the three big outside manufacturers of this stuff and unfortunately, what we find is because of COVID, they've learned early that they have to lock down their allocations themselves for their own network. Ideally if this were, you know, really open and transparent. Maybe you know, let's say, b Braun takes on 20% of the volume that Baxter used to they do just as a reciprocity or like, hey, we can pick this up, guys, but that's not how we're organized and how we work, right, right?
Speaker 1:But what's interesting, though, is you are learning from the concept that I'm hearing. What you're saying is every incident becomes an opportunity to improve the way you go about facing these things. So that's good, and you're not just finishing the crisis and washing your hands of it and forgetting about it. You do have a framework in place. You came to UC Health about two and a half years ago walking in. When you go to a new environment, what kind of assessment of the current state at that place do you conduct yourself?
Speaker 2:Yeah. So back to my first comment, it's all about talent. Do I have the people on the bench or are they in the right seats? I did a review of that and I also, frankly, did a tour of the entire operation. So I went from, you know, fort Collins in the north all the way to Memorial in the south. You know, within the first 60 days, taking a look at the operation and listening to the people, like what's working, what's not working.
Speaker 2:And you know, when you try and be a servant leader and focus on the right things, you've got to listen to the folks that are in the trenches and kind of build a plan around what they're giving you and feedback. And I took that feedback from the field and we've done a couple major projects to try and address those. Also, you got to meet with your customers, like how good is our service, and do kind of an honest reflection on you know, what are the things that are the gaps and what are the things that we're killing it. And you got to meet with your supply base. You know, or do we have the right supplier mix? How are we working with you in that? And typically that's 90 to 180 days of just working, but you start with your own team and talent. You work your way through your customers, your operations, you know, and then your supply base is probably my last stop where I go in and assess where we're at.
Speaker 1:That's it. I ask that because you know a lot of fluidity in our business and a lot of folks change jobs. You should have at least a plan about what you need to look for when you get to your new job. Do you do it before you get there? Probably you learn 80% after you get there. Anyway, you may have some ideas before you get there, but most of everything you're learning is after you've been on board.
Speaker 2:Anyway, you may have some ideas before you get there but most of everything you're learning is after you've been on board.
Speaker 2:So you have an interesting thing though, fred, before you know, since you brought it up, we just did a session at the IDN Summit, my operations leader and I, and had a wonderful, wonderful experience. You know, we we I led with our first question to the room, and these were both providers and suppliers how many of you are new to your role or your job? In the last year, and almost 40 to 50 percent of the building raised their hand, so you know that that was a wake-up for me of, like, the supplier change that's going on as well. So there's a lot going on in the provider ranks, with people retiring and exiting and that kind of stuff, but I have never seen this level of change in the supplier ranks either. There there's a lot of dramatic change going on right now too, and that adds to the challenge. Back to your point around how do you address, you know new coming into the role. You know there aren't a whole lot of playbooks out there, and I would lean into relationships and your service and focus on that is my message.
Speaker 1:Yeah, and I was in that audience. That's where I got this question from, okay, so the other thing is you have an interesting background in the fact, since you've worked for suppliers, you've been in the military educational organizations. You know what have you learned from each and how have you applied what you've learned?
Speaker 2:Yeah, I view myself as a builder, right Engineering head a little bit. You know. One might argue wasted a good engineering head and supply. But I would argue back like supply is a great place to use engineering. But I've learned and applied all of that experience.
Speaker 2:You know the thing that drove me when I was young I shared a room with my younger brother, mike, and he developed juvenile diabetes at a very early age. Just about lost him in the process of getting him diagnosed in the day, and you know he's like 14 months younger than I. I saw his struggles with health care and managing his insulin and you know the riddle of his diabetes just ravaging. You know I knew I didn't have the stomach for, you know, getting blood on me or watching any of that. But I knew I was going to devote all of my energy to making a difference in health care.
Speaker 2:And I think everything you do in life, you know if you can learn, go into it with a mindset of learning, much like you've done, fred, all of your experiences in the military and other things that you've done in your life. If you take on that, I'm going to apply this and make the world a better place and do what I can to help people and ensure they have good, appropriate care at the lowest appropriate cost. And I've had many different roles but I've always had that same vision and mindset and I truly believe if we all do that, we'll make a huge difference here in the United States in health care. It's not going to be the outside thing, that's going to be us making it.
Speaker 1:Yeah, and what's really neat is you're aware of your philosophy and your approach. A lot of you know. That's the important thing. I'm really impressed by that answer. So what challenges are you working on now? What do you think the areas that you'll have to address in the next three to five years?
Speaker 2:are. For me, the number one challenge is the sustainability, or lack of sustainability, of our cost model in healthcare. When you've got, you know, everybody thinking it costs too dang much which it does but you've got medical inflation going at 6-8% and pharma inflation off the charts, if your reimbursement is only going 1-2% a year, those graphs don't intersect very well. So my focus is how do I build a sustainable cost model on supplies that you know we can continue to provide great quality care to the people in Colorado at the lowest appropriate cost. And you know I truly believe that might entail doing some pretty advanced supply strategies that health care hasn't really dug too deep into.
Speaker 2:So potentially for me that would be a consolidated service center of some kind. It might be automating, digital transformation and integrating AI tools into automating you know everything that we can into automating. You know everything that we can and all of those strategies around, you know trying to keep that cost curve down or reduce that cost curve. So analytics is going to be a big investment along with that digital transformation. So those are kind of my key strategies. But my number one strategy is talent development. I've got to build the talent for the future that we're going to need. So we've already got our supply academy second cohort going where we're running that for all of our managers to give them an understanding of what good supply chain is and what we want them to do in running that supply chain and the operations. So you know we're making investments to build the future talent, building the infrastructure with consolidated service center and then building the data structure around digital transformation and analytics so that we can help drive, you know, an appropriate, affordable cost structure.
Speaker 1:Yeah, and it's going to get more and more difficult because the care is moving out further, which means it's going to cost more money to get stuff to the point of care. And you're going to have you know. Fortunately, you know we loud and obnoxious guys like Brent and I.
Speaker 2:I'm never going to live that down, am I?
Speaker 1:No, I think I mean you have no problem with me on this, because I realize that I am loud and obnoxious, but I would not. I don't think you'd probably say that around Brent, but the thing is we got to make it up. We had a much simpler environment. Now healthcare supply chain is really developing into a true supply chain, with the requirement of having true supply chain expertise instead of guys that rise up from kicking boxes in the warehouse to running the place. And I'm glad to see folks like you and Joe and you know the guys out there that really are talented and experienced and experts in the field, because it's going to be needed. So what didn't I ask about that you'd like to talk about?
Speaker 2:I think you covered a lot there and you know I think the one thing I would focus on is talent. You know we led with that, which is not, I would say, my strongest suit, but I've learned a lot in focusing on that. But how do we partner for suppliers so that we're all looking at the same problems the same way and leaning into them? How do we get the right people to say I want to invest my life in moving supply chain to best in class in health care? You know, if we can get those things moving and we can all kind of lock arms on it, we're going to survive just fine. And I love how supply chain is so collaborative like it is.
Speaker 2:I talked to providers this week around what they're doing about Baxter and other things and you know it's not like some of the other industries I was in where it's very tight-lipped. You don't share information because information's power. This is totally different being in health care where it's patient focused, and you know I spoke with a peer, steve, at, you know, cleveland Clinic. Or I spoke with Joe Dudas over at Mayo, or I spoke, you know I just opened up hey, what are y'all doing over there? Any suggestions for me. You know where in the world could you do that outside of health care? So this is a noble profession and it deserves every bit of the quality talent that we can get and let's grow it and support everybody as we try and get through the years to come.
Speaker 1:Yeah, I couldn't agree with you more. I just came back from this year's Bellwether League function and you know you don't realize the brotherhood and I use the term brotherhood in a generic way that we have in this industry until you're interacting among these people you've known for years and they'll instantly give you anything, any advice you need any opinions and the challenge I think and Dr Randy Bradley from University of Tennessee is one of the real great- leaders out there in academia.
Speaker 1:Academia. You know how do you convince people to go into a noble profession, become a servant leader. Commit yourself to a mission-driven life, because you ain't going to get rich in healthcare supply chain from the provider side You're not. So you got to be here because you want to be here. And I think the thing that you said that really struck me was the tie with your brother that had diabetes. That gave you a focal point to want to do something meaningful in your life. How to get the talent that we need, that is willing and wants to serve a mission driven life. That's the challenge. I think you're going about it the right way.
Speaker 2:Appreciate the time, fred, and hopefully this is helpful to somebody out there and feel free to reach out. I'm great in returning phone calls and emails as well, so anybody interested. But thanks for the time man.
Speaker 1:Yeah, richard, thank you for taking your time and thanks for everything today. I really appreciate it. Great session. Have a good weekend and take care.
