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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We provide comprehensive planning and design services to develop world-class facilities and highly effective support services operations. Our capabilities in hospital supply chain consulting include applied industrial engineering, lean methodologies, systems thinking, and operations research to enable improved patient care and staff satisfaction. We are proud to have worked with over 100 hospitals, including 18 of the top 22 in the US, utilizing diverse design strategies, post-construction implementation, and change management.
Taking The Supply Chain Pulse
Strategic Sourcing and Innovation in Healthcare Supply Chains
This episode explores the integration of people, processes, and technology within the healthcare supply chain, with insights from George Godfrey of Baptist Health of South Florida. A proactive approach to staffing, financial pressures, and technology adoption reveals how healthcare organizations can enhance efficiency and patient care.
• Staff shortages impacting recruitment and retention
• Financial pressures leading to strategic sourcing and cost management
• Technology integration addressing supply chain disruptions
• Contingency planning for natural disasters and manufacturing consolidation
• Automation and CRM systems improving invoice matching and resource management
Welcome back to another episode of Taking the Supply Chain Pulse. This is Joe with St Onge Company, here to introduce our guest for this week, george Godfrey, who comes to us from Baptist Health of South Florida. George is the Chief Supply Chain Officer and the Corporate Vice President of Financial Shared Services. Vice President of Financial Shared Services. In this two-part episode, we'll discover insights on how to integrate people, process and technology with the challenges of today's industry. Let's get started.
Speaker 2:Today we're going to discover how George used tools at hand to help solve a problem that is present in every organization and is bothersome and costs money, and so we want to talk about that. But let's start out with this. George, you sent me some information the other day, which referenced an article that appeared in Becker's about what they called the 10 headwinds for health care in 2025. And you had segregated out four of those, which included continued staff shortages, financial pressures, technology integration and supply chain, and I want to talk about why you picked those out, and then we'll get into what you did to work on the problem that you saw needed work. So when you say continued staff shortages, how does that affect Baptist Health of South Florida?
Speaker 3:Oh, it's been an ongoing issue for us. You know, trying to find the right people with the right skill sets, especially in supply chain, is very difficult, and it's become a very competitive market in South Florida, for, I think, unemployment is like zero, and so we have to look at, you know, how can we get a little bit more from our resources with less out of them? And then how do we make the environment for the staff so rewarding that our turnover is very low, and so we put a lot of effort into making sure that everyone understands their roles and responsibilities, but also where they can find enjoyment, whether it's being self-directed workload management and being able to see the impact that they're making to our operation and our patients.
Speaker 2:Yeah, well, the other thing is, I was talking with Ed Hiscock the other day from Trinity and he said something that I really believe is important too, and that is this Back when I started at Baptist Hospital in 1969, there was no such thing as supply chain.
Speaker 2:There was purchasing, there was materials management, which was led by a man named Leo Grizzle, and there was central processing and distribution CPD which I became ultimately the director of, and all we had to do was know enough to back the truck up to the dock, pull the stuff off, push it in the warehouse and then take it to where it needed to go. Today, you have 11 hospitals, you have about 23,000 employees in Baptist Health of South Florida, you have over 100 other off-site locations that you have to serve, and you've actually become a real supply chain. So you have to not only have people to do the work that we did, but you have to have people with other skills skills in analytics, skills in areas that we basically outsourced either to the GPOs or to the MedSurg distributors. Is that fair enough to?
Speaker 3:say yeah. I mean, our size and scope is huge and the responsibilities are significant. You know, I'll give you something I was looking at this morning. Today at Baptist Health in South Florida, we have twelve hundred and seventy five unique back orders, which is unfortunately common in our industry now.
Speaker 3:It used to not be, but now we have all these back orders and the very first thing that that we put a lot when you asked about technology, we say, ok, of the 1,275, which ones do we care about? So we run it through a computer system now to filter it and we say, hey, do we have an ETA? Do we have an ETA that passed this past due or do we have an inventory at the warehouse and we can live from that? We have 30 days of inventory. We don't need that backwater item right away. And we run it through this filtering process and we get the twelve hundred down to three hundred and fifty and then for the three hundred fifty we go OK, which ones are for procedures, which ones are going to impact patient care? And we start to go there. And what's interesting is using this technology now that's available, and I don't want to go into AI, but using technology to allow our workers to focus on what's important. You know we have 75 unique back orders today that are for patient procedures. How do we make a positive impact on those back orders for our patients and our clinical staff? And what we're seeing is our staff is enjoying that work a lot better than just chasing a lot of activities, a lot of transactions. It's rewarding in that you are making a difference within the clinical care.
Speaker 2:Yeah, and you have to have people that know how to work the tools if you will necessary to get the outcomes, as opposed to, like I said, mainly we were just menial workers who moved stuff through the hospital in the old days. That's a big difference.
Speaker 3:Yeah, yeah, it's a big difference and the team's large enough that they need to be self-directed. So we need we need to have the tools and reporting that when people show up to do a role in deploy actions, you know that's what mainly supply chain professionals are doing is what action. You know how are they going to deploy that action and how they're going to make it very cost effective to deploy that action.
Speaker 2:Okay, so the second item is financial pressures. I mean that's a general term. How does Baptist Health of South Florida, affected by financial pressures?
Speaker 3:Like all providers in a negative way. I mean our raw materials and supplies expenses continue to have pressures, especially, you know, where there could be some tariffs coming that will impact that even more. The reimbursement for procedures is typically going south, not north, and so we have financial pressures that we need to be able to be more cost competitive every day, and so we look at opportunities through sourcing and aggregation of market share agreements and things like that to try to lower our purchase costs. But also, you know how we more efficiently use the supplies, have less waste. A lot of things go into that.
Speaker 2:I know that historically. I think you know this, but I used to work for Brian Keeley and Brian was the CEO of Baptist South South Florida since 1995, but he started there in 1969, the same time I did. Baptist has always been a financially strong organization. Financially strong organization when other places were in the red, baptist was running for a private, not-for-profit hospital and then health system a pretty healthy bottom line.
Speaker 3:Does that remain true? Fortunately, yes. Brian recently retired and now we have Bo Bollinger as our CEO. That's only been with our system for 29 years, I think. So we have a lot of stability in the leadership, and the leadership of Baptist is just outstanding. So the system's been blessed. We continue to grow. We've announced 12 hospitals that we're in the process of building, and continuing to expand and solve more.
Speaker 2:Very good. Well, I'm going to jump to number four and then come back to number three, because number three, which is technology integration, is what we're going to talk about with the way you solved this issue that I'm still keeping a secret. Generally speaking, supply chain was one of the issues that the article brought out as being a headwind to look in. Where do you see, in general, supply chain being an issue and the issues facing supply chain?
Speaker 3:We touched on it a little bit already. I mean, we obviously have cost pressures, but now we're getting into just the basic of having the supplies and being able to anticipate disruption in the supply chain and when you can anticipate it and react to it and then solve for it. That's the challenge, and to do so in a cost efficient manner. You know running the business that deals with patient care. We just can't have twelve hundred back orders and put our heads in the sand and say we don't care. We have to now start to take actions that will allow our clinical staff to be successful in treating patients and so, as more and more items become impacted by just supply disruption, putting the right technology in place and the right communication process in place to deal with that is very important. So supply chain is not just going to be using ERP data to know what you need to buy and when you need to buy it. It's now going to be how do you respond to lots of disruptions and communicate that in a timely fashion?
Speaker 2:Well, you know, you're in South Florida, which in 50 years, is supposed to be underwater and which every year faces the possibility of a hurricane, and I know that you have to have contingencies planned for natural disasters such as hurricanes. But let's go back to 2017, when Hurricane Maria hit Puerto Rico and we found out that all the mini bags in the world are manufactured in one plant and you had to find ways to survive that. In general, when you get a specific interruption from an integral product After you're finished, do you have a system for saying, okay, we've got to make sure next time something like that happens to this particular integral product, not just some nice thing to have out there Do you make plans for dealing with those things when the events take place?
Speaker 3:Sure, we try to, but a lot of it's outside, unfortunately outside of our hands, outside of the provider's hands. I mean, we just had a similar instance that impacted IV solutions just recently. It was like a repeat in that we had one large, very large manufacturing facility that provided more than half the market with IVs being impacted and it's taken months for us and other health care organizations to recover from that. As more and more manufacturing has consolidated and as that consolidation has occurred, you know we have less opportunities to be multi-source and have backup. So it's a challenge.
Speaker 2:Yeah, and the other thing is now, with the political environment that's out there and the uncertainty and, I would say, the purposeful disruption that's being caused with the idea of tariffs and the idea of shutting off delivery of things from China, for example, where a lot of our stuff comes from, you've got to be giving attention to what ifs there I was talking. Once again. Many people don't know that the chief element to aluminum is bauxite, and bauxite comes from Canada, and Canada is on the list of people we're going to maybe do something to. So I would ask you if you're buying a lot of wooden crutches right now, because you ain't going to have any aluminum ones around.
Speaker 3:Yeah, the notion of the tariffs is frightening in that it's uncharted territory for at least myself. We haven't had to deal with that issue and the disruptions that that could cause, so we have to see. You know what that brings.
Speaker 2:So are you, on the whole, optimistic and do you feel comfortable going to work every day, or do you walk in going, uh-oh, what's going to happen now?
Speaker 3:No, I love going to work every day. I love the team I have. It's just that they're outstanding. Every day is a pleasure. We are doing something special for the community and providing outstanding care for our patients, and then, from a supply chain standpoint, every day we're just trying to be the best of the best. We're constantly challenging ourselves for continuous improvement. How do we leverage people, process and technology to benefit the organization? It's just our mission and it's fun trying to make a positive impact.
Speaker 2:Well, you made the great statement right there to sort of let me transition in here people, process and technology. So you have your people with your people's skill sets, you understand processes and you have technology that you're already using, maybe for other things. So if one day or one night you're at home saying we have a tremendous amount of of unresolved invoices where the prices don't match, the quantities don't match, the item numbers may not match what we ordered and we may not be getting the contracted pricing that we're supposed to from our special agreements, how do we resolve these? Tell us what you did about that.
Speaker 3:That's a long story. So prior to joining Baptist, I've had 25 years of manufacturing experience and manufacturing. We measure it. It was healthcare manufacturing, diagnostics, and we measure everything statistical process control. We have to measure things to make sure we stand in control.
Speaker 3:So when I came to Baptist, I started implementing various KPIs, and one that was very unique to me was this invoice match exception. We never had that outside of health care. When we issued a PO in a manufacturing environment, we issued it for five dollars. The supplier shipped us the item at five dollars. They didn't ship it and bill us at ten dollars, and health care, for many reasons, follows different rules and we have this system nationwide that suffers from invoice match exceptions. And when you do 40, 50,000 transactions a month, the mismatch of match exception starts to build up, and so for years I would see this, you know we would have thousands of match exceptions. We would occasionally go on credit hold.
Speaker 3:It was taking a lot of resources to identify what was the root cause of the match exception, who needed to do what, how we're going to resolve it. It took a long time. It wasn't strategic, wasn't bringing any value, and so we started about five or six years ago of saying, okay, how do we use technology to solve this? And so we looked at robotic technology. We looked at our ERP system and trying to do different things with BI tools, being able to report it better and manage it better, and that helped us, but it really didn't automate, didn't solve for the problem. Us, but it really didn't automate, didn't solve for the problem. And then we looked at CRM technology. Basically, salesforce or ServiceNow are the two leading CRM providers.
Speaker 1:Be sure to join us next week to continue the conversation. George helps us further understand how the importance of CRM and automating processes helped influence efficiency and the resulting financial impacts. Don't forget to subscribe and connect with us online, where you can find all of our episodes. If you have a topic you'd like to discuss or want to be a guest on the show, you can reach out to Fred directly at fcrans C-R-A-N-S. At stonge, s-t-o-n-g-e dot com.
