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
From Struggling to Standout: How a Mid-sized Health System Built an Award-winning Supply Chain
St. Luke's Health System in Boise, Idaho has been recognized by Gartner as one of the top 25 healthcare supply chains in the country, achieving this distinction as a mid-sized independent organization competing with much larger systems.
• Eight hospitals, 300+ clinics, and $4 billion in annual revenue.
• Transformed supply chain operations by hiring 20 strategic employees, mostly from outside healthcare.
• Generated $160 million in cost savings over a decade through strategic negotiations.
• Built true strategic supplier partnerships based on transparency and aligned incentives.
• Opening a 330,000 square foot Consolidated Service Center housing both medical-surgical and pharmacy operations.
• Collaboration with other health systems provided valuable insights for supply chain transformation.
• Mission-driven approach to healthcare supply chain offers better work-life balance than for-profit sectors.
• Addressing critical talent pipeline challenges by engaging with local universities.
Remember to subscribe and connect with us online where you can find all of our episodes. If you have a topic you would like to discuss or want to be a guest on the show, you can reach out to Fred directly at fcrans@stonge.com.
Hello and welcome to another episode of Taking the Supply Chain Pulse. This week, Fred is hosting Adrian Wenger, the VP of Supply Chain at St Luke's Health System in Boise, Idaho. They were recognized recently by Gartner as one of the top 25 supply chains in the country. And here's your host, Fred Kranz.
Speaker 2:Adrian, welcome to the podcast.
Speaker 3:Yeah, thanks for having me, Fred. Really appreciate the invite and looking forward to our discussion.
Speaker 2:So how is life out there in Idaho these days?
Speaker 3:Oh well, you know it's a well-kept secret. It's a beautiful place to be. That's part of the reason why I haven't left the last 20 plus years. If you're an outdoorsy person, this is the place to be.
Speaker 2:And it's sort of like one of those places that you hope no one discovers.
Speaker 3:That's exactly right. Let's hope this doesn't go well for me today.
Speaker 2:No, it'll go well for you.
Speaker 3:You're an accomplished guy. So are you historically. Are you from the area? Yep, I grew up in a small farming town outside of Boise and I've been living in Boise the last 20-plus years and you know, throughout my career, I think originally I had an opportunity working through Trinity Health to see a lot of their sites across the country, so I still keep coming back to Idaho. It's a great place.
Speaker 2:Well, you've got to invite me out there, because Idaho is one of the three states I have not been to. I'm trying to hit all 50. I had a friend when I was in the military and in the service. I was a corpsman and he was from Pocatello, idaho, and you know I've always been intrigued, never made it there. So what I wanted to talk today about is you guys were recognized by gartner as one of the top 25 health care supply chains in the country in 2024, correct?
Speaker 3:that's absolutely right. We came in at spot number 21, I believe yep and uh and uh, that's.
Speaker 2:That's quite an honor, right yeah, absolutely.
Speaker 3:It was a big accomplishment, one that we've been working on the last I don't know six or or seven years to really set ourselves apart.
Speaker 2:And if you look at that graphic that came with the Gartner thing, they had a pyramid from the bottom to the top and then after that they had at least three systems Mayo, the Cleveland Clinic and Intermountain that were in outer space. Okay, so I thought that was something, but the point I like to make to a lot of people is most of the people that would be watching or listening to our podcast probably work at places that aren't giant IDNs. So tell us, how big is your IDN, how big is your system?
Speaker 3:Yeah, happy to St Luke's. Well, first let's back up. There are a lot of St Luke's health systems across the United States. St Luke's out of Boise, idaho, is not affiliated or attached to any other St Luke's in the US, so we have about 18,000 employees, about $4 billion in annual revenue, eight acute care campuses and a little over 300 ambulatory clinics.
Speaker 2:Yeah, you guys. Most St Luke's people would consider to be probably Catholic organizations and you guys are an Episcopalian organization is that correct?
Speaker 3:That's exactly right. A little confusing there.
Speaker 2:It didn't confuse me, I looked it up. So so, um, you're eight hospitals with, uh, around 300 clinics. Yeah, so that means that you have at least 308 service areas.
Speaker 3:That's exactly, that's is that fair to say? That would be on the low end. Some of these campuses are multidisciplinary, obviously, and there's some ambulatory sites inside of them. But yeah, I think that's a good number to go with.
Speaker 2:Okay, so we'll start there. Now let's talk a little bit about you. Tell us about your background.
Speaker 3:Sure happy to. Well, I'll try to keep it short, but supply chain is not something that I decided I wanted to build a career out of. I stumbled into it, like a lot of people, and I've been doing supply chain work both in and outside of health care now for about 32 years. The last 22 have been inside of health care. I've been lucky to have some great mentors along the way, one of which we both have in common Mr Ed Hiscock has been a fantastic mentor to me and he really lit this passion and that's part of the reason why I've stayed in it as long as I have. So 10 years outside of healthcare and then dropping into healthcare. I started with St Alphonsus, which is one of the Trinity Health Hospitals out of Boise, idaho, spent about 11 years with them and then moved over to the other large health system here in Boise, which is St Luke's Health System.
Speaker 2:And.
Speaker 3:I'm coming up on 11 years with St Luke's this year.
Speaker 2:Is St Luke's affiliated with any gigantic IDN?
Speaker 3:Nope, no we do a lot of partnership, but nope.
Speaker 2:Now we got a second thing going on. I wrote an article last week about is bigger better? Okay, One of our folks had asked with all the stuff going on in health care, just because someone's bigger, is the cost of their supply chain lower? And my answer in the article is bigger is not better, better is better. And the example I was trying to make is there's like three kinds of health care organizations in this country those that are amazingly successful, those that are holding on and barely making it by, and then those that are either going to be going out of business or being acquired, and the most unlikely thing of all is an unaffiliated system that can survive in the land of giants. And you've got one of the biggest giants in the form of Trinity as a competitor in your marketplace. Is that correct?
Speaker 3:Yeah, very, very true. You know, I am happy to say on the supply chain front, we don't compete. I think that's one of the beautiful things. You might agree that you know, sharing best practices in healthcare supply chain is welcomed. And you know, if we get a chance to talk a little bit about our Consolidated Service Center initiative, it wouldn't be designed the way it was without so many other IDNs helping us. You know, share lessons learned.
Speaker 2:Yep, and I've always said that. You know I've been an advocate of collaboration for over 50 years. I said long ago that you're never going to go out of business over the cost of Band-Aids. Okay, so you might as well work together about it absolutely. But historically I can guarantee you that in your community before trinity was involved, when you had two standalone hospitals there and they were probably hospitals, not systems they went at war with each other and they and the medical staff leveraged both against each other because they were probably on both hospitals' staff working together. And that's all changed.
Speaker 2:So, given all that, what kinds of things have you done? Oh, the other thing I saw is you had a background on the non-healthcare side, where. The other thing I saw is you had a background on the non-healthcare side where, with I guess it was All West, where you had a big logistics presence and a big logistics background, and you have experience in both capacity planning and resource planning. So, given your personal background, what did you find when you got to where you are, and what things have you done to improve the system to the point where you're now one of the top 25 with Gartner?
Speaker 3:Yeah, absolutely. I think early in my healthcare supply chain career working for St Alphonsus Trinity Health, you know I spent the better part of seven years learning all of the intricacies of health care supply chain Right how, inventory management, perpetual periodic par the ins and outs of all of the supply chain verticals, just to become proficient enough to be dangerous. Proficient enough to be dangerous. But I think really it's been my most recent time working for St Luke's Health System. That's given me more autonomy to really transform the supply chain department.
Speaker 3:So when I started 11 years ago, we didn't have strategic supply chain employees. We didn't have strategic supplier partnerships, which is so critical, especially post-pandemic. So we've spent the better part of that time honestly blowing it up and putting it back together to be more scalable, efficient, which included examining the historic GPO, medsurge and drug wholesaler relationships, identifying which supplier partnerships that we wanted to build those strategic relationships with, and just building our own internal credibility with our stakeholders and C-suite executives and board members. The net result of that, I will tell you, fred, over the last decade, is about $160 million in reduced costs and equipment negotiations and leveraging all of that strength and expertise to get us where we are today, which has just been fantastic. So it's been much more on the strategic front than I'd say operational improvement.
Speaker 2:So when you came there, Did you walk in with C-suite credibility or did you have to earn that?
Speaker 3:Yeah, I had to earn that. Yeah, absolutely. How did you do it? Yeah, well, in the case with St Luke's, we had a chance to go on road shows. So we interviewed all of our campuses across the state of Idaho and we asked them a few questions How's your relationship with supply chain? If you had a magic wand, what would you do differently, and are there some immediate pain points that we can solve for you?
Speaker 3:We took, captured, all of that feedback, we put it together in a document and out of that bore a couple of different strategies. You know, it was clear that the previous supply chain leadership didn't always follow through on their commitments. They had a hard time building these relationships and they just didn't have the strength or the expertise. And so the first order of business was hiring about 20 strategic supply chain employees, only one of which had healthcare supply chain experience. That was all by design. The problems we were facing couldn't be solved with the same lens. So, you know, I think having a deeper bench strength within healthcare supply chain and then going after those low fruit opportunities At that time we weren't highly standardized, go figure, right, that's the biggest problem that faces us in healthcare supply chain today. But we also didn't have deep clinical integration, we didn't have consistent relationships with our physicians and clinicians and if you don't have that, you're not going to get very far in the work that you need to do to help the patients and the communities that you operate in.
Speaker 2:Well, you know it's. It's interesting. You, um, you said that you added 20 strategic supply chain employees. Now, that that's a lot of resources.
Speaker 3:That is yeah.
Speaker 2:If you do the math, 20 times a hundred thousand a year is 2 million plus benefits. 20 times 100,000 a year is 2 million plus benefits. 20 times 50,000 a year is a million plus benefits. So somewhere between there was probably the salaries those people were making. How did you make the sale to get the resources? Because, in my opinion, the lack of strategic resources is the difference between Trinity Health. They had two giant buildings there in Livonia, michigan, and millions of cubicles in there. They looked like the Borg from Star Trek to somebody in an aid hospital system. How were you able to convince people, number one to give you the money and number two, how were you able to convince people with the skill sets and I don't mean this in a bad way to move to Boise, idaho, to work with you?
Speaker 3:Yeah, well, first and foremost, I think you have to have a solid business case right. That becomes critical. No organization is just going to give you a check for 20 resources without some sort of return. So we calculated a business plan that had a pretty significant ROI and the immediate savings at that time for those 20 resources was about $32 million. And that was through some strategic contract negotiations. It was moving to a different GPO and some of those distributor and wholesaler relationships had to be upended. So I think the use of national benchmark pricing told us that we had an opportunity and so we laid out a multi-year plan, we articulated that to the C-suite executives in the board and we got their buy-off to do it.
Speaker 3:I think the second part of that question, again going back to that well-kept secret of Boise, when we fly candidates out here for the weekend before we make a final offer, they usually don't want to go home. It's a beautiful place, there's so many things to do. So the city kind of sold itself, to be honest. And now I think you look at this city post-pandemic the cost of real estate is just, it's over the top, and so that has lessened some of the attractiveness of this valley, like so many others, but it's still a great place to live.
Speaker 1:Before we dive back in, you may be asking yourself is my supply chain future ready? At St Onge Company, we don't just optimize logistics. We engineer smarter, leaner and more resilient systems from end to end, from manufacturing to retail to healthcare. Our experts bring decades of experience in cutting-edge strategies to transform your operations. Visit and discover how we're shaping the future of supply chain, one solution at a time.
Speaker 2:Yeah, you know, I think that the problem with places like Colorado and Montana and Idaho and Wyoming is that now that people can work from remote areas and people having lived in some of the really densely populated cities, especially in California, they're just dying to get away from stuff and it's like anything else that's really good. At some point in time people are going to discover it and ruin it.
Speaker 3:You know what I mean, I hope that doesn't happen for Boise, but yeah.
Speaker 2:Well, I hope not too. The other thing you spoke about, which I think is important, and I've been talking a lot about this lately there was just a two-day conference at the Cleveland Clinic about strategic partnership with suppliers and they had 200 suppliers there and I guarantee you that of those 200 suppliers, about 180 of them went to that two-day conference with the idea of just getting the Cleveland Clinic's business, not really understanding what strategic supplier partnerships are. Could you maybe describe uh one or two uh relationships that you built and how both of you benefit from it, you and the supplier?
Speaker 3:yeah, absolutely. Um. So you know, in your previous podcast, which I've had a chance to listen to, you you brought on some amazing healthcare supply chain executives and there's been discussions about the cost to serve, right, the SG&A that exists outside of healthcare versus what exists inside of healthcare. There's a premium attached to that. You couple that with other discussions around the Puerto Rico hurricane, right?
Speaker 3:I think we all learned a great lesson in 2017 about not having visibility about where manufacturing occurs, especially as it relates to IV fluids. That was one of our first strategic partnerships we entered into with ICU Medical, which, as you know, bought Hospira's book of business from Pfizer. We went off contract from the GPO, entered into a direct relationship with ICU Medical and that really helped us, circa 2017, avoid some of the continued stockouts and backorder issues, quality control issues in the IV fluid and set front right. You fast forward to where we are. Even last fall again, when you had that issue happen in North Carolina again, when you had that issue happen in North Carolina, St Luke's was largely unaffected by that because we had built this partnership with ICU Medical where our allocations were not below 100 percent right, and so, as we come together on a pretty frequent basis.
Speaker 3:Our opportunity is to try to figure out how each of us can make the other's operations more efficient and more cost effective, which means you've got to be transparent, you've got to have shared goals and you've got to have aligned incentives. And I know that. You know that that comes up again and again. But if you don't start with those three things, you're not going to get very far.
Speaker 2:Yeah, you know and you're bringing out something else up in my career yeah, we never talked from the provider supply chain to the supplier supply chain. We talked from the provider supply chain, which was not called supply chain itself until maybe 2010. It was purchasing, it was materials management. We talked to their sales folks. So what has been the value of implementing conversations and discussions supply chain to supply chain with these guys?
Speaker 3:Yeah, you nailed it, fred. If your counterpart at the supplier organization is a salesperson, they are driven by hitting their quarterly or annual goals right and, depending upon the category or the market share growth that they've been asked to hit, that may not necessarily work, because the problems you're trying to solve may exist somewhere else. And so I think getting inside of the supplier organization to the right supply chain person allows you to say, hey, what's the cost of your outbound freight, right, and what's our ordering pattern for that? And can we start to aggregate and bundle our orders? And more specifically, when we look at product families, like when you look at implants, you're all over the place.
Speaker 3:So how can we begin having some really valuable conversations to try to align product families? And if there's pressure on their manufacturing front to discontinue products because they don't have enough volume or whatever it is, can we work together to have enough insight and lead time to make those conversions happen so they're not so disruptive? I think the suppliers you know and again, not to talk poorly of them have used a burning platform post-COVID to get rid of low margin products, right, and you just lump it into. Well, we just can't make it anymore. So I think you know there has to be mutual respect on both organizations to come together and have some honest conversations about these challenges that we're both facing.
Speaker 2:Yeah, you know, every time there's a negative event, it becomes an opportunity for someone to use it to make money, right? Absolutely yeah, I mean the tariff situation. You know, anytime something happens, as long as you can jack up costs and blame it on the other guy, you got gold going on right.
Speaker 3:Yeah, yeah.
Speaker 2:The other thing, though, that I think is interesting in bringing the supplier expertise, supply chain expertise, in is that over the years, you know, we've outsourced two major components of supply chain operations. We've outsourced purchasing and contracting to the GPOs just, you know, because we thought, oh, they're doing a good job and distribution to the transportation and logistics to the distribution folks. Now we have to learn about it. So has working with suppliers differently helped you learn about it, to build your proficiency in your operation?
Speaker 3:I think, yes, but not so directly. You know, to tell you a little bit about our journey through our transformation. You know, every health system supply chain department has a maturity curve, right, and usually it is as they get larger. They have more funding and they can allocate more resources and bring in new systems, and that's how they mature. But I think for St Luke's, for us, it was.
Speaker 3:You know, we knew that we would hit this fork in the road where we would have pulled all the value out of our GPO relationship, and we knew that we needed to get ahead of that. So we didn't, you know, hit a brick wall at the end. So, circa 2016, we started doing some site visits across the country and we decided to determine is a Consolidated Service Center initiative right for St Luke's? Did we have the right size? Did we have the right maturity and discipline to make it work for us? There were so many health systems. We visited over a dozen of them from 2016 to you know even after the pandemic, learning from them about their journey into self-distribution and self-contracting.
Speaker 3:I think their best practice sharing helped us understand the real value, and so that's why I'd say you know, our maturity and our success has largely come from our peers in the industry, those who opened the doors and said we want to tell you what we did and here's some mistakes to avoid, right, and that was just fantastic feedback to get.
Speaker 2:Yeah, that's not a cavalier decision. I think a lot of folks just do a cavalier decision. Oh, you know, we buy X amount of stuff, so we should have a consolidated services center. Now you have one right, or you're about to have one.
Speaker 3:Yeah, we go live with ours in about 30 days and again, this has been a year and a half of construction and design work. But yeah, we're really close and really excited.
Speaker 2:And how large is your Consolidated Services Center Center?
Speaker 3:Yeah, ours is about 330,000 square feet, which is about seven football fields. And no, there's no blue turf in there, but maybe we should get some, given the, you know, boise State Broncos. I will tell you, fred, that our Consolidated Service Center also houses several verticals of pharmacy, right?
Speaker 2:Yeah, that's what I was going to ask. What other services are in?
Speaker 3:there. Yep, absolutely Well. We're just going live, obviously, with MedSurge and the basic operations of pharmacy, but we've got compounding, we've got home infusion specialty. Mail order pharmacy will be in there. We've got a pretty big 340B presence in the state of Idaho so we're excited to partner with pharmacy. That was a big learning lesson. Many of these CSEs across the country pharmacy is an afterthought and it's expensive to bolt on you know additional building to bring their services in. So I'm very appreciative for the fact that our you know pharmacy leader and I came together and we had the same vision about the value that would be for the patients and the community members for St Luke's.
Speaker 2:That's great. Another area that lends itself well. I mean, if you've got eight hospitals, unless one was built yesterday, you've got eight hospitals that have sterile processing operations that need to be looked at and possibly upgraded, updated and perhaps put in one place. Have you given that any thought?
Speaker 3:Oh yeah, we have several future phases planned for our CSC, and again you've got to pencil it out. But, fred, I think you nailed it, there's no stopping it. You could get into case cart picking right, you could get into instrument sharpening, you know, equipment scope, repair, decontam, the possibilities are endless.
Speaker 2:Yeah, and I'll tell you I don't. I don't. I think it may be too late because I think she retired, but at St Onge we worked with Children's Hospital of Philadelphia, with Joni Rittler down there and I think she just retired recently. But what I got out of learning about that process is and you've done it, you talked about it with the pharmacy folks the key to being able to do anything collaboratively is to build excellent relationships with the different stakeholders, the different departments. I mean, historically it was everybody for themselves in hospitals. You know, I want to get more money than you because I want to build my operation bigger than yours, and now collaboration is absolutely necessary. So you're it's.
Speaker 2:It sounds to me like like you've learned from uh Ed, who is Mr Smooth uh what, what, what collaboration is about and and how to build uh goodwill with your, with your fellow uh VPs and directors and leaders. Am I wrong or am I right about that?
Speaker 3:You're spot on, Fred. I couldn't have said it better.
Speaker 2:Well, hey, I think we're probably almost at the end of our time, Adrian, what is out there? What burning platform do you have? That means something to you that I forgot to ask about.
Speaker 3:Well, you know, one common thread in some of your former podcasts have come up around the pipeline for supply chain talent. Right, and I feel really strongly about this. There are some really great leaders out there that we're fortunate enough to work with, but the pipeline appears to be drying up, you know, and I think we've got to put our heads together to figure out how are we going to influence that, to bring up the next level of leaders, help them learn from us. It can't be that we all just have a nice retirement and you just leave this big gap right. There's some pretty big batons that we need to pass off so that you ensure that continuity of knowledge and that leadership approach.
Speaker 3:Being a servant leader in healthcare it's a big challenge, right. It means you've got to have a low ego, you've got to practice humility, and so I think, you know to those listening out there, we've got to work together to figure out how we're going to solve this pipeline of leaders and where they're going to come from, and there's some great ideas happening around the country. We've just got to tap into those. So that's kind of what keeps me up at night. I'm very close to Boise State University. I had the opportunity over the last month to talk to them in their ethics panel. We talk a little bit about how healthcare supply chain works and I love the ability to talk locally because that's a great feeder pool for us to try to find people who are interested in maybe a supply chain they haven't heard of. Right, so super excited yeah, I was at.
Speaker 2:I was at university of tennessee in knoxville, randy bradley's place. Uh and uh spoke down there with amy watson, one of my colleagues, and you know, out of uh, out of maybe 80 people in two classes, we got about uh eight. Maybe that uh uh were interested in the health care supply chain afterwards, but that's eight, it's a good number.
Speaker 2:Yeah, because, uh, because you know, uh, health care supply chain is tough. You're not. If you don't go into it to get rich, you don't go into it to get famous. You go into it to, uh, help care for people and you come from a mission-driven organization and you understand that. But you know everyone else it seems like every other business in this country is motivated solely by profit, and the folks that we raise as children to adults get locked into that pathway and it's hard to get them to swerve into doing something on a mission-driven basis.
Speaker 3:Absolutely, and a big selling point needs to be that this is a really rewarding career. If you spend your 20s and 30s working for a for-profit organization, you're going to get burned out. There's no work-life balance in that. That's the one thing that healthcare supply chain still has to date right Great work-life balance and the ability to be influential with friends and family in your community. It's got to be a bigger selling point that we all market.
Speaker 2:Yep Well, Adrian, it's been a pleasure having you on the podcast.
Speaker 3:Thank you, fred, I really appreciate it.
Speaker 2:People ask me how we rehearse for these things and I say we don't. People ask me how we rehearse for these things and I say we don't. Yeah, yeah, conversations are the best way to do things. So, adrian man, that was a really nice job, thank you so much.
Speaker 1:Well, that's all for today. Thanks again for joining and, as always, don't forget to subscribe and connect with us online, where you can find all of our episodes. If you have a topic you would like to discuss or want to be a guest on the show, you can reach out to Fred directly at fcransatongcom. See you next time.
