Supply Chain Hits Home On Health Equity

Karen Conway

By Karen Conway, vice president of healthcare value, Global Healthcare Exchange (GHX).

The COVID-19 pandemic exposed the true costs, human and otherwise, of health disparities, as low income and minority populations suffered disproportionately from the virus. Blacks, Native Americans and Hispanics were 2% to 3.3% more likely to be hospitalized or die from the virus compared to non-Hispanic Whites, primarily because of a higher prevalence of underlying disease states (hypertension, obesity and Type II diabetes) caused by relative lack of access to the so-called social determinants of health: good paying jobs, healthy food, safe housing, and transportation, among others.

As with so many aspects of the pandemic, supply chain is front and center in the fight, which is playing out on their home turf, literally. Once again, supply chain is also getting noticed in the executive suite, as the boards of trustees for America’s hospitals prioritize health equity in preparation for taking on more risk for the populations they serve under value-based reimbursement programs. Here are few ways they are making a difference.

1. Bringing Diversity Home
Supply chain professionals have long sought to increase their spend with diverse suppliers, defined primarily as those that are women, minority, veteran, or LBGTQ-owned. That data is tracked and often used to support grant applications. More recently, transparency around that spend is being mandated. In California, for example, Assembly Bill 962 (AB 962) requires all hospitals meeting a certain threshold to report how much they spend with diverse suppliers each year.

But for many health systems, diversity is not enough. They want to make sure they are using their purchasing power to support the health and well-being of local communities where the patients they serve live. Spending in local communities has a multiplier effect. For example, investing in a local business supports job creation; in turn the wages for those employees generate local tax dollars and increase their ability to spend and generate wealth in their own communities.

2. Anchors as Partners
In many communities, large and small, hospitals are anchor institutions. Once built, they rarely move and are often the largest or one of the largest local employers. The Affordable Care Act requires not-for-profit hospitals to assess and report on how they are meeting local needs. At the same time, many hospitals are struggling financially in the wake of Covid-19 and do not have the staff nor the infrastructure in place to effectively address both clinical and social needs on their own.

Organizations such as the Healthcare Anchor Network are supporting hospitals as they seek more opportunities to invest in local communities, as well as opportunities to partner with existing community service organizations as they seek to support the social determinants of health.

3. Blur the Lines
Some healthcare systems are taking it a step further by investing in manufacturers or becoming manufacturers themselves. For example, Banner Health in Arizona partnered with a local manufacturer to produce reusable isolation gowns designed by the clinicians who will use them. This addresses both supply continuity as well as sustainability objectives for the health system.

Banner is also one of more than a dozen health systems that joined their group purchasing organization to purchase a minority stake in a domestic manufacturer of personal protective equipment. The health systems have committed to purchase a portion of their supplies from the company, while also being able to purchase product from their manufacturer before the rest of the market.

Ochsner Health in Louisiana took it a step further, entering into a joint venture to build its own manufacturing facility. The move not only helps secure more reliable supply, but it will also create thousands of new jobs to support both the physical and financial well-being of the local population.

With these steps, healthcare supply chain leaders are demonstrating their ability to deliver value on multiple fronts. As they align with the highest objectives of their system leaders and boards of trustees, the supply chain continues to elevate itself in stature. Most importantly, supply chain is supporting the redesign of our healthcare system, from one focused on caring for the sick, to one that helps prevent illness in the first place.


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