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New group aims to lift supply chain operations by its bootstraps

SMI focuses on fundamentals via grassroots idea sharing

by Rick Dana Barlow

Most professional organizations, such as associations, societies and trade groups, tend to focus their efforts on advocating relevant issues for their respective industry audiences, educating members on new processes and products and providing networking opportunities for members to exchange ideas and maintain relationships.

Typically, these are high-profile organizations that garner plenty of media coverage and industry exposure. Mention a particular acronym and not only will the well-informed recognize it but the ill-informed at least will take some notice.

While some are knowingly successful at either advocacy, education or networking or all three of these goals, others contribute to industry development in different ways. They may be smaller organizations that fly under the radar as they conduct their business, perhaps on more of a grassroots level.

The Strategic Marketplace Initiative (SMI) is one such group. You won’t find executive administrators and elected officers lobbying Capitol Hill or hundreds, if not thousands, gathering to learn what their peers are doing successfully and how vendors supply the products and services that can contribute to provider financial and operational strategies.

Instead, you’ll find a more intimate group of provider and supplier executives that don their thinking caps and roll up their sleeves during regular "working" meetings as they create, develop, test and implement specific solutions to real-world challenges. Those efforts even extend beyond the "official" meeting boundaries and into their own respective professional settings where member facilities serve as interactive case studies that potentially will emerge as success stories demonstrating the value of the products and processes they nurtured.

Tom Hughes, a long-time healthcare industry consultant with a storied career in hospital administration and materials management, leads SMI. Hughes was appointed executive director of the organization in early 2005. Prior to SMI, he was the founding principal of Concepts in Healthcare, a consultancy he sold to Becton Dickinson and Co. in 1998 that became the foundation for BD Healthcare Consulting & Services. Hughes served as vice president of that venture. Before launching his consulting career, Hughes worked at such hospitals as Tufts New England Medical Center and Beth Israel Hospital in Boston.

After an in-depth conversation during the recent AHRMM Annual Conference in Orlando, Healthcare Purchasing News Senior Editor Rick Dana Barlow invited Hughes to share his thoughts about supply chain management in healthcare and how the new organization he represents contributes to its development and improvement.

HPN: What was it about the Strategic Marketplace Initiative (SMI) that attracted you to leave retirement behind and return to the healthcare battlefield, presumably the front lines?

HUGHES: First of all, I never really retired. Like many veterans of our industry, I had to make more room in my life for my family, especially my grandchildren, and my health. When presented with the opportunity to get involved on the ground floor with a dynamic group that is truly focused on propelling this industry forward, I jumped at it. In my opinion, SMI is the first non-profit group that brings the right people, at the right level in the supply chain, together with the knowledge, desire and real ability to make positive things happen across the supply chain.

We’ve seen a number of new organizations, dedicated to educating people on how to improve some aspect of the supply chain, sprout within the last two years. How is SMI different from what’s out there already? How is it trying to rise above the noise and attract attention without distraction?

What makes SMI most different is that we are non-profit, we are senior executives and we are comprised of both buyers and sellers focused on taking action on industry-wide issues. SMI is comprised of IDNs and healthcare partners (product manufacturers and distributors, equipment suppliers, IT organizations and service providers) with a direct stake in the effectiveness of the healthcare supply chain. We formed to act as a change agent for healthcare and to introduce non-healthcare industry practices and approaches to the healthcare supply chain. No other organization is like that.

SMI is a working organization where collaborative teams representing the whole supply chain come together to address industry issues and develop real solutions. Our members recognize that there are much inefficiency in the way the supply chain operates. People have complained about these for years, but there has not been a solution in many cases. So SMI members are using our collaborative process to address issues and create positive change.

Why does the healthcare industry need SMI? What is it doing that other organizations aren’t?

SMI provides the critical mass of senior industry decision makers who voluntarily interact and voluntarily work on teams to address industry problems and develop industry solutions. We have two Forums annually at non-resort locations where the focus is on initiative work. Between our Forums, the same teams of SMI members regularly meet and work on the initiatives. Through their collaborative efforts, solutions, tools and techniques are developed and tested. Members are then able to take these solutions back to their organizations and implement to meet their organization’s needs. I do not know of other organizations that are doing that.

Why shouldn’t associations like AHRMM and IAHCSMM, among others, be concerned about SMI competing for attendees, members and supplier sponsorship dollars?

We do not compete with AHRMM or IAHCSMM or other similar organizations. All these groups add value to the industry. SMI collaborates with them when possible, sometimes complementing the work they do. SMI does not hold trade shows or seminars, nor do we compete for supplier sponsorship dollars. Supplier sponsorship is against our bylaws. We are not an educational organization, although education is a natural by-product of our work. We are a supply chain solution organization. We are focused on developing solutions and taking action on those solutions. Other associations have completely different focuses.

How is SMI funding itself?

Member dues are the sole source of revenue. In addition, members are not paid to participate on teams or attend SMI activities or our bi-annual working Forums. They do so voluntarily. No monies by way of consulting fees, honorariums or surplus allocation are provided to the Board of Directors or any member. In the unlikely event that SMI should be dissolved, all remaining funds are to go to charity.

How is SMI able to bring together executives from the provider and supplier sides of the healthcare supply chain to work together without running afoul of federal regulations?

We understand the importance of strict compliance with the antitrust laws and other federal regulations. We have retained outside counsel to advise us on the law, to participate in meetings, and to review written materials. In some cases, standardized industry practices and procedures, for example, product classification standards, are good for competition and, consequently, are perfectly consistent with the antitrust laws. We have also considered suggesting guidelines in certain areas, for example, guidelines concerning vendor access to healthcare facilities in order to ensure patient safety and heighten vendors’ awareness of their obligations and responsibilities. In those cases, we make clear that the guidelines are voluntary and that providers are free to tailor them to their own needs or ignore them altogether. In addition, we make certain that there are no discussions at any of our meetings that could adversely affect the competitive process.

SMI has been working on a number of key projects designed to improve the supply chain. Will you provide some details about each of these projects and explain why they matter – individually and collectively?

SMI Initiatives are selected by our members. We try to focus on issues where virtually everyone involved in the healthcare supply chain will benefit from the successful implementation of a solution that we come up with. Our collaborative process involves significant research and understanding of an issue, development of possible solutions, testing and piloting of those solutions and adoption by our members. Since SMI is dedicated to improving the healthcare supply chain, we share our work and solutions at no charge to the industry.

At the recent AHRMM Annual Conference, we distributed two CDs containing SMI-developed solutions. One CD contained our recommended ‘Vendor Access Guidelines’ to assist the industry in efficiently managing the challenges of providing safe access. The other CD contained a relationship management software tool called ‘Measuring Effective Relationships,’ which helps bring business partners together to evaluate and measure elements of their relationship. These are available for download free of charge at www.smisupplychain.com by clicking ‘Tools.’

Other SMI Initiatives currently underway include: Perfect Order – developing ways to evaluate an order’s accuracy, completeness, etc.; Contract Synchronization – improving data management in the contracting process; Healthcare Data Standards – promoting the development and implementation of standards for collecting and reporting healthcare information; Evaluated Receipt Settlement – exploring improved efficiencies in payment processes; and Collaborative Product Introduction – establishing effective business processes through supply chain executives to manage the introduction of new, emerging and enhanced products.

How are these projects different from what you in your previous life – a consultant – offers?

Let’s make sure it is clear that SMI is not a consulting company. SMI is dedicated to improving the healthcare supply chain and to that end, all outputs are shared with the marketplace. As a consultant, I was in a for-profit mode and usually worked for a single client where the project focused on addressing the client’s issue, with a written report as the most frequent deliverable. With SMI, the focus is on action and implementation because we are trying to address ‘industry’ problems – not just study them. Since SMI is comprised of buyers and sellers, a different level of understanding is required of all participants to understand each others’ needs, challenges, and requirements.

Ultimately, what is the outcome toward which SMI is working? What does SMI hope the healthcare industry learns and gains from its efforts and accomplishments? And how long do you think it will take to happen?

By bringing key senior supply chain stakeholders together with the correct focus and process, SMI truly believes that we can positively shape and influence this industry, improve efficiencies, and ultimately, lower the cost of healthcare. The industry will gain from SMI’s abilities to discover, experiment, and implement. We hope that the industry sees that if SMI can do it, then they all can too! Our time frame is now, and we are having an impact today. But everyone realizes that it took a long time for our industry’s supply chain to get to this point, and real solutions are not created and implemented overnight. HPN

Editor’s Note:

For more information on SMI and how to participate, visit the organization’s Web site at www.smisupplychain.com.