Up Close
 New Novation chief aims to reinvigorate GPO’s stature

Joellyn Willis directs more aggressive approaches,
steers ship into international waters

Assuming the top post at the nation’s largest group purchasing organization can represent a challenge even for the most seasoned healthcare executive.

Not only do you provide supply chain services for nearly a quarter of the nation’s hospitals but you also become one of the key faces – some claim the poster children – of the GPO industry before federal legislators and regulators aiming to crack down on alleged anticompetitive practices.

Now imagine taking on that role if you’re a seasoned executive from outside the healthcare industry with no experience or exposure to the subtle and not-so-subtle nuances that drive industry progressive crawl.

That’s what Joellyn Willis faces today. Willis accepted the presidency of Novation back in May and has spent the last six months getting up to speed, as well as participating in a new international venture that promises to be an intriguing direction for the market leading GPO.

Willis brings more than 15 years of senior leadership experience directing sourcing and logistics operations in the electronics and utilities industries. Most recently she served as the senior supply chain executive for Constellation Energy Group, the nation’s leading supplier of competitive energy, based in Baltimore. She also has considerable strategic, operational and corporate management experience. Throughout her 25-year career, Willis led organizations to create and use best practices and implement innovative supply chain processes, driving substantial savings along the way.

Willis took some time out of her hectic schedule to field a few questions from Healthcare Purchasing News Senior Editor Rick Dana Barlow about her reasons for jumping into the healthcare industry, where she plans to take Novation and how she believes Novation will fare in the competitive landscape for years to come.

HPN: You came into healthcare from outside the industry. What about healthcare attracted you to assume the top office at Novation?

WILLIS: The healthcare industry is operating in a very challenging – and exciting – environment, and there’s a lot to be done. Hospitals are under more pressure than ever to control costs without compromising the quality of the care they provide.

In looking at what Novation has been able to accomplish in lowering healthcare costs, I saw an opportunity to lead an established, industry leader on a path of continued growth, and apply much of the supply chain knowledge I gained in outside industry to help move Novation ahead. The transformation of the supply chain is a strategic priority and I’m excited to be a part of it.

What do you feel you bring to healthcare group purchasing from your experience in the electronics, manufacturing and utilities sectors?

I have a strong supply chain management background and I have successfully led teams in both the manufacturing and utility sectors to transform their supply chain. I plan to take some of the proven best practices I’ve seen in supply chain management and tailor them to support healthcare contracting.

We are going to begin looking at our business in a new way. Through a focus on continuous improvement along with clear growth strategies, I think you’ll begin to see exciting innovations coming from Novation.

Will you provide some examples and explain why they matter?

Examples of such best practices include operational efficiency improvements through proven methods like lean and six sigma, as well as strengthening sourcing strategies to include supplier scorecards.

What can you share about this ‘new way?’ Where do you see the ‘clear growth’ areas for Novation that will fuel these innovations?

We are looking at ways to use our core strength – contracting – to increase our knowledge and effectiveness, and in turn to increase the knowledge and effectiveness of the members we serve. For instance, our venture in the UK will lend us incredible knowledge about new technology that is usually launched in Europe before being introduced in the United States. The experiences of English clinicians with new technologies will provide VHA and UHC members with unique knowledge-sharing and education opportunities never before available.

How do you anticipate your new role as the leader of the healthcare industry’s largest group purchasing organization (in terms of annual purchasing volume) differing from your previous role?

This new role is certainly exciting to me. This position offers me the opportunity to utilize two of my strengths – general management and supply chain management. My broad leadership skills afford me the opportunity to not only focus on operations, but also on the strategic direction of the business.

So do you plan on taking a more hands-on approach? Why?

In the beginning, I plan to take an active role in our business to learn the nuances of the healthcare supply chain and to pinpoint immediate areas of focus for our team.

Some observers contend that healthcare group purchasing is more complicated – or needlessly convoluted – than their counterparts in non-healthcare industries, such as manufacturing and retail. They attribute the complications to all the rules and regulations from payers and clinician demands, just to name a few. After several months at the helm of Novation, what’s your take and why?

Each industry has its own set of regulations and complexities, and the healthcare industry is no different. The nature of the healthcare supply chain where the end user is not the purchaser, certainly adds to the complexity. However, supply chain best practices have been successfully applied across industries. Novation is committed to taking an active role in initiatives, such as driving adoption of industry standards, that we believe will alleviate some of the complex issues healthcare organizations currently face.

How will driving the adoption of industry standards make it easier or more efficient to deal with end users that are not the purchasers of products and services?

Industry standards drive efficiencies for all stakeholders within the supply chain. For those end-users not directly involved in the purchasing process, standards provide a positive impact by ensuring they will have the right product at the right time – thus, increasing the ability to provide quality care. Standards not only drive operational and economic efficiencies in areas like work processes and logistics – they also ensure a safe and secure supply chain.

As an industry outsider jumping into the healthcare mix what’s your take on the whole GPO antitrust-safe harbor imbroglio brought up by the government and selected vendors?

Contracting is Novation’s primary product offering and I’ve spent a great deal of my time learning the company’s processes. I have found Novation’s bid process to be open, and very supportive of competition, innovation and diversity. Any allegations of antitrust just don’t hold up because of two simple truths: 1) supplier fees do not in any way influence contracting decisions, and 2) hospital participation in contracts is purely voluntary.

In the past, GPOs have trumpeted contract compliance guarantees in order to give the industry an illusion, at least, of having a competitive edge. However, emphasizing that participation is voluntary in the wake of the antitrust allegations and the resulting fallout seems to run counter to that strategy. How do you bridge the gap between the two ideas?

Member compliance and participation is evidence that they see value in what we do. The fact that this participation is voluntary further emphasizes their support of our contracting services.

Novation recently embarked on an international quest, signing a major deal with DHL to supply the National Health Service in England, a contract that reportedly represents 45 percent of that country’s Department of Health’s expenses. How did that deal originate and what was your role in it?

Novation viewed the prospect of partnering with DHL to provide procurement services for the National Health Service in England as a very exciting opportunity and an excellent fit with our growth strategy. Our ultimate goal here is to help hospitals afford the essential, but expensive, supplies they need to deliver quality patient care. We will, in turn, gain valuable knowledge about products and services introduced overseas and foster the sharing of that knowledge with the members we serve in the states.

As for my role, I plan to be closely involved with the team as they work through this exciting new opportunity. I also hope to share some of the global market insights I learned from my previous industry experience.

When you mention ‘essential, but expensive’ supplies, are you referring to physician preference items or everything – including commodities? Also, how much of this international expansion factors into Novation’s growth strategies? Are you setting the stage where Novation becomes more of an international GPO as VHA and UHC assume more control over their contracting and supply chain decisions? Why?

Our contracting efforts will initially focus on consumable items, like surgical gloves, food, etc. International opportunities are an important part of, but by no means, the only focus of our growth. We will continue to focus on growing our core business by continuously improving the contracts and services available to VHA and UHC members.

Is there anything – impressions, observations – that you can share initially here?

The venture officially started October 1, 2006.

You have considerable experience in international logistics services – particularly in Europe. Was that a key factor in your coming to Novation? Why?

My international logistics will be helpful as we continue to pursue growth opportunities and transform the supply chain. However, my decision to assume the leadership role at Novation was sparked by the ambitious and focused direction of the organization and the dedicated and committed employees whose contributions make Novation the best in the industry.

Does the British contract signal a new and/or developing direction for Novation, particularly as VHA and UHC have assumed somewhat more control over processes previously managed by Novation? Why?

Novation will continue to explore new opportunities that support our growth strategy and leverage our existing contracting services business. We’ll build on the success of our business opportunities with DHL and the National Health Service by leveraging innovative procurement strategies to improve efficiencies, maintain high quality and increase savings for the National Health Service in England.

How long before you determine how successful the NHS partnership is than you pursue other international opportunities? One year? Two? Five?

We have entered into a 10 year agreement with DHL. The agreement is planned to deliver savings greater than $1.8 billion.

What’s the most difficult part of your new job right now and how are you overcoming it?

Novation’s strategies and focus need to reflect the opportunities and issues alliance members are facing. For example, helping alliance members reduce supply chain costs – this is an area where Novation can match its capabilities to meet members needs and help make a significant difference for their organizations. We continue to deliver innovative technologies and market-leading pricing, but going forward we have to do better than that. Novation is seeking to broaden its supply strategy and take a more aggressive approach to strategic sourcing, effectively managing our contracts and supplier relationships on an ongoing basis.

How do you plan to reinvigorate Novation as a GPO powerhouse?

Novation is undeniably the industry leader today, and we’re taking aggressive steps to expand our market leadership position. We’re investing in new technology and process improvements that will strengthen our core business and enhance the services we provide to members. We’re seeking new ways to partner with our alliances, VHA and University HealthSystem Consortium (UHC) to ensure their members are receiving the most value from our contracts.

We’re focused on growth strategies that leverage our core competencies. A good example of this is the business venture we just announced with the National Health Service in England. We’ll continue to explore additional opportunities that make good sense for us.

You’ll also see Novation take a more active role on important areas like industry standards. We’ve got a great team in place that is dedicated, driven and ready to take Novation to the next level and I’m confident we’ll set new standards in the industry.

One of the key themes I hear you repeating is this idea of aggressiveness. What do you mean by Novation having to take more aggressive approaches and be more aggressive – strategically and operationally? Is that even possible with all the antitrust scrutiny? Why?

As the industry leader, it is Novation’s responsibility to aggressively pursue improvement in all that we do. We have to ensure that our contracting services meet the current needs of members. We should be the example by which strong, ethical standards and quality contracts are measured. HPN

November
2006