Four CEOs share strategies and thoughts about genuine leadership performance

Two of them are this: CEOs who already may be in the hot seat have the burners turned up to full strength, and supply chain management operations suddenly become so much more critical.

But Healthcare Purchasing News didn’t need financial calamity to connect those dots when it launched its annual campaign in 2005 to identify and honor hospital and health system CEOs that “Support, Understand, Recognize and Empower” supply chain management with its SURE award.

In layman’s terms, these executives make the connection between the basement and the board room as bookends to optimal patient care.

The four individuals recognized and honored here bring to 20 in five years the total number of supply chain-focused CEOs that HPN has profiled. Out of the thousands of provider CEOs working today that amount may seem like a drop in the bucket. But for HPN, it’s merely the start of a germinating trend first chronicled within these pages.

HPN’s exclusive staple, typically featured in the January edition to start the year off in the right-minded direction, recently – and appreciatively – attracted the promotional support of the Association for Healthcare Resource & Materials Management.

The 2010 SURE CEOs are Michael Riordan, president and CEO, Greenville (SC) Hospital System; Joe Morris, CEO, Kootenai Health, Coeur d'Alene, ID; Russell Harrington Jr., president and CEO, Baptist Health, Little Rock, AR; and Lynn Britton, CEO, Sisters of Mercy Health System, Chesterfield, MO.

Most noteworthy is that two of this year’s SURE CEOs can trace their professional roots to early careers in supply chain management – Riordan at the venerable Emory Health System in Atlanta, then progressing to the CEO’s office at University of Chicago Hospitals & Health System before heading southeast. Britton parlayed his family business’ retail supply chain management street credentials to a director of materials management position at Mercy Health Center, Oklahoma City, in 1992. Seven years later, Britton moved to St. John’s Mercy Health Care, St. Louis, as executive director of materials and resource management, and in 2000 became vice president for resource optimization at Mercy’s corporate office in St. Louis. Britton helped spearhead Sisters of Mercy’s new supply chain division, Resource Optimization & Innovation (ROi) before assuming leadership of the parent organization.

Meanwhile, Morris and Harrington clearly value supply chain management’s integral contribution to operational success and high-quality patient care delivery.

In HPN’s typically wide-ranging interview, Greenville's Riordan, Kootenai's Morris, Baptist's Harrington and Sisters of Mercy's Britton share their vision of supply chain success, highlight their expectations of supply chain performance and offer insightful encouragement to a profession building a solid credibility base.

HPN: What motivates your interest in supply chain management?

RIORDAN: My graduate training is in management engineering. My first job in healthcare was as a storeroom manager. The combination of hands-on experience and academic training gives me perspectives about the value added of supply chain management that I might otherwise not fully understand.

MORRIS: I have always had a strong interest in supply chain management since that function is critical to the smooth operation of our hospital organization and our ability to control costs in a very challenging healthcare environment.

HARRINGTON: The economy and its impact on healthcare. We have to find more opportunities to reduce our cost.

BRITTON: What started my interest in supply chain is that I grew up in it. I began my career in my family’s retail business behind the desk keeping track of inventory.

What motivated my interest in healthcare supply chain is that I felt it could be so much better. In my previous work, I had seen so many other industries with so much more advanced capability. Then I came to healthcare, the business that save lives and keeps people healthy, and it has the least evolved supply chain infrastructure. Everything we do in healthcare depends on the supply chain to get medicines and supplies where they are needed. We can’t deliver care without it. But when I got into healthcare in the 1990s, I felt like it was way behind. I wanted to be passionate about making the supply chain better so that it could have an impact on the lives of all the people we take care of.

How hands-on should a CEO be in a supply chain that should be under the control of a supply chain management executive?

RIORDAN: The answer to this question may depend on the size of the organization. In organizations as large as GHS, the role of the CEO tends to be highly strategic in focus. The CEO articulates the organizational vision and sets the system-wide goals. The next level of executives has responsibility for developing the strategy and tactics to achieve relevant goals. I am lucky to have a strong supply-chain team, led by John Mateka, executive director of materials management, with executive support from Greg Rusnak, Chief Operating Officer, and Susan Bichel, Chief Financial Officer. As a result, my day-to-day involvement in materials management is minimal. I do think that one strategic issue deals with group purchasing negotiations. The CEO has a role in these decisions.

MORRIS: The role of the CEO in supply chain should be to set direction and goals, but then leave the details and execution up to the supply chain professional. Another role of the CEO is to occasionally provide support and backing when there are issues that could be controversial or create push-back from vendors, physicians and others.

HARRINGTON: The CEO should strive to maintain a reasonable degree of awareness regarding the management of the supply chain but depend upon the supply chain executive for effective operations and planning.

BRITTON: How hands-on a CEO should be depends on the supply chain executive and the nature of the company’s experience. If the company hasn’t had a robust supply chain previously, the CEO is going to have to help the supply chain leader lead the charge and be supportive and engaged. If the company has a highly-evolved supply chain with a strong foundation and credibility, the CEO can take on a different kind of role. It just a question of where an organization is in its evolution toward sophistication in supply chain.  

How can/does a supply chain manager influence you?

RIORDAN: A strong supply chain executive has the ability to contribute on numerous fronts. By developing highly efficient systems and processes, patient care and internal customer satisfaction is enhanced and financial results can be strengthened. In our organization, materials management is a key partner in our efforts to expand purchase activity with minority and women-owned business enterprises as well.

MORRIS: The supply chain manager and other managers, if they are good at their job, can influence the CEO by keeping that CEO in the loop, forwarding articles on the importance of supply chain and communicating new ideas and direction of supply chain management. Most managers would be surprised that their input and communication does influence the CEO.

HARRINGTON: By assuring open communication and minimum surprises.

BRITTON: Opportunities to impact patient safety and the quality of patient services in a positive way always catch my attention. The supply chain team at Mercy is always looking for ways to do just that. 

What would you say to a CEO of an organization that outsources many of supply chain management’s functions to third parties, such as consulting firms, distributors and GPOs?

RIORDAN: It is crucial in today’s highly technical and complicated healthcare delivery environment to have qualified and responsive materials executives supporting the operational goals of the organization. There are times when qualified candidates/teams are not readily available and these are times where outsourcing is a viable option.

MORRIS: There is a role for outsourcing and a role for keeping functions entirely under the control of the organization. Certainly, distributors and group purchasing organizations are extremely important. I believe in local control and a direct relationship with people in my organization responsible for the supply chain management function.

HARRINGTON: Each CEO has to assess what is most effective for his/her organization. My history with our organization has not included significant outsourcing other than working with our GPO.

BRITTON: My personal view is that you cannot outsource something that is so fundamentally important to your business. Every healthcare organization today depends on drugs and supplies to deliver any kind of care, so supply chain is vital to what they do. How you can outsource that to someone whose incentives aren’t aligned with yours is a mystery to me. 

How can consulting firms, distributors and GPOs contribute to the performance of your internal supply chain management expertise without overshadowing the department or usurping control?

RIORDAN: Collaboration is key. It is also helpful if a qualified materials management/supply chain professional can function as the organizational champion in coordinating/managing these relationships.

MORRIS: Distributors and group purchasing organizations can contribute to performance by being reliable, high-quality partners. They also are critical partners in our current cost reduction efforts since they bring expertise and have comparative supply utilization data from throughout the industry.

HARRINGTON: Provide materials, supplies, and equipment, which improve quality and reduce costs.

BRITTON: If any consulting firms, distributors or GPOs have a true value proposition, we are open to listening.

What are some of the attributes/characteristics of an effective supply chain director/leader?

RIORDAN: Proficient in expense/labor and procurement management; personal commitment to exceptional customer service; experienced in non-salary expense reduction; and the ability to effectively work with physicians and clinicians.

MORRIS: Effective characteristics of supply chain leaders are not much different than the characteristics of any effective leader. Those characteristics a supply chain leader would need to possess to be successful would be to be outgoing, competent, a great communicator and someone who can see the big picture.

HARRINGTON: Intelligent, analytical skills, integrity, ability to cooperate, strong customer relation skills, good communication skills, good planning skills and self-motivated.

BRITTON: They are the same attributes that are necessary for an effective leader of any kind, not distinguished by being focused on the function of supply chain. An effective leader has to be a man or woman of integrity and a risk taker. This person has to have a bias for action and understand the big picture of the organization, not just the goals of their single function.

What from your career background do you bring to your current role?

RIORDAN: An understanding of and appreciation for the contribution of support services in delivering high quality care and service to our patients and families. Also, a perspective about using data to help form strategy, set goals and make decisions.

MORRIS: I believe my diverse education and life experiences allow me to be a contrarian in many circumstances and to see the big picture.

HARRINGTON: A recognition that we need to employ the most qualified and experienced person we can find and then allow them to utilize their abilities.

BRITTON: My front line experience helps me stay grounded in the day-to-day work of Mercy co-workers. 

What’s the biggest misunderstanding CEOs have with supply chain managers and how should they both solve that disconnection?

RIORDAN: The key is to have no misunderstanding. Sound and regular communications with the executive over material operations and/or with the materials executive is crucial. This applies much more broadly throughout the organization.

At GHS we’re focused on improving communications at every level within the organization. We have incorporated rounding on staff, patients, and internal customers into our day to day practice. We also hold quarterly Leadership Development Retreat designed to train our management team on issues and management practices that we believe are core to helping us become an even better organization. For front-line employees, every 90 days we hold a series of Town Hall Meetings focused on keeping staff informed about our progress relative to our organizational goals. We conduct annual employee opinion surveys to assess employee commitment and to identify areas for improvement.

In 2009, we added a new feature to our intranet site, the CEO Corner. This is an easy access point for staff to be briefed on important organizational information. It also features an ‘Ask the CEO’ page where staff can submit questions for response. Wherever appropriate, questions and responses are posted for public viewing by all staff. We’ve got a strong commitment at GHS to creating an environment where communication is open and authentic and information is transparent.

MORRIS: I think the biggest misunderstandings CEOs have with supply chain managers would be that they believe that it is easy to always buy the least expensive product and underestimate the difficulty of achieving that goal when dealing with 200 cost centers and 250 physician preferences. Discussion and dialogue between the supply chain manager and the CEO can help resolve this misunderstanding.

HARRINGTON: I have been fortunate in that I really haven’t had many misunderstandings with supply chain managers during my career.

BRITTON: Both sides need to understand that supply chain is more than the cost reduction arm of the organization. Supply chain leaders need to connect their work to the organization’s strategy and CEOs need to challenge them to do so. 

What would you like supply chain managers to understand about the complexity of your job?

RIORDAN: There are tremendous and increasing pressures to reduce costs. And at the same time, it is imperative that physician leaders are better integrated in decision making.

In addition, I want all leaders, and all staff for that matter, to understand the connection between their work and our organization’s vision, mission, and goals. We’ve been working on creating high levels of alignment between those system goals that all employees share and our individual goals related to our specific role in the organization. I want supply all managers to be able to talk to their staff about how their departments support our system-wide goals and about how important what they do is in helping our system deliver high quality patient care and exceptional service to those patients and families who need our care. As for understanding my job, I talk to managers regularly at quarterly Leadership Development Retreats and in others settings about my goals, how they relate to our system goals, and what I’ve been doing to make progress toward achieving these goals.

MORRIS: Most managers do not understand the pressure on today’s hospital CEO. These pressures come from many different areas in today’s healthcare environment including the economy, health reform, evolving integration with physicians and the current complexities of physician relationships. 

HARRINGTON: I really do not expect supply chain managers to be concerned about my job, but rather to focus on doing their best in their job.

BRITTON: I’m always interested in their work. The needs of our ministry require me to diversify my interest and focus.

What, for you, remains the most innovative thing supply chain management has accomplished that exceeded your expectations?

RIORDAN: I am intrigued with the potential use of RFID/RTLS technology (radio-frequency identification/real-time location system). Hospital systems like ours often involve huge facilities on multiple campuses. Effective tracking and recording of devices and people could provide information and benefits not currently available.   

MORRIS: The most innovative thing supply chain management has accomplished in our organization was to lead a standardization effort on physician preference items. This is obviously a high-risk, high-reward endeavor, which requires openness and innovative thinking. 

HARRINGTON: Automation of the receiving process utilizing bar coding and handheld computer devices. Acquisition of the Price Lynx online supply pricing system.

BRITTON: For me, it is the Mercy Meds medication administration program and the work we did to create a closed-loop medication administration system. This system begins at the acquisition and distribution of the drugs to the nursing units and continues through the process to the bedside scanning to verify the correct patient, medication, dosage and time. The impact it has had exceeded expectations. Mercy Meds is at 5 Sigma now for medication administration accuracy. That translates into thousands of people who do not have an adverse medication event annually at Mercy.   

How do you ensure that the clinicians (doctors and nurses) get along and work together with supply chain management so that the processes for revenue generation, expense reduction and high-quality patient care are not disrupted (e.g., refereeing disputes, building consensus)?

RIORDAN: This gets back to my earlier answer regarding securing qualified and competitive materials professionals capable of working with the medical staff. Another key component is to have a unified vision and mission with defined responsibilities and measurable targets. At GHS we’ve introduced unit-based teams led by physicians and nurse managers responsible for managing day-to-day operations. One of the critical elements to success in this model is a collaborative-based approach to work, not only physicians and nurses, but the entire team – and that includes supply chain management.

MORRIS: To get clinicians and physicians to get along and work together with supply chain management requires meeting face-to-face and first establishing common goals between the clinicians and supply chain management. The key to this process is being open about the goal to provide the best quality products at the best price and to not be locked in to one product and brand even if it is the one the group purchasing organization utilizes. The key to price is standardization and the key to standardization is this openness and working together towards common goals.

HARRINGTON: Involve them in the process of evaluation and decision-making as early as possible. Educate them to the need for expense reduction.

BRITTON: Creating a collaborative culture is about mutual accountability and having a thoughtful process that enables business and clinical co-workers to co-create an outcome. Once that happens, they have to be accountable for their decisions, act with integrity and keep their word.   

What are some practical, common sense ways for supply chain managers to generate CEO-level support while balancing the need to provide high-quality service to clinicians and other departmental customers?

RIORDAN: I tend to be someone who likes data and measurement in support of decision making and strategy development. I think that many CEOs share this perspective. Supply chain managers can best achieve support and endorsement by quantifying the value of a project to the organization and making a connection to vision, mission and organizational goals.

MORRIS: The key for supply chain managers to generate CEO-level support is to occasionally meet with the CEO, keep the CEO in the loop and ask for support when needed while avoiding surprises.

HARRINGTON: Generate implementable ideas that create efficiency for the organization and quality for the patients.

BRITTON: Supply chain leaders should make sure they know their CEO’s key objectives for change at the organization and make sure that the supply chain strategy clearly supports those objectives.  

How important is supply chain management for an organization during a recessionary economy?

RIORDAN: Our staff is our most valuable asset. In times where revenue is tight, minimizing and reducing expenses is crucial. Approximately one-third of our total expenses are consumed by supplies and supply-related services. Reductions in these areas may prevent, if not minimize, a work force reduction. 

MORRIS: During a recessionary economy, supply chain management takes on an increasingly important role in the organization. At our organization, we have set a goal to reduce our costs of non-labor expenses by $3 million to $5 million as part of a year-long project at expense reduction. With increasing numbers of uninsured and rising bad debt and charity care, it is becoming increasingly difficult to cost shift the care of these patients to insured patients. I remind the organization that a dollar of cost reduction is a dollar that goes to the bottom line whereas a dollar of a rate increase generates 47 cents.

HARRINGTON: It is truly one of the highest priorities during a recessionary period.

BRITTON: Supply chain management is no more or less than important during a recessionary economy than at any other time. 

What’s one lesson you learned or piece of career advice you’d like to share with supply chain managers to be successful?  

RIORDAN: This is advice I would give to any manager, regardless of their professional focus. Engage your workforce. Help your people understand the connection between how they spend their time at work to the larger mission of the organization – patient care. Listen to their ideas and concerns and be responsive in addressing issues wherever possible. Look for the positive elements that exist in all situations. I love to start conversations with employees and managers with a simple request: Tell me what’s working well.

MORRIS: The keys to success for a supply chain manager are again not much different from any other manager. Integrity, honesty and open mindedness are the foundation for a successful career.

HARRINGTON: Be aggressive. Always be looking for new ways to improve. Don’t wait for your supervisor to suggest new approaches.

BRITTON: Be faithful to the struggle of pursuing your dreams. 

What does it take to be a hospital CEO? What does it take for a supply chain manager to become one?  

RIORDAN: This is a big question. I’ll offer just a couple of thoughts. As for what it takes to be a successful CEO, there are many things including, but not limited to, the ability to think strategically, to comfortably move from topic to topic and issue to issue in rapid fire fashion throughout the day, to delegate responsibility and accountability for larger projects and organizational functions to others, and to communicate the organizational vision throughout the system – from leadership to front line staff.  Often, this role tends to be quite public and therefore it is helpful if you are comfortable being in front of different groups.

As for becoming a CEO, beyond developing some of the qualities I’ve just described, it will likely take a willingness to explore and experience professional expertise beyond supply chain management. In addition, it may be helpful to consider a disciplined approach to developing a personal leadership philosophy, incorporating that philosophy in to current leadership roles, and establishing a track record of successful leadership that you can build on as you grow professionally and personally over time. 

One last thought. In the end, it takes an honest desire to become a CEO – with a full understanding of the rewards and responsibilities associated with such a role. If that’s what you want, go for it. But if your goal is to be the best supply chain executive you can be, know that about yourself.  

MORRIS: To be a hospital CEO requires a broad career exposure, years of experience and appropriate Masters-level education. For a supply chain manager to become one, they would need to first expand their responsibilities within the organization beyond that of supply chain. By expanding responsibility and obtaining the appropriate educational credential, one might be able to work their way up the organization.

HARRINGTON: We do not have enough time or ink to cover what it takes to be a hospital CEO in today’s environment. I have never personally witnessed a supply chain manager becoming a CEO, although I am sure there are those with enormous capability.

BRITTON: The process and attributes for a supply chain leader to become a CEO are no different than what is required for any individual to do so. You have to be willing to push yourself outside your comfort zone and learn new things. You have to recognize that it not about you, but about the team you surround yourself with.

The higher you rise in leadership structures, the more you have to use influential leadership rather than direct authority. People often think the CEO has ultimate power. I would suggest that the CEO typically has less power than almost any other direct line leader in the organization. If you will everything into existence by giving directives and orders, you won’t be around very long. You have to build a shared vision and empower people to lead their part of the organization toward that vision.  

What do you believe sets you apart from other hospital CEOs? What sets hospital CEOs apart from other industry CEOs?  

RIORDAN: I inherited a great system from my predecessor – Frank Pinckney. As for how healthcare CEOs may differ from those in other industries, perhaps many of us chose to pursue careers in healthcare because of the mission focus. At the end of each day, we know that because of the work we do, people’s lives have been touched as patients, family members, and throughout our communities. That’s a pretty great thing to think about on the drive home.

MORRIS: I believe I am a little different than a lot of hospital CEOs in that I have stayed with the same organization for 35 years. That means I have grown with the organization professionally and matured as the organization has grown in size and complexity. Hospital CEOs often need to juggle more responsibilities than other industry CEOs in that we have patients, the community, a hospital board, a large medical staff, a large group of employees and the community to answer to. In addition to that, we operate in a regulated environment with probably 100 different regulatory organizations having some say as to how we operate.

HARRINGTON: I do not assume that I am set apart from other hospital CEOs. I am just committed to doing the best job I can in the role I am in.

BRITTON: I don’t compare myself to other CEOs. It isn’t about me or them; it is about the healthcare ministry we serve.

What words of wisdom did you receive from a particular mentor that has helped you in your CEO role?  

RIORDAN: Pray and meditate on a regular and consistent basis.

MORRIS: The head of my graduate program in hospital administration’s last piece of advice to me was ‘Just make a decision.’ He said that some individuals do not have the ability or the courage to make the hard decisions. That does not mean you do not obtain the necessary information and data, but you still need to be able to make a decision with imperfect information and data. The ability to make an independent decision and not rely on others to be your crutch is a key skill for any manager.

HARRINGTON: Be fair. Be decisive.

BRITTON: Fidelity to the struggle is the true achievement. 

Within the last few years, there’s a lot of heated debate and discussion about the need for product data standards as adoption and implementation deadlines loom. What can you do as a CEO to reinforce the value of product data standards and position your organization as a key driver?  

RIORDAN: Align our information systems and processes to incorporate the standards as they become available and take full advantage of the information.

HARRINGTON: Make certain that our supply chain manager and our hospital administrators understand my support for this important effort.

BRITTON: At Mercy, I don’t have to do anything but get out of the way. Our supply chain team members are key influencers and early adopters of these industry standards. 

Aside from the noble and idealistic intentions of healthcare reform, what’s your deepest fear about its passage?  

RIORDAN: That it won’t go far enough and doesn’t happen soon enough.

MORRIS:       My deepest fear about health reform is that it will not go far enough and that it will not cover enough individuals and will leave us with a too large of a number of uninsured people in this country. Another fear around healthcare reform is that it won’t pass, but that all of the cost reductions in the reform proposals will be implemented anyway. That would mean continued rising numbers of uninsured with increasing cost pressure.

HARRINGTON: Access – Adding up to 46 million people with insurance coverage at a time when we already have a growing shortage of physicians will place a severe demand on the system. Funding – Financing a high percentage of the cost for healthcare reform on the backs of providers by cutting Medicare/Medicaid reimbursement.