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When it comes to supply chain management the healthcare industry generally gives hospital administrators/CEOs a bad rep.

Thankfully, as Healthcare Purchasing News discovered in its search for supply chain minded CEOs, that bestowed rep isn’t as pervasive as you are led to believe.

Based on reader input, HPN chose 10 individuals deserving recognition for their supply chain dedication and of that total four CEOs worthy of our inaugural SURE Award for Supply Chain Excellence for the way they support, understand, respect and encourage materials management professionals.

Although our 2005 recipients hail from either coast, as well as America’s heartland, they all share one common attribute as a business trait: They admittedly turn a watchful eye and a listening ear to supply chain issues as a barometer of success for their respective organizations.

Greg Gerloff, CEO, Altru Health System, Grand Forks, ND; John Lloyd, president and CEO, Meridian Health, Neptune, NJ; Michele Tarbet, CEO, Sharp Grossmont Hospital, La Mesa, CA; and Richard Tschider, president and CEO, St. Alexius Medical Center, Bismarck, ND, truly "get" materials management. And for that, HPN salutes them.

Gerloff appointed a registered nurse to lead materials management’s efforts and strengthen its clinical credibility throughout the organization. Gerloff also worked with the IDN’s physician president to communicate the importance of supply chain processes and procedures throughout the organization. He routinely seeks out information about supply costs, issues facing materials management and the interrelationship between revenue and expense, according to Cynthia Braseth, R.N., division administrator of support services. "Greg truly understands that managing the supply chain is more than negotiating good contracts," she noted, "and reinforces the processes being developed." Those include a supply formulary, criteria-based decision-making procedures for supply selection and a technology assessment committee.

After college, Gerloff spent two years in the United States Navy Hospital Corp. and then entered the private sector in 1968, working for a medical-oriented computer company. Three years later he joined Grand Forks Clinic Ltd. as senior administrator until July 1, 1997, when the clinic merged with United Health Services to become Altru Health System, a non-profit integrated delivery system comprising one hospital and numerous nonacute care facilities, including a rehabilitation center, cancer center and clinics. Altru named Gerloff CEO.

As Gerloff was leaving the Navy, Lloyd was entering the Marine Corps where he spent part of his three-year tour of duty as a battalion supply officer. During the 1970s to early 1982 he worked his way up from an administrative assistant at Philadelphia’s Episcopal Hospital to executive vice president. From there he assumed the presidency of Jersey Shore Medical Center (Neptune, NJ) and its holding company Modern Health Affiliates Inc. through December 1996. In January 1997, Lloyd became president of Meridian Health (Wall, NJ), a central New Jersey-based IDN comprising three hospitals and numerous nonacute care facilities. His strategic vision led to the creation of the Coastal Cooperative of New Jersey LLC, a "mini-GPO" that contracts on behalf of its members, which includes Meridian and another organization.

"He passionately supports the importance of materials management as an integral part of a successful organization. He intuitively understands the key issues and concepts we face, recognizes our strategic value, and significantly empowers our staff," noted Patricia Klancer, Coastal’s director of network services, and Jeff Welch, vice president of materials management at Meridian who also runs Coastal. "John recognizes that contemporary materials management teams must not only negotiate best prices, but also must excel in finance, distribution, utilization, standardization and systems development.

"John supports materials management efforts through his attention to and participation in the process of the Cooperative, as well as through his general knowledge of the importance of the cost control issues in maintaining the financial viability of a healthcare system," Klancer and Welch continued. "One key indicator of his support can be found in the level and quality of materials management leadership he has developed and his personal guidance and support of materials management initiatives. John raises the bar for the materials management function by highlighting results and opportunities at the executive level."

With a background in nursing prior to starting up the administrative career ladder within San Diego-based Sharp HealthCare, Tarbet easily can connect the dots between clinical, financial and operational management. "Michele has a unique perspective on getting the supplies to the patient," noted Vanessa Dimalanta, Sharp Grossmont’s materiels manager, who, along with Tarbet, is a 20-year veteran of Sharp HealthCare. "She absolutely understands what happens when the product or service is not there and the detrimental effect that it can have on patients and outcomes. She understands that there is a whole human aspect to making this happen that cannot be minimized or overlooked." In fact, she recognizes that the hospital’s GPO and distributor relationships are but components of a successful supply chain initiative, Dimalanta added.

Amerinet CEO Bud Bowen praises Tschider’s "long history of support for e-commerce, bar code technology and advanced materials management sophistication."

In fact, the material resources division actually reports directly to Tschider, who has worked at St. Alexius for the last 45 years, starting as personnel director and moving up to CEO in 1976. When material resources submitted a proposal to purchase the first bar code technology designed for healthcare, Tschider approved the roughly $50,000 expense and then struggled through two years of implementation challenges. They finally scrapped the system and replaced it with an internally designed software that became the talk of the industry for at least a decade. Tschider then immersed himself in healthcare automation and standards organizations and their efforts, recruiting his then-director of material resources, Frank Kilzer, to pick up the torch, too. In 1993, St. Alexius installed computers in every patient room, enabling clinicians to track medication and supply consumption via bar code scanners, a strategic and operational model that is only now emerging as an industry standard. "His leadership can serve as an example for other CEOs as to how they can leverage an important department by supporting, understanding, recognizing and empowering the material resources leadership in their organizations," said Kilzer, now vice president of material and facility resources and a member of the hospital’s administrative council.

"We consider material resources to be a significant part of our operations and are proud of their accomplishments," Tschider said. "I’m sure you can appreciate that it takes support from the CEO. I can assure you that it also requires leadership within the materials management operation and a committed staff who extend themselves every day to make things happen."

What follows are excerpts of exclusive interviews with Gerloff, Lloyd, Tarbet and Tschider about supply chain management’s role in their strategic thinking.

HPN: In terms of supply chain management activities, how much has your organization saved (expense reduction and budget elimination) in the last year and what were your specific contributions to the process as CEO?

GERLOFF: Our annual savings in supply costs is $3.4 million. Avoided costs, such as reductions in obsolete inventory, lab reagent costs, capital equipment costs is $766,000. Our total savings and avoided costs amounted to $4,166,000. My specific contributions included showing visible support of the process being developed to control costs, making time on executive and board agendas for progress reports, supporting decisions made even when physicians lobbied against them and sending the message at leadership meetings that this is the NEW way.

LLOYD: For the year ended this December 2004, we will achieve savings of $6.4 million and for 2003 about $7.2 million. That’s both in terms of savings through our co-operative as well as through our supply chain initiative. We have a separate legal corporation for our co-operative. That is set up so that other organizations can be part of it. Right now we have at least one other organization that’s part of it. The supply chain is through the hospitals and the non-hospital entities.

We have our own purchasing co-op but we still have some relationships with GPOs – Novation and [University HealthSystem Consortium]. Right now we probably have about $50 million of supplies that are being purchased through the co-op. Our estimated total supply cost is probably about $150 million to $175 million.

As the system’s CEO part of my vision has been to truly create what I’m going to call world-class corporate services across the board. We view our role as supporting our hospitals and what we call our partner companies, which handle our non-hospital activities. We want to add value to what they’re doing. In all of our corporate areas we want to achieve world-class performance. To do that we need very talented leadership. Right now we’re very proud of the leadership we have in Jeff Welch, our vice president of materials management. He also manages the co-op and sits on the co-op board. Also, the leadership of our organization – both corporately and at the hospitals – are committed to supply chain initiatives. We believe there are a lot of opportunities for savings through line item cost reduction and standardization – that will actually help us improve quality. It’s easier said than done, but if we have the leadership and we have the commitment to become more knowledgeable. I try to stay in tune with what’s happening in the purchasing/materials management/supply chain area. I was part of a group of executives here within Meridian in consultation with JPC in New York that thought it would be innovative to create our own purchasing co-op. I was probably the primary individual within Meridian that spearheaded it about five or six years ago. I’ve tried to keep a hand in it, but we have able leadership in Jeff Welch and our hospital presidents.

My experience as a Marine Corps Battalion Supply Officer truly helped. I’m very proud of that. I’ve always had some interest in the whole supply chain initiative. The supply chain isn’t just about ordering something and finding out how much it costs. It involves a lot of logistical issues, quality issues and user issues in terms of satisfying their needs. It’s a whole process. I can attribute that understanding to my background. Also, I try to stay abreast of what’s happening here. I saw this whole field evolving over the years. We all remember the days of our purchasing agents, and it was easy. Order this, order that. Make sure you get a good price. But whoever really looked at the purchases? We weren’t under financial pressures. We assumed that our people did a good job, and it wasn’t as complicated. Things have really changed.

TARBET: Sharp Grossmont Hospital is part of an IDN. Our hospital benefits primarily from aggregate supply savings which stem from contracting at our corporate level. Each hospital materiels manager works directly with the contracting arm to maximize savings at the local level. In addition to the materiels manager, key large department managers (i.e., OR, Catheterization Lab, Imaging) are part of the negotiation efforts that achieve savings that benefit the organization. Some areas that we have worked on include drug-eluting stents, OR products and IV solutions. Any of these product categories net large savings for the IDN as a whole. Savings range from hundreds of thousands or more.

As CEO, my role is to advocate and support new technology requirements, understand community best practices and ensure that this is well-communicated to the appropriate staff and, most of all, to trust that my materiels manager has his/her finger on the pulse of what is happening from a supply chain perspective. For example, we recently opened a five-story building that houses a state-of-the-art critical care unit and emergency department. My materiels manager was part of the entire seven-year process. She wanted to try what is known as a ‘3 PL’ or third-party logistics arrangement with our distributor, Owens & Minor. This meant that the vast majority of the operational equipment (gurneys, IV poles, mayo stands, etc.) would be ordered, managed and delivered when needed by Owens & Minor. When our project had some delays, we did not have to worry about storage while we caught up to our timeline to open. Processes occur in a timely and effective manner and communication is improved because I have a solid base of trust between my materiels manager and the clinical teams.

Obviously, I am not part of that operational environment. However, I trust my team to make sound decisions that will improve our bottom line and improve outcomes.

TSCHIDER: My contribution to supply chain expense reduction activities is at the strategic level, making sure the medical center has skilled people who understand what needs to be done and that they have appropriate technology and equipment necessary to do the job efficiently and effectively. With those two elements addressed, then it’s a matter of supporting their efforts and letting them handle the operational details to make things happen.

As for expense reduction this past year, we generally do not account for supply chain savings in annual ‘lump sum’ dollars. Our approach has been to measure savings at the department level or the project level. An example would be the recent efforts of a multi-disciplinary team that analyzed all costs associated with orthopedic implant procedures. Material resources staff coordinated the efforts that dealt specifically with the implant devices. Through collaboration with the operating room staff, orthopedic surgeons and representatives from Amerinet, our group purchasing organization, they were able to reduce surgical implant costs that will represent approximately $1 million in savings over the next three to five years. This team was also able to identify additional expense reductions in pharmacy, laboratory, the operating room and they made many other process changes that improved the overall level of care we are providing our patients.

Who should be taking ownership of and making key decisions about your organization’s supply chain management activities – the CEO or the materials manager – and why?

GERLOFF: Both the CEO and materials manager should take ownership, along with the operations team, executive team and Board of Directors. These are organizational decisions and often have widespread impact that requires buy in and support from the administrative person in charge of the affected areas. The materials manager is responsible for information, direction, input and implementation on these decisions.

LLOYD: The materials manager should take ownership and make those decisions. In our case that’s the vice president of materials management. If you have someone that has the experience and the expertise, then you have to have the confidence in that individual and the organization he or she develops. We’re very happy to empower the Jeff Welches of the world to do their job. We have guidelines and we have processes and we want to follow those but in the end analysis we want Jeff to lead that initiative. Along the way we have ways to check in and see how we’re doing. Our organizations have become so large and complex that you can’t manage them the way you used to in the past. You have to find the right people, you have to empower them and let them run.

TARBET: The ownership of making key decisions about supply chain activities has to be a partnership between the CEO, his/her executive team and the materiels management department. The CEO has the 40,000-foot view of where the organization is headed strategically. The CEO has the responsibility to ensure that long-range plans include input from key departments (such as materiels management) and that these departments have access to knowledge specific to their industry. This knowledge can include trends, supplier partnership developments and other areas that would affect strategic goals.

TSCHIDER: The vice president of material resources has responsibility for making key supply chain decisions. If an issue requires my input he develops an overview of the situation. We meet bi-weekly or more often if needed, at which time we discuss these issues and I have the opportunity to offer suggestions or lend my support whenever it is appropriate. As a result of these meetings I am able to stay abreast of what is happening in the material resources division and from this interaction I gain a significant level of trust that supply chain decisions being made are in the best interest of the medical center. Material resources has developed a strong working relationships with other managers, the physicians, Amerinet and our vendors and they are very capable of handling the day-to-day operations in an efficient and cost effective manner.

Some industry observers argue that CEOs are woefully ill-informed, if not uninformed, about supply chain operations in their facilities. How do you react to these observations and what do you tell those observers? What do you tell those CEOs who, in fact, are out-of-touch with supply chain ops?

GERLOFF: In most organizations, supply chain operations have been an on-and-off issue with the CEO. However, it needs to be an on-issue all of the time. Increasing costs of supplies and pharmaceutical products make it mandatory that CEOs pay attention to this area. Those that are out of touch should get in touch. It is fun to be involved in supply chain management because changes made to processes, such as how items are added to inventory, impact the whole organization.

Often CEOs focus on human resources when looking for ways to cut costs. In doing so, it makes staff wonder why that is the only area of focus. By looking at areas like the supply chain, cost reduction activities become less personal and more objective, and physicians, staff and managers become more engaged in the process.

LLOYD: I think it’s true to some extent. I can’t measure how great an extent. It’s what’s happening in this environment. CEOs are being pulled in so many different directions. Most organizations are in a crisis mode if you’re in a tough managed care state or in a tough state for Medicare reimbursement. Therefore, I think they’re not able to focus on this area. But I think an increasing number of CEOs are focusing on this area now for two reasons. One is supply costs involve a huge number in our organizations in terms of the money we spend. There are definitely opportunities for savings from standardization. It’s just a matter of a CEO today having so many areas to focus on that it’s becoming harder and harder. Supply chain’s not the only one. IT’s another one. IT’s a huge area now in terms of healthcare. I just think that all of us at our level have to find ways to become better educated in these areas that are increasingly important to us. I think of IT, supply chain and quality. We also have to find qualified people to lead these initiatives. We try to find very qualified people. We try to strategize with them on what we want to accomplish. We try to support them to accomplish it. And you’ve got to let them run with it. I think you’re seeing an increasing number of CEOs focusing on it. But I don’t think it’s for any reason other than there’s just so many distractions in today’s environment, so many crises.

What I would say to those CEOs who don’t get it is that there are great opportunities for their organizations if they would find the right leader to lead it. If they would become educated there are great opportunities for savings, great opportunities for improving quality through standardization and great opportunities to collaborate with the medical staff on these issues. I don’t know how else you could run an effective organization if you don’t focus on it. There are too many changing technologies and too many changing medical devices. I think organizations are at risk clinically and at risk from a safety viewpoint. You try to achieve both the savings as well as the outstanding quality. I think it’s an opportunity missed if they don’t focus on it.

TARBET: CEOs have a wide variety of responsibilities, including running the hospital, and interacting with physicians, community, patients and staff. On any given month, the percentage of time given to any particular responsibility can change dramatically depending on the complexity of the issue. Although some CEOs may appear to be ‘woefully uninformed,’ it may only be an observation at a given point in time. As a nurse, I am fortunate to have an ear that is tuned towards any issue that will affect our patients. Many issues affecting patients are directly impacted by supplies or equipment. I feel that this background allows me to understand a potential negative consequence quicker than a colleague without that background.

For CEOs that are out of touch, I would suggest regular ‘rounding’ on their materiels management department or, at a minimum, ensure that the executive team does so. Firsthand knowledge combined with regular interdepartmental survey results would benefit any CEO who is determining if there is, or is not, an issue with supply chain operations in their facility.

TSCHIDER: For the most part I think CEOs are aware that supply chain activities represent 25 to 35 percent of their organization’s operating budget. If there is a perception that they are not fully informed, it may be because they are not involved in discussions that relate to the supply chain.

Strategically, this is an area where CEOs can impact the supply chain and influence the implementation of technologies that are successfully being used in other industries. At St.Alexius Medical Center we have aggressively pursued the use of EDI and bar coding and have been able to substantiate the benefits of this technology. Unless we make it known to the industry that these tools are essential to the efficiency of our operations the industry will not respond, and the perception that there is a lack understanding among CEOs may continue.

Some in the ‘C-suite’ have criticized materials managers for being too technical and not strategic enough to assume a leadership role in administrative, financial and operational matters. Do you agree? Why?

GERLOFF: No, I don’t agree. I believe that the material managers should be a key part of the top administration of any organization. They should have great influence on not only their area of expertise but also on new technology advances and the costs associated with them.

LLOYD: I agree to some extent. And I don’t limit it to the materials management area. I think in this environment some of the managers of the past – be it in materials management, be it in plant operations and maintenance, be it in nursing, be it almost anywhere – were able to be technical and not as strategic in a different environment. In today’s environment I don’t know any leader at any level that’s going to be successful if they’re not strategic and if they don’t have more leadership ability. I think it’s a generic issue for a lot of management areas. In the materials management area a lot of the people in the past who were very capable purchasing agents don’t have the breadth of knowledge and skills and leadership abilities to do what we need to do today. I think the Jeff Welches of the world are examples of materials managers getting it. You need them to be strategic. They have to have the leadership skills to be change agents. It’s not about black-and-white ‘I want to do this so let’s do it.’ How can they lead initiatives to be change agents? How can they work effectively with clinicians?

TARBET: Materiels managers have a variety of responsibilities to juggle daily. The majority of these responsibilities are operational and financial. This will sometimes encourage too much focus on the daily routine issues they face. In order to encourage a materiels manager to focus on the more strategic needs of an organization, they must be given specific information on where the hospital wants to go.

At Sharp Grossmont Hospital, we have very well-defined organizational objectives, and every manager and director is part in the initial planning process with their respective ‘C.’ This information is then rolled up to our administrative team. Once the administrative team agrees on the final document, the plan is then presented to all managers and above at a day’s retreat. At the close of that day, each attendee has a clear picture of the objectives of the strategic plan. By including the materiel manager as part of the whole leadership team, this individual has first-hand information as to expectations for the upcoming year.

TSCHIDER: Any position that represents 25 to 35 percent of the budget is an important position and should be at the administrative level on the organization chart. Historically, materials managers have focused a significant portion of their time negotiating contracts and working hard to obtain the best prices for products purchased, which may be construed as being technical. In today’s environment, with the slim margins that exist in healthcare, materials managers should be more strategic in their approach. They can rely on group purchasing organizations to negotiate contracts which affords them the opportunity to redirect their attention towards assuring that inventories are being appropriately managed throughout the organization; working with managers on expense reduction initiatives; monitoring consumption data and making sure products are being used as intended; collaborating with physicians to find ways to reduce expenses without impacting the quality of care being provided. Hopefully through these efforts they will be recognized as leaders in administrative, financial and operational issues.

To what do you attribute materials management’s credibility challenges in the executive suite? A lack of foresight on the part of the executive leadership of that function or to a lack of leadership skills and talents demonstrated by the materials management pool?

GERLOFF: Both. We in the executive suite do not have a thorough understanding of materials management and therefore, lack the foresight to appoint individuals with the skills and talents to make them credible at the executive level. For us, having an R.N. on the administrative team with responsibility for materials management has greatly increased the communication and rapport between materials and clinicians. These improvements in the relationship have increased credibility.

LLOYD: It’s a combination of both but I don’t know where I’d assign more weight. Where you have effective leaders in materials management and where you have the C-suite getting it the results are remarkable. When you don’t have that the results are horrible.

TARBET: We do not have a credibility challenge with our materiels management team. This team is very clinically and customer service oriented. My materiels manager routinely demonstrates leadership skills, which include a thorough knowledge of products and services, the needs of her customers and the flexibility to meet the demanding needs in a very busy and changing environment.

TSCHIDER: I think it is safe to say that credibility challenges in the executive suite are the result of things being missed at the CEO level, and at the same time, materials managers not having the skill sets that are required for them to perform their duties. It wasn’t necessary for CEOs to focus on supply chain activities during times when a positive bottom line was easy to achieve. This may have been cause for CEOs to overlook the role of materials management. Today, with the reimbursement cuts that we have experienced more attention is being given to all departments in our organizations to assure they are operating at peak performance, and this includes materials management. Today, materials managers need an additional set of skill compared to what was required in the past. They need to be capable of analyzing financial reports, think strategically, develop relationships throughout the organization and with the medical staff, and they need to keep abreast of technology and trends that are constantly changing at a very rapid pace.

How do you handle it when the physicians try to influence you away from materials management’s cost-cutting efforts by using the bargaining tactic that they bring in patients, which translates into revenue?

GERLOFF: It is important to include the physicians in the process early on so that the decision to change a product or supply line is made on scientific value-based facts, not on vendor relationships, dinners, cruises, etc. Key physicians are involved in the discussion and are asked to provide input into changes to clinical preference items. If a physician does come to my office, I listen to them and make sure their concerns have been addressed. I remind them of the process used for these changes and direct them back to the appropriate committee or individual. I do not negotiate or reverse the decision made.

LLOYD: The best way you can handle that is twofold. One, every leader in the organization has to listen to physicians when they have concerns and issues. I always try not to get into the discussion about physicians who want to move their business. I always say that that’s not in anyone’s interest and that’s not something that I care to discuss. What I’d rather discuss are the facts. What I’ve always found with physicians is the more you can put data and facts in front of them the more successful you can be. I usually try to channel physicians back to the materials manager. If there are issues over facts and data then they need to resolve them first. I find that will solve a lot of the problems. When you get to the purely political issues and we’ve looked at all the facts, sometimes we have to take a hard line. Part of it is having the political savvy to know how to do that. I usually have no problem taking a hard line after we look at all the facts and the data. We’ve actually had some wonderful success stories where physicians have sat with us in negotiations with vendors at our co-op. That’s after being presented with all the facts and data and after they have bought into what we want to do. It can be a very effective way to move toward standardization and savings.

We’ve had some highly charged political situations and when the facts and data are there I don’t think the institution should back off. Sometimes the institution may have to compromise. That’s a political reality. If you have a large service like orthopedics and you’re trying to standardize to one vendor you may not achieve it. On the other hand, if you can move from six to two it’s not a bad thing to do. We strategize a lot with the senior leaders in this organization. The hospital presidents work very closely with Jeff. I actually didn’t get personally involved in the standardization of some of the orthopedic implants and devices but the three hospital presidents did. The end result is that we essentially now have two vendors. That’s a way that you can move forward with significant savings. In that case we saved about half a million dollars. And yet you can be sensitive to physician concerns. Sometimes compromise can do as much, if not more, for you because you don’t have a disaster at the end of the day. [Laughter]

TARBET: We address this issue on an individual basis, as well as through the various physician committees. We appreciate the business our physicians bring and we are willing to share information with them regarding costs, profitability and their influence on costs and profitability. Generally, we are successful in controlling behaviors. We utilize a team approach, including the physicians, service line directors, clinical directors and materiels management.

TSCHIDER: Our materials management staff have found when physicians resist cost cutting efforts it is generally because they have not been involved the process and the physicians are not aware of the costs associated with the items they are using. By collaborating with the physicians, obtaining their input at the beginning of the process, educating them about costs and working together to establish boundaries for the overall process physicians are much less resistive to changes that will reduce expenses without decreasing the quality of patient care.

What’s the biggest misunderstanding CEOs have with materials managers? How should it be corrected and who should initiate it?

GERLOFF: The CEO in an organization of our size has a tendency to spend more time, and concentrate more effort, in direct patient care areas rather than those areas that support patient care. The biggest misunderstanding is not understanding the importance/value of this part of operation. Because we don’t understand the relationship between clinical decisions and increases in supply costs, we expect materials to decrease those costs in isolation. To correct this misunderstanding, the top corporate level needs to set strong objectives every year for materials management with corresponding objectives in other areas of patient care delivery.

LLOYD: I’ve always found that the biggest misunderstanding may be about the whole bidding process. Sometimes CEOs just think that it’s easy to go out and find a quality product with huge savings and a low price. Sometimes CEOs tend to oversimplify the bidding process and how you can achieve savings. There’s always this debate on whether you should use GPOs. I know CEOs who prefer to force the materials manager to cherry pick everything they can. That’s what I mean by understanding the difficulties in the bidding process, understanding the value of GPOs, understanding the difference between committed and uncommitted volume. You have to understand the process. If you don’t understand it you’ll definitely have misunderstandings with your materials manager.

TARBET: I think ‘communication’ issues can cause the biggest misunderstanding. This can be corrected by a willingness to share information on both sides and to explore all options. This should be initiated by both the CEO and the materiels manager.

TSCHIDER: I’m not sure misunderstanding is the correct way to define this. Possibly a better way to describe what happens is to say that communications may not have been as good as it could have been. To correct this, I would suggest that materials managers should be part of the top decision-making administrative team, report to the CEO on at least a bi-weekly basis and provide updates on supply chain activities that are in progress. Each year the materials manager should have a set of division goals and provide written updates on a quarterly basis. This provides the opportunity for the CEO to support the efforts of materials management and offer guidance and direction whenever it is needed. It also gives the materials manager an opportunity to educate the CEO about the supply chain and the role it has within the organization.

What specific project do you feel that materials management exceeded your expectations?

GERLOFF: Cardiology savings exceeded expectations. The team accomplished more in that department, working with those physicians than we ever expected. They worked with the cardiologists to standardize on pacemakers, stents and balloons. They agreed on strategy together and then stayed with it. When vendors tried to split materials staff and physicians, they were met with a united front and received the same answer from everyone. This worked because we set up a process to include physicians; get buy-in from them in the very beginning. They are also included in the ongoing evaluation of cost savings.

LLOYD: The orthopedic standardization. Basically the goal there was for our three hospitals to achieve greater standardization and savings. We had five or six different products in the implant area. It was a very difficult, at times contentious, process. But I think it was handled exceptionally well by Jeff Welch in working with the three hospital presidents. It took a while – maybe a year – but they had a well-thought-out process. It was inclusive of all the orthopedic surgeons. There was a lot of back-and-forth. The end result was primarily two vendors. At the end of the day we achieved significant savings, and it was done in a way that ultimately generated physician agreement.

TARBET: As mentioned previously, we opened a new building. The materiels management department was part of the entire process from design to completion. This seven-year process drew on all of our skills to ensure that we stayed abreast of community and national technology changes. Our materiels management department was a tremendous resource and reliable partner in ensuring that this new building was properly set up and operating smoothly from a supply perspective. They were part of the weekly operational meetings and were entirely dependable in everything they said they were going to do.

TSCHIDER: The materials management staff at St. Alexius have done an excellent job with applying technology to business practices and improving overall operations. Their efforts have been recognized at the local, regional, national and international level as having created the supply chain model for the future. This was emphasized in The Wall Street Journal, June 10, 1997, in an article about our institution’s supply management system.

What are some practical, common sense ways for materials managers to generate effective CEO-level support, as well as keep patient satisfaction in mind, as they perform their roles?

GERLOFF: Get the CEO’s attention! Include facts and figures regarding costs. Present possible areas for savings and suggested approaches. Develop a rapport with physicians and other clinicians in key departments. Present clear rationale for changes and develop physician champions. Here’s one final thought: Once you are involved in supply chain management it is a breath of fresh air and gives you a new perspective on how savings are accomplished. The staff in materials are committed to the organization, are very appreciative of your involvement and eager to accept your support and interest.

We at Altru Health System believe that we are all here to care for patients, whether we do it directly or support those who do. This philosophy has helped us to give these support areas, materials management among them, greater time and attention.

LLOYD: Have a very well-laid out plan for the year. We do this in our co-op. We have a business plan. There was a lot of input. What areas were we going to look at? You need a very well-thought-out business plan. Identify what you’re going to accomplish in the year, then have targets, maybe by quarter, and have defined processes to accomplish them. Having an organized process, having targets and goals always will get the CEO’s attention and support. And it doesn’t have to be complicated. We have a business plan for our co-op that is two pages. That’s it. It’s very clear. Here’s what we’re going to accomplish by each quarter and behind that is the organization involving materials management. We have a clinical advisory committee in our case for the clinical issues so you have to cue them up in the process for certain clinical devices. You have legal counsel that may have to be involved. Lay out a plan, list some deliverables, have an identified process and when you deliver on it you’re a hero.

I have to say I’ve been very impressed with how the industry is maturing and how we’re seeing more and more truly excellent leaders in the materials management area. I really believe that. As the environment has gotten tougher you see more and more people stepping up to the plate. It’s impressive.

TARBET: Having your materiels manager round in all clinical areas, especially with nurse managers, is the best way from them to fully understand the clinical needs. Open lines of communication, trust and excellent customer service also help materiel managers be successful in their role. And of course, keeping an eye on costs is a must!

TSCHIDER: Most important is keeping channels of communication open between materials management and the CEO. And when meetings occur, to use the time as productively as possible to resolve the needs of both the materials manager and the CEO. HPN

For more information about our inaugural recipients’ facilities be sure to visit their Web sites at www.altru.org, www.meridianhealth.com, www.st.alexius.org and www.sharp.com

January 2005