How a Community Purchasing Strategy for Hospital Services and Supplies Can Improve Community Health and Strengthen Communities in the New Year
Amid all the uncertainties facing the health care industry today, one thing is clear. We need to continue to improve the health of our communities and do so in a way that supports, honors and leverages diversity. One of the most impactful actions hospitals can take is to reimagine their sourcing — from accounting and IT services, to landscaping and laundry, to biomedical services and surgical products — creating a broader, more equitable network of diverse suppliers. The benefits are far reaching, creating local jobs that strengthen the local economy and in turn, improving health outcomes and equity.
At Vizient, we’re creating pathways for hospitals to strategically shift a portion of their supply spend to local, diverse suppliers. Last year, as a part of our Supplier Diversity Program, we piloted a Community Contracting Program that facilitates member sourcing and contracting with both Tier I and Tier II certified diverse, local businesses. The program helps members strategically shift a portion of their spend to local, diverse suppliers.
We piloted the program in Oakland, Chicago, Dallas/Fort Worth and Atlanta — all high-need metropolitan areas with untapped networks of diverse suppliers. In 2021, based on member feedback and the growth in spend with locally contracted diverse suppliers, we formalized the program to offer it in every community. Our plans for the new year include expanding the program to other regions in Ohio, New York, Georgia, Texas, Illinois, Florida and North Carolina. We’ve also constructed a model to formalize and implement community contracting in all 50 states and potentially across the globe.
Is community contracting among your hospital’s priorities in the new year? Here’s what we did and what we learned. I hope you’ll consider investing locally to build stronger, healthier communities in the new year.
When we piloted the Community Contracting Program in those first four cities during 2020, we reached out to local, community stakeholders to find the best ways to connect hospitals with local minority-, women-, veteran-, LGBT, HubZone, disability-owned suppliers and service providers and small businesses. Local community organizations play a crucial role in helping to identify which local, diverse business to target.
We compiled a list of about 30 supply chain categories, engaged and collaborated with local advocacy and diverse business organizations, queried diverse business databases and contacted a diverse group of suppliers who we educated about group purchasing with hospitals and health systems. We then engaged the suppliers in a vetting process and who were ready to do business with member hospitals were provided a contract. After that, we began actively connecting those businesses to hospitals in those communities.
The feedback from participating hospitals was immediate and positive. They told us how through COVID they saw supply chains becoming more local, how tremendously important it was to connect with certified diverse local suppliers and service providers, and how our program helped to streamline the task and strengthen their supply chain resiliency. They also shared how we helped to bring together hospitals within a community with a shared goal of healthier, economically sustainable communities.
Overall, the biggest takeaway from our four-city Community Contracting Program launch is the demonstration of how such programs strengthen communities. It’s a win-win for both hospitals and communities.
As hospitals contract with local, diverse businesses, those dollars stay firmly within the community, creating greater economic stability in neighborhoods where suppliers and service providers live and work. The money spent supports further job growth, livable wages and economic sustainability and helps spur a more healthy, vibrant patient population. More jobs mean more access to stable homes, greater food security, and ability to access health care, including preventative care.
As those businesses’ needs grow, they hire additional employees and create jobs. It’s what we call the “multiplier effect.” Diverse local suppliers investing in employees who live in the community helps strengthen the local economy and facilitates a strong ecosystem of equity.
Developing and sustaining a meaningful community contracting program is not always easy. It takes dedication throughout the entire organization.
But in the end, it’s energy well spent. With all partners working toward the same goal, we can have a widespread, sustainable impact on health systems, suppliers and communities everywhere. Whether you team up with Vizient, or you do it on your own, we hope more hospitals and health systems follow our lead to invest locally and build a stronger, healthier tomorrow for everyone.
If you need assistance implementing supplier diversity programs or strategies such as community contracting, don’t hesitate to reach out to me.