Why Supplier Diversity is Mission Critical for Healthcare Organizations
Ellen Murphy: Diversity has become a number one priority for businesses across all industries. While many leaders are spearheading diversity initiatives in their HR and talent management teams, there's another key driver in the diversity equation: sourcing and procurement. Supplier diversity helps create resilient supply chains and for the healthcare industry, it is mission-critical to the patient and provider experience.
I'm your host, Ellen Murphy. Today, we're exploring how supplier diversity helps healthcare organizations drive success and deliver high-quality care. I'm speaking with Berri Heinz, director of supply chain procurement and supplier diversity at Prisma Health. Welcome, Berri. Thanks so much for joining us.
Berri Heinz: Hi, Ellen. Thank you very much for having me.
Murphy: So first off, could you tell us a bit about Prisma Health and your role there?
Heinz: Prisma Health is the largest health system in South Carolina. We have 2,947 licensed beds, 18 acute care and specialty hospitals, and approximately 300 physician practices. We have roughly 30,000 team members and serve about 1.5 million unique patients across 21 counties, which is about 51% of our total population.
Heinz: Yeah, we have quite an impact in South Carolina. My role, in particular, I am the director of supply chain procurement and supplier diversity. I've been with the organization for 13 years. And interestingly, and this is actually relevant to the topic, I started out as a volunteer.
Murphy: Oh, wow.
Heinz: I was unemployed as a result of the recession in 2009, and I lived in Texas and relocated. Lost my job, lost my house, all that fun stuff that we read about. And I came to South Carolina, to move in with my sister and look for work.
And I came to Prisma Health looking to volunteer, which is my passion. And I figured I would build a network that way. And I'm college educated, you know, had a great job prior to the recession, and I just had to reinvent myself. So when I got to Prisma, they said, "Well, the purchasing department actually needs a receptionist and with your background in procurement, perhaps you could interview there and start there." So I did that.
I interviewed with the then director of purchasing and saw what they had as far as technology goes. It was a DOS-based ERP system. And I took a calculated risk, and I said I will answer the phones for you 40 hours a week, unpaid if you give me an opportunity to interview for the next position coming up. And, he took me up on it.
And within two weeks, he saw my skill set and brought me on as a temp and eventually as a buyer. And I have moved five positions up to the director of supply chain procurement. And the reason that's important is because I know the power of reinvention, and I know what it means to start back at the bottom, to be told no. I know how to pivot. And that actually lends itself to this conversation about supplier diversity.
Murphy: Yeah, that totally makes sense. That's such an interesting journey of how you've expanded your career in that way too. And it probably gives such great background to have so many different positions that you've been in.
So jumping into supplier diversity specifically, how would you define that? Or how do you view supplier diversity?
Heinz: Yeah, supplier diversity is really a business strategy. It's the practice of intentional inclusion to ensure that diverse suppliers have a fair and equitable opportunity to bid on your products and services. It's another way to ensure that you have a diverse supplier base in your procurement of goods and services, really, for any business or organization.
You can further define it. Diverse suppliers, in broad definition, is a business owned and operated by an individual or a group that is part of a traditionally underrepresented or underserved community. A further definition to be truly diverse a supplier must be at least 51% owned, operated, and managed by that particular underrepresented group. That's a truly diverse supplier.
Murphy: Okay. Great. And why would you say, especially in today's environment, why is that so critical to healthcare supply chains?
Heinz: Supplier diversity is critical in healthcare supply chains because we serve an incredibly diverse population. As previously mentioned, 51% of our population is served by Prisma Health. And it is paramount that our supplier base represents those patients that we serve.
So beyond that, supplier diversity combines the best of our desires for a better, more equitable world and the drive to be a competitive leader in the marketplace. And the healthcare supply chain right now is very, very volatile. And it is more important than ever for us to be competitive and to drive down that cost.
Additionally, supplier diversity adds economic value because it encourages the growth of diverse businesses. Diverse businesses typically are small businesses who are statistically proven to aid in economic recovery and sustainability of their communities.
A supplier diversity commitment also benefits the company because it promotes innovation, provides multiple channels from which to procure products and services, drives competition between existing suppliers, thus driving down cost, and it allows the companies to take advantage of new opportunities for business expansion as a result of shifting demographics for their customer. And for us, our customer is the patient. So we always keep the patient in the forefront of our mind when we're making any business decision, especially sourcing our goods and services.
Murphy: Mm-hmm. That makes sense. So, in terms of when you were developing the supplier diversity program at Prisma Health, can you tell us a little bit more about your thought process for that? Any additional information?
Heinz: Sure! Our goal has always been to take care of our patient needs. We keep the patient in the forefront of our mind even in supply chain. It's hard to imagine that. But patient care, really, we look at ourselves as, from a supply chain standpoint, actually one degree of separation from patient outcome.
So with that in mind, we go beyond just the clinical outcomes and look at the total health of a patient who also happens to be team members. It was important to make sure that our suppliers, essentially, represent us and our diverse needs. Also, as the largest health system in South Carolina, it is our responsibility to make a positive impact on our own communities. So helping to grow diverse businesses is one of the ways that we are doing that.
Murphy: That makes sense and based on how much of the population you're supporting too, that's a huge part of the overall population there too.
Murphy: So super important. So what would you say is the most challenging part of running your supplier diversity program? And how are you and your team kinda solving those challenges?
Heinz: So, supplier diversity is not for the faint of heart. I will not even sugarcoat that. You get a lot more nos than you get yeses even as an advocate and as an ally.
I would say our two biggest obstacles are, first would be time and resources to give to this initiative. And I'll explain that. And then number two, the concept of standardization across large organizations. So as far as time and resources, as one of the largest—well, the largest health system—but also one of the largest employers in South Carolina, it's fair to say that we have hundreds of suppliers reaching out to us, to me, at any given time. And it's simply not possible to respond to all of those inquiries. And that is assuming that they're all legitimate organizations. The pandemic unfortunately, produced some questionable business practices. And I'm using a filter when I say that. It was a pretty treacherous time trying to discern between legitimate businesses and businesses that were looking to take advantage of you or well-intentioned suppliers who were in over their head. And so that was my first obstacle.
The goal with supplier diversity is the first step is to get them in the doo, to get that conversation with them. That's the hardest part getting them to the table, letting them feel seen and be heard. But also be seen and be heard. Seeing them is very difficult. So, interestingly, what I've developed is an email system. I created automatic replies. I set up some rules in Outlook because I'm the person they're trying to get in touch with. And the procurement side of my job, I take care of patients.
My job is to also make sure that patient care isn’t affected, that backorders are resolved and that product is continuing to flow into the organization. So I was not always able to respond to their emails. So in my, it's sort of an out of office, but it goes to every external email that's ever sent to me. They will get an automatic response that basically addresses their possible questions up front. Your typical, you know, if you're a supplier wanting to submit an invoice, here's how you do this. And then it says if you are a supplier trying to do business or looking to partner with Prisma Health, it sends them to our website. There is a repository. They will fill out the supplier information, and then that will dump into our repository where I have access. And then, it further defines if you are a diverse supplier, then do the above step.
And then second, email this person and that person is our executive assistant. My vice president was kind enough to lend her to me a little bit to do some scheduling, after some begging and pleading. So, we have an arrangement. I have blocked off two days a month, 8 hours a day, so a total of 16 hours, where I devote time to just meeting with—basically, kind of like speed dating—with as many suppliers as I can fit into that 8-hour period. So a total of 16 a couple weeks apart and I block it off just for diverse suppliers.
So the instruction to diverse suppliers is: fill out the repository. And then step two is to email the executive assistant with your capability statement and with your diversity certification. And she will set up a meeting with me and then I will see it on my calendar. And she stacks the deck. Last Friday, I had 10 or 12 meetings, I think, back-to-back. And then I have the opportunity to see their capability statement ahead of time. I can do my homework. And I can reach out if I see on the capability statement, "Hey, I might wanna bring in some extra resources. Maybe somebody from IT or somebody from pharmacy. " I can have them jump on the call. It's just 30 minutes so they can share with me about their business and about their capabilities. And so that's the first step is having them feel seen and heard but actually being able to see them and being able to find out what their needs are.
So the second obstacle, that's the really tough one. That is standardization. And small businesses, when I use the word standardization with them, their eyes kinda roll in the back of their head because that's usually a killer for their business. They are asking us to carve out a piece of the business from this massive standardization mode that we have. And again, we have 30,000 employees, 18 hospitals, 1.5 million patients. And the only way to drive down cost is to standardize your products that you use and in supplier diversity, I am actually going against that or at least asking the contracts team to consider carving out something maybe for one of the smaller hospitals.
So standardization for me is: I explain to the supplier in that 30 minute call, "Here's where I am an expert. I am an expert at med-surg supplies and taking care of the patient. I am also an expert at networking and I happen to be passionate about supplier diversity and diversity equity and inclusion in particular." So what I promise to them is: "I see you. I hear you. Now, I'm going to connect you with the department that is the subject matter expert over that area, whether it's pharmacy, food and nutrition, IT. They are the subject matter experts. They are the decision-makers." So I connect them with those departments who they otherwise would not have any visibility of whose those people are out of 30,000. I'm the most visible when it comes to supplier diversity.
And from there, I explain to them, "Now, the work is up to you. The hard part is up to you. You have to sharpen your pencil, and you have to be competitive. This is not an affirmative action type of situation. You must be competitive regardless of who you are." Because at the end of the day, our cost, increases or decreases, would affect patients. And so we always keep that in mind. When, when you look at any type of supply chain as consumers our personal prices go up because cost is going up. That's no different in healthcare. So we work incredibly hard to drive down that cost. And so we expect our diverse suppliers to be just as competitive if not even more competitive.
So I explain to them step two is the hard part. The easy part's meeting with me. I have figured out how to meet with you and include you and get you to my table, and now I'm going to serve you to the next table. But the hard part is up to you. And you have to prove that you are a sustainable organization, and that you can help us serve our patients, even if that is carving out one hospital out of our 18, which is what we do. We'll say, "Well, okay. We have 18 hospitals. Can we carve out one of the smaller hospitals and have you sell us supplies just for this one hospital and see how that goes?"And with the intention of perhaps growing that business. But step two is the hard part, and that's up to them.
Murphy: That's great. That's really cool that you've presented this opportunity for these suppliers too to meet with you too and to have a place to start at the very least and then hopefully work with as many of them as you can.
So how is Prisma Health's diverse supply chain helping your team navigate, especially now with economic uncertainty and then everything we've had with supply chain volatility?
Heinz: This is one of my favorite topics. I have actually been talking about the usefulness of supplier diversity since ebola, believe it or not—and ebola isn't even something we even talk about anymore. We only talk about COVID. But this goes back from—my personal experience at Prisma Health goes back to ebola. So I'll combine the two.
What we saw and what we see in times of crisis is the feel-good and economic impact of diverse suppliers really rising to the table and pivoting with us as quickly as we had to pivot, right? That was the name of the game in 2020 and 2021. You pivot. Everyone pivots and healthcare was no exception. We were the first group to have to pivot, right? Because PPE and shortage of supplies. And what was so really beautiful, I'll be honest with you. It was very beautiful to see small and diverse businesses showing up at our docks. And, before, the big guys of the healthcare supply chain, right? Everyone knows who they are. They're big distributors. They get the lion's share of the business. That's just the way it is.
But they're not open on weekends, and they're not open before 8 o'clock in the morning. And, you know, when FedEx isn't delivering because of a hurricane that hit their hub in one of the southeastern states, our supplies don't get to us. That doesn't mean anything to a diverse supplier. Diverse suppliers will get in their car, and they will drive to our dock and be standing at our dock. And I'm literally talking—our docks are built for 18-wheelers—and they will show up in their four-door sedan standing at the bottom of the dock, and they will have supplies for us.
And that is a true story. I've had suppliers standing at the bottom of the dock with boxes to hand us samples, anything they could do to help us take care of patients, which ultimately were their neighbors, their community. And we had small diverse businesses showing up out of the woodwork during both crises with ebola and with COVID, um, over the weekends that, you know the CDC is notorious for changing regulations and, I remember especially with ebola, as new clinical cases would come out they would learn, "Well, you need to use this type of PPE or that type of PPE to protect yourself." And we had a situation where one of our suppliers, he was a minority business who, based out of Maryland, actually had opened up a warehouse in South Carolina because of us so that they could store their supplies there for us.
We called him out of a deer stand one weekend. This was during ebola. CDC changed their guidelines, and we've gotta get our hands on this product ASAP. And that supplier had that product at our doorstep that Monday morning before the big guys ever even opened their doors and turned their call center on. And so diverse suppliers know how to pivot. They live and breathe that concept of pivoting, and they know that right, wrong, or indifferent, they have to be better. They have to be more agile than the big corporations.
I look at it as like a huge freight liner. The big guys are the big freight liners, and then you've got the small diverse businesses, which are like little speed boats. And you can't turn a freight liner around in the middle of the night. Speed boats can stop, pivot, about-face, and get, get the job done before the freight liner even thinks about turning around. And that's how I equate diverse suppliers for our supply chain. They've come through in the most magnificent way. If I could write a book about it, I would.
Murphy: That's wonderful. Yeah. That's super valuable for you as a health system to have those relationships with an abundance of those diverse small suppliers. That's—wow. That's really compelling.
So going into,how would you say, you've touched on this a bit, but how does this impact patient care and the clinician experience as well?
Heinz: Oh, just to feed off what we just talked about. So going back to that last example, it's a very simple statement: There's no disruption in patient care. That's it. Full stop.
When diverse suppliers are in the mix, we don't have—not to say we would have a disruption with [larger business] you know. But, diversifying our sourcing strategies ensures that there is no disruption. So if the larger organizations have back orders, which are abundant in normal business. We see that just as personal consumers. I guarantee you, we can reach out to a diverse supplier, and they will be able to either get us a small supply of that product to get us through, or they will be able to get us something comparable.
And that really boils down to relationship management. They have relationships with C-suites, you know-- they go to lunch, play golf with various people, they have access to that. Some of the larger organizations, it's just a lot of red tape to get through. And when you're talking about these small and diverse businesses, part of that pivoting is this relationship management. So at the end of the day, it all translates to better patient care. It all translates to they help us prevent the disruption of product coming in.
So when you have overnight orders, stat orders, which is common practice in a non-pandemic world, you know. We have the operating room, you have new surgeries come in or traumas come in, and you have a new clinical need. We need to over-night product. That's the name of the game in healthcare. Diverse businesses can help us achieve that.
Murphy: That makes sense. They're super valuable when a crisis or something unexpected hits. You need those relationships. So that's really valuable. So what role does technology play in helping you manage your supplier diversity program?
Heinz: So data is the name of the game as far as supplier diversity. You're looking at either the feel-good reasons of why we should diversify our sourcing strategies, but then you also look at the economic reason. The only way, the feel-good, you can't measure that. Right? We don't measure feelings in that way.
Heinz: So it is what it is. It's the right thing to do. But how do you know you're being successful is the data. You look at data. So we measure the tier one and tier two diverse spend. For those who don't know, tier one spend is dollars that go right into the hands of those diverse suppliers. So if I were a woman-owned business, and you pay me for a, you know, product or a service, and you pay me directly, that is tier one woman-owned spend.
Heinz: Tier two spend is diverse suppliers selling their products through a distributor. So you're really much smaller organizations, companies, diverse companies that, you know, maybe could not handle the volume that we would have. They would sell to a distributor. So we track tier two spend as in, "Hey, how much of Prisma Health's money is actually going to a tier two supplier?
And so we track both tier one and tier two. Tier one is very easy to track. you can mark this business as woman-owned and run a report every month, every quarter, and find out how much actual dollars went into their pocket. Tier two spend is harder to track because it requires self-reporting.
Murphy: Yeah, that's super interesting. And, and related to that, how are you measuring your success in that area too? Do you have certain criteria of tier, tier one you want to go for, or tier two? Or how, how do you determine what success looks like in that area?
Heinz: We set goals every year. I have my own goals for my role and my position. And the organization has goals too. Every organization that works in the supplier diversity space has some type of measurable goal. Some of it is percentage of spend. Sometimes it's dollar spend. And whatever you choose, you measure against that. And again, you know, you try to increase that every year, get a little more aggressive and a little more lofty in your goals.
Essentially, we look and say, "This is how much money we want to spend based on our need, based on what we know we currently spend. We think we can spend about this much money with diverse suppliers." And we measure our own selves against that. And we report that to our board of directors that these are the initiatives that we are taking to ensure that we have diverse spend.
In addition to that, we have contracts with hundreds of suppliers. And we use a group purchasing organization to help us with those contracts. And we have been very successful in rewriting our RFP language so that it helps encourage a prime supplier to establish a diversity program, a supplier diversity and/or a diversity program if they don't already have one. And we help coach them on exactly how to do that. But it lets them know that our expectation as your customer is that you have addressed this issue, you acknowledge it, and you have actionable and measurable goals in your organization as our prime supplier and as a partner for us that you share our values and, and our vision.
And so that's another way we track is to make sure that we're helping move the needle and continue that conversation outside of Prisma Health walls but actually planting that seed in our prime suppliers mind. And if they don't have one, they can say, "Wow, Prisma Health is very serious about this. They've written it into their contractual language that this is the expectation."
Murphy: Yeah, that's super interesting. And that's super helpful for those prime supplier organizations too because then if they have diverse suppliers as well, then they aren't going to say, "Oh, we're out of this certain supplies.” They can't give it to any of their customers too. So it's, you know, a win-win for helping the diverse suppliers but then also for those prime organizations.
Heinz: And also, you know, it also adds to the economic impacts. So we talked about earlier, it's not just about it feels good, and it's the right thing to do. I'm a feeling type of person, so that is very exciting to me. But if you wanna look at the economic impact, diverse businesses pour billions of dollars into the economy. And when you help move that conversation, and you help raise that awareness for a prime supplier, for example, that may not have a diversity program and then they start one because you said, “This is something that's very important to us. We're the largest health system in South Carolina. Our input is very valuable.” And so if Prisma Health says this is important, it must be important.
And so if they start growing their program, then imagine the businesses that that would impact and the economic impact it would have in that organization's state wherever they are located. So it really has a downstream impact beyond just Prisma Health. You know,we're, of course, concerned about our patients. That's who we serve. But we're also concerned about the entire economy, the American economy and beyond. And if we can move that needle and move that conversation with suppliers outside of us, then it's a win-win for everybody.
Murphy: It definitely helps patients in other parts of the country and other places as well too–making sure they aren't without and the clinicians there as well have the supplies they need.
So just looking ahead in terms of other organizations that don't have supplier diversity programs or aren't in as robust of a state as you are at Prisma Health, what advice would you give to those healthcare teams that are just really looking to get a program built up?
Heinz: Honestly, I like to talk to organizations that don't have one that are forming one because it's easier to start from scratch than it is to just start midstream. So it all starts with leadership. From the C-suite down, your leaders must be strong and committed to doing more than just checking that box of compliance. But actually moving the needle in supplier diversity takes perseverance and creativity.
And truthfully, it is not for the faint of heart. You do get told “no” a lot more than you get told “yes.” If supplier diversity were easy, then we wouldn't even have a need for this department. I like to look at it this way. We are all diverse. Our entire community, our state, our country—we're diverse. You can look around the landscape, and you can see diverse populations, cultures, races, religions, genders. But that doesn't mean we are inclusive. And so supplier diversity focuses on being intentionally inclusive. And there is a saying in the supplier diversity space that there is one thing being asked to the party and there's another thing being asked to dance. And so what we strive to do is actually asking our diverse suppliers to dance with us, not just show up at the party. They're already at the party. We're all at the party, but dancing is a different story.
So it really does start with leadership and we talk a lot about not checking that box of compliance and just saying, "Hey, are we compliant? Are we doing our job? Did we do the bare minimum?” That's what you don't want to do in supplier diversity. If you're really passionate about this work, then you're going above and beyond just, just compliance and saying, "Yeah, we're checking this box, and we're doing the bare minimum." The hard thing is to ask instead of "Why should I bring the supplier to the table?" You actually need to start saying, "Why not? Why not bring them to the table?" They bring innovation to the table. They bring competition to the table. And so it starts with leadership.
And the other thing I would tell somebody who hasn't gotten into this space is don't get disheartened. Don't, don't let the nos—of which there will be many—don't let them steer you away from your mission. I have had some pretty rough years, it felt like sometimes, where I just don't feel like I'm making an impact. But I just can't measure my success on that. If I keep listening to them, I keep hearing them, I keep bringing them to the table, it's gonna stick somewhere.
And it's not a lack of desire to help folks get this business. Nobody at Prisma Health wants to not give them the business. It's, "Does it make good business sense, and will it take care of our patient care in the long run? What is our overall trajectory? Are we changing products and this supplier just doesn't fit our need?” We have very legitimate reasons why a supplier just won't fit for our needs and our patient needs, but in supplier diversity, we're just trying to get them to give them a chance and take a chance but it has to be a very careful and calculated chance.
Because again, at the end of the day, it's always about the patient. The patient is at the end of that line. And again, in supply chain, we're one degree away from the patient. So we keep that in the forefront of our mind at all times. But it all starts with leadership.
Murphy: That's great that at Prisma Health, you have those leaders in your organization that are so devoted to the cause too. Super valuable. So looking ahead at the next couple years, what would you say are your goals for supplier diversity at Prisma Health?
Heinz: I'm not sure if you could tell. I'm passionate about this.
Murphy: Yes. Of course. It's wonderful.
Heinz: I'm just very, very passionate about bringing the underrepresented and underserved to the table. It's a personal passion outside of work as well and so I'm able to marry the two.
What I would love to see with Prisma Health is that we just continue to grow the program. I mean, the name of the game is to grow. That's the name of the game for anybody in supplier diversity is just continue to grow our footprint and continue to bring in these diverse suppliers.
My smaller tangible goals for the next year are to continue to meet with diverse suppliers twice a month—which is 100% dedicated time to diverse suppliers. And side note, you know, non-diverse suppliers may say, "well, what about us?" You are being seen and being heard. You have a voice at the table already—maybe not your specific business, but you have a voice at the table. You are the voice of the table. And it's my job specifically to make sure that the voices that are being drowned out are getting heard. That I am actually looking for them in that crowd, that sea of voices and I'm bringing them to the table. So my job is very, very specific. Because all suppliers matter, and they all, at the end of the day, are taking care of patients. But the non-diverse suppliers are at the table. We see you. You have the lion's share of the work.
And so, I really enjoy things like this podcast where I can continue to get the word out about the importance with large organizations. And this message is really for people who are not yet in the supplier diversity space. Folks in the supplier diversity space, we all know exactly what we're talking about. So when I go to these supplier diversity events, we're all pretty much in that space. And we understand the mission. And we're helping collaborate and, and further that mission.
But what I want to continue to do is have speaking engagements where we can talk about the importance in healthcare, we can talk about the importance of leadership buy-in with supplier diversity, and make sure people understand this is not just about—I keep saying this because it's so true—it's not just the feel-good, warm fuzzies. I love those, don't get me wrong, but there is such an economic impact in diversifying your sourcing strategies and it would help our entire economy.
It's hard to see how people don't see that. When you say this is huge for our economy. If we just take a step back, look at the big picture, and look down the line—not just tomorrow, not just at the end of your fiscal year—but look down the line at how much money these diverse businesses could pour or are already pouring. But if we continue to pour into them, how much they would pour back into our economy, their communities, their underrepresented communities which will then lift up our economy.
Murphy: That's wonderful. It's great that you can be this advocate for something that, yes, does help. It does help the community and feels good to do but is also business critical and essential to patient care. So it's helping everyone if we can adopt this more so.
Heinz: That's where I think people just struggle. I, again, I keep shouting it from the rooftop, but it's mission-critical. You just said exactly what I've been trying to say probably for the last few minutes. It's mission-critical. And it really is more than just it's the right thing to do.
Murphy: Right. That's wonderful. Awesome! Well, we've been talking about supplier diversity in healthcare with Berri Heinz from Prisma Health. Don't forget to follow us wherever you listen to your favorite podcasts. I'm your host, Ellen Murphy, and I hope you have a great Workday.