Kathleen Wessel (Host): Supplier consolidation can enhance financial
performance by lowering procurement costs, improving service levels,
streamlining operational workflows, and unlocking greater volume.
Welcome to a HA Associates Ring Value, a podcast by the
American Hospital Association.
In a series of podcasts, we speak with a HA associate program.
Business partners check in on their efforts and learn how they support a
HA hospital and health system members.
I'm Kathleen, president of Business Management and Operations at the A,
and our discussion today is with Adam Vice President of Corporate Accounts
from Healthcare Line Services.
Adam, welcome.
Adam Buol: Thank you Kathleen.
Hi everyone.
Uh, appreciate the opportunity to be here today and, You know, happy
to be a partner with the a HA.
Looking forward to a great conversation today.
This is a subject that's pretty near and dear to my heart.
We participate with a huge host of, uh, healthcare clients
throughout the nation here.
And, You know, I, I think there's a, there's a lot to be said for
consolidation and, you know, look forward to exploring that a little bit deeper.
Kathleen Wessel (Host): Absolutely.
I wanna start by framing the discussion today.
Can you explain how working with fewer suppliers affects vendor relationships
both positively and negatively?
I
Adam Buol: think the first place that everybody goes when they
give this consideration is cost.
With economies of scale, cost is always, you know, an element in there, right?
I mean, it would be foolish of me to say that we would potentially offer
a customer to participate in one line of business with us, and by adding
another business line, their, their costs would, You know, increase.
But, You know, in reality, through consolidation, there's always a
pathway to overall cost savings.
So, just to kind of address the, the most obvious, I, I would say that
that's the, the primary element.
But you know, no.
Less importantly, I think there's also something to be said for
the improvement in efficiency and organizational energy associated
with consolidation of suppliers.
A couple of things that I mean by that are, you know, when you're
consolidating suppliers, you're, you're also consolidating the efforts required
to manage all of those suppliers.
You know?
So let's just say you've got five lines of business that today.
Are managed by five individual suppliers.
You've got five individual sets of invoices.
You've got five points of contact, you've got five different sets of business
reviews that you have to participate in to manage all of those things.
Whereas if you were to consolidate those five lines of business into one, you
know, all of That is consolidated into one point of contact, one invoice, et cetera.
So a lot of organizational energy improvements and efficiency gains
to be had through consolidation.
Kathleen Wessel (Host): Makes absolute perfect sense and I'm sure is is just a
regular kind of, you know, front of mind consideration for any hospital out there.
Actually, I wanna take a step back.
It's always helpful for us to kind of understand your background
and where you're coming from.
Can you share with listeners more about your healthcare experience and expertise,
because you bring a ton of expertise in this space and how Healthcare Linen
services group supports a HA member
Adam Buol: hospitals.
Great question.
Happy to share.
So, healthcare Linen Services group has been my organization through
most of my professional life.
You know, before this I, you know, worked with a variety of other companies, not
in healthcare, but you know, a lot in the service sector, some crossover there.
But for the last 15 years or so, I've been with, uh, with HLSG in
a variety of different capacit.
Initially I came on board on the operation side of the business, actually
running a handful of our plants in the state of Illinois, Batavia, Illinois,
Joliet, Illinois, a couple plants there.
So, you know, really cut my teeth in the industry on the
operation side of the business.
So understanding how the linen is returned from our hospitals
to the plant, how it's process.
And then redeliver it to be used again.
You know, from there, I, I actually transitioned into the
commercial side of the business.
So my, my first foray onto that side of it was in sales.
I led, uh, all sales efforts for the healthcare Lending Services
group for about three years.
Mm-hmm.
Kathleen Wessel (Host): You know,
Adam Buol: through that timeframe we were able to.
Successfully bring on quite a few customers and, You know, really
expand our offering to, you know, a lot of great new partners.
And after my, my three years in that, I've been on the corporate account side of
things for about three years now as well.
So, you know, managing high level relationships and managing
customer experiences for the north of 3000 customers that we
support across the portfolio today.
Kathleen Wessel (Host): Oh, that's amazing.
And, you know, from those different experiences, you really got to understand
kind of all of the nuances And the complexities of, uh, working with
Adam Buol: hospitals directly even further with the, with the topic of
consolidation here, You know, I've seen it from both the operations side of
my business, the laundry business that I was supporting and, You know, the,
the customer side from the hospital.
So, you know, when I was an operator, I, I loved.
The concept of consolidation, right?
Because that was work that I didn't have to manage.
If I can bring in a supplier or a partner that, you know, has the ability to do
A, B, C, D, E as opposed to just a, You know, that, that makes it a lot easier
on me to, You know, manage my day-to-day and, and maybe shift focus from, you know,
having to manage some of these little.
You know, nuances that I don't necessarily shouldn't need to handle
and, You know, focus on some other priorities to really attack more things
all at once, if that makes sense.
Kathleen Wessel (Host): Yeah, it makes perfect sense.
So what should members be thinking about beyond costs?
How does supplier consolidation help streamline day-to-day operations and
procurement and supply chain management?
Adam Buol: Well, I think it's important to first kind of assess
your goals and your expectations of your, your different suppliers.
And, you know, I'll, I'll sort of, you know, get into that by
defining two things that I use to, to sort of categorize suppliers.
You know, on, on one hand I look at what I call a transactional supplier.
And, you know, a transactional supplier is a, it is a wonderful supplier.
You know, it's a, it's more of a short term goal and objective
kind of, you know, more hands off.
Doesn't really require a whole lot of.
Consistent collaboration.
And the, the reason behind That is typically a transactional
supplier, the expectations are agreed upon ahead of time.
So You know what is being delivered, what is the quantity that's expected to
be delivered, when is it supposed to be delivered, you know, all of those things
in, in my mind represent transactions and therefore, You know, categorizing
that as a transactional supplier.
Now, on the other hand, the other term I like to use is a strategic partner.
And You know, strategic partner in my mind is more of a business partner.
You know, it's someone that your operation truly relies on
and couldn't function without.
So there may be elements of a transactional supplier that
exists within a strategic partner.
Take our organization for example, you know, we're not only providing the laundry
services, but on the rental program that we offer, uh, we're also procuring all
of the products that we are laundering and delivering to the hospitals.
We're essentially taking that transactional piece off of
the plate of the hospital.
'cause otherwise, you know, they'd have to have their own category
managers, procurement folks going out and sequestering these products from.
Variety of different locations, which is complicated in this day and age and
you know, kind of risky if you don't diversify that a little bit overseas.
But by shifting all of that over to us, You know, we're not only handling
the laundering piece, but we're also handling the merchandise piece, the
transportation piece, and all of the other facets of the business.
Kathleen Wessel (Host): Thank you, uh, for diving into that.
That was a great set of explanations.
Examples.
Kind of hitting on the, the cost aspect or the financial performance aspect a
little more members are faced with a daily barrage of challenges, many of
which are buying for that top spot.
But financial performance is arguably in that top spot, you know,
how does consolidating suppliers impact administrative overhead and
contract management Complexity.
Adam Buol: Well, you know, it's, it's hard to put a specific dollar amount on
that, but I mean, conceptually you have to understand that by kind of what I
explained earlier, if you're, if you're managing several different suppliers that
all, you know, collectively provide one, let's call it category of service, but
yet you've got all of these different folks, you've got all of these different
invoices and all these different things that need to be processed.
It's much more clean and it's much more efficient if it's all done by, you know,
one individual supplier as opposed to, you know, a handful of different ones.
And, you know, beyond that, I, I also tend to think that by having one
singular, you know, point of contact that's working on the, you know,
the holistic approach for that piece of the business And the operation.
You're eliminating what I believe are conflicting priorities from other
suppliers, you know, and, And what I mean by That is, you know, supplier A,
B, and C might all provide, you know, a very different but integral part
of, you know, the overall service.
But you know, supplier A is kind of pitching to the hospital, you
know, what is going to be best for them in that scenario, supplier B.
What's best for them in that scenario and, And so on And so forth.
But if all of those suppliers and all of those activities are consolidated by one
supplier, then it's more likely that the overall proposal or business operation
is truly in the best interest of the hospital And that singular supplier.
Kathleen Wessel (Host): Thank you.
You know, I'm thinking about if I place myself in, in the role of one of our
member organizations and I'm thinking about this sort of supplier evaluation,
you know, where to consolidate, where, where do I retain what factors men
need consider in this sort of review.
Adam Buol: I mean, I think the most important part is how can you make sure
that your suppliers have a truly vested interest in the success of your business.
Mm-hmm.
And, you know, one of the, one of the examples that You know is front
of mind for me, in a, in a linen program, it has to do with linen
replacement costs in any linen program.
You have your acquisition cost for linen, and as that linen is, you know,
cycling through the facility there, the reality is that there's loss, right?
I mean, as the product is used, it degrades over time and must be replaced.
You know, sometimes through patient transfers and other areas of loss, the,
the linen just leaps the system, right?
And There are things that we can do to control that.
And at HLSG, you know, we believe that that's our responsibility.
You know, we're the experts.
We have the training and best practices and you know, the understanding of how
linens, You know, typically leave the system when they do leave the system.
And by doing that, we can actually commit contractually that the linen
loss experience or linen replacement experience is a shared burden.
And we share in that financially through our contracts.
Typically you'll see, you know, suppliers, they, they just look at, oh, okay, these
are the items that we had to purchase to replenish the inventory, You know,
to get you guys what you're ordering.
And the cost is just simply passed through one-to-one.
And you know, that's not the case with us.
And we find that our customers, You know, respect that, believe in that and you
know, appreciate the fact that we are taking a financially vested interest in
their business by sharing that burden.
Which then, you know, obligates us to putting our best efforts forward to
controlling that cost because we don't, then, you know, that's not only impacting
the customer, but it's also impacting us.
Kathleen Wessel (Host): I really wanna thank you for
walking me through all of this.
This is definitely an education for me and, and you've brought up some
elements that I hadn't really considered.
Thanks so much for joining me on the podcast and sharing
takeaways with members.
I know they're also appreciative of these types of insights.
For listeners, if you'd like to learn more about Healthcare Women Services
Group And the AHA Associate Program, please visit us@sponsor.aha.org.
Has been an Associates Bringing Value Podcast brought to you by
the American Hospital Association.
Thanks for listening.