SMI marks decade of process improvement

Tom Hughes, a veteran hospital supply chain executive who earned national recognition for his healthcare consulting contributions to the industry celebrates the 10th anniversary of the latest venture in his more than four-decade career.

Strategic Marketplace Initiative (SMI), led by Executive Director Hughes, marks 10 years of making a difference in healthcare supply chain, operations and finance through the creation, development and release of such resources and tools as "Contract Synchronization," "Measuring Effective Relationships" and "Perfect Order."

Hughes, a recipient of the AHRMM Leadership Award, was honored in 2012 for his storied career with his induction into Bellwether League Inc., the hall of fame for healthcare supply chain leadership..

Healthcare Purchasing News Senior Editor Rick Dana Barlow asked Hughes to reflect on SMI's industry impact and as well as his role in it.

HPN: As SMI celebrates its 10-year anniversary, can you explain what inspired and motivated SMI's creation and launch in 2004?

HUGHES: SMI's creation and launch in 2004 was inspired by the vision of John Gaida from Texas Health Resources and Carl Manley from Sentara Healthcare. They were my inspiration as well as our founding committee and our first Board of Directors. Their vision was simple. Create a non-profit organization founded by a small group of IDNs, providers, and suppliers who had the passion to do something different that would make the marketplace more efficient. SMI has provided the opportunities to take a holistic view of the healthcare supply chain and start working together to resolve existing issues.

SMI's forerunner, the Network of Networks, was created in the late 1990s as a way for healthcare reform-driven IDNs to meet and candidly discuss current events and issues and how they were impacting process and performance improvement.

How did the SMI model represent the next iteration of these efforts?

That's a great question. For several years the Network of Networks was comprised of providers only. We would discuss best practices and current and future challenges facing large IDNs. After a while we realized that we were "looking in the rear view mirror" and not focusing on creating positive change. We also realized that key players in the supply chain were missing from the discussions - suppliers. At that time in our industry, providers and suppliers did not generally embrace collaborating together. So in 2004 we incorporated as a 501 c6 not-for-profit organization, funded solely by member dues, dedicated to uniting healthcare providers and suppliers to shape and improve the healthcare supply chain and make it more efficient.

How many provider and supplier members did SMI start with and how much has membership grown since then in terms of average annual percentage rate and total number today?

In the beginning, we started with a core of 25 highly respected IDNs like Sentara Healthcare and BJC Healthcare, and almost two dozen suppliers that stepped up to support our vision, such as C.R. Bard, Kimberly-Clark, BD and Owens & Minor. We now have 61 providers and 51 suppliers, which allows SMI to remain a small organization that offers our members small balanced group interactions, a characteristic that our members highly value. For example, at our Spring 2014 SMI Forum, 70 percent of our members' time was spent in small groups focused on addressing common industry challenges. SMI is governed by a Board of Directors comprising 12 persons, equally representing provider and supplier members. Our Board members are true visionaries and leaders in our industry - they have been instrumental in the success of SMI.

Let's get personal about your professionalism. What lured you out of "semi-retirement" to be SMI's first executive director? Humorously speaking, hadn't you done enough?

Rick, when is the right time to retire? I have learned over the years that some executives can really retire without ever looking back. That's fine for them.. .but not for me! I loved owning my own consulting firm and I love this industry. So being the Executive Director of SMI has allowed me the opportunity to stay engaged, share my knowledge and experience, and help SMI to propel our industry forward. SMI members are exceptional thought leaders, and I enjoy working with them to leverage their collective talents for the benefit of the entire industry. It is very rewarding and a lot of fun!

Ten years ago, as the healthcare industry had emerged from the dust cloud of the dot-com implosion, what were some of the key challenges faced by the supply chain that SMI has sought to address?

The lack of trust between trading partners remains an industry challenge that impedes our industry's collective progress. This lack of trust is sometimes reflected in fragmented operations that push excess supply chain costs back and forth between trading partners, rather than working together to remove the excess cost altogether. The fact that our industry lacked supply chain data standards was clearly evident 10 years ago as technology utilization enabled new efficiencies, and SMI and its members continue to make progress on that front. I think the lack of strategic recognition of supply chain's value in the provider C-suite is another area where SMI has made a difference in 10 years. The increased strategic recognition in the C-suite has also helped the industry recognize the need to recruit top talent. SMI and our members continue to work on these challenges every day.

One of SMI's foundational and hallmark achievements is recruiting members to participate actively in the projects - and resulting products - it develops. In other associations and trade groups, participation is more passive and receptive whereby people merely listen to speakers and network with each other. How difficult was it early on to attract individuals and corporations to commit to this model financially (in terms of dues) and occupationally (in terms of the considerable meetings, paperwork and projects)? How much of a challenge is it today?

Rick, you just hit upon one of the elements that makes SMI unique. SMI Members participate and engage at high levels, which is a great reflection of their commitment to SMI and its mission. Modem supply chain leaders have demanding jobs along with added professional commitments to attend other industry meetings. Yet these same leaders volunteer their very busy time to serve on SMI initiative work teams and on our Board of Directors. We also engage our many collaborators, including AHRMM, HIDA, ECRI Institute, HPN, and others whose experience and expertise greatly influence and complement these work teams. I initially thought that participation and commitment could be very challenging, but to my surprise and delight, that is not our challenge. My real challenge is to continue gathering member input on ways for SMI to keep moving our industry forward.

Will you recall a memorable experience early on in SMI's creation and early development?

In our first year, driving to the airport with Teri Gallagher to meet with our first Board chair, Carl Manley, Teri was interested in managing our event planning but I still needed someone to manage financials and other administrative priorities. She said she would be willing to manage all of our operational needs. A year later, we asked Dennis Orthman to project manage our various initiatives. Since then he has taken on many more responsibilities. More recently, when we needed to enhance our communications to a level equal to our executive membership, so we hired Christine Dean. [Editor's Note: Teri Gallagher serves as SMI's Administrative Director, Dennis Orthman as Senior Director and Christine Dean as Communications Manager.]

If you were to single out three of the most significant changes within SMI during the last 10 years, what would you name and why?

One change that comes to mind immediately is SMI's expanded advocacy efforts. To continue support for data standards, SMI leaders have met with senior leaders at CMS, as well as staff members of the Senate Budget Committee and the House Ways and Means Committee in Washington. Another change has been the creation of added value for members through special events and webinars, both of which have been well received and supported by members. And I'd be remiss without mentioning the changes that we've seen in our bi-annual meetings. Our members have all quickly learned that SMI Forums are a place where we all can be honest and open about our industry's challenges. We are especially proud of that.

What is the one healthcare supply chain challenge you would like to see solved before you retire from SMI, and how do you anticipate SMI will help its members and the industry deal with/solve this particular challenge?

I'd like to see the adoption of data standards before I retire. And I know I am not alone on that one. SMI's early work on this issue helped contribute to the industry's coalescing around GS1 as the industry's standard. SMI members and staff continue to actively support standards adoption through active participation on the GS1 Healthcare US Leadership Team and their other workgroups. So many of the early adopters of GS1 standards are SMI members, leading by example and sharing their learnings with others to promote continued adoption. I am hopeful that our industry will seize this moment and reach the tipping point soon.

In your view, what one contribution has SMI made to the industry that you would like to be most remembered?

In my view, the introduction of the Perfect Order methodologyh, piloted by SMI member BD into the healthcare supply chain has been very impactful and will continue to be for many years. During these past 10 years, SMI has developed over 29 tools and resources, free of charge on our website, to help our industry solve complex business issues. But I think our greatest contribution is that SMI has demonstrated that providers and suppliers can work together for the benefit of the industry, and the more they work together, the greater the level of trust. And the more trust, the greater the ability to work together. Collaboration builds trust, and trust opens the door for rapid progress. I hope years from now, people can look back and see that SMI helped to change our industry's culture for the better.

In your opinion, what remains SMI's toughest challenge and how does SMI overcome it? Our toughest challenge is competing for peoples' time. The demands on our industry today have never been greater. The demands and expectations for supply chain have also never been greater. I don't think we can overcome this situation, but I do know that we work awful hard to insure that we do not waste our members' valuable time.

What are SMI's top 3 priorities for the remainder of 2014 and for 2015 and why?

SMI's priorities are driven by our members' priorities and right now our members are all concentrating on managing the changes brought on by the Affordable Care Act phased rollou t. So our priorities are to support our members and the industry through the generation of innovative ideas, the sharing of best practices and successes, and helping supply chain leaders expand their impact while margins are shrinking and funds are getting scarce. SMI's overriding priority is to be the best forum that our members can attend each year.

Where does SMI go from here in terms of projects, leadership and growth/expansion?

Projects will be determined by our members' input. Volunteer leaders will be those that want to be at the forefront of not only their own organization but also the healthcare supply chain industry overall. Leadership will also continue to come from volunteer members who have the passion and energy to create tools and solutions for the industry. During our next 10 years, we intend to do that by creating valuable productive relationships between trading partners. Finally, size is important as it relates to our mission. Our goal is to continue to engage very strategic organizations and individuals. I think that we have become very good at offering membership to the thought leaders of today and in the future. HPN

For more information on SMI or to downbad its free tools and resources, visit: www.smisupplychain.com.