working with local, diverse suppliers

Purchasing Power and Impact Spending

How Kaiser Permanente leverages its purchasing power to create a more equitable and healthy society through working with local, diverse suppliers.

Kaiser Permanente’s spending decisions are aimed at building healthy, equitable and sustainable economies.

They address economic and environmental disparities and create positive health outcomes through three focus areas: supplier diversity, sustainability and economic impact.

“We help address inequities by making deliberate choices about the purchases we make – from hospital supplies to countless other goods and services,” said Mary Beth Lang, chief of supply chain and procurement for Kaiser Permanente. “This focus on impact spending involves seeking out and using small suppliers and businesses owned by women, people of color and other underrepresented groups as a way to improve the economic health and well-being of the communities we serve and contribute to their success and resilience.”

Kaiser Permanente is an active member of local, regional and national organizations chartered to advance business opportunities, support and advocate for the growth and welfare of small, minority, women, LGBTQ+, veteran and disabled-owned business enterprises, and connect them to corporate members and their buyers.

To make a larger impact in equitable spending across the industry and to improve community health throughout the country, Kaiser Permanente worked with Healthcare Anchor Network to create an industry initiative: the Impact Purchasing Commitment. Kaiser Permanente and 11 other hospitals and health systems signed on.

The Impact Purchasing Commitment includes collectively increasing spending with Minority and Women Owned Business Enterprises (MWBEs) as well as local and employee-owned, cooperatively owned and/or nonprofit-owned enterprises, by at least $1 billion over five years. The institutions also agree to work with at least two of their large existing vendors to create hiring pipelines in the disinvested communities that they serve and to commit to specific sustainable procurement goals.

Participants who signed the commitment promise to help build healthy, equitable and climate-resilient local

Mary Beth Lang

economies with how they spend their dollars,” Lang said. “Improving the health of our members and the communities we serve is core to our mission and the work we do every day. This focus is heightened during a pandemic that is disproportionately affecting both low-income individuals and communities of color.”

Kaiser Permanente’s diverse supplier spend

Kaiser Permanente increased its spend with diverse suppliers by 27% in 2020 to $2.56 billion. It also spurred

$510 million in diverse spending by suppliers on their behalf in 2020.

Its approach includes collaboration with community anchors and large-scale purchasers to optimize collective impact. It provides capacity-building opportunities for diverse and local entrepreneurs in its footprint to create wealth and employment and targets local spending to invigorate local markets.

“Organizations can make an impact in their communities by applying a sustainability and social impact lens to their procurement practices,” Lang said. “I encourage all organizations to leverage their organizational assets and shift their spending strategies in order to create a more equitable society.”

Kaiser Permanente promotes organizations to get started on their impact spending journey through: ʯ Using vendors with sustainable products and practices, when possible, to reduce climate impact and harmful pollutants. ʯ Contracting with women-owned and minorityowned vendors to address gender, racial and economic inequity created by historical disinvestment and discrimination. ʯ Using local vendors, when possible, to improve the economy within the local community. ʯ Supporting community wealth-building by working with or fostering employee-owned enterprises to promote financial security.

“I encourage and invite all health systems to join us in leveraging their purchasing power to improve the health of communities by signing the Impact Purchasing Commitment,” Lang said. “There is an undeniable urgency – that now, more than ever, we as anchors – need to hold ourselves and each other accountable by reimagining our procurement practices so that we’re leveraging our assets and purchasing power collectively to build an inclusive economy.”

Upstream determinants of health

“Healthcare is a foundational component of equity,” Lang declared. “The health implications for the individuals and communities we serve, as a result of the economic consequences brought on by the pandemic, are unlike anything we’ve ever seen.”

Lang added that health status is directly correlated to the socioeconomic and environmental upstream determinants of health. “We cannot solve for one without addressing the other,” Lang said.

Local spending aims to have a multiplier effect beyond just one purchase that can increase local economic activity. “When local businesses are awarded contracts, they are able to employ local residents and provide stable wages that allow employees to consistently afford food, housing, healthcare and other necessities,” Lang said.

Kaiser Permanente’s strategy focuses on partnerships and an impact beyond its own walls. “It focuses on collaborations as drivers and amplifiers of meaningful and measurable commitments that advance concrete business strategies that both strengthen and create equitable local economies.”

During the past four years, the Kaiser Permanente-sponsored ICCC program has trained 1,043 businesses over 14 cohorts. Of those, 61% were minority-owned businesses and 56% were women-owned businesses.

Its partnership with the Initiative for a Competitive Inner City (ICIC), Kaiser Permanente supports the Inner City Capital Connections (ICCC) Program, an executive education and training program for small businesses with the goal of promoting economic prosperity in underserved communities. During the past four years, the Kaiser Permanente-sponsored ICCC program has trained 1,043 businesses over 14 cohorts. Of those, 61% were minority-owned businesses and 56% were women-owned businesses. Participants witnessed an average revenue growth of 45% with $67 million total capital raised and 1,361 jobs created.

And the pandemic only bolstered the program. In 2020, 776 businesses participated with 73% being minority-owned businesses and 60% being owned by women.

“We are in precipitous moment. One that will go down in history,” Lang concluded. “It is impossible to do this work alone. As such, we have a responsibility to ourselves, each other and our communities to be bold in our thinking and actions, innovative in our practices, and collaborative in our work.”

Six Sigma Doctors

Fortune 500 execs get leadership training. How about physicians?

When was the last time you came upon one of your

physician customers poring over their copy of “7 Habits of Highly Effective People,” “Good to Great,” “Wooden on Leadership” or “Jack: Straight from the Gut,” by the late chairman and CEO of GE, Jack Welch?

Reading materials like these may be what’s needed, as today’s physicians face all kinds of leadership challenges that earlier generations of doctors did not – quality and outcomes ratings, safety audits, automation, managing mid-level providers, nasty social media reviews ... COMPLEXITY. Are they up to the task?

Some are natural-born leaders. Traits like kindness, empathy, respect, listening, inclusiveness, decisiveness and teamwork come naturally to them. But experts in physician leadership believe leadership is a skill that can be learned and must always be practiced – and practiced some more. They believe that failure to do so hurts patients and leads to disengagement on the part of the staff as well as the physician leader.

A shock to the system

Brian Bolwell, M.D., describes in his blog “Straight Talk” a leadership shock he received some time ago. “My interest in leadership principles began when I received my personal 360 evaluation about my leadership skills about 20 years ago,” he writes. “I thought I was a wonderful leader and that I knew it all. Well, I received a 25-page evaluation about my leadership skills, and 24.5 pages of it were highly critical. I thought I was a good leader, but in reality, I was nowhere close to being the leader I wanted to be. I knew very little about the entire concept. But it was a wonderful opportunity for me to learn and get better.”

Today he is director of physician leadership and development for Cleveland Clinic.

Six Sigma Doctors

“A lot of psychological studies have found that adults have built wonderful defense mechanisms,” he tells Repertoire. That may be especially true for physicians, who throughout their young lives were top-of-the-class students and accustomed to success. “To hear that their leadership style may be lacking in one area or another usually comes as a surprise.”

Some embrace the opportunity to improve. Others don’t. After receiving a review identifying leadership shortcomings, the latter may say, “That’s taken out of context,” or “I’ve been to leadership classes and I have an MBA, and I don’t need this stuff,” he says. “One of the hardest things is getting people to realize that most of the work they have to do is inward – reflecting on who they want to be as a leader and a person.” Do you want to live with integrity, live with values? Are you doing so? If not, are you willing to change?

“I would hope the vast majority of physicians see themselves as leaders, even if they’re not interested in becoming department chairs or CEOs.’

Joseph Hopkins, M.D., M.M.M., clinical professor of medicine at Stanford University School of Medicine and director of the Stanford Leadership Development Program, believes physicians can learn leadership skills the same way they learn about new methods of diagnostics and therapy. But they need the will to do so.

“It starts by becoming aware that you need to learn something to do it better, whether that means catching up on the latest way to treat medical conditions or learning how to better lead a medical group or clinic,” he says. “The awareness that you need development in this area is a critical foundational step. It’s a factor of how you think about yourself and your professional role.”

Once the physician has made a commitment to be a more effective leader, he or she looks for ways to acquire the skills needed, either through continuing education, coaching or both. “As you acquire new skills, you put them into practice, and as you do that, you gain confidence in them,” says Hopkins. “And then, at some point, you become aware there’s something else to work on, so you do that. It’s an iterative process.”

One direction

Strong leadership benefits everyone in the practice, according to those with whom Repertoire spoke.

Effective leadership leads to well-functioning teams, says Hopkins. Effective physician leaders welcome involvement from a business manager and staff. “In a well-oiled team, people are engaged. They feel free to speak up if they see something that could be done better. The leader welcomes their suggestions and has a dialogue with them regularly.

“Lacking this, you find people aren’t as dependable as they could be, and they may drop the ball because they’re not quite sure what they’re supposed to do. The team lacks efficiency and effectiveness, and can even cause harm.”

Stephen Swensen, M.D., M.M.M., senior fellow, Institute for Healthcare Improvement and former CQO and director of leadership and organization development for Mayo Clinic, believes that leadership systems and processes are much more likely to blame for burnout, dismay and distress than the oft-cited suspects – electronic health records, ill-informed administrators, unbending payers. In successful practices, everyone is pointed in the same direction – toward the patient and their families, and the community, he says. “If everybody in healthcare looked at things that way, there would be better care, more professional meaning and purpose, and lower rates of professional burnout.”

Is it about power?

One of the important fundamentals of leadership taught in Stanford’s Physician Leadership Certificate program is “power.” But it must be understood and exercised judiciously, says Hopkins.

“A powerful leader is one who gets things done,” but not by brute force or authoritarian actions, he says. “As a leader, you can influence people, you can engage people, so they become willing to do what you believe needs to be done for the good of the practice. When that happens, they feel good about their role, recognized for their efforts, and confident they are making a difference.”

He refers to a concept called “transformational leadership,” which focuses on the meaning people derive from their work. In an environment where effective leadership exists, people look beyond themselves for that meaning. “There’s a huge difference between feeling like a gerbil on a wheel and being a partner who is contributing to how things are done and the higher mission.”

Bolwell believes effective leadership is about relationships, whereas poor leadership is almost always about

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Six Sigma Doctors

command and control. “Leaders not only have to believe teams are important, they have to live it,” he says. “They have to ‘upend the pyramid,’ so their role becomes supporting the team, giving them credit for the work they do. The key word is trust. If you have trusting relationships with your team, and those on the team have trusting relationships with others on the team, you’ll have a great environment.”

Effective leaders are transparent, he adds. “When they make a mistake, they admit it and apologize. These principles sound simple, but they can be difficult to put into practice. One thing that has always helped me – especially during COVID – is authenticity. When the leader acts as if they are reading from a script, employees pick up on it immediately.”

‘If you think you’re smarter than the collective, you’re performing at a subpar – and maybe even a dangerous – level.’

“I would hope the vast majority of physicians see themselves as leaders, even if they’re not interested in becoming department chairs or CEOs,” says Swensen. In decades past, solo practitioners could function well and produce top-quality medicine by themselves, with the aid of a professional network. “But that’s impossible today. Medicine is a team sport. No one has the expertise or knowledge to [succeed] on their own.” Effective physician leaders welcome the expertise of nurses, pharmacists and others. “If you think you’re smarter than the collective, you’re performing at a subpar – and maybe even a dangerous – level.”

A hunger to lead

“Our experience has been that a growing number of people appreciate they can be more effective if they have leadership skills, whether they are on the clinical team in the operating room, or leading a division or group of physicians, or taking on a leadership role in a professional organization,” says Hopkins. “Not everybody wants to do that, but others have what one of our speakers – Tom Gilmore at the Center for Applied Research – calls a ‘hunger for leadership.’ It’s a combination of ambition and desire to make things better. It’s the physician who can’t look at a problem without trying to figure out a way to make it better.”

Peer-to-peer coaching has proven effective at Cleveland Clinic, whose coaching program has two core components: the Center for Excellence in Coaching and Mentoring, which offers physician-led peer physician coaching; and the Mandel Global Leadership and Learning Institute, which features coaches who are not physicians.

Physicians who coach other physicians are said to get as much value from the experience as those they are coaching. “One of my roles is to be a mentor and coach to an ever-increasing number of physicians,” says Bolwell. “It is a lot of fun for me.” But coaching works best for those who are open to change.

“You want to start out by asking yourself, ‘Why is it important that I change, that I go from Point A to Point B?’” he says. “If you really want to be a better leader, that’s enough of a reason. In my case, the negative review I received 20 years ago was highly motivating. I was devastated at the time, because I care very much about my team. I don’t like to fail, and I certainly didn’t want to be anything but a very good leader.”

That hunger for leadership has been explored and encouraged in industry and startups, but not so much in healthcare, he says. “And that’s one reason Cleveland Clinic is doing what we’re doing. But ultimately, I believe two fundamental principles lie at the bottom of all of this. First, there’s this concept of serving your team. It’s not about you, your resume or your fame; it’s about doing everything you can to hire great people and then support them. And second, it’s about improving yourself, living your values, getting feedback from others, having the courage to be vulnerable, and being honest, authentic and trustworthy.”

Says Swensen, human beings have three basic needs: ʯ Camaraderie, that is, social connectedness, without which people can actually experience physiological harm, such as hypertension, as well as burnout. ʯ Agency, that is, a sense of control over one’s life and decision-making. Collective decision-making promotes a sense of connectedness. ʯ Coherence, that is, a sense of seeing how one personally fits into the puzzle of life. “If teamwork helps make you a better doctor or pharmacist, you will believe you have great value in life.”