Key Takeaways:
- Healthcare organizations today are diversifying their supplier base and supporting underrepresented communities while also gaining a competitive advantage.
- The supply chain is uniquely positioned to help providers enhance diversity, equity, inclusion and belonging (DEIB) goals.
- Read Conductiv’s full report on 2022 Diversity Spend in Healthcare.
Building an organizational culture of diversity, equity, inclusion and belonging (DEIB) is no longer aspirational – it’s vital.
Greater diversity in healthcare brings new perspectives, capabilities and competition to the market. And it delivers broader societal benefits by generating economic inclusion and opportunity for traditionally disadvantaged communities.
The latest data from the U.S. Census Bureau estimates that nearly 20 percent of all U.S. businesses are minority-owned, 21.4 percent are women-owned and 5.6 percent are veteran-owned. The National Minority Supplier Diversity Council reports that minority-owned business enterprises generate:
- $400 billion in economic output;
- 2.2 million jobs; and
- $49 billion in annual revenue for local, state and federal tax authorities.
Supply Chain as a Driver for Diversity
To support DEIB efforts, key areas providers are turning to include the supply chain and purchased services, which are uniquely positioned to expand social impact through inclusive sourcing strategies and diverse supplier partners.
With the industry’s leading data on third-party purchased services, Conductiv® released its annual report to better quantify diversity spend in healthcare ─ and create an industry-specific baseline from which providers can benchmark annually.
Conductiv is a leading third-party services optimization solutions provider and a consolidated subsidiary of Premier.
2022 Spend Results
Conductiv members spend, on average, 2.31 percent of their total indirect expenditures with diverse suppliers – up from 1.36 percent in 2021 and an increase of nearly $2 billion year over year.
The Conductiv members analyzed spent $4.5 billion in aggregate with diverse suppliers in fiscal year 2022, spanning more than 317 categories. On average, buyer members have 6.08 known diverse suppliers on a local or GPO contract.
Ultimately, organizations blazing the trail of DEIB activation can see more success in satisfying regulatory requirements, promoting innovative solutions, and driving competitive pricing and terms – among other benefits.
Here we break down some key strategies for enabling a strong supplier diversity program in purchased services.
Setting Clear Goals
There are several innovative approaches to supplier diversity in healthcare. First and foremost, setting clear and measurable DEIB goals is critical to enabling strong outcomes.
A vital component of this process includes accurately measuring the number of diverse suppliers and the total spend to evaluate current engagement, set benchmarks and monitor your ongoing progress.
Involving Key Stakeholders
Leadership plays a significant role integrating supplier diversity into the enterprise-wide goals of a healthcare organization and stakeholder participation is essential for the success of any program.
Via strong collaboration early and often, supply chain teams, leadership and key stakeholders can promote a symbiotic relationship – helping to enhance DEIB efforts while also ensuring a competitive, resilient and cost-effective sourcing process.
Leveraging Technology and Data
Leveraging technology helps with pinpointing diverse suppliers and related spend, tracking certifications, measuring performance, monitoring and more. Alongside the data and critical benchmarks, providers can further advance DEIB efforts with a dedicated team, enterprise-wide strategy and commitment, and with ongoing goal setting and metrics evaluation.
Opportunities to leverage technology include:
- Supplier Tracking and Management to search for and identify potential suppliers based on different factors such as minority ownership, veteran-owned business status, etc.
- Reporting and Analytics to benchmark spend and engagement with diverse suppliers and monitor progress against goals.
- Monitoring and Reporting tools to help ensure compliance with regulatory standards and guidelines for supplier diversity, allowing businesses to avoid penalties for non-compliance.
Identifying Diverse Sourcing Opportunities
With the team, strategy, and goals/benchmarks in place, it’s time to determine those diverse suppliers that will serve as an integral part of your procurement process. If healthcare companies collectively decide to improve diversity within the supply chain, it can not only fuel growth within an organization, but also promote inclusion and help strengthen the economy.
Conductiv and Premier remain committed to supporting providers in their DEIB efforts ─ driving positive socioeconomic change in the communities they serve by identifying opportunities for them to partner with minority, veteran, women and LGBTQ+-owned and small businesses. This includes:
- Providing our members with expanded options to do business with diverse and local suppliers that offer innovative, cost-competitive products.
- Advocating to broaden the supplier diversity classification in state and local governments.
- Sourcing education and enrichment for diverse and small suppliers (SEEDS™), which provides resources and tools ─ including coaching, mentoring and business educational tools ─ to help suppliers contract with our members and build long-term relationships.
- Developing innovative technology solutions that allow healthcare organizations to easily identify and engage with diverse and local suppliers – and monitor progress on an ongoing basis.
Together with our members, we’ve also stood up a Supplier Diversity Task Force to ideate on best practices and innovation in supplier diversity strategies, including:
- Continued data enrichment opportunities (i.e., Tier 2 supplier reporting);
- Common goals and benchmarks among peers;
- Ongoing supplier education and development initiatives; and
- Strategies for continuing to communicate our messages and the importance of greater diversity across the supply chain – and across healthcare.
Through education and support, hundreds of diverse supplier contracts and artificial intelligence (AI)-powered analytics technology, health systems today are efficiently increasing spend with diverse suppliers, meeting broader DEI goals and supporting local economies by choosing local, qualified and diverse suppliers.
For more information:
- Check out the Supplier Diversity Pledge from Premier and our members.
- See more of the benefits in partnering with diverse-owned businesses.
- Learn more about Lumen, a diversity, equity, and inclusion initiative for purchased services professionals.
Report Methodology
Conductiv retains a proprietary database of healthcare organization buyers and their 647,000 suppliers, and has analyzed more than $566 billion in spend over the past 15+ years.
This report leverages purchasing data collected in fiscal year 2022 from n = 35 Buyer Members. The data contains information for more than 140,000 suppliers across all categories beyond just purchased services spend. Ahead of this assessment, individual buyer members validated that Conductiv’s diversity analytics results are in line with their expectations.
Definitions
- Conductiv Members: acute healthcare organizations providers (serving regional, national, for-profit, non-profit, children’s and academic systems) across the U.S. who make purchasing decisions that employ suppliers.
- Certification: achieved when an accredited, third-party agency validates a supplier’s diversity status.
- Diverse supplier: typically characterized by a business that is at least 51 percent owned and operated by an individual or group that is part of a traditionally underrepresented or underserved group. Common examples: indigenous and people of color-owned, women-owned businesses, veteran-owned businesses, small businesses, and green/sustainable businesses.
- Diversity: the measurable performance or outcome of inclusive and equitable sourcing practices.
- Equity: sourcing methodologies and criteria to award contracts to the most qualified supplier, regardless of incumbent history or supplier status.
- Inclusion: practices put in place to bring qualified local and diverse suppliers into the sourcing cycle.
Authors:
- Mickey Meehan, Group Vice President and General Manager, Conductiv
- Deborah Williams, Sr. Director Supplier Diversity, Premier, Inc.
