Author Archives: Tom Finn



About Tom Finn

Tom is a serial entrepreneur and reluctant expert in the myriad applications of optimization to strategic sourcing and supply chain management –especially in healthcare, where the first collaborative sourcing projects ever attempted were successfully executed under his direction. He has been the first business executive hired by technology innovators from MIT, the University of Cambridge and CMU, so getting high-brow intellectuals and early commercial adopters on the same page is a battle-tested communication skill that Tom has had ample opportunity to hone over a 30-year career. Tom earned his undergraduate degree at Allegheny College and went on to the University of Taipei to continue his study of Mandarin. He has a knack for connecting dots that others don’t see and a readily obvious ability to communicate the possibilities.


What the Super Bowl Can Teach About Risk Management

Pause for a moment to consider how adept the NFL has proven itself at proactively addressing logistics and risk management. Whether we’re talking facilities, security, transportation or emergency services, there’s obviously a lot more behind the curtain than we know about. Suffice it to say that little imagination is required to accept that the NFL sets an interesting, if not teachable, example — not just in terms of how to pull off a mega-event but how to react to most anything that could possibly go wrong. It expects problems and is prepared for them.

Taming the Tapeworm: Even Amazon Needs a Little Help

healthcare

As reported earlier this week, Amazon, Berkshire Hathaway and JPMorgan have announced a partnership to cut health costs. Apparently, the partnership won’t be Amazon-led but rather an independent company that will operate “free from profit-making incentives.” What does that mean? My best guess is that the new entity will deliberately bear no resemblance to the current group purchasing organization (GPO) supplier-paid fee model.

Procurement’s Innovation Deficit: The Wisdom of ‘Why Not?’

Procurement doesn’t have customers, it has prisoners. Although the statement is paraphrased (borrowed from sentiment long associated with enterprise software companies), does our profession deserve such criticism. Is it fair? Let’s face it, when it comes to driving innovation, procurement’s less than stellar reputation is well earned. Its inability to act as an intelligent and informed customer of the would-be innovator is generally so bad that companies have established separate offices dedicated to the practice. And here’s the rub. What do these innovation offices typically cite as their single biggest obstacle to success? You guessed it: internal procurement. We’ve got to fix this.

Healthcare Consumerism: Supply Chains that Follow the Patient Home

There’s been a lot of talk about “healthcare consumerism” lately. Is it really about increasing competition among insurance providers? As the acute care market continues to consolidate and vertically integrate, aren't the insurance pickings for most of us getting conspicuously slim, especially if employers are making our coverage decisions? Here’s where I’ve landed: If healthcare consumer advocates are relying on insurance companies to drive “consumerism,” then they’ve put the cart before the horse. My money is on the jockey, and the jockey in this race is good old-fashioned consumer preference.

U.S. Healthcare Needs Private Equity

The Wall Street Journal is reporting this week that two major hospital systems, Ascension and Providence St. Joseph Health, are in merger talks. If the deal goes through, the combined entity would include nearly 200 hospitals across 27 states with annual revenues of about $45 billion. The combination would surpass the current largest U.S. for-profit hospital operator, Nashville-based HCA Healthcare. Proponents of the deal say the move could add supply chain efficiencies, eliminate operational redundancies and reduce unnecessary spending.

Jaggaer Again Leads with its Chin in BravoSolution Acquisition

While terms and conditions of the transaction are not public, this is a bigger deal than U.S.-centric market followers may think. Regardless of how much Jaggaer paid, the most important feature of this deal is that the U.S. procurement market’s most prolific hunter-gatherer just bought itself a global footprint. Yes, the solution pieces are all there now. And, as Jaggaer's CEO argues, they’re all best of breed. But what he doesn’t mention, nor does Jim Wetekamp, BravoSolution’s CEO, is the word “integration.”

The Specter of Amazon Rx

Shares of Rite-Aid and CVS initially plummeted on rumors of Amazon’s possible move into pharmacy. Surprisingly, however, their stocks prices have recovered of late, trading places with major medical distribution companies McKesson and Cardinal Health. With rumors of Amazon lurking, it was apparently their turn, as McKesson and Cardinal share prices have recently hit the skids. First grocery, an $800 billion business, then drugs, about a $500 billion business, and now medical products?

Old-Fashioned Heuristics: Common Sense Cause and Effect

Regarding the countless examples of reckless government spending we like to mock, I stopped caring a long time ago. Instead, I have turned my attention to the funding of studies designed to confirm things that we should have already known. If you have a sense of humor, there are numerous ridiculous examples where taxpayer money might have been invested more judiciously. Spending more than a billion to confirm that the use of seat belts saves lives comes to mind, as does funding a long-term study to determine whether obligatory handwashing might be a good idea in health care settings. Studying hospital behavior to determine if they might be playing self-serving games with the current reimbursement calculus also strikes a chord.

More on Healthcare’s Saline Bag “Shortage”

The saline bag “shortage” in healthcare has been going on for a few years. I’ve got some strong opinions on the matter, as I have had the pleasure of interviewing the assigned category managers at the nation’s largest healthcare GPOs, health system sourcing professionals and executives at Baxter, B.Braun and Hospira, the nation’s three largest manufacturers and suppliers of the product. It turns out that there are very few resin producers that make the type and grade used to manufacture saline bags. Not only did these producers cut production, but they’ve increased their pricing by more than 300% in the last year. Why?

Supplier Rationalization — Revisited

category management

Rationalizing a supply base is typically defined as picking the right suppliers and the right number of them, but in common practice, it has too often come to mean shrinking or consolidating a supply base in the name of securing more strategic relationships. We tend to forget that supplier rationalization can also mean increasing the number of suppliers used, routinely changing your mix of suppliers or expanding and then reducing the number and types of suppliers you select in support of changing organizational objectives, tests, hunches and the desire to accelerate the transfer of innovation.

The Latest Worst Kept Secret: Amazon’s Move into Pharmacy

“I think Amazon getting into the PBM business (pharmacy benefits management) is a bunch of B.S.,” said Vishnu Lekraj, an analyst with analyst firm Morningstar. “I don’t understand how a company that can ship goods to a consumer can take over every single industry.” According to state pharmaceutical boards, Amazon has received approval for wholesale pharmacy licenses in at least 12 states: Arizona, North Dakota, Nevada, Alabama, New Jersey, Michigan, Louisiana, Connecticut, Idaho, New Hampshire, Tennessee and Oregon, with applications pending in other states. In fact, some of the license types go beyond prescription drugs and include approvals for products and devices that fall under the durable medical products category, such as oxygen and other medical gasses.

Embedding Procurement Across the Enterprise

category management

Has procurement reached a point where it can be trusted with measuring its own performance? Notwithstanding the need for practical checks and balances, is your procurement organization looking through the lens of its own performance microscope or is it pacing the halls of finance, waiting for validation? As procurement becomes increasingly responsible for non-traditional areas of spend and building business cases supporting change, its organizational importance will continue to soar. But cost control is a shared responsibility. And unfortunately, sinking your teeth into the myriad complexities related to measuring a procurement department’s performance often yields more questions than answers.