we made sure our work wouldn’t come at the expense of UPMC and its core mission. After that, we asked if we could truly create value for other health systems, what the costs of building a commercial hardened solution would be, whether we could market on a national basis, and how these costs would ultimately add value to the enterprise. That’s what we’ve done with Prodigo and Pensiamo — we’ve hardened their offerings so that they will work in any environment. And then we’ve leveraged our reputation for excellence to market these solutions nationally.” Robert A. DeMichiei, Executive Vice
President and Chief Financial Officer, UPMC
“Through a collaboration with Finance, Tax, Legal, Physician leaders and Supply Chain a detailed fea- sibility study was conducted by Cleveland Clinic to determine the viability and creation of an LLC. Fol- lowing the feasibility study, a business plan ensued to provide a structure and financial outlook to the business proposition considered. Financial metrics and organizational shells were modeled to provide
leadership a complete and detailed review of the business venture being proposed. “Much as a case needed to be built within
Cleveland Clinic, the same had to happen within Vizient. Once both parties agreed that there could be a case for taking Excelerate to market, there was a significant amount of collaboration to build out the model and gain approval from our respective leadership teams. “Numerous presentations to a variety of se-
lect leaders in both organizations ensued with the culmination of a final presentation to each company’s c-suite executives. Once the business case was evaluated, vetted and approved by both leadership teams, sub-teams began working on executing the first phases of the business plan.” Simrit Sandhu, Executive Director, Supply Chain Operations, Cleveland Clinic
“The Supply Chain leader has to remove his institutional executive hat and don his tena- cious entrepreneur hat to develop a business case with solid evidence of the market potential
Supply Chain’s Great Reawakening?
Imagine turning a small portion of what historically represents a cost center into a revenue generator. Supply Chain may have started as a profession pursuing caution by controlling expenses even as they acquire products and services for their organizations. Yet a small number of progressive organizations see their Supply Chain experts pursuing risk by establishing, operating and sometimes spinning off revenue-generating ventures. How does an organization know if its Supply Chain experts are primed and ready to launch a revenue-generating product and/or service enterprise? Here’s what some who have done it have to say.
Stephanie Matejka, Senior Director, New Business Development, Mayo Clinic
• Leadership support is absolutely necessary to support a new venture that is external- facing and might take time to develop and mature.
• Ability to redeploy resources away from core activities. If you are go- ing to enter the market as a service provider, you need to ensure your ability to support the growth with knowledgeable seasoned employees who will represent you well within the market.
• Understanding your strengths, what you do differently than others and if that is replicable. Do your home- work to understand your likelihood of success. Pilot the program when possible to better understand your market, revenue potential and costs.
• Culture of excellence. Position your organization as an indispensable resource to your own organization and others you might serve.
Simrit Sandhu, Executive Director, Supply Chain Operations, Cleveland Clinic
• Authentic purpose. It’s important to pin down your “why.” This should be your company’s North Star guiding every aspect from recruitment to customer management to product development and sales.
• A powerful brand. If you want to create a scalable business, you have to understand how crucial it is to build brand equity and emotional connections with your customers.
• Partnership and collaboration. Doing everything yourself can be tempting but being humble enough to find a partner who can truly collaborate and help you scale is essential.
• Community. Building an ecosystem that is fluid and dependable through teamwork help to maintain the growth of your venture
• Flexible, adaptive leadership. To continue growing, executives and leaders need to keep evolving at the right pace. This requires introspec- tion, self-awareness, and a keen sense of adaptive, flexible leadership to evolve with your strategy — both long and short.
Bill Tousey, RN, Vice President, Cooperative Services of Florida
LeeSar and Cooperative Services of Florida are not a traditional Supply Chain department. These companies were designed to be a supply chain “laboratory” that continuously seeks out new approaches to member value creation. Visionary leadership, strategic planning, coordinated execution, and member support have enabled us to realize multiple successful initiatives over the last 15 years.
Jim Szilagy, President and CEO, Pensiamo, and former Chief Supply Chain Officer, UPMC
The key attributes for launching a successful product or enterprise are motivation, the ability to work as a team, and recognition of the op- portunity. Not only does the team have to have the talent, capacity, and technology to launch a new venture, there also must be a strong market need for products and services. And don’t underestimate the need for top- notch legal and other shared services support, as well as longitudinal invest- ment from the provider as critical factors in success. Sheer will, desire, perseverance and courage on the part of the new venture team are essential for the challenge of transforming a progressive, well-performing, in- house department to a commercial, for-profit organization.
Robert A. DeMichiei, Executive Vice President and Chief Financial Officer, UPMC
The department, and even more so, the larger organization, needs to be committed to the struggle that is ahead. Health systems have many priorities, many challenges that can get in the way. Don’t expect over- night success — the sales cycle in healthcare is a long one. You must be committed to the process and to
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the time involved in creating value through a startup. Additionally, the organization needs great talent, great process and great technology. Those capabilities need to be in place and be robust because they’re going to be stressed and taxed. Launching a commercial venture isn’t for the faint of heart.
Greg Meier, Vice President, Finance, ROi
• [Supply Chain] has individuals that have had significant experience beyond provider-based supply chain, particularly in sales
• It is considered strategic to the hospi- tal/IDN, not just a service provider
• It has strong overall operations and financial performance
• It is able to overcome barriers, not be stymied by them
• It can objectively look at and chal- lenge itself.
William Mosser, Vice President Materials Management, FMOL Health System and LogisticsOne
I believe the key attributes of an or- ganization ready to launch a revenue- generating initiative are: • Organizational credibility • Executive support • Team self-awareness • Agility and tenacity in implementing change
• Willingness to take on risk.
and five-year revenue forecast with acceptable ROI. Not only does this change of perspective need to occur with the new venture team, but the individuals must also be prepared to place their internal credibility and external reputa- tion on the line to develop this new business opportunity. “At Pensiamo, we are fortunate to be part of
UPMC because not all health systems have the vision, resources or ability to launch commercial ventures. UPMC harnesses the strength of its clinical, technical, business, and capital resources to develop, test, and deploy healthcare products and services that improve the lives of patients across the globe and reduce costs. Through UPMC Enterprises, the commercialization and innovation arm of UPMC, we have access to an impressive team with expertise in healthcare investing that’s second to none.” Jim Szilagy, President and CEO, Pensiamo, and former Chief Supply Chain Officer, UPMC
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