Season 3: Episode #82

Podcast with Mike Alkire, President & Incoming CEO, Premier Inc.

"One of the lessons learned as a result of COVID is we have to create a more resilient supply chain"

paddy Hosted by Paddy Padmanabhan

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In this episode, Mike Alkire, President & Incoming CEO of Premier Inc., discusses the ongoing vaccine roll-out and the lack of resiliency in the medical supply chain for U.S. healthcare.

He discusses how Premier is expanding their data analytics capabilities, such as AI and machine learning to make the supply chain infrastructure more resilient and support better clinical decisions. Mike believes that the changing competitive landscape of healthcare and the entrance of non-traditional players is unleashing innovation in the industry. He also shares three leadership lessons from his long and successful career. Take a listen.

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Show Notes

02:49Some significant lessons learned as a result to the COVID virus is we have to create a more resilient supply chain.
05:16We need technology to really support the federal government and public health officials around syndromic surveillance.
16:28 Approximately 30% of our healthcare systems cost is wasted and we want to help them with evidence based, AI-enabled guidelines embedded in their workflow to drive that waste out.

Q. What are you seeing as a big trend driving the healthcare industry in the wake of the pandemic? What are you hearing from your major customers?

Mike: I think along with the public, our healthcare systems are really focused on getting as many shots and arms as possible. Our first focus area is to bring in efficiency to the supply chain of the vaccine. Second focus is getting back to normalcy. Healthcare systems obviously have been really caring for the COVID patients and our focus over the last few months is really helping our healthcare systems think about what does the new normal look like and leveraging some of the silver linings in the cloud that was covered.

We had some significant lessons learned as a result related to the COVID virus. One is we must create a more resilient supply chain. What happened was there was this huge demand-supply balance and Premier had to go out and stand-up additional capabilities to secure additional masks, isolation gowns, gloves, and drugs. We found that this supply chain that was being utilized by U.S. healthcare was not resilient enough. And so, we got a big focus on trying to diversify that. We partnered with several our healthcare systems to create domestic production of N95 masks. We have also partnered with them down the lines for manufacturing isolation gowns domestically. We are going to continue down that path from a supply chain standpoint. From a technology standpoint, there were a few lessons learned as well. One was that we did not have the technology to ascertain what the inventory levels look like across the healthcare system. And we’re right now working with a few agencies or organizations within the federal government to leverage some of our technology that would potentially help them in the future pandemic to dynamically allocate product. Because what has happened in the last few months or the last number of months is that everybody is trying to create stockpiles and it’s creating an incredible inefficiency in the market. We believe that if we could leverage technology, we could understand inventory levels and we could dynamically allocate product where it was needed so that not everybody was going out and trying to create these stockpiles. With the technology, we created a science of predictive capabilities on the onset of the virus, where we use both public and our data. And as the virus progressed, we built out some models based upon utilization of PPE and generic drugs to forecast where those products were going to be needed, depending on where the virus spreads. The knowledge about the onset of virus in demographic areas and the utilization or resources accordingly are, I think, very critical. We also need technology to really support the federal government and public health officials around syndrome surveillance.

Q. I understand that you’re talking about supply chain lacking resiliency because we are over dependent on certain types of sources. What are you referring to there?

Mike: I think we had way too much dependency on China in Southeast Asia for these critical products. What happened is that when the pandemic hit, there were all sorts of instances of constriction of supply products from where we historically gotten products and a lot of cases like this was China, but we contract manufacturer for PPE, we probably do six billion or so gloves a year. We set up production in Taiwan for N95 facemasks as well. When we needed it the most domestically, we were unable to get it out of the factory that we had contract manufactured those products for. And all that product was for the most part, shipped to mainland China. That’s just one example. Another example is during the peak of the virus, filtration media is critical to N95, it’s primarily produced in China and India, China embargo the shipment of all that filtration media. So, all the production of N95s were happening in China and nowhere else in the world. And that created a big issue. There are other instances where I am not saying it was right or wrong, but I am just saying we had an overdependence on one country. And the other area that I have been talking about this since basically 2011, if not earlier, is we have way too much over dependence on China and other Southeast Asian places for generic drugs, especially those that are chronically in short supply, as well as those active pharmaceutical ingredients that go into those drugs.

Q. Can you talk about using data analytics technology to bring out additional efficiencies and get better with the distribution processes. How have you driven that kind of transformation for yourself as well as for your clients?

Mike: Over the years, the clients, the customers, and our members really asked us to continue to invest in technology enabling the supply chain. That really was the notion of bringing AI, machine learning, predictive technology into the supply chain setting. So, think about as you are making a decision, a clinical decision from a supply perspective, they want the ability to look at clinical outcomes as it relates to the utilization of specific products. So, they want that kind of data. They want the data on appropriate utilization. Should they use one or two per procedure and what is showing the best outcome in those kinds of things? So that tie between the clinical and the supply chain data is critical as our healthcare systems are continuing to figure out ways to transform their supply chain. We also made some significant investments just prior to the pandemic. But then during the pandemic, I’m really building out an e-commerce platform to help the non-acute side of our customer base get access to product. During the pandemic, New York City and Seattle were hit hardest first. Seattle sort of exhibited itself in nursing homes and long-term care facilities. Historically, those kinds of organizations did not have a great deal of access to PPEs. So, our platform called stockdTM is a platform that has reliably sourced products. Organizations in our acute setting buy products on that platform. But we open it to provide access to non-acute folks that were affiliated with Premier to allow them to get access to these products. We have reliably sourced and had a strong chain of custody, which is obviously really, important to protect the caregivers who are caring for those patients. So that’s number one. Number two, we recently made an investment in a company called IDS. And what IDS does is it is all about e-invoicing and e-pays. And we believe, along with our ERP and our front end stockdTM program, that we now have an end to end procure to pay technology ability truly all the way from the purchase point on the e-commerce platform all the way through e-invoicing and then through e-payment plan, we believe by leveraging the IDS technology, our healthcare systems can centralize the whole invoicing function across their health system and the accounts’ payable function. So, we are incredibly excited about integrating all those data assets and bringing all the efficiency to our health system.

Q. We talked a great deal about the syndromic surveillance, last time when you were on my podcast, tools and the algorithms that you were using to get early indications of who is likely to be contracting COVID. We are now at a moment to roll out vaccination across the country. Have you been able to use some of the same tools to repurpose them towards the vaccine distribution effort?

Mike: We took a technology that we were utilizing to help our healthcare systems manage for PAMA, which were the CMS Medicare guidelines for high-cost imaging utilization. We were looking at the unstructured notes of the electronic medical record using natural language technology, natural language processing, to obviously create the mechanism for using appropriate utilization of images and we pivoted that very quickly. And because we could get that the unstructured notes, the unstructured data, we could actually look at symptoms of the disease and we could identify where there were surges or where there was a significant part of the disease. That is something we do think that various health officials should really begin to think about. As what it allows is, because the data is at a zip code level, for public health officials to create different models to protect populations depending on where the submerges are where you did not have to shut the whole state down. You can look at various zip codes and determine where are the resurges and those kinds of things. For the same kind of technology, we have been having dialog with different parts of the federal government about looking at the success rates of the vaccines and looking at the clinical efficacy of the vaccine and those kinds of things. So, we are primarily just in conversations because it was so quick upon us if we weren’t able to get the product out. We are certainly in the discussions to save for future events. Not just Premier, but there are a number of organizations that the technology is underpinning and could truly support them as they’re either developing a new vaccine or as launching one. 

Q. You have been a part of this journey for the past 18 years at Premier and have seen it all unfold in front of your eyes as you take on the role of CEO. Can you share with us what new areas do you anticipate are going to take up your time and attention?

Mike: Yeah, I think they fall under two broad buckets. One is I think we have got to leverage all the technology and capabilities that I’ve been talking about to really accelerate value to our members, our partners, that also then obviously accelerate value to our investors and shareholders. I think accelerating the utilization of that technology, getting it implemented, helping our healthcare systems get back to normal and truly delineating that value, is going to be critical. The second area falls under three principles. One, we need to help our healthcare systems reduce the waste in healthcare. Approximately 30 percent of the cost is waste, and we want to help them with evidence based, AI-enabled guidelines embedded in the workflow to drive that waste out. Number two, we want to modernize, and tech enable the supply chain. We think that there is a ton of manual tasks. There is a ton of data that is not being utilized at the point of decisions. And we want to make sure that we are bringing that information transparently to the decision makers. We have got to continue to build out more resiliency in that supply chain, look for more opportunities to domestically manufacture products, especially those that are highly automated and generic drugs, as well as some of the APIs. We need to be thinking about how to do that more domestically as well as nearshore. And then finally, we need to continue to evolve our technologies to help our healthcare systems truly thrive in a value-based care economy. So, those kinds of capabilities include clinical decision support, which obviously we believe is going to be important. As you know, healthcare systems are going to be on the hook to deliver high levels of care, high quality care by both employers as well as payers, and then obviously at a patient level as well.

Q. The shift towards value-based care is perhaps not as fast and not as rapid, not as deep as we might have expected, and we are still in a predominantly fee-for-service environment. However, the marketplace has its own way of recalibrating the market for products and services. We are at a moment when we have big technology players like Amazon, for instance, getting into core care delivery. We have got digital first companies that are delivering healthcare in a more digitally enabled, digital first kind of way. And we have got all the non-traditional players like CVS and Walgreens and Walmart looking at the healthcare space. What does it all mean for your clients and consequently for Premier?

Mike: There’s always going to be new competitors, given that healthcare is such a significant part of the gross national product of this country. So, we happen to believe that competition is good as it unleashes innovation. And ultimately, at the end of the day, it provides better levels of patient satisfaction and obviously more innovation becomes online. It provides more choices and obviously a better overall system. Our health systems, specifically the ones that are tied with Premier are embracing the challenges and the demands of all this innovation, and we see it every day as they are building out new capabilities around telehealth and virtual health. And our clinical decision support capabilities are an important underpinning of that so that you can drive a level of consistency. As you think about all these virtual visits, you think about our health systems as they are building out more models around hospitals at home and mobile clinics and the need for all that clinical decision support, patient engagement tools are going to be critical. We believe that vertical and horizontal integration is going to continue. So horizontally, healthcare systems coming together to create more scale. Vertically, you are going to see them get into other areas of service that is outside of the four walls of the hospital to include areas like post-acute pharmacy and integrated primary care.

Q. All this potentially expands your own addressable market and opens brand new market opportunities for Premier. Is that a fair statement?

Mike: It’s very fair and that’s the reason we’re so focused on the technology enablement of both sides of our business, both the clinical as well as the supply chain, because as they vertically integrate, it’s going to be extremely important to ensure that information flow is seamless and accurate as we’re caring for patients across the continuum. So that you have the right clinical data, the right safety data, and the right supply chain data so folks can make decisions along that entire vertical integration. So that it just goes back to our primary premise, which is why this technology enablement is so critical, especially using advanced technologies like a machine learning, natural language processing and technology. 

Q. Are there any potential other implications? For instance, you talked about the horizontal integration of health systems looking for economies of scale and what that potentially means is that service providers or suppliers such as Premier, for instance, might feel a little bit of price pressure. So, you have to stay one step ahead by making your own operations a little bit more efficient so that you can protect your margins while continuing to be of value in the emerging landscape? Is that a valid assessment?

Mike: Well, that is a very fair statement. But I think we are so fortunate in that as we have this incredibly strong network of innovative healthcare systems that I think constantly push us to innovate and bring us ideas around how to create more efficiency for them. So, they as opposed to each of them building out the clinical decision support and the technology for global payment, they’re coming to us and saying, can you build those kinds of things as opposed to each of them blockchain enabling those sophisticated invoicing and payment systems are saying, can you build that out for us? So, we look at it as an opportunity as all this technology continues to advance and the shifting landscape continues to evolve, because of that tight connectivity we have with our health systems, we’re going to be able to innovate right along with them and create technology and services to help them become more efficient.

Q. Mike, you’ve had a long and successful career and many of my listeners would want to know a few lessons from you. Maybe talk about one thing that you wish someone had told you when you were younger?

Mike: Firstly, the notion of diversity and the exposure to diversity. When I talk about diversity, I’m thinking of every sense of the word. I think it is important for folks to have that sort of thinking because it provides you insights and perspectives that you might never have seen before. So, diversity in terms of people that come from different walks of life that are trained differently. On the other side of that equation, it also gives you a bit of compassion and empathy and understanding of what others are going through. Right on my podcast, I talked quite a bit about the word humanity. And what I mean by humanity is getting to know everybody as an individual as opposed to a label or something else. That exposure to diversity is important. I think number two is just understand and appreciate. You are going to make bad choices and bad decisions. And to me, the most important thing throughout your career is how do you recover from decisions that did not go the way you want it. And so, I’ve always sort of built a process or an internal process, if you will, of how to sort of recover very quickly from decisions that you have made that have not gone the way that you want. And it is really important to have that perseverance to bounce back and come right back at it with some great learning because of a decision that didn’t go the way you wanted. I also think that one of my strengths was the ability to get onto the next thing faster. Whatever that issue was or whatever the strategy was, it was critical in my development that I did not just harp on a bad decision or a bad strategy. I fixed it and moved on and got into the next thing. And then the last thing is this notion of an inverted leadership structure. Sometimes people call it the inverted pyramid of leadership. I think that is critical. All that means is that I’m here to support my next layer of leadership and to take out the roadblocks that are inhibiting them from growing and accomplishing their jobs. And their job is to do the same thing for their people. I think we have got incredibly talented group of people at Premier. And one of the things I asked my leadership team to do is make sure that you’re helping your leaders manage folks and provide leadership to people in the most effective way possible and to just unleash their brilliance. So, I think that notion of the inverted leadership structure is real as well.

 

About our guest

Michael J. Alkire is the President of Premier. As President, Alkire leads the continued integration of Premier’s clinical, financial, supply chain and operational performance improvement offerings helping member hospitals and health systems provide higher quality care at a better cost. He oversees Premier’s quality, safety, labor and supply chain technology apps and data-driven collaboratives allowing alliance members to make decisions based on a combination of healthcare information. These performance improvement offerings access Premier’s comparative database, one of the nation’s largest outcomes databases.

Alkire also led Premier’s efforts to address public health and safety issues from the nationwide drug shortage problem, testifying before the U.S. House of Representatives regarding Premier research on shortages and gray market price gouging. This work contributed to the president and Congress taking action to investigate and correct the problem, resulting in two pieces of bipartisan legislation.

Prior to serving as President, Alkire was president of Premier Purchasing Partners, which offers group purchasing, supply chain and resource utilization services to hospitals and health systems. Premier remains among the top group purchasing organizations in the industry as the value of supplies purchased through its contracts has increased to more than $56 billion. Upon joining Premier in late 2003, Alkire worked closely with the Purchasing Partners team to develop and implement a three-year transformation plan designed to dramatically increase returns to the alliance’s shareholders while building stronger relationships with members and suppliers.

Alkire is a past board member of GHX and the Healthcare Supply Chain Association. He recently was named one of the Top 25 COOs in Healthcare for 2018 by Modern Healthcare. In 2015, Alkire won the Gold Stevie Award for Executive of the Year and in 2014 he was recognized as a Gold Award Winner for COO of the Year by the Golden Bridge Awards. He has more than 20 years of experience in running business operations and business development organizations at Deloitte & Touche and Cap Gemini Ernst & Young. Before joining Premier, he served in a number of leadership roles at Cap Gemini, including North American responsibilities for supply chain and high-tech manufacturing.

Alkire graduated magna cum laude with a Bachelor of Science from Indiana State University and a MBA from Indiana University.

About the host

Paddy is the co-author of Healthcare Digital Transformation – How Consumerism, Technology and Pandemic are Accelerating the Future (Taylor & Francis, Aug 2020), along with Edward W. Marx. Paddy is also the author of the best-selling book The Big Unlock – Harnessing Data and Growing Digital Health Businesses in a Value-based Care Era (Archway Publishing, 2017). He is the host of the highly subscribed The Big Unlock podcast on digital transformation in healthcare featuring C-level executives from the healthcare and technology sectors. He is widely published and has a by-lined column in CIO Magazine and other respected industry publications.

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Sign up to get Paddy’s Newsletter that is personally curated by Paddy along with analytical notes on the developments for the week.