Supplier Diversity in Action at Advocate Aurora Health

Many companies remain committed to advancing equity, diversity and inclusion - from workforce initiatives to corporate investments to supply chain strategies.

Studies show that organizations with greater diversity tend to make better business decisions and outperform competitors, and nearly 60 percent of U.S. companies have established a dedicated team to promote inclusivity.

As one key component to greater representation, supplier diversity drives the inclusion of diverse-owned and small businesses in the procurement of goods and services within an organization.

Healthcare providers today are building a more inclusive supply chain that values minority, women, LGBTQ and veteran and small-business owners.

In doing so, providers are bringing new perspectives, capabilities and competition into the market.

Underserved and minority patient populations continue to be hardest hit by the leading health issues affecting the world today. Supplier diversity has the power to improve equity in healthcare, build trust between patients and providers, and improve health outcomes.

Supplier Diversity in Action: Advocate Aurora Health

When Wisconsin-based Aurora Health Care and Illinois-based Advocate Health Care announced their merger in 2017, the newly formed Advocate Aurora Health sought a focused and cohesive diversity program. As work began on merger details and enterprise-wide goal setting, leadership made diversity, equity and inclusion a key component of Advocate Aurora’s report card for the combined organization.

To underscore the importance of supplier diversity in the new health system, the team implemented:

• A thoughtful internal reporting structure. Advocate Aurora’s supplier diversity leader has a dotted-line reporting relationship to the senior vice president of support services and the system vice presidents of both supply chain and construction. The chief external affairs officer serves as executive sponsor and oversees the supplier diversity leadership team.
• Long-term goal setting and metrics evaluation process. Aligning with overarching business goals, Advocate Aurora developed three-year supplier diversity goals that were approved through the health system’s board of directors.
• Program implementation. Advocate Aurora launched a robust supplier diversity program and a second-tier program, encouraging its major suppliers to use diverse vendors as well.

"At the core of our Diversity, Equity & Inclusion work is prioritizing health equity to ensure all people in the communities that we serve have the opportunity to live well. That is critical to the survival of these communities and of Advocate Aurora. Health equity includes making communities economically stronger. The supplier diversity piece, when done right, helps to lift the economic power of diverse communities, helping to make for economically healthier communities. This truly meets intent of the quote 'a rising tide lifts all boats!'"

- Bruce Radcliff, System Vice President-Supply Chain, Advocate Aurora Health

Advocate Aurora’s success shows through its increased engagement with diverse vendors. In 2017, the system spent $119 million with diverse vendors and closed 2020 spending almost $200 million with minority and women-owned suppliers, about 6.5% percent of total spending. The health system believes the most important aspect of success is having senior leadership help establish goals and timetables for progress in this area and hold the organization accountable for achieving supplier diversity targets. This work is hard to do without that kind of support.

For one of the nation’s leading not-for-profit health care systems with 26 hospitals and more than 500 sites of care, Advocate Aurora’s supplier diversity initiative is strengthening local economies and encouraging a more robust diversity ecosystem for the industry at large.

Here’s a snapshot of the five steps for providers to create and sustain a Supplier Diversity Program:

Step 1: Commit to supplier diversity.

A strong foundation starts with a focus and commitment to making supplier diversity an integral part of your hospital’s supply chain management strategy and purchasing policy.

During this phase and at the program’s onset, it’s also vital to identify community resources. Supply chain leaders should work closely with local partners to seek input as well as pinpoint and engage certified diverse-owned small business and contractors.

Step 2: Identify the team.

Determine the employees who will develop and manage your program, and outline specific roles and responsibilities.

Critical to success will be a dedicated program manager who can ensure the program has sufficient resources and is appropriately integrated into enterprise-wide sourcing and marketing strategies. Other key areas to consider include outlining who will be responsible for obtaining certification documentation as well as staff in charge of updating the hospital’s enterprise resource planning (ERP) database with diversity designations.

Step 3: Set the strategy.

Clearly defined program goals and expectations tailored to the needs of your hospital as well as employee awareness, integration and commitment will help engender a successful program. This includes senior management awareness and engagement in the process, typically your hospital’s chief executive officer (CEO) and chief procurement officer (CPO).

Once the strategy is set, providers should also consider making relevant information accessible on the appropriate websites, including:

• Policy statements
• A supplier registration portal
• Supply chain team contact information
• Hospital contract opportunities

Step 4: Establish your benchmark.

Uncover your current spend and the number of diverse suppliers with which your hospital is currently doing business. This usually starts with an accounts payable data scrub, a complete forensic assessment of your existing supplier database, looking at reported sales volume and local/regional contracts.

Intuitive technology can give you a thorough and precise look into your current spend with diverse suppliers. From one platform, providers can leverage robust analytics to efficiently evaluate current engagement and activate new contracts with vetted local, diverse-owned suppliers.

Step 5: Identify 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.

U.S.- and Puerto Rico-based businesses typically denote diverse ownership to include minority, women, LGBTQ, veteran and small-business owners with least 51 percent owned/operated/controlled by a person or persons that meet the specific designation criteria.

With a myriad of third-party certifying agencies that validate whether a supplier is 51 percent-owned and -operated as minority-, women-, LGBTQ-owned enterprise, hospitals may choose to join organizations or industry groups to assist with the process. These organizations provide matchmaking opportunities, peer networking, supplier development and communication platforms.

The origins of equity and economic opportunity start at a local level. Alongside diverse suppliers and other partners, there’s a great deal that providers can do ─ in their own institutions and communities ─ to make a significant and positive impact.

With nearly 400 diverse contracts and counting, Premier is committed to fostering an environment rich in diversity where our members bring equity and distinct perspectives to their supply chains.

For More:

• Read our white paper to learn how diverse suppliers are addressing some of the most significant issues in healthcare.
• Don’t stop at supplier diversity – healthcare also has the power to drive more sustainable operations and reduced environmental footprint. Check out three ways health systems are going green in their supply chains.