For Trinity Health, the grass really was greener on the other side of the fence. And Trinity's leaders knew it.
That's why the nation's eighth-largest healthcare system, based in Novi, Mich., recruited a rising young supply chain executive from General Motors Corp. in February 2001. Trinity executives saw the healthcare industry lagging behind other businesses in purchasing and supply practices. In Lou Fierens, they found the desired skills for leveraging their new purchasing potential, resulting from the 2000 merger of Holy Cross Health System and Mercy Health Services.
"We went outside healthcare and picked Lou. He had tremendous experience at GM," says Michael Slubowski, executive vice president of Trinity Health's eastern division. Fierens had directed GM supply chain integration and GM's worldwide purchasing process group. For 16 years at the world's largest vehicle manufacturer, he was exposed "in a very practical sense to some of the very best practices in supply chain management," Fierens says.
As Trinity's vice president of supply chain management, he entered a decentralized system of 47 hospitals, 342 outpatient clinics, and 79 long-term home and hospice facilities spread from Maryland to California. Members were buying individually under loose affiliations with two group purchasing organizations.
Fierens recruited a skilled centralized team focused on specific categories: sourcing managers for cardiology, general medical, radiology and surgery, for example. He selected one GPO, Consorta, and negotiated a trendsetting hybrid relationship, allowing Trinity to use the GPO or deal directly with suppliers. He established very clear sourcing procedures and educated the organization on the methods and power of centralized purchasing. As a result, Trinity got "immediate traction" from his presence, Slubowski says.
However, in crossing industries, he has needed to build credibility. He listens carefully and spins back possible solutions in a different framework.
"He is insightful, helpful, and lays out areas where he has strong convictions about the opportunities for this organization. He also changes course when necessary," says Slubowski, who adds Fierens "executes well and delivers what he promises. That's where the trust grows."
After two years, he can document savings of $57 million from transforming decentralized purchasing into a focused, single-source enterprise. The savings come across the board: from the most invasive clinical items to slippers. Trinity Health's five-year goal of achieving $110 million in supply chain savings by 2006 is within reach.
Fierens, who earned an MBA from the University of Michigan and completed an executive development program at the London Business School, says he finds more personal rewards in healthcare. For example, savings from his group can be used in Trinity's community benefit ministry to provide charity care for uninsured expectant mothers.
"Expense control can be used to provide more patient care. We are building a lot of momentum, and we should continue to do that."