Materials managers in healthcare are undergoing a metamorphosis, and this situation presents both opportunities and trials.

On one side, the evolution of the profession represents advancement in stature, as MMs are finding a place at the table with senior executives and being recognized for their significance after years in the basement. On the other, the lofty new position presents a more complex set of demands, with a higher level of accountability.

"At many organizations, the role and importance of the materials manager is being recognized by the C-suite," said Sean Angert, managing director for Chicago-based Huron Consulting. "We're seeing materials managers evolve into supply chain directors and executives. It is no longer about the purchasing function and what is paid for a widget, but how they are managing the overall supply budget."

Increasingly, Angert says, MMs are being assigned to handle non-traditional contracting areas, such as purchasing services, equipment maintenance, housekeeping and food contracts.

"This doesn't mean they own it all, but their expertise in contracts is much more recognized," he said. "As they gain more credibility with management, they are moving into broader support service areas."

Pam Poshefko, consulting manager at Chadds Ford, Pa.-based IMA Consulting, adds that the MM function has become a much more strategic element to the hospital's financial goals.

"Their titles are changing – no longer are they VPs of materials; they are becoming chief resource officers," she said. "They need to be part of the short-term and long-term planning for the hospital, actively involved in the decision process for service lines and helping the C-suite align with physicians. They are becoming a more consultative group, serving as intermediaries between clinical and finance because they have the knowledge base of both groups."

In fact, the MMs' knowledge base is quite unique, Poshefko said, because they occupy the zone between the clinical and financial departments.

"They are data managers, keeping track of purchasing and product utilization," she said. "They go to the clinicians and talk about controlling costs. They are raising awareness about cost containment. Now a chief resource officer must handle other aspects, such as gauging product performance, procedural benchmarking and OR preference cards for certain procedures. They also have the authority to make some decisions."

Talent scouts

These new demands are calling for individuals with a valuable skillset, and hospitals are going outside healthcare to find them, said Joe Greskoviak, president of spend and clinical resource management at Alpharetta, Ga.-based MedAssets.

"We're seeing folks brought in from outside the industry – namely chief resource officers from other business sectors," he said. "Hospitals are looking for someone who sits on the executive team to find greater opportunities in the health system."

To be sure, the materials management function is "dramatically different today," agreed Pete Allen, senior vice president of sourcing operations for Irving, Texas-based Novation.

"The sophistication required is so much more advanced than in years past," he said. "The pressures hospitals are under are causing them to invest heavily in supply chain, their second largest expense next to labor. The dynamic behind it is the need to reduce costs at facilities."

Mike Alkire, COO for Charlotte, N.C.-based Premier, says one of the most important new assignments for MMs is to look at product use protocols and help establish proper use levels. Their mission, he said, is to determine which clinical and cost evidence supports the use of particular products.

"Materials managers have become more clinically attuned – we are seeing more clinicians as part of the team," Alkire said. "Physicians, nurses and pharmacists are all more involved in product selection and are working to drive standardization. They see an opportunity to reel in costs and assure new innovations."

Marching onward

Stepping onto a bigger stage also presents bigger challenges. Poshefko sees the inability to maintain a constant source of supplies as a major dilemma.

"They may have trouble getting some pharmaceuticals that aren't made anymore because the profit isn't there," she said. "The economy now is so global that an earthquake in Japan or China can affect supply. They need assurance that the products they are getting are of good quality and they need price transparency from vendors and GPOs. Finally, they will have to do more with fewer people."

Angert adds that MMs will continue to be accountable for a budget they don't "own" and raise their profile as the ultimate authority on product use.

"In order to do that you have to be a strategic person and develop relationships across the board," he said.

Furthermore, MMs will have to become more involved with the cost issue, Angert said.

"They don't have to lead it, but they must be at the table and know what is going on with utilization, efficacy and value," he said. "They must provide more knowledge and understanding about direct patient costs and overhead costs. They are the facilitators of the process."
 
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