Archive for November, 2007
Produce Compliance
Over at Fresh Talk, the blog of The Packer, the food industry is starting to sound like the health care industry. A group of food buyers, represented by the Food Safety Leadership Council, issued a list of “On-Farm Produce Standards” designed to encourage safe food production practices starting at the farm. These buyers are asking producers to comply with standards and commit to audits.
As Tom Karst, the editor, writes “the FSLC should be credited for appreciating the value of on farm food safety standards…” He also criticizes the FSLC’s stance that its members (including Publix supermarkets, Walt Disney World Co., and others) will each decide whether or not to do business with a producer who does not meet the audit standards. “What,” he wonders, “is the point of the standards if they can be ignored for whatever reason?”
The parallel between this effort and hospital/healthcare systems materials management and compliance is striking. Many hospitals take a comprehensive approach to their vendor management and compliance programs at inception. Then, exceptions begin to be made. “This vendor is too big to NOT be trusted,” they say. ”This one is too small to bear the burden of record keeping,” they worry.
Exceptions break down the best intended vendor compliance and materials management programs. When a vendor can push for and achieve exemption, the exceptions shout that the hospitals aren’t serious about the program.
It’s like the parent who says “no,” but later gives in. The child learns that with a little persistence (say, 10 minutes of whining), she can get what she wants.
Our Take: The strongest vendor compliance and materials management programs we’ve seen are the ones that allow for tiers of risk, but don’t allow exceptions to participation. Most importantly, the strongest programs have a reciprocal commitment from the buyer to the vendor. The buyer commits to the vendor, “If you comply with my standards, I won’t do business with anyone who doesn’t.” It doesn’t mean that buyer won’t do business with a competitor, but it does narrow the field to competitors who comply with the same rigorous standards.
Add comment November 26, 2007
Abundance
I’ve been thinking about the disappearance of Thanksgiving as retailers continue to rewrite the merchandising seasons to jump from “Back to School” to the simultaneously marketed holidays of Halloween/Christmas. Other than the grocery stores and a few restaurants, Thanksgiving is hardly mentioned. Some would argue that we consumers brought this on ourselves. After all, every September purchase that reflects the Halloween or Christmas theme only encourages retailers to start the shopping opportunities even earlier the following year.
Despite limited marketing efforts, Thanksgiving creates the heaviest travel traffic of the year. Despite the moans of travel woes and family drama, we persist in loading up the car or standing in line at the airport to go “home” for this holiday.
I’m reassured that something in the American psyche that keeps “Thanksgiving.”
So in keeping with the reality that this week your mind may be somewhat distracted, this week’s post is going to be a simple “Thank you.” Here’s a brief post to thank you all for making Vendormate’s progress possible throughout the past year and to wish that the blessings of life be yours in abundance in the coming year.
Add comment November 19, 2007
The Fashion Police, Pt. II
It’s Friday, and I’m in a lighthearted mood. Maybe it’s because I’ve recovered from my flu shot. Maybe it’s the thought of next week’s Thanksgiving feasting and family.
Whatever the reason, I want to follow up on my earlier post about Crocs. As you may recall, Crocs, the ubiqutuous holey plastic footwear, were banned from patient care areas in one hospital late this past summer. The concern was that a rogue syringe would pierce an unprotected toe.
Despite this ban, Crocs have stepped into the health care world. The American Podiatric Medical Association (APMA) has given the Crocs Rx™ line its Seal of Acceptance. The three shoe models in this line are targeted to ease foot pain. Essentially this endorsement allows Crocs to capitalize formally on the doctor recommendations they’ve already enjoyed. Your medical provider may not be allowed to wear Crocs to work, but they can recommend that you do.
Add comment November 16, 2007
The Little Dutch Boy
There are so many great ways that I could title this entry:
“Power tends to corrupt; absolute power corrupts absolutely” Lord Acton’s Dictum
Blue Hawaii
Hail to the Queen
Whatever you label it, read AIS Health.com/REPORT ON MEDICARE COMPLIANCE article about the allegations against the former compliance officer at The Queen’s Medical Center in Honolulu. It seems the vendor compliance officer may have awarded herself several compliance-related consulting contracts with the hospital that totaled over half a million dollars. The heart of the Federal allegation is that she did not disclose that she was the owner, as well as sole employee, of these consulting firms.
The defendant counters that no information was withheld from the hospital and that the board and another senior hospital executive had approved these contracts. She was a senior level employee of the hospital. How much better can you “know your vendor”?
The alleged activities occurred in 2002 through 2004, and there has already been a civil lawsuit action between the hospital and the defendant. But now, the Department of Justice has stepped in with criminal mail fraud charges related to the activities.
Regardless of the outcome of these charges, the fact that it has gone this far is sufficient to give one pause. The Queen’s Medical Center is not a small medical facility. It’s a 600-bed hospital. It is large enough to have a vendor compliance officer that maintains true independence, not one that manages other areas of operations and awards contracts.
Our Take: All hospitals feel understaffed — with more to do than their resources can manage. But this story is an object lesson that the value checks and balances can’t be overlooked.
Once the dam of trust is cracked, the rushing stream of temptation cannot be held back.
I’m speculating that the dam analogy applies here. But consider that the first contract was (only) $40,000 in January, 2002. That was the first crack, and then came the stream. In October, 2002 an annual contract valued at $270,000 was awarded. October 2003 delivers another annual contract worth $150,000. Finally, in summer 2004, the last contested contract of $138,640 came through. In the end, the contracts totaled more than $500,000.
Simple steps, such as Stark law-related ownership disclosures or financial verification of the consulting firms, could have highlighted unusual circumstances here, if not demonstrated outright fraud.
Of course, disclosure itself isn’t enough. Someone would have to independently review the records. Think about the unusual results. Even question the data to catch something similar to these allegations before they happen.
Now, It’s almost 8 years after the first questionable contract was awarded. No matter how this case turns out, the hospital and the defendant will have spent years dealing with this when simple record keeping, audits, and checks and balances could have either caught it earlier or cleared the allegations at the very beginning.
Sidebar: For those of you wondering about The Little Dutch Boy title, read this.
Add comment November 6, 2007
Why Didn’t Gap Fall into the Gap?
A role model lesson in ethics, openness, transparency, and responsible documentation occurred this week. The Observer reported that an unauthorized sub-contractor of a contractor of Gap was using child labor to manufacture garments for an upcoming fashion season. Early media speculation centered on the potential black eye to Gap’s ethical image.
The story broke on Sunday, October 28. It has a hook that appeals to the web news cycle — Global company oppressing third world masses. This story should have legs and criticism of Gap should mount. Yet, by Wednesday, October 31, the story was off the internet. How was Gap able to pull this off?
Gap successfully mitigated the potential damage through a history of openness, transparency, and documentation that allowed them to address the potential criticism head on. Gap already had reports publicly documenting its 90 “Vendor Compliance Officers.” It was already a matter of public record that these officers had performed 4,438 inspections of 2118 factories in 2006. Its spokespeople could quickly recount that 23 contracts had been terminated based on noncompliance.
By Monday, Gap had terminated relations with the contractor, seized the inventory, and committed not to sell the child-made goods.
Gap understood two concepts that our health care customers and prospects miss occasionally. Public trust requires compliance management even more than the law does, and vendor management and compliance is not a passive practice. Compliance takes some effort. Gap could easily have limited its compliance efforts to having its suppliers sign a pledge of good behavior. Surely that would have limited its legal exposure. But Gap understood that public trust required a more active effort. By naming “Vendor Compliance Officers”, by actively investigating vendors, and by acting on the information from those investigators, Gap has protected its public image. Much of the resulting web commentary is pro-Gap, just like this post.
Our Take: Too often we hear health care systems looking for solutions that address the letter of today’s laws and regulations. “Keep it simple, and keep the effort off our already burdened back,” they cry. We understand that. No one looks for more work to do.
Yet regulations are often created as protections for the consumer. As U.S. health care shifts to a consumer-driven model, the consumer will hold the provider accountable, not for the letter of the law, but for the spirit of public interest.
Leading health care providers look for vendor management and compliance solutions that are more than just a “sign here to acknowledge that you read this” file. They are balancing the letter of regulatory compliance requirements with active vendor management, such as integrating score cards to track the intangibles of vendor performance as well as the pass/fail of expired certifications. They want to know their business partners are exemplary, not just acceptable.
Gap initially instituted its ethics policies to address criticism of previous child labor use. From this experience, I believe its program has been successful, both from financial and ethical perspectives. Health care providers shouldn’t wait for a well-publicized complaint to move from passive to active vendor compliance management.
Sidebar: Interestingly, the Delhi police were slower to act than Gap. They did not raid the factory and recover the child workers until Tuesday.
Add comment November 1, 2007
