EP 55 - University of Vermont Health's Charlie Miceli On AI As The New ERP In Healthcare Supply Chain

Speaker A: I've been given so much by the healthcare ecosystem over time with the relationships, the camaraderie, the opportunity to mentor folks I want to give back. What value can the folks that we've already done our service, what can we do to help the folks that are leading the charge now and how can we contribute to their success? The technology's there, but what are we going to do with it? You still need a human perspective and an emotional intelligence for the organization. Make sure your staff are keeping up with what's going on. Make sure that they have the tools and equipment to do their job. And listen to them. Not hear them, but listen to them.

Speaker B: Hey. Hey everyone. And welcome to Smarter Sourcing Healthcare, the podcast where we talk to supply chain leaders in healthcare and uh, that are doing innovative things, uh, and working on the problems we face today. Uh, if you're in the healthcare supply chain, you know, you know that we have no, uh, shortage of challenges. Uh, there's labor shortages, there's technology challenges in the, in the world, uh, and we're just trying to figure out together, uh, the only way forward is together, uh, how to address those, uh, those challenges. And today, uh, we're joined by a great supply chain leader, uh, Charlie Micelli. Uh, Charlie is retired recently as the chief supply chain officer at the University of Vermont Healthcare Network. Uh, Charlie is a bellwether league member, 2023. Uh, he is a supply chain healthcare, uh, supply chain lifer, uh, an industry icon and a renaissance man. Charlie, welcome. Welcome to the podcast.

Speaker A: Yeah, thanks. You may be Blush Eric.

Speaker B: So you've been a tremendous, uh, addition, uh, and contributor to the industry over a lot of years. Uh, and maybe I just wanted to kick that off. I mentioned the fact that you're a, uh, Renaissance, uh, person, rock band leader, uh, chief supply chain officer, uh, interim cfo, CEO of a health system, uh, also chief technology officer of a health system. You're also on the board of the patient, uh, safety movement. Which one of these do you identify with, uh, the most, uh, or do you have others that are in your repertoire of things that uh, Charlie Mitchelli does?

Speaker A: Yeah, I identify now as a retired family man, but I guess my focus is I've been given so much by the healthcare ecosystem over time with the relationships, the uh, camaraderie, the opportunity to mentor folks. And um, I want to give back and um, I've tried to do that throughout my career, continue to do so. And with the way that the industry is going now, what value can the folks that we've already done our Service. What can we do, uh, to help the folks that are leading the charge now and how can we contribute, uh, to their success and ultimately to better and safer patient care? Because that's what, that's what we're wearing it for.

Speaker B: Yeah, no, that's, that's, that's true. And you've had anchor relationships and participated in lots of different industry groups that have supported that in the past. You know, and maybe you know, because you wore some different hats, uh, at the, at the University of Vermont over 15 years. Um, you know, the reporting relationship of supply chain and how it integrates into the fabric of care and management, management and leadership. Um, you know, do you have a perspective on where supply chain should report to and why, how does it, how and where does it work best? Uh, and integrated into the organization?

Speaker A: Yeah, I guess the textbook answer, but the human answer is who's ever the best boss and the best leader? Um, I've been fortunate enough to uh, over the last uh, 17 years to report into the CFO and uh, three different CFOs, all stand up, uh folks, great leaders, mentors. But um, that's, that's been my preference. But prior to that I did serve under uh, chief Operating officers and that was good too. But I'd say the cfo, because you can get the finance, the finance perspective closer and learn more about the infrastructure of. Because you have to know operations anyway. And if you can understand the numbers, the funding, the pressures that are there for the CFOs and their teams, I think is the, that's the preference. That's where I'd want to be.

Speaker B: Yeah. And the only, maybe one question on that because I've seen a few of these roles that were chief supply chain officers that now organizations are taking to chief procurement officer. It seems to be kind of shifting back to more of a sourcing focus, which only seems to be a part of it for me. Did you ever have any challenges with that where it was just pure sourcing CFOs, price at the pump kind of people versus kind of the more integrated view of supply chain related to clinical on others.

Speaker A: Back when I started, you know, it was three bids in a cloud of dust. So we're, we're. And that's how I was brought up. But you know, that works really good when everything's nice, but when there's challenges and you know, we had challenges all the way back in the late 80s with supply, continuity of supply, availability of products, um, the relationship with the supplier community. Um, I got rid of the word vendor in probably 1988. And it was supplier. And really, you know, when you, when you look at the healthcare industry, there is an aspect of altruism with the companies that participate in there because at some way, shape and form or some time, somebody had an idea to help out a patient or help out a process that supported uh, a patient in that industry. And that took me a little bit to learn when I first started because I came out of the uh, packaging industry, uh, before I started in healthcare and um, back, back, back in the day and you know, just a different world. But that patient at the end of the, at the end of the. Whatever you do on the, on the healthcare side, whether you're in supply or in accounting or know nursing or, or whatever professional group that's there, it's very important to, It's a relationship. And I think, you know, and then there was the move from just the three bids in a cloud of dust to who can have the best contract. And um, you know, he had terms and conditions that were pretty much weighted back in the, in the late 80s were more weighted toward the suppliers. Um, and um, it was just business terms that you just signed off on and hopefully nothing went wrong.

Speaker B: Uh, your brand, uh, has been as a collaborator, uh, both with technology partners and uh, with suppliers. I'm glad to hear you use the word supplier versus vendor. What benefits did that provide you? Maybe in the more recent past, uh, of things that uh, you know, created new and unique relationships that benefited the University of Vermont, uh, health network.

Speaker A: Yeah, um, when we sat down with a supplier, a strategic supplier, and a strategic supplier could be somebody you spend multi millions with or multi tens of thousands because they support and they line up with your requirements to take care of the patients, uh, and run your operations. I guess the big thing there is trust. How do you build the trust? And that becomes a salient point when something goes wrong. So no entity, no outfit is perfect. So when the yogurt hits the fan, how does the customer and how does the supplier show up to balance that out and solve number one and then make sure it doesn't happen again? And when we sit with our suppliers, whether it's a distributor or uh, a tech manufacturer or an IT company, that relationship is what gets you through the dark times or gets you through the problem. And you know, threats, you know, that was the old way of doing it. Um, you know, I'm going to call the president and uh, you've made threats and it was an antagonistic relationship. It didn't work. I mean it Works once and then something's going to happen again. You're going to need somebody. What I found out of the whole thing Eric, is never burn a bridge because the way people move throughout the healthcare ecosystem, whether you're on the supplier side or on the provider side or even in the middle as a consultant, it's a small world.

Speaker B: Yeah, no, in the next three to five years, where do you see, you know, kind of this going uh, in, in AI and technology platforms and, and, and what problems do you anticipate being solved through that?

Speaker A: I'm seeing it, it's the new erp. So we, we went from these transactional accounting systems, inputs, outputs, you know, have a draw, a detailed trial balance at the end of the day, which we used to have back in the 80s where now you're doing, you know, you're projecting what's going to happen down the road with algorithms, uh, sensing systems, uh, data control towers, all the different terminology that's out there. I think we're in that next phase where AI, it's a starting point. How can we make that work for us? It took us a long time, several years to get the ERP systems tuned up so they would give, inform us. I think we're at that same stage now with AI where the technology's there, but what are we going to do with it? And it's not just a headcount mover, uh, if you will, it's not a headcount reducer necessarily. Uh, it could be because the waste process, it can help us take Muda out of the system that we've already tried to get out. And maybe it's the next level cracking that next barrier. But you still need a human perspective and an emotional intelligence for the organization that has to drive this thing. And I think, um, I can't remember if it was Ruben Pele or one of the futurists, but it's almost like a minotaur where you got the power of the horse. But then you have, you still need a brain and a, somebody to uh, in an emotion to care for because again this is patient care at the end of the day that we're supporting in our, in our group. So I think, you know, it's trust but verify from my perspective on how AI applications work or any, any of the data systems where you know, the LLMs or even something that even with the agentic components you still need somebody driving it and uh, working it. So I think we're in that flexion point now and let's see what happens.

Speaker B: Yeah, there's been some great developments. Right. It's the early innings of this, as I always say, but, uh, some great opportunities. And you mentioned the LLMs, large, uh, language models. And uh, you had mentioned to me that, uh, there might be the possibility to leverage AI for succession planning and mentoring. Can you elaborate on that? What does that mean to you? How do you see that working with AI?

Speaker A: Scary. Because, you know, the first thing you look at is, oh, this is going to take my job. You know, it can write, it can look at, uh, an LLM and a contract database. And that's, that's been happening for at least 10 years with, on contracting. Well, that's just the terms and conditions. You know, what's the, what's the life cycle of the contract? How, how do you make that support your organization? An algorithm is not going to do that. It's going to help you measure. But that human factor of the relationship is still important and it should. The AI component or the tech? I'm going to just use technology. The technology component should give you more time to do critical thinking to help support your organization. And you know, I, uh, was fortunate in my chain of command. I, I had people that were way smarter than me working in my group. And so what I could give to them was just experience and exposure to technology. And I think that's what leaders should do now is make sure your, your staff are keeping up with what's going on. At a minimum, just be aware of what's, what's go. What, what's happening.

Speaker B: Yeah, no, that's a, Ah, that's great. And uh, you know, you, you also told me that you had a Venn diagram in your head of how, uh, sourcing and procurement from other industries could be aligned to health care. Uh, sourcing and procurement, uh, with some tangible benefits, uh, that came from technology. Can you share your thoughts around that?

Speaker A: Yeah, sure. So I started out in procurement and uh, in industry and uh, not non, uh, health care, where, you know, it was manufacturer planning. And I still remember when I first became a director of procurement, there was a shortage on. I can't remember. I think it was latex, uh, exam gloves. So I went over to the purchasing buyers and I said, what's the production rate on the gloves? I mean, how many gloves do these plants make on a daily basis? They go, we don't know. I go, what do you mean you don't know? Well, we get it from the distributor. I go, well, um, what's, what's their inventory fill, uh, ratio? Well, we don't know, we just know that we, we negotiated a cost and they deliver the product. And I said well we got to start learning you know what our production rates are, what's the, the continuity of supply, what are all the different components and they're even getting down to raw materials. And it's progressed now that you know we look for were the raw material ingredients, you know the APIs for pharmacy for uh, you know, what are the impacts of what we've learned through with uh, all the risk management modules and the risk management systems. You know the pandemic was kind of the wake up call for us to really understand more because most of our procurement was indirect, has been indirect. If you look at your supply you're going through a distribution channel and that Venn diagram to bring in those practices that strategic supplier management. SSM has always been on the non uh healthcare side in big industry and that's uh, accreted uh, into the healthcare ecosystem now, which is great. I think the more lineup and arm's done a good job developing and uh, you know, building the organization to support a broadening effect of what supply chain is in procurement into the healthcare side. You know, taking from uh, the real world, what I call the real world. Um, I never really participated in the healthcare supply chain organizations. I belong to procurement leaders, to ISM or it used to be called the national association of Purchasing Managers. That's where I got all my like time certification, et cetera, working through those organizations. But I, and that's why I said the Venn diagram. But they are, they are getting closer which is great. And there's been more healthcare I think with the new leaders that are out there and uh, the folks that are you know at the tail end, they've realized that and they've embraced uh, they've embraced that.

Speaker B: Yeah. So I'm gonna shift gears a little bit uh, Charlie, uh, and talk about another passion uh for you which is the patient safety movement. Uh, it's unique for you in an area I know that you've had high passion of what for our audience. What is the patient safety movement? How did you get involved and how can healthcare supply chain best support it and lean into uh, to improving patient safety?

Speaker A: Yeah. The Patient Safety Movement foundation was uh, started by Joe uh, Chiani who was the founder and CEO of Massimo. And in 2013 there was the first Patient Safety Technology Summit that was run out in California. Major corporations, healthcare corporations were there. President Clinton and other uh, politicians came in to support as well as patients and families of patients that were Harmed by, uh, medical error. And medical error could be omission of care, could be a drug error or just a procedural error. And over 250,000 patients are mortally injured, uh, annually. And this was an attempt and has been an ongoing, uh, mission to mitigate patient harm. Our initial was zero deaths by 2020. Obviously, we didn't hit that number, but it's really do no harm and tie into doctor, uh, Lucien Leap's, uh, imprimata that was put out earlier. I was involved as a musician first, but then as I was participating, I was also serving. I had biomed responsibility, uh, as well as, as IT and leadership and saw, boy, uh, we should get more involved in this. And from a supply chain perspective, we had the relationships with the suppliers as well as with the EHR companies and the technology and the data that was used in technology. How do we safely collect that data and then how can we share that data to make each of these, uh, systems run, uh, safely and, uh, contribute to, uh, improve care and mitigate errors? And the first thing that we did from a supply chain perspective is we shared our architecture steering committee checkoff, uh, document whenever you brought in either a new application or wanted to share data. Did we meet all the regulatory compliance rules that were there from a. From that side. But then also can that systems talk to each other? Can, you know, epic talk with McKesson packs? Can, uh, GE talk with, uh, epic? You know, how do we set up this whole component of interoperability, which we have to have that on the supply chain side when we're sending information from our ERP systems to make sure we have continuity supply. Well, can we have the same thing with continuity of patient care data and share that? And that's evolved over time. And also from a government perspective, our government's done a great job making that a requirement that you have clean data, that the data can be shared. And ultimately, uh, from a supply chain perspective, can we leverage our relationships with the supplier community to make the data pledge to share the data to take care of our patients in a better way?

Speaker B: Yeah. And there's a great data component of that. There's also the value of service, Right. Having the clinicians have the time to provide the care in a consistent manner? I don't know. Did you ever dig into kind of that value of service and product continuity? Uh, does that play a role there or not?

Speaker A: Yeah. Um, well, one of the cool things that I experienced over my tenure is when I worked in IT Again, like I said, I always had a lot of people that were 10 times smarter than me. Uh, I just helped them, uh, do what they wanted to do is we were able to get an interface where uh, uh, a radiologist could, uh, work in the PAC system, but then also have EPIC show up at the same time. You have the ehr. This, um, is before Radiant, which is the EPIC radiology, uh, system. Uh, this is back before that when that was first being developed. We were able to have the physicians to have that, the radiologist to have that right in front of them. And that was a keynote presentation at the rsna because they hadn't been done before with a non epic, uh, product. And we were able to, the tech folks were able to work that out. And from a physician satisfaction perspective, it was a grand slam. And you know, that was just so meaningful to have that. And actually the first time we did it was how did we have. And um, I saw this in an old email, an archived email, when we had the bio biomedical device integration with our monitoring system with epic. So a nurse didn't have to write in the vital signs or type in the vital signs. They just pushed a button and the monitor would send the data into epic. I mean, that was, you know, and my wife's a nurse that took a load off, uh, and let them do more things to support the patient or even take care of themselves because it's such a stressful job. So, yeah, I mean, um, that was pretty cool.

Speaker B: Are there ways that you would challenge the current healthcare supply chain leaders, uh, to engage more with patient safety, both at the, I don't know, procedural hospital level, as well as, you know, all the way through kind of population health and the way that that's supply chain can impact that.

Speaker A: Back in the day, we leveraged the whole, uh, cybersecurity component because that's patient safety. And if supply chain isn't involved in making sure that we meet all the requirements of cybersecurity, we're not doing our job. That's like, we're not monitoring continuity supply. We have to monitor continuity of cybersecurity too, because it's our job, uh, to manage that supplier relationship and the suppliers beyond that. In fact, back in 20, I want to say 2016, I was fortunate enough to work with our president at the time, Dr. Dave Mayer, who ran the MedStar, uh, safety institute and started it. Dr. Mayer and I presented at Gartner and talked about cybersecurity. And right then, that's when the WannaCry virus had hit the NHS and it showed where, if you didn't have Everything ticked and tied with your suppliers. There was a risk that was there. So that's critical and we have to continue to do that. That risk is there. You see data breaches on Resolute. You see data, look at the change healthcare issue that occurred. Supply chain, we had to get involved in that, to work with the suppliers to make sure that they were, you know, were they okay or were they at risk.

Speaker B: Yeah. Well, thank you for all your support of patient safety. Uh, that's been a really cool uh, chapter of your life and uh, appreciate all the, all the support there. Uh, you know, maybe just a couple last questions. One about uh, the untouchable areas of supply chain historically, uh, sacred areas. Um, you know, how do you see that uh, being addressed in the future? Uh, what would you say to the industry and our audience about going after those untouchable areas of supply chain?

Speaker A: Not necessarily untouchable. They were not looked at. So maybe not. They were. It was opaque. There was a spend there. But as our uh, ERP systems and our financial systems, there's more transparency there and some of the ancillary, uh, analysis systems that are out there, you see spend that we never really uh, touched or never really. Our end users worked with the best that they could with their supplier relationships that they had. But we had no comparative, uh, opportunity, if you will, to see where we stood. But over the last three to four years there has been, uh, pursuit of the non clinical spend areas. And I don't necessarily we were brought up sacred cows make the best hamburger. But, but you know, it just wasn't something that supply chain got involved with. Whether it was in, you know, HR spend, uh, it was in contingent uh, labor, uh, facilities. But now if, you know, watching LinkedIn and looking at all the things that the group purchasing organizations are doing, special organizations like Logic Source and other components of uh, folks that are out there, they're bringing that real world aspect into the healthcare system to really take a look at how we're managing that spend. And in some cases it's managed very well. In other cases it's like it's never been looked at because it's like, yeah, it's 100,000 bucks a year. Well that 100,000 is very important when you're not making your numbers. And um, if it's 110 of a million, so you got to put eyes on it. And I think with, with some of the tools, the AI tools, the analysis tools that are out there now, if that gives us time to go look at the spend in these other non uh, clinical areas or spend where supply chain really didn't get involved on. We get involved now. And that's why I like the reporting structure into the cfo, because you get to learn where these other spend structures are. Um, but you become tight with the GL and see where that spend is, whether it's in contingent labor. And we're not the experts in that, but we facilitate and we support and look for the best processes to uh, work that spend. So it's fair. We're not, you know, and fairness is there that companies have to make money to survive and we have to have a margin so we can take care of patients. And I think it's very important, um, for us to continue, uh, and don't close our eyes to uh, a spend that is there. There's also, you have to look at local geography, local availability, uh, where you stand and make sure that you can have continuity. The lowest cost always isn't the best cost. And um, you have to make sure what's the best fit for your organization. And again, what's fair and what gives us continuity of service is critical.

Speaker B: Yeah, no, well, just super well stated, right. That area of spend is 40% of supply chain and uh, tends not to have great governance over it. And all the variability that you talk to around service, but that's where that

Speaker A: Venn diagram comes in, is that there's the real world industry saw that where they can help and you know, it takes time. It's governance, it's culture. And some organizations can go faster and um, but the, the whole, uh, concept is totally valid. And if you're not, if you don't look at it and don't try it, you're not doing your job. So that's all I have to say about that. So.

Speaker B: No, appreciate it. Well, you know, we're coming to the end of our time. Uh, really appreciate all that you've shared. Um, are there any parting thoughts that you'd have if you were, if you were starting up in uh, a healthcare supply chain leadership role, uh, at a provider today? Is there anything you'd do different or advice that you'd give to our audience

Speaker A: for the leaders that are there today? Embrace your staff. Make sure that they have the tools and equipment to do their job and listen to them. Not m, hear them, but listen to them and make sure that the decisions that are made are analyzed with ground truth and accurate data. Because if you don't have that, then it's just, you're just know, shooting at it. And may you're doing ready, ready, fire, aim versus ready, aim, fire. And sometimes you have to do that. But um, you know there, there is an emotional component when you're tying into this. But the other thing is is that make sure that there's flexibility with what your folks are doing and what they can do. Don't pigeonhole them into one, one slot because sooner or later technology is going to take that slot. But if they can build their skill sets to do other things and help the organization, that's when you're a uh, strong leader. That's my uh, perspective.

Speaker B: Amazing. Uh, and with that Charlie thank you for being here uh, and to our audience, uh, thank you for uh, your continued participation uh and feedback uh on the podcast that we've been doing uh, on behalf of Smarter Sourcing Healthcare. Uh, I'm your host Eric O'Daffer. Uh, and uh, I hope you all have a great day.

Speaker A: Thank you Eric.