MODERN HEALTHCARE: Hello, Joan Archie. How are you doing?
JOAN ARCHIE: I’m real good. How are you doing?
MODERN HEALTHCARE: I am doing good. Thank you so much for making time for this. Thank you so much for being able to share your insight.
JOAN ARCHIE: You are so very welcome.
MODERN HEALTHCARE: You were a very big inspiration for me becoming a business owner when I was back at University Chicago Medicine. So, I have to thank you for that again.
JOAN ARCHIE: Thank you for your kind words.
MODERN HEALTHCARE: Let’s start with a couple of data points that kind of help tell us what’s going on in the landscape, and then we’ll get into questions. The first data point is that roughly 18.3% of U.S. businesses are minority-owned. Nearly 20% of U.S. businesses are women-owned. In 2019, the average annual revenue for women-owned businesses was $384,000. In that same year, the average annual revenue for male-owned businesses was over $752,000. So, a huge disparity there.
And in the U.S., healthcare and social assistance is one of the largest four sectors of businesses. Let’s start with the first question, just about you. You’ve been recognized as a real advocate for women-owned and minority-owned businesses. I’ve personally experienced that. How did you become so passionate about this? And why is this more of a mission for you than just a job?
JOAN ARCHIE: When I was in college, it was my intention to become a corporate executive. I was going to make a lot of money and I was going to retire early. As I moved down that road towards my goal, I worked for the Chicago Urban League. I intended to work there for about three months until I found another job more aligned with my career goals. While I was there I simply fell in love with the social justice and economic empowerment mission of the Urban League. And the three months I was going to stay lasted for nearly 25 years.
MODERN HEALTHCARE: Wow. It sounds like you see business opportunity as an avenue for social justice, right?
JOAN ARCHIE: I do see that.
MODERN HEALTHCARE: So, vendor diversity tends to be kind of a blind spot for hospitals. I actually had a conversation with a friend of mine who’s a Diversity, Equity, and Inclusion officer at a health insurance company. And he mentioned that they don’t have any businesses on their list of vendors that are black-owned. Not one. I’m curious to hear, what are some of the reasons or excuses you hear from health systems who are not doing well in this area?
JOAN ARCHIE: These hospitals often say that their core focus is on the provision of quality healthcare. They believe that initiating a robust supplier diversity program will detract from that focus. They believe it is too difficult to identify diverse suppliers that can support their unique needs at a competitive price. Many of these hospitals also belong to purchasing collaboratives that source the goods that they need, and that allows them to focus on their core mission. Many of the hospitals that you reference simply don’t understand that it takes more than medicine to build healthy communities.
And then there’s another factor, too, with hospitals. Hospitals have very, very unique levels and areas of spend. For example, hospitals purchase MRI machines, imaging machines. They purchase a wide array of clinical hardware and medical equipment, and there really isn’t a minority, a woman-owned company — there are not many, if any, in those particular spaces. So, a hospital has to really look harder at their total and overall operation to see what areas of their spend can they focus on, and what areas and departments generating the spend can they work with to include certified minority and women-owned firms.
MODERN HEALTHCARE: And that’s a common reason that we hear in other spaces, too. It’s too hard to find them. But it sounds like if they’re part of purchasing collaboratives, it’s not just the hospitals that need to be looking for these businesses. The purchasing collaboratives need to put that effort in too, to make sure they are offering a diverse menu of potential suppliers.
JOAN ARCHIE: And I see some of them are. Some of them in — I’ll say over the past five or six years — they have been looking for diverse firms that add to the collaborative. But not enough.
MODERN HEALTHCARE: So, you’ve mentioned that business opportunity is a social justice issue, right?
JOAN ARCHIE: Right.
MODERN HEALTHCARE: What are your thoughts on what could happen to local economic development if large purchasers like a health system included more diverse vendors and suppliers?
JOAN ARCHIE: Well, according to the Bureau of Labor Statistics — and I was looking at this last night — hospitals spend over $852 billion yearly on goods and services. And they generate greater than $2.9 trillion of economic activity. Now because not-for-profit hospitals are tax-exempt, surrounding communities might view them as disconnected from small businesses and community development. However, the missions and the bottom line of hospitals actually tie them to their respective communities.
More than other industries, the hospital industry has the ability and incentive to leverage resources for total community revitalization. Diverse vendors and suppliers represent one element of the resources hospitals could focus on and use to focus local economic development. And there are some hospitals in the Chicagoland area that have recognized that. And they are doing a lot to really create change and to maintain that change in the community in which the hospitals reside.
MODERN HEALTHCARE: I had a similar conversation with Anthony Ashby. He was the guest on a recent podcast as well, and he mentioned that if your Diversity, Equity, and Inclusion efforts include hiring more senior leaders, that’s great. But you’ve only helped that one person. When you bring a business on and you help that business grow by allowing them to have contracts with you, you could potentially be helping dozens of families.
JOAN ARCHIE: You are helping dozens of families. You are truly uplifting the community. That is a very, very true statement.
MODERN HEALTHCARE: Let’s say you’re an aspiring leader. Let’s say you notice there’s no diverse vendors on the roster. How would you advise an aspiring leader to approach their C-suite in a way that will actually make them take action?
JOAN ARCHIE: In the C-suite, they’re looking for a benefit to the company. So, I think at first, articulate the business case for supplier diversity. The business case would outline the benefits the hospital can derive from developing a supplier diversity program. And that business case should be rooted in the tangibles of the numbers. So, then you ask, well what are some of the tangible benefits that would accrue to a hospital for developing an aggressive supplier diversity program? Well, one key benefit would be cost savings. The cost of doing business with diverse suppliers can be less, and that creates a savings within the hospital supply chain.
I think that that person should also explain the demographic shifts that the country is experiencing now. Because it’s predicted that by mid-century, the nation’s majority population is expected to comprise racial and ethnic minority groups. And when diverse suppliers are supported, economic activity is generated in the communities where the hospital’s patients and employees live.
And they should also highlight the metrics. Discuss metrics, such as total dollars supported by diverse procurement; documented successful procurement engagements; and the impact of second-tier spend reporting because this spend tends to reach the smaller, more diverse suppliers. Make a data-driven case. Show the benefit to the hospital — the tangible benefits. And then you can talk about some of the intangible benefits.
MODERN HEALTHCARE: Absolutely. Let’s talk a little bit about your role and your track record at University of Chicago Medicine. So, you’ve brought many diverse vendors to the table to be considered for contracts. Can you share any success stories that are top of mind for you that have not only helped the business, but also had that added benefit of community development?
JOAN ARCHIE: Well, over the past almost 15 years, the diversity effort at UChicago Medicine and at the university has resulted in a number of professional services, contractors, and suppliers joining the ranks of our valued business partners. As a result of opportunity the firms received on this campus, some have been able to increase their number of employees. And they have been successful in competing and winning work at other hospitals and at other firms — and that’s what we want.
They achieve both an increase in technical capacity as well as economic benefit through their work here. One firm, after working here for about four years — it was a new firm — was able to offer a modest scholarship for two high school students pursuing a degree in mechanical engineering after high school. And we were very, very proud of that.
MODERN HEALTHCARE: That’s amazing. You mentioned one of the common reasons is, well we can’t find them. It’s too hard to find folks. And you’re right — in some sectors, there may not be a large representation.
JOAN ARCHIE: Right. There may not be minority- or women-owned businesses in that space, unfortunately.
MODERN HEALTHCARE: Right. How do you recommend health systems go about finding diverse vendors, especially if you’re not used to interacting with people who don’t look like you?
JOAN ARCHIE: I think that they need to link with organizations, such as the Minority Supplier Development Council. They also need to just scroll through the city of Chicago’s MWBE (Minority/Women-owned Business Enterprises) directory. Cook County has a MWBE directory that they can look at. And they should also really look for the various trade organizations and associations because a lot of them focus on particular segments.
There’s a minority engineering association and there are a lot of minority associations there. And you can find, possibly, the companies that you’re looking for. They should also network with similar firms, asking them to share the names of minority firms that they may be utilizing. So, they have to spend some time really prospecting. Where are these firms? Who are they? Who should I talk to?
MODERN HEALTHCARE: And the take-home message there is it has to be an intentional effort.
JOAN ARCHIE: It has to be an intentional effort. It’s very easy to say, I don’t know where the companies are. And I have heard that through my career. And I really have to stop myself from laughing, but the answer is, “You don’t know any? Well, then I can introduce you to some.”
MODERN HEALTHCARE: Just giving more advice to aspiring leaders who want to make change in this area. What would you say — if you had to nail down the top three corrective actions that they should pursue to address a lack of vendor diversity, what would they be?
JOAN ARCHIE: Well, I would suggest, even if their company doesn’t have a formal business diversity initiative, they should make every effort to use minority vendors and suppliers when they are available and cost-competitive. Because the company may not have a formal plan, but if there are dollars that they control through the procurement effort, then they should make every effort to identify and use these minority vendors and suppliers.
They should also speak with other leaders in their organization and gain their support in considering minority vendors and suppliers when they have a procurement. Speak to others in their professional network about the need to include minority vendors and suppliers in their procurement efforts.
MODERN HEALTHCARE: And it seems like there are creative ways to do this. If you have a vendor that you love to work with — they’re not women-owned, they’re not minority-owned — that’s fine. But if it’s a large enough contract, could the health system leader say, “Look, we want to work with you, but you have to subcontract some portion of this to a women-owned or minority-owned firm”?
JOAN ARCHIE: When the hospital has a formalized program, they’ve established utilization goals. When they bid that opportunity out — included in the bidding materials for the request for proposal — they are asking that there be a subcontract relationship with a diverse firm. Some of the procurements are such that having two firms working in the same space wouldn’t work for a number of reasons.
Then, the hospital should require that the team working on their project have diverse people. And that gives individuals a chance to work on a hospital-related project, work on a large project. You know, in addition to economic benefit, they gain the technical capacity for working on a large project that if that requirement were not in place, they wouldn’t have the opportunity to work on a project such as that.
MODERN HEALTHCARE: Thank you so much. What do you do with all your awards? Do you have a big wall?
JOAN ARCHIE: I’m looking at them now. There are some file cabinets above my head — all the awards are on top. So, I can look at them when I feel discouraged. Anyone coming in my office can look at them.
MODERN HEALTHCARE: That’s awesome. Thank you so much for your time.
JOAN ARCHIE: You are so very welcome.
OUTRO COMMENTS: Thank you, Joan Archie, for that insight on vendor diversity in health systems. Hospitals and health organizations have the ability to make significant economic change, and a major part of this is through choosing diverse vendors.
Again, I’m your host, Kadesha Smith, CEO of CareContent. We help health systems reach their target audiences through digital marketing that focuses on the right content.
Look for more episodes of Next Up at modernhealthcare.com/podcasts, or subscribe at Apple Podcasts, Google Podcasts, or your preferred podcatcher. Thank you again for listening.