The State of The Medical Supply Industry with Cindy Juhas
Cindy Juhas
Welcome to Champions of Care, a Champion Chair podcast, and your go-to resource for industry-leading insights regarding medical seating and their applications.
Daniel Litwin:Hello, everyone. Welcome to Champions of Care brought to you by Champion Chair. I'm your host Daniel Litwin, the Voice of B2B and folks thank you so much for joining us on another episode of Champion Chair's podcast. Make sure that you're subscribing on Apple Podcasts and Spotify. You can find us by looking up either Champion Chair or the podcast name Champions of Care, give us a subscription and make sure you're leaving a rating and a comment on the different platforms where you listen to your podcast content. And make sure you're also going to our website to find more information about Champion Chair and some more info on our content, including podcasts, blogs, and video content. You can find us at championchair.com.
Daniel Litwin:On today's episode of the podcast, we're taking a detailed look at changes in logistics, strategy and business relationships for medical equipment suppliers. With COVID-19 on top of several long-term industry shifts in how to build those relationships with your buyers and what a future-focused business model looks like for a medical equipment supplier, there are many dynamics influencing this conversation. And so we wanted to pull these insights from someone who's been in the industry for a while, really understands the ins and outs of what it is to supply this equipment. And build those relationships with buyers and adapt the solutions and the services to the buyers, especially in a time like now with a raging pandemic.
Daniel Litwin:So we are getting some fabulous insights today from Cindy Juhas. She's Chief Strategy Officer for CME Corp. They are a comprehensive medical equipment and healthcare services company that helps medical facilities nationwide to launch renovate and expand seamlessly.
Daniel Litwin:Cindy has also served on five different boards of directors, including the Health Industry Distributors Association, the HIDA Education Foundation and Professional Women in Healthcare. Cindy was also inducted into the Medical Industry Hall of Fame in 2012, which was the first for a woman. So we are in the presence of greatness. Cindy Juhas, great to have you on. How are you doing today?
Cindy Juhas:Thank you, Daniel. It's great to be here with you.
Daniel Litwin:Look, even those of us who are blessed with greatness still have to deal with power washing outside of their neighbor's house. So it's okay. Everyone's working from home and everyone's making it work, but we're just excited to have you on the podcast today. How have you been holding up during this crazy time?
Cindy Juhas:Well, it's certainly a change, right? For all of us. And working from home has been not bad really. I miss the interaction with my coworkers, of course, but you don't have to comb your hair. You don't have to take a shower. You don't even have to get dressed if you don't want to.
Daniel Litwin:Very true, very true. Podcasts in pajamas, it's a new show I'm looking to launch. Yeah. I love that. Well,thank you again for joining us and I'm glad that you are holding up well and making it work. I think for a lot of industries, we're going to be going back to the office soon. So there's some dynamics to consider there.
Daniel Litwin:Within your industry, just before we get into the specifics of today's topic and conversation, how has remote work fared? Is it something that is doable or that the industry was able to adapt to well? What was that dynamic like for you?
Cindy Juhas:I think that for the most part, we did a great job at CME and our manufacturers have certainly been doing a great job also. Unfortunately, being in distribution and equipment distribution especially during the pandemic, we had to have a certain amount of our crew still work at the warehouse. Because we're delivering lots of products to people in need and that still has to happen. And so do our manufacturers have to ship them to us.
Cindy Juhas:So a lot of our administrative type people and even customer service, we're all working from home. But our frontline logistics guys and installers and warehouse people, they're all still working. And a lot of the managers that manage those groups they've been having to work also. We have a plan in place for social distancing and especially when the guys go to our customers facilities and we've been getting them trained and equipped with everything they need even with the shortages of PPE as we've been seeing.
Daniel Litwin:Yeah. It's definitely interesting to see how different aspects of even just one industry how they've shifted and adapted work during this time. And I'm sure you've had to retain a lot of relationships with your buyers during this time. And COVID-19 has also amplified. A lot of the trending dynamics that healthcare suppliers have already been dealing with in the industry, which we'll get into here in a little bit.
Daniel Litwin:So yeah, always interesting to hear perspectives on how people are adapting. So let's go ahead and get into the main topic. Again, we're breaking down changes in logistics, strategy and business relationships for medical equipment suppliers kind of at a broad level. And there are several different main points I want to run by you. Let's just go ahead and start here.
Daniel Litwin:I know that just in general customers in the medical field, your clients that you source to are really looking to cut operational costs across the board, even beyond just the fact that there is a pandemic happening right now. And this has been a trend for a while. I wanted to unpack that trend, get some context on why operational costs are wanting to be cut or needed to be cut. So yeah. Could you give us some content?
Cindy Juhas:I think it all started really when the ACA was enacted a little over 10 years ago. And the ACA really focused on was actually, they tied it to reimbursements for Medicare. So large facilities, medical facilities would get more reimbursement if they could demonstrate better patient outcomes, better patient satisfaction, improved patient satisfaction, and also cutting costs.
Cindy Juhas:So what that kind of spurred in the industry was number one, the facilities focusing on those three pillars and then also in conjunction with that, the industry started to collapse on each other. In other words, there was a lot of consolidation going on, not only with the customers, but in distribution and manufacturing. So in order to cut costs and become more efficient, many customers consolidated. So what you had was larger facilities, larger systems and thinking about, "Okay, where can we cut operational costs?"
Cindy Juhas:And in a lot of cases, it happened in those areas that supported equipment, because equipment doesn't always need people, right? You get a new piece of equipment, you need to receive it. You need to unpack it. You have to assemble it. You have to check it out with your biomedical guys and then you have to place it where it's supposed to go. So again, as these healthcare systems started to broaden their reach into the community and get a lot more non-acute facilities out there, they didn't have the people to really deliver that equipment in an efficient and streamlined fashion.
Cindy Juhas:And these people weren't busy all the time. So that's where we started seeing the cuts in the operations with facilities people and biomed people. They didn't need as many and they needed to supplement those services outside of the four walls of the hospital, which is kind of where we came in because we have all those types services available to the end users.
Daniel Litwin:If the reasoning for wanting to cut down on operational costs is that operational costs now are too high for healthcare orgs. What are the impacts on crafting budgets, on a hospital's bottom line, or just on day-to-day practices of having overspending in your operational costs? What are the effects of not addressing that issue?
Cindy Juhas:If they don't address it, then again, the reimbursements that they get from Medicare, which is a good percentage of what they make is going to be affected negatively. So they want to maximize their reimbursements, which means they do have to cut operational costs. And hospitals starting running more like businesses after ACA was enacted. They were looking at their bottom lines.
Cindy Juhas:It used to be the hospitals just spent and they didn't necessarily care, but because now it's affecting the money they make, they have to act more like businesses. So we've seen systems just changed completely into, "Okay, we've got to figure out ways to make our operations as streamlined as possible, as efficient as possible." And the ones that have are the leading healthcare systems in the country and the ones that haven't are closing or getting bought.
Cindy Juhas:And that's the reality is that the consolidation has been ramping up the last few years because of those very factors that I just talked about. If you can't figure out how to make money in this day and age, you have to be bought. And the bigger you are, the more economies of scale you get. So again, there's a study that came out that I read that said by next year, by 2021, that 50% of the healthcare industry is going to be locked up in the top 50 IDNs across the country. So the bigger are getting bigger and reaching out more to the community, taking that whole population health to heart.
Cindy Juhas:Again, if you are wanting to improve outcomes and patient satisfaction, you've got to be able to keep your patient with you from birth til death. And so a lot of systems are continuing to expand out into the non-acute side of the world and even into post-acute to make sure that they keep their patients with them and can monitor and kind of make sure that their patients are getting the best care and getting the best outcomes.
Daniel Litwin:So now let's link that with actually sourcing medical equipment. What are the main pieces of medical equipment that you see your clients and buyers sourcing today and why? And then how does a sourcing that equipment intersect with wanting to cut operational costs, if at all?
Cindy Juhas:As far as the type of equipment, it's all across the board and what we've been seeing mostly the last few years in the growth areas is, again, as I was saying earlier, because healthcare systems are expanding their reach into the communities. You're looking at an increase in sales of items that are mostly suited to a clinic or a non-acute setting. So lots of exam tables and recliners and anything that you would use in a non-acute setting has been increasing. And the building, the construction of those facilities has increased.
Cindy Juhas:I would say we do a lot with new construction and the new construction has definitely. It used to be new hospitals and there's still hospitals being built, but now we're seeing the move towards lots more non- acute type facilities, clinics offsite type equipment. So you're looking at anything, you're walking into your doctor's office and you sit in an exam room and anything in that exam room, they will be buying.
Cindy Juhas:And so if you look at equipment in general, equipment, the purchases of equipment are small compared to the consumables that a customer uses, correct? I mean it's probably only maybe 10% of their total spend in any year. But equipment has a lot of costs involved with it. As I was saying earlier and a lot of costs that the hospital doesn't always think about, it's the shipping and what happens when it gets to your dock, how do you get it? How do you uncrate it? Where do you put the trash? Do you have somebody to put it together? You have somebody to deliver it. So all those costs are kind of just compounding.
Cindy Juhas:And what has happened over the last few years is that hospitals are looking at those costs and saying, "How can we reduce them?" And again, one of the things CME does is a lot of those logistics that a hospital used to do, but it's too costly for them to do it now. And again, they want to streamline the process, get the product in and working faster. I can remember going to a hospital up in Northern California and there was an exam table sitting on the dock and I asked the warehouse guy how long it had been there. And it had been sitting there for a month because he had nobody to put it together and take it to the facility that was on the campus, but in two buildings over.
Cindy Juhas:So again, they're looking for ways to cut those costs. And so let's talk COVID now. COVID, it just made the equipment supply chain crazy. Let's just put it that way. All of a sudden, all these hospitals and healthcare facilities needed all of these temporary pieces of equipment to outfit these temporary triage areas, temporary ICUs, temporary labs, and the products that are involved in that part of the supply chain, there weren't a lot in the supply chain.
Cindy Juhas:I mean, we all have some stuff sitting around, but there's not a whole lot. Because equipment is you build it to demand kind of thing. So the recliners, I know Champion went crazy with the amount of orders they got for recliners, stretchers, those little cots that they put together, thermometers face shields, IV poles. All of that stuff. The demand was so great that basically we couldn't meet the demand. No one could. Everybody was back ordered. We were sourcing from all over the place. We ended up sourcing thermometers from 15 different manufacturers. I think it's up at 21 now and we're still on back order.
Cindy Juhas:So it really made everybody a little nuts. And what we're seeing now though, is that hospitals are going back and they're revisiting their pandemic response plans. And I think that they're going to do more to get the equipment bought and more readily available in case this happens again. Because we were obviously all caught off guard, the entire supply chain. So again, all of this does involve logistics and operational costs. And again, the hospitals are all looking at how can we streamline and what can we do to keep those costs down, but also be able to expand when they need to?
Daniel Litwin:Thank you so much for all that context. That was great. So you've been in healthcare now or healthcare distribution for 40 years. And you've also been the owner-
Cindy Juhas:Are you suppose to say that, Daniel? Really?
Daniel Litwin:Well, hey, look, we need the context here. You've been an owner of an equipment-focused distributor for 22 years. You really seen the evolution of the industry and have been able to adapt the solutions and services that are provided as well as just observe how the industry has evolved during that time. So I want to draw from some of that experience.
Daniel Litwin:How have you approached listening and adapting to the needs of your equipment buyers in those last several, several years of work that you've been in the industry? And on top of that, what have you come to learn as tips and strategy for evolving products and services to match customers without departing too far from a tried and true catalog or business model that already works for the time?
Cindy Juhas:What we've done over the years especially in equipment, first of all, most distributors out there are full service distributors that sell consumables and equipment. So they haven't focused on the sector like we have. I think we're the only national company that really just focuses on equipment. And what we've done over the years is just what you just said, listen to our customers. What do they need?
Cindy Juhas:And I can remember going into, I think they're the largest IDN in the country. And they had their own warehouse full of equipment. They had a full staff and they came to me one day and said, "We want to get rid of our warehouses." They had two, one in Southern California, one in Northern. And we took over all of those operations. We brought all of the equipment into our facilities. We did all the prep work. We did all the assembly. We delivered when they needed. Took away the trash.
Cindy Juhas:All that stuff that they used to maintain and distribution is not cheap, it's expensive. So they got to repurpose those people. They got to streamline the process and stick to what they do best, which is healthcare. So that along within the next phase as people started to really wanting to cut expenses and look for other ways to augment services within their facilities, there was a shortage of biomed techs.
Cindy Juhas:First of all, there was a shortage anyway, but the fact that now they have all these offsites and their team of biomeds can't get out to the facilities, they're outside of the four walls of the hospital. They're very busy within those four walls. So we've also then added on and really multiplied our service techs across the country. We have over 80 people across the country that can service any equipment anywhere and help augment their biomed teams.
Cindy Juhas:So again, I think listening to the customers, what they need and talking to them now at this point they're saying, "Okay, now we need to work on our emergency preparedness plan." And again, we're looking to help them in that area. One of the things that we've seen pop up is that there's no place for them to store this extra equipment that they needed for COVID. So we now have a program where we pick up the products, store it in our warehouse and when they need it again, we have biomed guys that'll check it out, make sure it works and then deliver it back when they need it.
Cindy Juhas:So again, I think it's all about listening to the customer and saying, "Okay, what's troubling you? What do you need to do and how can we help?" And because we focus on equipment, we can be very specific about what we can do in that very small part of their business, but very important when it comes to something like this, a pandemic.
Daniel Litwin:With the pandemic I'm sure the equipment needed in the short-term to respond, especially in some of the cities and states where COVID has been raging the hardest has shifted some of those dynamics for what buyers are asking for, how you strategize around sourcing and delivering those products. And I know that CME Corp has adapted during this time. So I want to learn a little bit more about that as well.
Daniel Litwin:Let's start with here. Are medical equipment buyers asking for any specific changes in the business relationships with their suppliers as of late needing more or unique services? And if so, what are they asking for? And how has that forcing some structural change for companies like CME Corp?
Daniel Litwin:I know there has been an addition of some direct to site delivery that CME Corp has added to its catalog of services. So if you want to add that into your answer for some context, I think that could help our audience understand.
Cindy Juhas:This is one of our premier services prior to COVID, but it really came into play during COVID and that is the direct to site delivery. And that goes back to what I was saying earlier, hospitals and facilities do not have the space to store any equipment. So if it's a new facility, a new addition, a renovation, if they need a bunch of new equipment, they have no place to store it. So again, we bring it into our warehouses. We have 30+ service centers across the country and we store it not for very long. We really don't like to store it because it costs money, but we bring it in, we prep it, we assemble it, we stage it and we deliver it right to where it's supposed to go in the facility when they need it.
Cindy Juhas:So we have been doing that during COVID too, and it's been a little crazy. We did part of the Javits Center. We actually outfitted the state of Rhode Island and Rhode Island had basically a three-week turnaround time from the time they started to the time they needed their new 1200-bed facilities outfitted. And we brought everything in, we deliver it over a three-day weekend, and everything was in place on their due date to take in the COVID patients.
Cindy Juhas:So again, we adapt according to what the customer needs and we will work weekends. We work early in the morning, we work after hours. If we're delivering to a facility that is a working facility so that we don't impede any patient flow.
Daniel Litwin:How do you see something like direct to service delivery growing as a solution for equipment suppliers? And in launching that program, what were some inhibitors for the logistics of delivery on site that might've been obstacles to forming that program that you've learned from and might recommend to other equipment suppliers out there looking to launch something similar, especially during COVID-19?
Cindy Juhas:I don't want anybody else to do it.
Daniel Litwin:That's true. You got to keep that for proprietary. Well, if there's any advice you can give without showing your whole hand that might be helpful.
Cindy Juhas:Well, the process has changed over the years. And one of the things we did over the last two years was automate the process. Delivering product for a new facility or even a facility already in place seems like it would be easy. "Okay. Yeah, sure. Just bring it on over," but it's not at all. And to do it the right way, which I think we try to do, and we improve it all the time. We needed a way to manage the project, so to speak. And so we developed a project management software program that kind of links into our ERP so that everything is in real-time.
Cindy Juhas:We can track a product from the time, let's say it's a new facility and we're getting or the hospital would have been getting a 100 orders from a 100 different manufacturers to outfit this new facility. The deliveries would come Helter Skelter, any time during the day, any day. There was no management of the process. And we decided to take that into our hands and really manage the process. So that we could make sure that the product comes to us when it needs to come to us, not too early. Because we don't want to be storing stuff and we don't want to charge the customer for storage.
Cindy Juhas:So we bring it in when it's needed. And so let's say we ordered something from Champion and Champion ships it, all of that is recorded in our project management system. The minute it's received in our warehouse, it also is loaded up to the project management system. And you have a real-time picture of where the equipment is from the time you order it from the manufacturers to the time it actually is delivered to the end user.
Cindy Juhas:We don't lose stuff. Nothing is damaged. And in a hospital, if they were doing it themselves, that's one of their biggest complaints is first of all, number one, they never had the space and they shouldn't be using a space that they could be seeing patients in revenue generating spaces for new equipment. So hey have no space. They have no process to kind of manage the POs and they certainly don't have the personnel to receive it and assemble it and all that stuff.
Cindy Juhas:We continue to fine tune that process. And really, again, if anybody's looking to do it, you really have to dedicate people to it. Because it's very important. One of the things that we learned about two years ago, three years ago as we expanded across the country, was that we had to have our own person at every single delivery. So we guarantee that any delivery is managed by us, not a third party warehouse person. We don't do any of that.
Cindy Juhas:Every time you get a delivery from CME, there is a CME person at that delivery to make sure it gets done in the right way. Adheres to our process that we've come up with that is best practices for us. It's one of the reasons that customers might buy it from us versus our competition. Even though we might not be the lowest price. Because we make sure all of those little details are taken care of and they know they can count on us to get the product there when they need it, how they need it.
Daniel Litwin:Like you were explaining, I think a really important part of why direct to site delivery is growing is because in the rest of our lives as just consumers, there has been a shift in the conveniences of our services. I think we've come to grow accustomed to our services evolving too. I mean, even necessarily our demands, but just to some standards that have been set on, "Hey, we can get you this piece of whatever. This food delivery or this package or something." First it was a week, now it's three days, now it's two days, now it's same day.
Daniel Litwin:So there is a bit of a culture change on what do our companies provide us and how do those services continue to grow and be more convenient for us, the consumer? I think that mentality makes its way to B2B services as well, even if the dynamics are very different and the kinds of services rendered are more complex.
Daniel Litwin:Now, I wonder, do you see COVID-19 as being the main factor, shrinking the window for wanting or needing these supplies and encouraging programs like direct to site delivery? Do you think is going to be the catalyst to really cement that or do you think it lines up more with my sentiment, which is that this is a sort of a natural progression of solutions and services across industry or both? What are your thoughts?
Cindy Juhas:I think that one of the things that came out of COVID is that the entire, as I said earlier, the entire pandemic response from the medical industry was not very good. I think that capacity is probably going to expand within manufacturers. And I think that I know us as a distributor, we're going to make sure that we have more choices and really focus on those manufacturers that do a lot of their manufacturing here in the U.S.
Cindy Juhas:So I think there's going to be that shift. I know you didn't talk about that in your question, but I think that's going to be part of this shift. And I also think that hospitals as a whole, as they get bigger, because I think this is going to continue to spur the consolidation that we already see. Because COVID has hit some hospital and hospital systems very hard where they're not being able to make any money.
Cindy Juhas:And even though there's some government bailout, there is also still going to be some hospitals that are going to probably look to sell. And so I think that it'll spur that consolidation. And again, as facilities and healthcare systems get bigger, they look for outsourcing certain parts of what they do because they just don't have the capacity to do it anymore. And it's less expensive for them to sometimes outsource. I k now that's been a big trend the last 10 years is that customers are more willing to outsource services that they know they don't do very well.
Cindy Juhas:And this direct to site delivery is one of those because they don't have the capacity or the people to be able to take a piece of equipment off the dock, get it prepared, put it together and get it to the right place like an outside company could. So that's where I mainly see the switch is more consolidation and looking to figure out the most expeditious and streamlined, and even less expensive way to do certain processes. Maybe outsourcing them instead of doing it themselves.
Daniel Litwin:All right, Cindy, that just about wraps up our conversation. I want to end on this note. How do you see these kinds of supply chain innovations like a direct to site delivery impacting the buyers? What is the benefit to the buyer beyond just the convenience? How does it domino effect into affecting budget, operational costs, quality of care, all of that good stuff? And do you see more buyers wanting to, I guess, find these services and capitalize on these services? Give us your breakdown and your thoughts on the future there.
Cindy Juhas:There's a real push towards outsourcing certain tasks within a healthcare system that they know is expensive for them, and they don't do very well. And again, a lot of it is around logistics and believe it or not, biomed services because it's harder and harder for them to maintain their own people and keep their own people. People are expensive. And again, with all the consolidation going on, that's where it's going is that people are going to continue to look for ways to make it easy for themselves.
Cindy Juhas:You said it, if you get someone else to do it and you trust them to do it the right way, you're going to rely on that service. I think that's going to be an important part going forward. You have to prove yourself and make sure you're doing it right and document it and give them a visibility into the processes and where their equipment is. Nobody likes to give up their equipment unless they know where it is. And so that's one of the things about our software program. They have visibility, they can see where it is.
Cindy Juhas:So I think as long as you provide those kinds of services and can help them streamline and even save money overall, again, because they're repurposing their own people to do things that are more important for them. And they need to make money and they need to streamline and they need to get stuff. Just take a new construction project. If a new construction project is delayed one day, a 20 doctor clinic, they're losing $125,000 in revenue. Because that's the average daily revenue a 20 doctor clinic can produce.
Cindy Juhas:So you want to make sure that kind of a new facility opens on time. You have to get people involved that will make that happen. And so any of those types of services that you can do to make sure you get the product there on time, reduce costs, streamline processes, increase their visibility. That's what they're looking for, that convenience, and also streamlining and saving operational costs. Very important.
Daniel Litwin:Cindy Juhas, thank you so much for joining us on the podcast and giving us this breakdown. I really appreciate it. Again, we've been chatting with Cindy Juhas, Chief Strategy Officer for CME Corp. Cindy, if folks want to find out more about CME Corp or some of your direct to site delivery services, where can they go?
Cindy Juhas:www. CME Corp, C-O-R-P.com
Daniel Litwin:Fantastic. Cindy, thanks again. And looking forward to chatting soon.
Cindy Juhas:Thank you, Dan.
Daniel Litwin:And thank you everyone for listening to today's episode of Champions of Care, a Champion Chair podcast. If you like what you heard and want to listen to previous episodes, make sure you're going to our website at championchair.com not only for previous episodes and upcoming episodes of the podcast, but plenty of blog, article and video content as well as information on our solutions and services.
Daniel Litwin:But you can also find this podcast like I said, on Apple Podcasts and Spotify. Make sure you hit that subscribe button and leave a rating and a comment wherever you're listening to your podcast content. I'm your host Daniel Litwin, the Voice of B2B. Stay safe out there. Until next time.