Across the country, healthcare institutions are recognizing that they can creatively leverage their supply chains to address the upstream economic and environmental conditions that have the greatest impact on the health of local residents. In doing so, they can create family-supporting local jobs and build community wealth. This toolkit on local and diverse purchasing showcases examples of how hospitals and health systems are reevaluating their roles as their community’s largest purchasers, understanding that a thriving local economy is fundamental to a healthy community.
The Business Impact Case
Inclusive, local purchasing contributes to better institutional and community outcomes. Incorporating these priorities into your institution’s operations can:
- Address supply chain needs and gaps
- Create a more efficient and resilient supply chain
- Generate a thriving local business community
- Improve the quality of local jobs
- Increase community impact by targeting underserved neighborhoods
- Leverage existing philanthropic and public funds
- Align sustainability, diversity and inclusion, and community benefit priorities
- Reduce unnecessary and costly utilization of medical services
- Strengthen your reputation as the provider of choice for your community
The sourcing of goods, services, and food that your hospital or health system does every day, when aligned with your mission, can help build local wealth in the communities you serve. Local spending has a multiplier effect that can increase local economic activity beyond that one purchase. For instance, dollars spent at independent local businesses will recirculate in the community at a greater rate than money spent at national chains.1American Independent Business Alliance, “The Multiplier Effect of Local Independent Businesses,” accessed July 7, 2016, www.amiba.net/resources/multiplier-effect/.)) By supporting diverse and locally owned vendors and helping to incubate new community enterprises to fill supply chain gaps, hospital and health systems like yours can leverage existing resources to drive local economic growth and build a culture of health in their communities.
This toolkit can help your institution get started. It highlights the concrete steps health systems are taking to shift policies to support local and diverse businesses and institutionalize and build upon these practices going forward. It focuses on two primary strategies for increasing local and diverse purchasing: creating connections and building capacity.
“Connection strategies” focus on connecting existing local and diverse vendors to contracting opportunities within your institution. Often, traditional procurement practices create barriers for local and diverse vendors—even cost-competitive local and diverse vendors. Adjusting internal practices to facilitate connections with local vendors not only shifts procurement dollars in a way that fosters local employment, which in turn promotes community health, but it also grows these businesses over time, allowing for a more responsive and resilient supply chain.
“Capacity strategies” increase the ability of the local business community to meet health system supply chain needs—growing the capacity of existing businesses as well as helping to incubate new businesses. A capacity building approach helps address supply chain gaps, meet specific product needs, and improve the efficiency and resiliency of the supply chain. Capacity building initiatives often incorporate philanthropic or public funding, bringing additional financial resources to the table. Moreover, such business development efforts can incorporate important strategies to maximize impact through inclusive economic development. Specifically, they can create job opportunities for the populations that experience the greatest barriers to employment and cultivate wealth-building opportunities with employee ownership. Capacity strategies are most effective when employed in combination with internal policies that encourage connections with local vendors.
The Widening Gap
Economic and racial divides are driving health disparities across the country: