Children’s hospitals and health systems continue to invest in the well-being of their communities in new and tried-and-true ways. For more than 15 years, Cleveland Clinic has done this by prioritizing the use of diverse and local suppliers within its Cleveland, Ohio, community.
“We think of ourselves as an anchor institution. We’re a major employer, and as a provider of health services, we’re responsible to help make this the healthiest community we can,” said Steve Downey, chief of supply chain and support services at Cleveland Clinic, the parent system of Cleveland Clinic Children's. “Having a diverse group of suppliers is part of that.”
The health system’s strategy focuses on increasing money spent with businesses that are at least 51% owned and operated by minorities, women, veterans, or members of the LGBTQ community. It also seeks out suppliers in Historically Underutilized Business Zones (HUBZones) — areas certified by the government as distressed and underused for federal contracting.
Along with focusing on using diverse suppliers, Cleveland Clinic Children’s has been more intentional about its diverse supplier strategy through a variety of programs:
- Evergreen Cooperative. The Cleveland-area initiative aims to “revitalize low-to-medium income neighborhoods through employee ownership.” Cleveland Clinic contracted with the Evergreen Cooperative Laundry company in 2018 to service the 19 million pounds of laundry it uses annually, adding 100 jobs in the community.
- Diversity Equity Inclusion (DEI) Supplier Accelerator. Cleveland Clinic partnered with University Hospitals in 2022 to launch this business development mentorship program to assist local businesses owned by women, veterans, minorities, and members of the LGBTQ community. Entrepreneurs selected to participate receive business development coaching and insight into the corporate sourcing process, access to leadership from both health systems, networking opportunities, a review of their business, and $10,000 upon completion of the six-month program.
- Healthcare Anchor Network (HAN). In 2020, Cleveland Clinic joined HAN, which comprises more than 70 health care organizations around the country seeking to address economic and racial inequities that contribute to poor health conditions in their communities. Participating institutions strive to effect change through more inclusive standards in their hiring, purchasing, and investing practices, including signing the organization’s Impact Purchasing Commitment (IPC). It includes a pledge to increase spending with minority and women-owned businesses by at least $1 billion collectively over five years.
Through these and other efforts, Cleveland Clinic has seen their diverse supplier spend rise dramatically. When the health system joined HAN in 2020, it committed to doubling its diverse spend from $80 million to $160 million by 2025. It achieved that goal three years early, recording more than $175 million in diverse supplier spend in 2022 — a Cleveland Clinic record. All told, the health system has spent more than $1.3 billion on products and services from certified diverse suppliers since 2010.
The importance of secondary suppliers
An important aspect of Cleveland Clinic’s progress is wielding its influence to promote diverse supplier practices among its primary vendors, known as Tier I suppliers. Tier II suppliers — those who provide goods or services to Tier 1 — accounted for nearly 40% of Cleveland Clinic’s record 2022 diverse supplier number.
“We created a requirement that the diversity clause go into all our standard vendor contracts. It’s not an add-on, it’s a requirement to move forward,” Downey said.
Downey added that it’s crucial to establish the data infrastructure with Tier I suppliers to accurately track and record diverse spending numbers.
Another key is to harness the power of shared knowledge. This not only goes for leveraging best practices from other health care institutions — such as Cleveland Clinic’s collaboration in HAN — but also by making introductions among vendors.
“We’ve created this ecosystem of influence where some of our suppliers are helping us train and develop other suppliers. They can relate to each other better and share their experiences,” said Berlon Hamilton, the system’s director of supplier diversity.
Getting started
The Cleveland Clinic supplier diversity team acknowledged it may be daunting to expect comparable results for those early in their supplier diversification journey — they’ve been building to this point for 15 years. Their advice: just do it.
“Sure, the best time to have planted a tree was 15 years ago, but the next best time is now,” Downey said. “Take the first step. Start tracking it, collecting the data, and figuring out who your partners can be in your community.”
