Supplier Diversity:
 How Small & Diverse Companies Impact & Improve Communities

Haberstroh

To celebrate its 35th year in business, O’Fallon, Missouri-based Phoenix Textile Corporation is pulling out all the stops. But in lieu of champagne toasts or team trips to an exotic location, President Linda Haberstroh had something else in mind—ramping up the company’s commitment to community support.

Phoenix’s employees have helped fund and build a Habitat for Humanity house, delivered Meals on Wheels to seniors, and participated in a cycling challenge to raise money for cancer research at Siteman Cancer Center and Siteman Kids, benefitting St. Louis Children’s Hospital.

Phoenix is also passionate about serving U.S. troops. Monthly, for 11+ years, the company has sent more than a million cookies and supplies to active-duty service members, and it recently funded an adaptive bike for a local veteran who sustained permanent combat injuries. Employees also pooled together their airline miles and donated them to Honor Flight Network, which provides military veterans a free trip to Washington, D.C. to visit their respective war memorials.

What is the benefit to this type of community involvement? It helps make teams stronger and more loyal: “We all spend so much time at work,” Haberstroh says. “When people feel they can be passionate and support the community they care about—while they’re doing their job—that only increases their commitment to their career and our shared mission at Phoenix.”

Turnover at the 100-employee company is low: Average length of employment is more than 14 years, with nine of the 11 original employees still employed, or working there until their retirement.

Hospital and health system clients are also taking notice of the work Phoenix Textile Corporation is doing for the community. “Frequently, meetings we’ve had with new clients have included a discussion on community involvement,” Haberstroh says. “It’s been really encouraging and a welcome focus.” The company’s nationwide footprint allows the Phoenix team to participate in wider regional efforts—and occasionally creates friendly competition.

When customers see the charitable impact of buying from a small business that supports the community, it can create differentiation from a big brand that doesn’t have the same local connections. And in the case of Phoenix Textile Corporation, a woman-owned business, such visibility can also help HealthTrust members meet their strategic goals for supplier diversity.

Support for Diverse Suppliers

HealthTrust has long recognized the value of a diverse supply chain.

“Supplier diversity gives healthcare entities a way to show that they’re supportive and representative of the communities in which they’re located,” says Joey Dickson, assistant vice president of supplier diversity. “It aligns with our members’ missions, and it can also mean a lot to their bottom lines. Sometimes the best value they find is in relationships with diverse suppliers.”

Dickson

Due to limited resources, these diverse suppliers can sometimes have difficulty getting exposure to members. Small companies often focus resources on product development and customer service, not marketing.

McCain

In 1999, with the inception of HealthTrust, the Supplier Diversity Program was created to help level this playing field and connect minority-, woman-, service-disabled, veteran-owned small business enterprises (MWSDVEs) to HealthTrust members. Last year, 92 MWSDVEs held 168 contracts with HealthTrust, representing more than $294 million of annual contract spend.

“All of our diverse suppliers go through the same rigorous vetting process as any other supplier,” says Janet McCain, director of business diversity for HealthTrust. “There are no special considerations for them. However, we do help them through the system, providing advocacy, guidance and mentoring on the request for proposal (RFP) process, presentations to advisory boards and interactions with members.”



Exceeding Expectations

Though Myco Medical has been a HealthTrust contracted supplier in the surgical blades and sharps safety category since 2006, the company only became part of the Supplier Diversity Program after being certified as a minority-owned small business through the National Minority Supplier Development Council (NMSDC) in 2011.

Meeting Diversity Goals With Tier 2 Spend

You may be contracting with more diverse suppliers than you realize. That’s because your suppliers have their own suppliers—and many of them might just be MWSDVEs.

“Oftentimes, members will have a contract with a non-diverse supplier, but that supplier sub-contracts with diverse suppliers,” says Joey Dickson, assistant vice president of supplier diversity for HealthTrust.

He points to Northfield Medical, on contract for medical device repair and service, as one example. While Northfield Medical is not a diverse supplier, one of its major subcontractors, Altomec Endoscopy, is.

“Tier 2 spend represents a big opportunity in supplier diversity because smaller, diverse suppliers are often found further down the supply chain,” Dickson says. “Boosting your diversity spend could be as simple as knowing about these tier 2 suppliers.”

One of Dickson’s objectives for 2019 is building the capability to recognize tier 2 spend in the supplier diversity program.

“Ultimately, we want to make sure members are aware of it so they can count it toward their supplier diversity goals,” he says.

As HealthTrust develops solutions to better capture tier 2 spend, Dickson recommends that members ask suppliers for their diversity spend reports. Just like hospitals and health systems, major suppliers have their own diversity initiatives, so they’re likely already tracking this information.

“When a member is able to support a diverse supplier—because it has the right product, at the right time, for a good price—and receive top-level service,” he says, “it’s a win-win both for the institution and the community.”

“While we are proud to be a diverse supplier, we are a viable supplier first and foremost,” says CEO Sam Kumar. “Because we’re smaller, we have to perform at a higher level than our competitors. We have to ensure that our product not only meets expectations but exceeds them.”

Because of its experience, the Apex, North Carolina-based Myco Medical has served as an example to other diverse suppliers with products and services included in HealthTrust’s portfolio. The company even received a Supplier Excellence Award at the 2018 HealthTrust University Conference, recognizing its product quality, on-time delivery, billing accuracy, customer service, and overall price and value.

“Traditionally, the HealthTrust Supplier Diversity Program has focused on developing strong relationships with our suppliers,” Dickson says. “We’re working on a greater awareness of the program across the membership as well as stronger alignment with our members’ diversity objectives. With a better understanding of our members’ diversity goals, we can pair them with contracted suppliers to help them achieve those goals.”

Among its networking opportunities, HealthTrust hosts an annual supplier diversity symposium. Mostly informal, the event’s objective is two-fold—help members forge one-on-one personal relationships with diverse suppliers and educate the suppliers about members’ needs and their diversity goals.

Both Haberstroh and Kumar found the 2018 symposium valuable. It gave Haberstroh an opportunity to learn about HealthTrust’s growth plans and talk to members about a lesser-known service line offered by her company.

“We are contracted with HealthTrust for more than just linens,” she says. “I learned of several hospitals that had design projects in the works. As a result, we were able to actually submit proposals for healthcare design services,” she says.

Kumar appreciated the one-on-one face time with members. “Getting a few minutes with the right contact so I can deliver our elevator speech in a very conversational way is always useful,” he says. “As an added bonus, several of our current customers were there, and they were more than happy to recommend us. That was very validating.”

For small companies, every additional contract means a bigger impact for its employees and community.

“We’re privately held, so we’re not planning from quarter to quarter,” Kumar says. “We’re always looking at the long term. We want to build a sustainable company, but more important, a sustainable community. That means ensuring our employees are well taken care of and ensuring there’s engagement and outreach not just to our local community, but also to communities everywhere.

“The perception that only big brands are able to make an impact is wrong,” he continues. “Collectively, it’s the smaller companies that are able to do so much more.”

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