During a discussion with LISC’s Bill Taft reported in our last newsletter, the longtime community development guru predicted that “Buy” would prove the most challenging of the three anchor pillars: “When it comes to procurement, these institutions have lots of priorities,” he explained.
Seth Grant, Associate Director of Culinary Services and Business Operations for Eskenazi Health, acknowledges the hurdles that come with cultivating local suppliers – but dismisses the idea that they can’t be overcome.
“You’ll hear that it’s hard [to implement localized procurement],” Grant said. “That’s true – it takes time and effort. But it can be done, and it’s worth the investment.”
Grant’s words carry the weight of results. Three years ago, Eskenazi Health purchased roughly three percent of its food products from “local” sources (then defined as a 250-mile radius, an area that stretches as far as St. Louis). Today, the hospital system buys more than 40% of its supplies from Indiana agriculture, with a goal of passing 50% by the end of 2018.
According to Grant, Eskenazi Health’s leadership and his team embraced this ambitious goal as part of the anchor institution strategy and as a natural extension of the health system’s mission.
“When we focus on the ‘total health’ of our community, it includes food and how we buy it,” he said. “Locally-sourced food is healthier for our patients, visitors and staff. It’s better for our environment, reducing our shipping footprint. And keeping more of the dollars we spend in Indiana adds to the health of our local economy, too.”
“And we’ve done it in a way that maintains efficiency,” he continued. “We’re eliminating excuses – if we can do it, other institutions and major employers can, too.”
Making local procurement practical
The biggest issue in institutional procurement is scale. A massive operation like Eskenazi Health couldn’t simply buy local produce and livestock directly, cobbling together sufficient supplies from small farms across the state. “We need streamlined purchasing to control costs and run smoothly,” Grant noted.
The solution leveraged Eskenazi Health’s buying power to create a new channel of local goods through the hospital’s existing distribution partners. Simply put, Grant’s team made growing levels of local products a condition for its distributors, sharing the legwork and logistics of identifying and screening local businesses as suppliers.
“We have long-standing relationships with distributors like U.S. Foods and Piazza Produce,” said Grant. U.S. Foods is a national food distributor with a national customer base of more than 250,000 restaurants, operators and other organizations; Piazza Produce is an Indianapolis-based company that serves a five-state area. “We’re a large enough customer that they’re willing to work with us on sourcing strategy.”
Both companies offered ‘Local Food’ programs, defined as 450 miles (for U.S. Foods) and Indiana and surrounding states (for Piazza). Narrowing these parameters took discussion and a collaborative approach.
“It was a six-to-eight-week collaboration with Piazza to create an ‘Indiana-only’ supply chain, and we went through a similar process with U.S. Foods,” Grant recalled. “But those talks are now paying off in a big way for us.”
Walking through the Ingram Micro Mobility Marketplace on the second floor of the Sidney & Lois Eskenazi Hospital, Grant gestures at a row of coffee carafes lined up on a nearby counter.
“Brickhouse Coffee is a local company – based in Greenwood – that just needed a foot in the door with a larger distributor,” he said. “Now we serve Brickhouse here in the hospital and they’re working with both Piazza and U.S. Foods.”
Grant cited other examples of Indiana-based providers now “on the menu” at Eskenazi Health, and on their way to much bigger business opportunities.
“You may have seen Miller Poultry chicken and Prairie Farms milk at Kroger, but both companies have worked to get national distribution opportunities beyond retail,” said Grant. “By helping them get into our distribution channel with Piazza Produce, they gain much more than our business – they’re earning access to new markets, in Indiana and beyond.”
And the benefits of buying local flow both ways.
“We care about the economic impact, but we also realize very tangible benefits from using locally-sourced foods,” Grant said. “Fresh produce is more nutrition-dense and healthier for our patients. And because we’re preparing more of our own food, we’re creating new jobs – we’ve hired a third shift cooking team.”
“Local businesses are also willing to work with us on product improvements,” he continued. “For example, we’re using Red Gold – an Indiana company – for ketchup and tomato products without high-fructose corn syrup…again, good for our economy and better for everyone who eats at Eskenazi Health.”
Opportunities and advice
“We’re eager for other anchor institutions to join us,” Grant said. “I met with colleagues at another health system recently, and in two hours we worked out a local dairy procurement plan – a process that had taken us weeks. If we work together to share information and create demand, we can make a major impact.”
Early research leading to the development of the anchor strategy showed that the city’s dozen biggest institutions spent billions of dollars in goods and services every year…but only a third of that was spent in and around Indianapolis.
If these anchors could boost local buying to half their collective budgets – as Eskenazi Health is on the verge of doing with food – the economic impact would approach $300 million every year. For Grant, the journey to reaching this massive number starts with a simple bit of advice.
“You have to pay attention,” he counseled. “The opportunities for purchasing closer to home are there if you’re willing to look. We were buying popcorn from Minnesota because it was our distributor’s default supplier, even though Indiana’s one of the biggest popcorn-producing states in the country.
“We don’t grow everything in Indiana, obviously. But we’ve learned to be opportunistic, and to think local first. Start there, and everything else follows.”