Inside Banner Health’s extensive supply chain and how it cares for more than one million members
Based in Phoenix, Arizona, Banner Health is one of the largest non-profit healthcare systems in the US, operating a network of 33 hospitals, three academic medical centers, and several specialist facilities across six states: Arizona, California, Colorado, Nebraska, Nevada, and Wyoming. With a mission of ‘making healthcare easier, so life can be better,’ Banner currently serves more than one million members, striving to effectively manage the health and wellness of its patients by expanding access to quality healthcare.
Banner’s comprehensive services span urgent care, imaging, surgery centers, maternity, hospice, home care, telehealth, and emergency. These medical services fall into one of three categories: everyday medicine, acute and specialty care, and medical services. Everyday medicine encompasses diabetes care, emergency services, imaging, outpatient surgery, physical therapy, telehealth, sports medicine, and urgent care. Acute and specialty care looks after academic medicine, Alzheimer’s and dementia, weight loss surgery, cancer, heart conditions, neurology and neurosurgery, orthopedics, and pediatrics. Lastly, medical services include behavioral and mental health, maternity, occupational health, pain management, pharmacy, and women’s health.
Offering specialist services in several areas, Banner’s portfolio boasts a range of highly specialized institutes. The University Medicine Neuroscience Institute, for example, provides state-of-the-art care for neurological conditions, whereas the University Medicine Women’s Institute offers comprehensive care from maternity to menopause. There’s even the Center for Healthy Aging, which was established to care specifically for patients over the age of 65 and aims to reduce the complications associated with older adults’ hospital admissions. As specialists in geriatric medicine, the Center for Healthy Aging is recognized by US News and World Report as one of the top ten US hospitals for geriatric medicine.
Specialist services
Mike Halmrast, Executive Director of Supply Chain Contracting, elaborates on some of the specialist services offered by Banner. “From comprehensive health and routine wellness to highly specialized care for chronic and rare conditions, Banner Children’s has been on the cutting edge of pediatric care since 2009,” he opens. “Today, family-centered medical care is available across Arizona at our dedicated pediatric facilities: Banner Children’s at Desert in Mesa, Banner Children’s at Thunderbird in Glendale, and Diamond Children’s Medical Center in Tucson.
“Since 2011, we’ve partnered with the University of Texas MD Anderson Cancer Center to provide patients with expert care and technology. This partnership oversees the diagnosis, staging, and treatment of all cancer types, as well as providing access to groundbreaking clinical trials and new investigative therapies. We also provide oncology expertise in supportive care services like cancer prevention and diagnosis programs, integrative oncology, genetic counselling, and rehabilitation services.
“In February 2015, Banner merged with the University of Arizona Health Network in Tucson, Arizona, to form Banner – University Medicine,” Mike explains. “At the heart of this merger is academic medicine, offering research, teaching, and patient care across three academic medical centers: Banner University Medical Center Phoenix, Banner University Medical Center Tucson, and Banner University Medical Center South.”
Patients come first
Commenting on Banner’s approach to delivering excellent patient care, Mike adds: “We come through for our members whether they’re in one of our hospitals, on our mobile website, in a Banner clinic, on the phone, or just need help to use their health plan to the fullest. At all stages in life, members can rest assured that Banner will meet their health and medical needs through outstanding service delivered by compassionate professionals. That’s why we’re the leading nonprofit provider of hospital services in all the communities we serve!”
Such an extensive network of hospitals and services requires a well-organized and efficient supply chain to ensure operations run smoothly. To gain a better understanding, we ask Mike how Banner balances reliability with rising costs. “Reliability and resiliency in the supply chain are often at odds with efficiency and economies of scale,” he says. “Sourcing strategies have evolved from single to multisource agreements, providing a safety net from supplier disruption, but the shift to near shore or on shore production has increased cost.
“Inventory investments have also increased to provide additional safety stock and minimize the impact of a disruption. There is not a ‘one size fits all’ approach, as supply chain resiliency strategy is determined based on product criticality, market availability, and source region. Unfortunately, in many cases, added resilience increases cost to the healthcare system.”
Navigating challenging times
In 2024, the healthcare industry faced a significant product shortage of Baxter intravenous (IV) fluids. Although allocations have been in place for years for many fluids, it was further complicated by Hurricane Helene hitting Baxter’s manufacturing facility in North Carolina. As the largest manufacturer of IV fluid in the US, Baxter produces around 60 percent of the fluid used in the US, and its production halt meant more than 86 percent of healthcare providers experienced shortages.
“Aside from the Covid-19 pandemic, the Baxter IV shortage has been the most impactful supply challenge we’ve faced, but the expertise of our clinical, pharmacy, and supply chain teams has enabled us to manage the situation,” Mike shares. “There are a few methods we’ve adopted, such as conservation around product usage and sourcing alternative products. We’ve also devised a bottle-to-bag process, which means transferring solutions from irrigation bottles into IV bags.
“We had some product reserves in place ahead of the shortage, but they weren’t sufficient to maintain normal operations for the shortage’s duration. To mitigate
the impact of future shortages, we are now evolving a self-distribution model to place more emphasis on resiliency versus operational efficiency. While we’re not able to store enough of any category to overcome months of shortages, we can identify SKUs where we can increase our inventory reserves to minimize the clinical impact of future shortages.”
To overcome inconsistencies in how suppliers report product shortages, Banner has implemented several new strategies. “We’ve created our own internal system to detect and investigate unexpected shortages at the time of purchase,” Mike says. “We’re also partnered with our national group purchasing organization, which does an excellent job of informing us when they become aware of market impacts from product shortages. Lastly, we subscribe to daily notifications of known or expected disruptions that may result from natural disasters, business announcements, product recalls, or political unrest.
“In terms of technology, we’re also involved in a multi-year effort to renew our ERP software, which will enable better connectivity between business units and clinical service lines. Such improved connectivity will provide enhanced oversight of workflows, product usage, and expenses, helping us to identify opportunities for further improvement.”
The future of Banner
When it comes to positive supply chain relationships, Mike considers three attributes as particularly important. “Transparency, timeliness, and collaboration,” he states. “We need our suppliers to be transparent about where and how products are made so we can efficiently respond. While there will inevitably be supply issues over time, communicating potential problems in a timely manner enables us to plan and find an appropriate solution that minimizes disruption. Bad news delivered early is much easier to mitigate than trying to deal with an emergency issue, especially in the healthcare space.”
To close our conversation, Mike turns his attention to what the future holds for the organization. “One of Banner’s strategic goals is to become a High Reliability Organization (HRO) through collaborative relationships with suppliers,” he reveals. “HROs are organizations that operate in high-risk environments but experience fewer accidents than expected. We’re prioritizing this goal in 2025 by adopting resiliency language, forming agreements with suppliers, and emphasizing our medical expertise across the network.
“Our overarching goal is to provide best-in-class, highly reliable care that is delivered with extraordinary service,” Mike concludes. “Known for our advanced strategic planning and execution, we’ve made the decision to extend our 20-year strategic plan to demonstrate our focus on long-term goals. This progression has shifted from focusing on acute care to now concentrating on population health, as well as expanding our focus to include preparedness.”