Providence joins commitment to increase MWBE spending to improve supplier diversity & build community wealth

Providence joined 11 other health systems to announce major shifts in procurement strategies to help address the economic, racial, and environmental disparities that impact community health outcomes

Renton, Wash., June 10, 2021 – A dozen hospitals and health systems across the country, including Providence, announced signing the “Impact Purchasing Commitment” to build healthy, equitable, and climate-resilient local economies through what and how they spend their dollars. The commitment, designed by the Healthcare Anchor Network (HAN) in partnership with Health Care Without Harm and Practice Greenhealth, includes collectively increasing spending with Minority and Women Owned Business Enterprises (MWBEs) as well as local and employee-owned, cooperatively owned and/or nonprofit-owned enterprises, by at least $1 billion over five years. The institutions also agree to work with at least two of their large existing vendors to create hiring pipelines in the disinvested communities that they serve. The HAN member signatories also commit to adopting sustainable procurement goals, which helps build additional momentum garnered by hospitals in the Practice Greenhealth network to purchase goods and services that minimize damage to health and the environment.

“At Providence, we are guided by our Mission and values, which includes our value of justice. That’s why we are pleased to sign on to HAN’s Impact Purchasing Commitment, which will ensure we increase efforts to leverage the purchasing and investment power of our health system across seven states. These intentional efforts will strengthen and support the economic health of our communities and, ultimately, improve health equity and access,” said Providence president and CEO, Rod Hochman, MD.

It is estimated that roughly one in five (or 420,000) small businesses have closed during the COVID-19 pandemic. These closures have disproportionately impacted small businesses owned by immigrants, women, and Black, Latinx, and Asian individuals, all of which have experienced higher rates of closures and sharper declines in cash balances. The number of Black business owners decreased by 41 percent, Latinx business owners by 32 percent, and Asian business owners by 26 percent. Immigrant business owners decreased by 36 percent and women business owners by 25 percent. The loss of jobs and wealth to workers and business owners is devastating. These businesses generate local jobs including downstream jobs such as with suppliers and other vendors, economic opportunities, and community wealth building that works to produce broadly shared economic prosperity and ownership. So, the loss of these small and MWBE businesses also has a massive impact on broader racial inequality and health equity.

“Health systems are uniquely positioned to have positive impact as leading employers and economic engines in their communities,” stated David Zuckerman, Executive Director, Healthcare Anchor Network. “In addition to providing quality healthcare, they can leverage institutional resources, including almost $500 billion in annual spending, to help address the economic, racial, and environmental resource disparities that impact community health outcomes,” added Zuckerman.

Small local businesses struggle with tapping large, stable contracts and MWBEs historically lack access to capital. This contributes to spending that is mostly leaving communities that are already under-invested in. Even small shifts in the health systems’ spending portfolio can make a difference. Hospitals and health systems can be anchor companies that help local businesses and MWBEs stabilize and begin to recover, which facilitates employment, and in turn increases access to health insurance and builds individual and community wealth and health. When local businesses and MWBE’s are awarded business contracts, they are able to employ local residents and provide stable wages that allow employees to securely afford food, rent, and other necessities—all of which are crucial to individual and family health. This local spending also has a multiplier effect that can increase local economic activity beyond the one purchase.

Inclusive local purchasing also makes sense from a business impact standpoint. By sourcing products and services locally and from MWBEs, these health systems can further align their capital with sustainability, diversity and inclusion, and community benefit priorities. They can also strengthen their reputation as the local provider of choice, address supply chain needs, and create more efficient and resilient supply chains. Sustainable procurement has positive societal impact such as reducing pollution particulates which contribute to chronic health conditions like asthma and switching to clean energy which reduces air pollution deaths. 

In addition to Providence, the health systems adopting the Impact Purchasing Commitment include Advocate Aurora Health, Baystate Health, Bon Secours Mercy Health, Cleveland Clinic, CommonSpirit Health, Henry Ford Health System, Intermountain Healthcare, Kaiser Permanente, Rush University Medical Center, Spectrum Health, and UMass Memorial Health.

These institutions are members of the Healthcare Anchor Network (HAN) that supports health systems to accelerate learning and local implementation of economic inclusion strategies. The HAN hospitals and health systems together employ more than 1.5 million people, purchase over $75 billion annually, and have over $150 billion in investment assets.