We see the devastating impact of COVID-19 on small neighborhood businesses throughout our towns and cities. Too many stores and restaurants have closed, leaving empty or boarded up voids on our main streets. Many that remain are struggling to get by and unsure of how they’ll be able to fully get back on their feet once the pandemic ends.
Hospitals and health systems are uniquely positioned to help the struggling local businesses that serve their patients, staff, and communities. They are leading employers and economic engines in their communities. In addition to providing quality healthcare, they can leverage their institutional resources, including almost $500 billion in annual spending, to help address the unprecedented times faced by our small local businesses. Financial security is a key social determinant of health. By practicing local and diverse procurement, the health sector can support business development that has equitable economic and social impacts.
Research shows that roughly one in five small businesses have closed during COVID-19. 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 40 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.
These small businesses are the economic engines in their communities so not only is the impact to business owners and their employees devastating, but the local neighborhoods will also feel the pain of the loss of income and wealth in the community. The impacts are also felt downstream to suppliers and others doing business with these companies.
When local and minority and women owned businesses are awarded procurement contracts by health institutions, they are able to employ local residents and provide stable wages. This local spending stays in the community, which has a multiplier effect that can increase local economic activity beyond the original purchase.
Last November, 42 Healthcare Anchor Network (HAN) health system leaders representing 47 states and D.C. convened at the HAN Anchoring Resilience: Aligning Supply Chains and Impact Purchasing for Community Health Summit. The summit, supported by Kaiser Permanente in collaboration with Health Care Without Harm and Practice Greenhealth, aimed to catalyze the conversation around how the healthcare sector could set a best practice standard for impact purchasing, in which health systems intentionally leverage their procurement practices to advance health equity and build more inclusive and sustainable local economies.
As healthcare purchasing leaders, even small shifts in your spending portfolio can make a difference. There are also many ways you can connect with MWBEs and help diversify and transition your procurement practices. Your institution can leverage your purchasing power and be a champion for making your local communities healthy, equitable, and thriving places to live through how you do businesses.
David Zuckerman, HAN Executive Director
Bich Ha Pham, HAN Director of Communications & Policy