For Hospitals Looking to Comply, July 1, 2025, Is Just Around the Corner, Hospital EVS Companies Can Help Hospitals Meet New Diversity Regulations
As summer’s end nears, many of us are thinking about back-to-school season, changing leaves, and pumpkin spice lattes. However, hospitals and healthcare centers in LA should be looking ahead to next summer – July 1, 2025, to be exact—when the diversity supplier law goes into effect.
The Hospital Supplier Diversity Program aims to further encourage hospitals to buy from and partner with suppliers that are certified as minority-, women-, LGBT-, and disabled veteran-owned business enterprises.
One of the ways hospitals can do this is by taking a closer look at the diversity of their hospital environmental services (EVS) company and other contracted service providers.
Background
In 2019, California passed Assembly Bill (AB) 962 requiring hospitals to submit an annual report to the Department of Health Care Access Information (HCAI) on their supplier diversity procurement efforts. The report had to include the hospital’s policy statement, outreach program to diverse businesses, and their procurement processes. The bill applied to hospitals with operating expenses of at least $50 million or of at least $25 million if they were part of a system of hospitals. However, the HCAI’s most recent report showed diverse procurement spending totaled only 2% of hospital vendor spending.
2023 Expansion
Assembly Bill (AB) 1392, passed in 2023 by both the California House and Senate and signed into law by Governor Gavin Newsom, expands the Hospital Supplier Diversity Program. The bill requires hospitals to report additional information, including their plans for increasing procurement from diverse suppliers. The new reporting mandates take effect on July 1, 2025, and Health and Safety Code Sections 1339.85-1339.87 task the HCAI with developing and administering the program.
Who Must File What
As with the previous version, each hospital licensed under subdivision (a), (b), or (f) of section 1250 of the Health and Safety Code that has operating expenses of $50 million or more and each licensed hospital with operating expenses of $25 million or more that is part of a hospital system or regional network is required to submit a Hospital Supplier Diversity Report. Hospital networks with two or more hospitals that are owned, managed, or sponsored by the same organization may submit a System/Regional-Level Hospital Supplier Diversity Report. However, this can only be done if the vendors supply services and goods to all the hospitals within the hospital’s system or regional network.
How to File and Avoid Fines
The reports must be filed electronically into the Hospital Disclosures and Compliance (HDC) report collection system. Reports cannot be filed via email or mail. A 30-day extension can be granted if the delay is caused by an HDC system malfunction. Section 1339.87 of the Health and Safety Code Section authorizes HCAI to fine hospitals failing to file a report by the July 1 deadline $100 per day.
Not a One-Way Street
According to the American Hospital Association (AHA), increasing supplier diversity is good for the community and society and for business. Encouraging supplier diversity broadens the vendor pool and increases competition on the price and quality of goods and services.
Benefits cited by the American Hospital Association include:
- A larger vendor pool
- Increased competition on pricing and quality of goods and services
- Cost reductions through innovation and product selection
- Enhanced contract terms and conditions
- Improved service
- Expansion of external partnerships within the community
- Innovation
- Local job creation
- Contracts with vendors reflecting patient and community populations
- Enhanced understanding of supply chain sourcing, sources, and potential issues and access to more solutions
- Easier compliance with government and grant contracting requirements for supplier diversity.
Where to Find Diversity
If you are a California hospital looking to comply with the new diversity laws—or simply to increase the diversity of your vendor pool because it’s the right thing to do and is good business—the good news is diverse businesses are all around you. However, many hospitals hear “supplier” or “vendor” and immediately products come to mind. While there are many diverse product vendors in the area, many hospitals forget to think about service partners, such as their EVS company, medical waste pick up service, facility maintenance provider, or even vehicle mechanic. These can be some of the easiest options to increase procurement diversity, and you may be surprised by the enhanced service, quality, and cost savings.
Servicon: A Leading, Certified Women-Owned and Operated Hospital EVS and Facility Maintenance Supplier
Women-owned and operated, Servicon is proud to be certified as a Women’s Business Enterprise (WBE) by the Women’s Business Enterprise National Council (WBENC). Servicon is a leading EVS and commercial cleaning services company specializing in healthcare, life sciences, aerospace that is also a full-service facility maintenance company. At Servicon, we live by our purpose to elevate the industry and provide healthy environments for people to thrive. As a privately held, women-owned and operated company, we work and live by our vision of creating a better working future. We do well by doing right by our people and the communities in which we and our employees work and live.
