Wholesaler Provides Support that Saves Hospitals Money on Pharmaceuticals

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Scott-Wilson-thumbWithin the field of drug distribution, an avalanche of branded drugs going off patent and the influx of multiple generic alternatives has materially changed market dynamics. National healthcare wholesaler and solutions provider H. D. Smith is taking advantage of the numerous savings that can be found within the drug market today by providing support to hospitals, pharmacies, and alternative-care facilities across the country.

Senior Vice President Drug Divisions Scott Wilson said that by 2017, many of the historic blockbuster brand-name drugs will have lost their patent protection and market exclusivity. The increased availability and use of generic alternatives will continue as more Americans have access to prescription medicines as a result of the Affordable Care Act.

In addition, dynamic growth in specialized medicines helps to fuel the uncertainty while suppliers, payers, and the insured are all working to understand the details.

Going lean to improve business

In an industry of thin margins, H. D. Smith has implemented a range of initiatives to promote efficiency. The company began a Lean Six Sigma project throughout all seven of its locations, which are strategically positioned throughout the country. H. D. Smith has hired several black belts and trained a number of green belts who identify “pain points” within the company and develop plans to improve processes or define potential savings in those areas. Wilson said the company currently has 10 such projects going on.

During the past several years, the company has expanded significantly, building five new facilities across the country and acquiring other wholesalers. This expansion has increased the need for more cohesion and efficiency throughout the organization.

In 2011, H. D. Smith invested in a new warehouse management system. This investment transitioned eight warehouse facilities to paperless, seven of which had never had automated systems. Wilson said they were able to implement the system with no interruption for customers in only 13 months. This was a huge feat, requiring a massive effort of planning, implementation, and training.

“We had a great spirit of unity and determination to get this done,” Wilson said. “We brought together people who were skilled in their areas, merging business folks with technical people, and put them on the road for a year. I tried to stay out of their way and just make sure they had the resources they needed.”

He said he is happy with the way things have gone so far. The still-new Six Sigma efforts are having an impact on the H. D. Smith culture. Through continued work, hiring, and training of different belts, he feels confident the organization will see continued improvement.

Another major investment for the company has been in SAP software over the past three years. This investment has influenced all other projects, as the company re-engineers its business processes to maximize effectiveness.

These efficiencies are a necessary part of the future of H. D. Smith, as they are with most areas of healthcare. The industry is faced with the challenge of providing excellent service at the lowest cost possible. With the shift to generics, Wilson said wholesale distribution is becoming more commoditized, which increases the need for efficiency.

Applying internal developments toward customers

The infrastructure efforts were implemented with an end goal of bringing more value to H. D. Smith’s customer base. With that backbone in place, Wilson said the organization’s next step is to begin applying the benefits in ways that support H. D. Smith’s customer service and satisfaction.

H. D. Smith’s mission statement says it intends “to be the preferred, customer-focused, national supplier of healthcare products and business solutions improving the quality, safety and cost of patient care, while maintaining the highest level of honesty and integrity.”

Wilson said he feels confident that current investments in software and infrastructure have met the goal of improving quality, safety, and cost. He also said honesty and integrity are key characteristics the company looks for in potential new employees.

“All of our approvals start with validating the integrity of candidates,” Wilson said. “In terms of trust, we are above board with our customers and suppliers.”

He said that H. D. Smith will continue to focus on training and growing employees and adding talent to scale the company’s capabilities.

“We have begun a town-by-town assessment with every individual in the organization to understand the talent we have,” Wilson said. “We plan to identify our talent needs, educate and train existing employees, and acquire new talent over the next three to five years.”

He said it is now time to take the lessons learned and focus outwardly on delivering excellent customer service. Through employee training and increases in efficiency, Wilson said the organization is poised to remain a leader in the industry and a preferred supplier.

“We are the only wholesaler that is dedicated to independent pharmacy,” he said. “Our services are geared to improve the gross profits of our customers, and we feel that if we continue to focus on that, our profits will improve as well.”

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