Wise Council

One pharmacy director discovers that when committee members act on the best interests of the IDN as a whole, each hospital benefits.
By Laura Thill

If you build it, they will come. So Kevin Costner’s character discovered in the 1989 movie, “Field of Dreams.” And, so Larry Koesterer, senior director of pharmacy, group purchasing and support services, Ascension Health (St. Louis, Mo.), discovered when he launched the Ascension Health Pharmacy Council. “We don’t implore pharmacy directors to join the council,” he says. “We have CEOs asking how their pharmacy directors can be on it. The Health Pharmacy Council is regarded as an organization-leading group, and people want to be a part of it.”

Koesterer joined Ascension in December 2001, bringing years of experience working in the acute care and pharmacy industries for both non-profit and for-profit organizations. “I originally came to Ascension to oversee the pharmacy department, but my position grew over the years,” he explains. Ascension is the nation’s largest Catholic, non-profit healthcare association, with over 100,000 associates in 67 acute care hospitals, according to Koesterer. The IDN has hospitals in over 20 states and the District of Columbia and boasts an annual pharmacy spend of over $530 million.

The 20-member Health Pharmacy Council began in October 2001, under Koesterer’s predecessor at Ascension, Jerry Herberholt. Today, the support staff for the council includes Diane Mends, contract administrator; Annette Karageanes, clinical resource specialist; Joel Hennenfent, clinical pharmacy specialist, Broadlane; and Willie Givens, contract coordinator and “the glue that holds the council together,” says Koesterer. “I didn’t originate the idea for the council, but I had worked with other organizations where their pharmacy leaders would convene to provide input and expertise. These are the people who are responsible for planning and implementing initiatives.” Of the 15 members participating in Ascension’s pharmacy council, four are standing members who represent the IDN’s largest hospitals, and the remaining are members at large, with a rotating membership.

How it works
Prior to implementing the pharmacy council, Ascension Health followed a very traditional contracting approach, notes Koesterer. “We were a founding member of Consorta, and our pharmacy direction had been to react to contracting and purchasing decisions made by the group purchasing organization,” he says. Currently, Ascension is a member of Broadlane.

“In contrast to that model, we now take a broader view and tackle all angles of pharmaceutical practice,” he continues. “We look at how to take an initial idea, work it through our process whereby sound clinical, operational and financial decisions can be made, inclusive of all relevant stakeholder groups, and then plan how those decisions can be successfully implemented. So, when our members come to council meetings, they don’t simply consider what’s best for their individual health ministries, but what’s best for our health system as a whole.

“Our council members take ideas and topics we discuss at the council meetings back to their hospital stakeholders,” says Koesterer. “In turn, they get their stakeholders’ input and bring that back to the next council meeting. This is key to our success. We have an open, sharing, collaborative membership, who contribute ideas from their respective health ministries. In fact, our members are encouraged to share new ideas.” True, the decision process may be long, but once a decision is made, it is implemented relatively quickly and successfully, he adds. “Thorough deliberation, planning, thought and discussion up front lead to a successful implementation, where everyone is in agreement.

“We arrive at all decisions through consensus, not by votes,” Koesterer continues. “There must be 100 percent consensus, or we move on to the next topic. But, with this collaborative, inviting style of communication, we seldom do not reach a consensus.”

How it has evolved
Since its inception, the pharmacy council has broadened its focus. When it first began, its mandate was to lower pharmaceutical costs, notes Koesterer. “Today, we think of the pharmacy process or practice as indivisible,” he says. “We should not and cannot separate the clinical practices from operations. For instance, we [have come to realize] we can’t separate cost from the efficacy or safety of a drug. If we find a drug that shows efficacy but is not safe, we don’t even consider its cost. [Supply chain executives] should not separate clinical best practices from operations, purchasing or formulary and cost reductions. They all go together.”

Koesterer is confident that this approach works: “Over the past five years, we have generated more than $140 million in savings,” he points out. “Our planning, decision making and implementation process has been key to our [program’s] success. Since our members work to get their shareholders’ input, we can standardize around a formulary class.” It helps that Ascension members work with one wholesaler (currently McKesson) and one GPO, he adds. “Our members realized early on that having one drug wholesaler partner for the entire health system would enable us to get better, more accurate data and lower prices, [as well as provide] consistent service. It has helped us create not only a spirit of collaboration, but an actual working collaboration with a single partner.

“As I mentioned, our members must consider what is in the best interest of our whole system, not their individual hospitals,” he says. “And, usually, this is what’s best for their hospital as well.”

About the Author

Laura Thill
Laura Thill is a contributing editor for The Journal of Healthcare Contracting.