CEO George Barrett: 'Pharmacists are positioned to play a bigger role'
With its integrated offerings, Cardinal Health is an essential partner for pharmacies, physicians’ offices, hospitals and other providers in the United States and almost 60 other countries.
“Cardinal Health has become a broad-based provider of services and products that help enable the health care system to function effectively and efficiently,” Barrett said in an interview with Chain Drug Review. “Behind the scenes, we are an enormously important player in health care.”
Besides pharmaceutical distribution, Cardinal Health’s assets include a broad portfolio of products spanning the medical, surgical, pharmaceutical, lab, specialty and nuclear sectors; business services for health care providers; and tools designed to help improve patient care, coordination, and medication adherence while at the same time reducing hospital readmissions. The company recently reported a 6.9% increase in revenue for fiscal 2017 to $130 billion.
“Within the next 24 hours, we’ll touch nearly 85% of the hospitals and 60% of the pharmacies in this country. We’ll also touch surgery centers, oncology clinics, the military and many other channels,” Barrett said. “Our company is an engine behind the system that enables the people who we describe as the heroes of health care — the providers — to do their work.”
The strategic value that Cardinal Health sees in diversification was reinforced earlier this year by its acquisition of Medtronic’s patient care, deep vein thrombosis and nutritional insufficiency businesses, according to Barrett, who has been chairman and CEO since 2009.
“This well-established product line is complementary to our medical consumables business and fits naturally into our customer offering,” said Barrett when the $6.1 billion deal was announced in April.
“We distribute some of these products today and have been collaborative partners with the leadership of this business. Given the current trends in health care, including aging demographics and a focus on post-acute care, this industry-leading portfolio will help us further our scope … reaching customers across the entire continuum of care.”
Cardinal Health is building its business through alliances as well as acquisitions, a model that is becoming increasingly prevalent in health care. The company’s most significant partnership in that regard is Red Oak Sourcing, a joint venture with CVS Health that Barrett indicated is among the most important purchasers of generic drugs in the U.S.
“We really like this program and its ability to move market share,” he said. “We recognize there is an opportunity to take advantage of our collective scale to be able to bring value to the market. Teams at Red Oak are extremely knowledgeable about the generic pharmaceutical business, which is a very complex global system. We’ve created a straightforward model that creates opportunities for customers as well as manufacturers. And CVS has been a terrific partner. In Red Oak, we have created a model that is valuable and scalable.”
The ongoing evolution of the health care system, clouded as it may be due to the lack of consensus in Washington, will result in fertile ground for new delivery models, according to Barrett.
“Current conditions are going to create some strange bedfellows,” he said. “Nobody can fix the systemic problems on their own. So I think we’re going to see many kinds of partnerships throughout health care, unexpected ones, all with the goal of figuring out how do we do this differently?”
“The policy discussion today is all about the financing of care, but we can’t forget that the delivery of care is also a critical element. The innovation around how we deliver care is going to be as important as the financing. The question we all face is, does what we’re doing create real value for our customers?”
Pharmacy operators, both chain and independent, are a focal point for Cardinal Health. In addition to maintaining a safe, secure and efficient supply chain, the company assists its business partners in such areas as patient care initiatives, reimbursement support, retail solutions and private label programs. Barrett indicated that the company will increase that commitment as the role of community pharmacy expands.
“Demographics are fueling a surge in demand for health care at a time when we’re all being asked to do more with less,” he said. “We believe that pharmacists are positioned to play a bigger role.
“We will continue to have pharmacies dispensing pills, but if you look at trust barometers and at the shortage of primary care physicians, our pharmacists are going to play a vital role as early responders to patient’s health problems,” he explained. “They’ll be the first touch point in the system. There’s no doubt that they’re going to provide more cognitive and patient monitoring services. Our goal would be to see compensation for those services.”
The evolution of the profession will spur parallel changes at Cardinal Health. The company is already hard at work figuring out what more it can do to provide support for pharmacists and their patients.
“Our job is providing as many tools as we can to pharmacists to free them up to do what they were trained to do,” Barrett noted. “The more tasks they can offload to us — and it’s not just the purchasing, it’s the inventory management, it’s the setting up of a diabetes center inside the store, it’s helping them look for financing. We would love to see pharmacists better compensated for the cognitive services they bring. We’re focused pretty heavily on trying to find creative solutions to do that.”
Cardinal Health maximizes the effectiveness of its assets by carefully matching them to the requirements of individual pharmacies.
“The solution is going to be different for every pharmacy,” Barrett said. “So it’s critical that Cardinal Health is knowledgeable about each of the pharmacies we serve. That makes our lines of business increasingly valuable to our partners. They need to know that at difficult times, at times of great change and uncertainty, they have an organization that they can count on.”