Distribution has to be part of the solution, says 2018 HIDA Chair Chris Kerski
Editor’s note: Chris Kerski, senior vice president of Laboratory Products at Cardinal Health, brings a rich variety of experiences to his role as 2018 HIDA chair. He recently shared some of those experiences, as well as his observations about distribution’s role in today’s healthcare system, with Repertoire.
Repertoire: You graduated from West Point in 1983. Talk about your time in the service, and your career in the years following. How, when and why did you get into healthcare distribution?
Chris Kerski
Chris Kerski: From my time at West Point and through my years of service, I have carried with me numerous experiences and lessons. First and foremost, I’ve learned that the importance of leadership can never be underestimated. Leadership manifests itself in numerous ways and can be exhibited regardless of your rank, role, or business. Across the numerous teams that I have led throughout the years, I have always instilled the value of leadership. From rising to the occasion on an individual assignment to providing structure and vision for a cross-functional team, to leading a large, diverse sales force, you always have an opportunity to be a leader.
The other critical learning I had from my time at West Point was the importance of teamwork. Assembling and contributing to a high performing TEAM is a key component of organizational success.
The time I spent in the Army was a great precursor to entering healthcare distribution. The Army has a strong foundation in logistics, which – little did I know at the time – would serve me well for years to come. I also had an assignment in Germany, which broadened my perspective and allowed me to be immersed in different cultures. As we operate in a global economy, this international experience will become increasingly important.
At the end of my service, I came out as a Junior Military Officer (JMO) and started with Baxter Healthcare. I found that the organizational and operational skills gained during my time in the military aligned well with my role at Baxter. As my career in healthcare distribution evolved, I leveraged the lessons learned in the Army. The difference is, at the end of our mission in healthcare distribution, there is a patient. And that patient is someone’s loved one. It is our responsibility to ensure that they (patients) have the highest quality products delivered efficiently and reliably so that they (the patients) have the best care possible.
Repertoire: What are your goals for your term as 2018 HIDA chair?
Kerski: As chair, I have three goals that will impact the HIDA organization as well as our industry as a whole, and ultimately the patients we all serve. They are: continued education, leadership development, and expanding engagement with HIDA.
Continued education: The pace at which healthcare continues to evolve underscores the need for continued education for our members, the manufacturing community, our customers, and our lawmakers. Our industry plays a critical role in ensuring a reliable supply of products day-in and day-out, regardless of situation. We have a responsibility to educate not only on what we do, but on the impact of legislative activity. Increasing participation in the Capitol Hill fly-in event is just one way that our knowledgeable constituents can help educate legislators on what we do, the importance of public-private partnerships, and the downstream implications of legislative actions.
Leadership development: As chair, I feel a great deal of responsibility for ensuring that we attract, develop and retain future leaders in healthcare distribution. We will need fresh perspectives, innovative approaches, and a diversity of experiences to ensure that healthcare distribution stays ahead of the change curve and helps health systems implement supply chain solutions that support evolving care delivery models.
Expand membership: The HIDA organization is not just for large healthcare distributors. Becoming a member or participating in HIDA events, such as Streamlining Healthcare and the Executive Conference, provide beneficial learning to manufacturers and healthcare executives as well. It is important for HIDA to learn from and cross-pollinate ideas with each stakeholder in the healthcare supply chain.
Repertoire: What are the three greatest challenges for HIDA and its members in 2018?
Kerski: Although we have made strides and improvements upon the challenges facing HIDA and its members, there is still work to be done. The first is the continued challenge of elevating the awareness of the value of distribution. Distribution is more than just moving goods from point A to point B. Distributors partner with their customers to help them achieve performance goals, ensure their organization has access to technology, streamline the ordering process, and support various inventory management programs, such as JIT, stockless, and low unit of measure. Each of these activities helps make the supply chain more efficient, which ultimately reduces the cost of healthcare delivery.
Industry consolidation presents a unique set of challenges. Health systems, manufacturers, group purchasing organizations, and even distributors are consolidating. As this consolidation continues, distributors play a key role in ensuring continuity of supply and consistency of care delivered to patients. This challenge also presents an opportunity to identify efficiencies, increase standardization and reduce SKU complexity so that costs do not increase as organizations merge.
Repertoire: How about the three greatest opportunities?
Kerski: Our greatest opportunity is to address the challenges mentioned previously. By increasing the awareness of the value of distribution, we elevate the conversation. The conversation becomes focused on solving problems and less rooted in the transactional aspects.
Another great opportunity is for diversification. Diversity of thought, background and experiences becomes a catalyst for innovative thinking. And innovative thinking is necessary in order to advance public-private partnerships on things such as pandemic and disaster preparedness.
Lastly, education will always be an opportunity, which is why it is one of my three main goals as HIDA chair. We must continually communicate and educate on what we do, and on the impact distribution has on lowering healthcare costs. As a conduit to health systems, we should understand their challenges, arm them with information and resources to address, and be a voice to legislators regarding these challenges.
Repertoire: The Affordable Care Act has been modified following a variety of actions by the executive and legislative branches of government (e.g., the elimination of the individual mandate). What challenge (or opportunity) does this present to HIDA members and/or their customers? How should HIDA members respond?
Kerski: Congress and the Administration have made changes to the Affordable Care Act in a piecemeal process, resulting in more flexibility for states to administer plans. Bipartisan attempts at market stabilization, to try to spur insurer participation and restore cost-sharing reductions, have not been successful, so states are taking market stabilization efforts into their own hands. HIDA members must be flexible and creative to adapt to an ever-changing healthcare landscape to successfully serve their customers.
Repertoire: What other legislation or policy decision(s) might have an impact on HIDA and/or its members this year?
Kerski: Public-private partnerships are important to the healthcare supply chain to ensure the availability of critical medical products during any emergency, pandemic response, natural disaster or public health emergency. A major “lesson learned” from the recent hurricane season is the need for rapid re-entry of healthcare supply chain personnel after a disaster. Unfortunately, issues and inefficiencies arose that prohibited distributors from adequately responding, thus creating barriers to accessing essential goods. For these reasons, HIDA is working with Congress and the administration, through the Assistant Secretary of Preparedness and Response, to establish a process to facilitate the transportation and distribution of essential healthcare goods during a presidentially declared emergency or major disaster declaration.
Repertoire: What is the niche of the traditional distributor in the “point and click” world, that is, the world of virtual commerce? How can HIDA members thrive?
Kerski: Distributors are afforded a unique opportunity due to the breadth and depth of the relationships we have with our customers. Our personal interactions result in a deep understanding of the challenges our customers face. With this understanding comes an ability to identify solutions proactively. The result is a relationship that is personalized and feels like collaboration, not just a transaction. Distributors often help educate customers on trends in the marketplace, which comes from deep industry experience and knowledge.
Repertoire: How will the medical sales rep of 2028 differ from that of 2018? What skills will he or she need to cultivate now in order to be successful 10 years from now?
Kerski: Technology, data and analytics, and communication will be critical drivers of success in the next decade. Business analytics, predictive analytics and the ability to manipulate large data sets will become a prerequisite for success in working with healthcare systems. The ability to distill insights from these data sets and turn them into actionable projects with customers will become an expectation. Healthcare customers will rely on the analytics and insights provided by distributors to help inform their long-term decision making, especially as it relates to managing across the continuum of care and the ability to provide a longitudinal view across a network.
Relationships, visibility, and concise communication will always be important attributes for a sales rep. Increasingly, managing personal brand will be as important as company brand, as personal brand is the cornerstone of trust built with a customer.
Repertoire: Anything else you’d like to share with Repertoire readers?
Kerski: Healthcare is an exciting, dynamic industry, yet cost escalation is not sustainable. Healthcare systems need partners that understand the challenges and present innovative solutions for growth and cost containment. Distribution is an excellent business to be in, as we can bring scaled, cost-effective solutions to a diverse set of customer interactions. A key element to success will be our ability to help lower the cost of care. Ultimately, our success as an industry is rooted in the ability to deal with change. We have adapted to the evolving needs of healthcare customers, which is why I remain excited and optimistic for our future.
Talking points: Chris Kerski
- The importance of leadership can never be underestimated. The opportunities to demonstrate it are numerous.
- HIDA is working with the administration to establish a process to facilitate the transportation and distribution of essential healthcare goods during a presidentially declared emergency or major disaster declaration.
- As consolidation continues, distributors ensure continuity of supply and consistency of care delivered to patients.
- Diversity of thought, background and experiences becomes a catalyst for innovative thinking.
- Increase the awareness of the value of distribution, and elevate the conversation to problem-solving, not transactions.
- Technology, data and analytics, and communication will be critical drivers of success in the next decade.
- Relationships, visibility, and concise communication will always be important attributes for a sales rep.
- Ultimately, our success as an industry is rooted in the ability to deal with change.
Speaking of lab
Editor’s note: Given Chris Kerski’s experience in lab, Repertoire recently took the opportunity to ask the 2018 HIDA chairman a couple of lab-related questions.
Repertoire: As hospital systems acquire physician practices, is that affecting the physician office lab or the lab market at large? If so, how? And what’s the impact on HIDA members?
Chris Kerski: Consolidation always has a downstream impact but, in many instances, the net result of the impact is positive. Specific to the lab market, aggregating/in-sourcing the test volume from physician practices to acute labs results in platform standardization across a network. The benefits of this include standardized and consistent test results and reference ranges, staff efficiencies with employees being trained on one protocol, and reduced costs. This all results in the potential for enhanced patient care and safety.
Repertoire: In January 2018, CMS began using private insurer rates to calculate Medicare payment rates for lab services, as part of the Protecting Access to Medicare Act (PAMA). What impact has this had on hospital labs? Physician labs? Distributors?
Kerski: The PAMA legislation resulted in significant rate cuts to the Clinical Lab Fee Schedule (CLFS). Initial estimates from the OIG had savings projected at $390 million annually, yet when the final rates were calculated, the numbers were nearly two times the initial estimate – $670 million. We are only a couple of months into the new fee schedule, so the long-term impact is yet to be fully understood. When rate cuts are this severe, laboratories evaluate how to offset the reimbursement losses. Offsets can come in the form of growth, expansion of their footprint and number of covered lives, operational efficiency gains and standardization.