|Where Automation’s Headed: An Interview with Parata CEO Tom Rhoads||| Print ||
The market for robotics and dispensing automation has developed rapidly in recent years. Pharmacies are looking at the technology in a different light and the technology has matured a great deal since it first appeared. In this interview, Tom Rhoads, who has been with Parata Systems for seven years, and is now the company's CEO, offers his perspective on the changes in this technology and the different dispensing models it can support. He also talks about his new role as CEO, leadership, and how Parata is organizing around the goal of moving dispensing automation and the practice of pharmacy forward.
CT: Tom, let's start by getting your thoughts on where pharmacy is right now.
Rhoads: I think it is probably one of the most dynamic times for pharmacy in its history. We are seeing such rapid change and growth and so many new ideas, it's really exciting to be part of at this time in the industry's long history. Pharmacy is being asked to rethink everything: reimbursements are pressured, supply chains are being reorganized, services are being expanded or contracted. There's just an unbelievable amount of activity right now, starting with the federal government. And, usually when the federal government gets involved, big change can happen very quickly, for example with healthcare reform.
CT: And what effect is all this change having on dispensing automation, in particular?
Rhoads: What we've seen happen is that people are trying to decide where to go next with this technology. We've said from the beginning that automation typically helps when you have predictable, mundane tasks that are repeated over and over again. This is the case for any type of automation. IVR, for example, has automated handling of certain types of phone calls and has really enabled convenience and access, becoming a standard of care in pharmacy today.
Speaking specifically about dispensing automation, our thought has been that pharmacists are not best placed when they are inextricably linked to the quality control process. To count by fives and verify that the correct pill is in the vial, we think should be done by someone other than the pharmacist. From this premise we started thinking and said, for which section of that puzzle can we offer a solution for pharmacists? Dispensing automation plays very well here, because every pharmacy does a very basic and consistent set of things to fulfill a prescription: select a vial, label it, fill it, and send it down the line. You can divide these tasks into smaller units or call them different names, but ultimately the process is the same.
CT: So dispensing automation's role becomes addressing these basic, repetitive tasks that every pharmacy performs in order to get prescriptions out the door?
Rhoads: That's right. And in this respect automation becomes an efficiency driver. To do this, it has to be intuitive, easy to use, and easy to maintain, all aspects we've focused on with our next-generation products, Parata Max in particular. This is something that we learned from our first-generation products, specifically from deploying them in a chain setting. It turns out that chains have vastly different user requirements than you typically see in the independent market. The unit has to be highly intuitive - something that's also good for the independent environment, of course. Otherwise new staff won't be able to easily become proficient with the technology. This is just one example of what we've addressed with the next generation, and it's not the biggest.
The biggest issue we addressed is probably the amount of time being dedicated to upkeep of technology. If you are going to automate a process to gain efficiency, then you certainly must ensure the manual labor and time to keep the automation running offers a measurable net advantage. You want to save time overall and this is true no matter what environment the automation is going into. With less than an hour of upkeep, Max will cover 60 percent of a pharmacy's volume. 20-30 minutes of maintenance once a day and you've got 60% of your volume covered.
CT: OK, so that's a look at the broader market. What are Parata's goals now?
Rhoads: We've established ourselves and our solutions in the independent market and we are beginning to do so substantially in the chain market, which is experiencing very rapid change. They are asking, are we going to get reimbursed for MTM? Are we going to be a health clinic? When and how is this going to happen? Should we start doing it before we are getting reimbursed? How do we change our image to be seen as practitioners when all we get paid for is filling?
Our contention is that, whether the landscape changes or not, you never want to spend all your time filling if there's a more efficient, more cost-effective, and safer way to do that. It is also our thought that, if you look at how chains especially have evolved, the interesting thing is that a lot of the strategies focus on cost effectiveness. They want to become more efficient and come closer to the patient. They want to free up time and automate.
Fortunately, there are a lot of great ideas out there right now that can help create cost efficiencies and create more time to interact with patients.
CT: What about the current resurgence in interest in central fill? There are some compelling arguments for this automation model for both chain and independent pharmacy. What's the balance between in-store automation and central fill?
Rhoads: Central fill is an old idea and we're in a new world here where all ideas need to be on the table, central fill included. The concept started in the mid-90s and gained some traction back then, before in-store automation really came into its own. There are some pharmacies out there that have been using central fill for more than a decade. What I think many pharmacies found out was, while this was a good concept and probably better than a manual process, it wasn't necessarily the end-all-be-all idea. I think there are a couple of elements to this. At the core, it means that you have to ask your customers to change their behavior and accept always getting their prescriptions on a one-day turnaround. That's a hard thing to do. Another unintended consequence is that customers don't always come in to pick up their medications. So, under a central-fill model, they go on the shelf at the pharmacy.
CT: How do you assess this model, then? What are some tools to use when thinking about it, so that you can make a good decision about when central fill can play a role?
Rhoads: We see two main considerations. One place to start is to consider how much more surgical the deployment of in-store automation can be. Let's think about a pharmacy with 1,000 locations across the country. Ideally you want an automation solution for the locations with the greatest need that you can deploy in the shortest amount of time. If 200 stores have a critical need for automation, what are the chances that all will be within 150 miles of each other? It's probably close to zero. So when you apply central fill to this kind of scenario, you only have the ability to address stores within geographic proximity or start building central fill facilities across the country. There's a diminishing return there.
On the other hand, you can take 200 in-store automation systems and put them in every store with an acute need. You solve the problem very quickly, efficiently and cost-effectively. Arguably the consumer experience can only improve as you free up pharmacists' time.
CT: And the second consideration?
Rhoads: The second thing is understanding what you can really expect from central fill. You'll see people who say 50% of our fill is in central fill, but if you look closely, that means that 50% of the targeted or available fill. This turns out to be about 20% of overall volume in most cases. By available fills, I mean refills that are the prime target for central fill. In addition to enlarging your target fill, Parata has spent two years studying from an industrial engineering perspective what the actual cost to dispense is. We've found that, on a per prescription basis, in-store automation is by far the cheapest option in the market and sweeps in the greatest available volume - all oral solids.
CT: Can you explain the numbers behind this conclusion on cost effectiveness?
Rhoads: Sure. Parata automation fills between 55% and 58% of the average pharmacy's total volume, including the 2o% or so that are ointments, liquids and pre-packs that cannot be processed on automation. So, if in-store automation offered just the same cost savings as central fill, but can be applied to 55% compared to 20% of store volume, then it is saving more than twice as much money. This is a key element that I think most people don't understand.
CT: Why's that?
Rhoads: Well, I think that first-generation technology was good, but not great. Our first-generation in-store automation didn't offer the same level of cost savings our next generation does. In fact, none of the first-generation products ever rose to the level that would make automation a standard of care. Otherwise, you would have seen it. People then revisited the idea of central fill. I think it's valuable to talk about the relative merits of that model and next-generation in-store automation because then you are addressing the underlying issues, such as efficient labor allocation and the best use of pharmacists' time.
CT: So what do you see as the future when it comes to centralization?
Rhoads: What does make sense is centralizing adjudication processes. When combined with automation, this allows the pharmacist to have a much more meaningful and engaging interaction with patients. So I think you will see central services emerge more.
CT: Tell us more about what you mean when you say central services.
Rhoads: Well, for example, we've been working with partners and chains on central service models and workload balancing. There's pharmacy management software out there now that lets you look at your pharmacies and say here's a location that isn't as busy right now; that store can adjudicate our claims and save us several minutes per prescription. That's powerful. And if there's a piece of automation in the background that will fill in-store, then I've reduced the dispensing tasks of my pharmacy staff to final verification. This kind of model can take a huge burden off a busy store, while taking advantage of a multiple-store configuration to optimize labor value across locations.
CT: It sounds like software that can connect pharmacies is critical here.
Rhoads: That's right. I think we are seeing opportunities for better utilization of resources through host software systems with workflow balancing functions. As a result, I think you'll begin to see more centralization of the adjudication process.
CT: Let's switch gears. Tell us something about yourself. For instance, how are you approaching leading Parata and how are you trying to position the company to be a leader in pharmacy technology?
Rhoads: I think that it's portable to any industry. There are a couple of premises for being a good leader that I've tried to align myself with. First you have to have vision. You have to know where you want to go. That's critical. At Parata, we are seeking to make our automation the standard of care in pharmacy. We will accomplish this in two ways: deep customer collaboration and intuitive solutions built around safety and productivity that enable our customers to achieve their service and growth goals.
The second thing is passion. Leaders have to have passion to inspire and draw people to them. The third thing, which is critically important, is people. You have to find the right people to complement you. I've never seen a great leader that had all the answers. Great leaders have great teams that they inspire with their vision. That team then drives the vision through execution.
CT: Can you give us an example of this approach to leadership?
Rhoads: OK. Let's take the vision that people shouldn't be in the QA process. We incubate this notion internally, and then take it to our customers and ask: Is this a good idea, is this a real problem? How can we help you solve it? That's our reality check. If the customer validates our idea, we refine it with their input, and pass it on to our teams to begin to solve the problem. I think great companies have the at the top of the org chart. You typically make pretty good decisions when this is the case.
CT: Let's talk about what inspires you next. What gets you excited to come into work and what drives this style of leadership? For example, what are the books on your side table at home or the Web sites you visit most?
Rhoads: I love to read about leaders, these are the books that most inspire me. One example is the book Titan, about Rockefeller, arguably the greatest entrepreneur who ever existed. Although he was painted as a greedy individual over time, I think that is because he is not well understood. Rockefeller established a legacy of philanthropy that's a direct result of his vision, his passion, and his acute attention to detail. At the end of the day, he was an unbelievably gifted individual who inspired people and was absolutely dedicated to where he wanted to take his vision. And this translated over when he changed his vision to being less business focuses and more human focused. He founded dozens of colleges and hospitals around the country. That's one that I enjoyed. Another one that I just read and enjoyed is the Big Book of Business, which is something of a summary of the Fords, and the Rockefellers, the Vanderbilts, the Carnegies, and all those.
I also love Popular Science. That's my indulgence. It has a lot of neat stuff in it and ways that people solve problems. I find technology fascinating in all different forms.
If I'm not reading like that, I'm interacting with my kids. We have three kids, and boy their schedules keep us busy.
CT: Tom, I think we've covered a lot of ground. Thanks for taking the time to offer Parata's perspective.