During its nearly 60 years in business, H. D. Smith has grown from solely serving customers in Illinois’ capital city to servicing more than 3,000 independent retail pharmacies, institutions, durable medical equipment retailers, acute care and alternate site facilities nationwide without losing sight of its founding values.
“My father’s vision at the time was to have a successful wholesale drug distribution business that served an underserved geography,” says President and COO Chris Smith, son of company founder and chairman emeritus Henry Dale Smith. “His goal was not to be the biggest but to be the best in terms of the service he provided.”
“While we’ve changed from just being a local company, the values on which my father founded the company are still with us today.”
Henry Dale Smith founded the company in 1954. Mr. Smith’s father, who ran a wholesale drug business in Spartanburg, S.C., discovered that Springfield, Ill. was one of the only cities of its size and location without its own pharmaceutical wholesaler. With this insight, Henry Dale Smith set out with his family to establish H. D. Smith Wholesale Drug in Springfield. Springfield remains the company’s base of operations today.
“Independent community pharmacies continue to be the biggest portion of our business, but we also have a strong customer constituency in hospitals, home healthcare dealers, physicians’ offices and a range of long-term care providers,” Chris Smith says. “The manufacturers we distribute for are our customers just as much as the facilities we distribute to.”
LOCAL ACCESS AND DISTRIBUTION EXCELLENCE
H. D. Smith’s emphasis on meeting the needs of independent retail pharmacies and regional chains distinguishes it from larger competitors who primarily distribute to national pharmacy chains. “Independent retailers are our core customer set. If a product is in short supply, big retail typically has first access to those products and the smaller customers, independents, tend to be an afterthought,” Corporate Vice President of Marketing Carolyn Webb explains. “Independents are a priority. To compliment this strength, we are growing and expanding into institutions/hospitals and other healthcare product and service providers of community care. Our size and structure differentiate us and allow us to be flexible and responsive.”
H. D. Smith’s tradition of providing excellent service continues to be highlighted by customers and associates alike. Customers seeking assistance are able to speak to live representatives as opposed to automated systems. “Our customers know us, their sales specialist and their customer service person. Our decentralized structure has allowed us to maintain close ties with our customers, many on a first-name basis,” she adds.
In addition to customer service representatives, each of the company’s seven regional distribution centers also features on-site management, information services, merchandising support and home healthcare sales specialists. Distribution centers are located in California, Florida, Illinois, Kentucky, New Hampshire, New Jersey and Texas.
“Local management allows us greater ability to respond quickly to customer needs,” Smith says. “We’re better equipped to handle customer issues expeditiously and efficiently when compared to the mega wholesalers.”
“We’re large enough to have the access to products and the resources to make an impact but small enough to be able to be nimble and flexible. Unlike some of our competitors, our business is not concentrated around a small set of key customers,” he adds. “When your customer set is concentrated, they yield significant power and influence on what and how you operate and innovate. H. D. Smith is able to innovate, partner and service many more facets of healthcare because our hands are not tied.
“Through H. D. Smith, our customers receive shipments on a next-day or same-day basis on a variety of products from a large number of suppliers, which gives them the ability to run their inventory operations on a nearly just-in-time schedule. Our customers depend on us to be both their supplier and their warehouse,” Smith says. “We’ve worked with them to create a more efficient distribution system where they need to carry significantly less safety stock because we’re carrying it for them.”
To ensure that patients within its communities have access to innovative prescription products as well as the newest generics, the company has two rapid delivery systems available to its customers: PharmaGen Express generic pharmaceuticals and QuickShip for new brand-name pharmaceuticals.
Understanding that technology solutions play an increasing role in advancing healthcare, H. D. Smith is also investing heavily in this key area. The company indicates, “The primary purpose of our information technology is to serve our customers. Health information technology is critical to community healthcare and essential to any retail or institutional setting, providing the innovative tools that allow pharmacists to ensure a medicine is on hand and that costs are closely managed. Making technology work for our customers allows H. D. Smith to apply innovative tools that improve competitive service to community pharmacies and health systems nationally.
“Innovative technology-based solutions are of increasing importance to effectively serve the needs of our customers and supplier-partners. Information is the lifeblood of healthcare services,” the company adds. “We believe we are in a unique position to deliver information technology solutions that will serve our customers and supplier-partners and grow our business. Providing solutions that will ultimately improve the quality of patient care, thus enhancing the quality of healthcare overall, is a top priority for our company.”
IN THE NETWORK
H. D. Smith’s services to independent retail pharmacies extend beyond stocking their shelves. The company’s Third Party Network offers retailers a suite of programs and services that help improve bottom lines.
“We work to be the voice of the independent retailer and aggregate their interests and value proposition when we work with manufacturers, managed care and pharmacy benefit organizations,” Webb says. “Our goal is to ensure that our customers not only survive the changing healthcare landscape but that they thrive in doing what they do best, deliver care to the community within which they operate.”
The network acts as a liaison between pharmacies and healthcare providers in negotiating terms and rates. Resources include a contract database, a help desk and regular communication of major industry developments.
“Our established relationships with industry partners and knowledge of the intricacies of reimbursement plans allow our members to attain the highest level of profitability,” the company adds. “Experienced with the challenges faced by independent pharmacies today, we actively listen to our network of over 1,000 pharmacies and develop responsive solutions to address their needs.”
“With a customized approach to matching our programs to each pharmacy’s unique businesses, we empower our members to stay highly competitive in this rapidly changing industry.”
One way H. D. Smith empowers network members is through assisting them with payment reconciliation. The company is the only wholesaler who helps retailers both reconcile and pursue outstanding payments.
“Many independent community pharmacies don’t have the leverage, expertise or time to manage third-party payments, which is where most of their money comes from,” Smith says. “In order to better serve our customers and help them best serve their patients, we got involved in helping them manage reimbursements.”
OTHER THIRD PARTY NETWORK SERVICES INCLUDE:
The Profit Optimizer program, which helps pharmacies maximize their revenue potential. The program provides retail pharmacies with a dedicated analyst who works on their behalf by handling billing errors, maintaining competitive pricing and running quarterly reports.
Pre and post-adjudication services, which include compliance reviews and competitive pricing evaluation tools.
Medicare and Medicaid processing services, which pair H. D. Smith’s technology with existing management systems to quickly process payments.
Electronic Funds Transfer (EFT) assistance.
Many other services are currently in development.
AN EXPANDED MISSION
While distribution to community pharmacies remains the company’s core function, H. D. Smith’s mission has expanded since its inception to include working with other healthcare providers.
The company’s services to health systems and specialty providers are similar to those offered to retail pharmacies, with providers also being able to take advantage of the Third Party Network and OrderBase suite (H. D. Smith’s online ordering system). Specialty distribution in particular is an expanding area of H. D. Smith’s business. A subsidiary company, Smith Medical Partners, meets this niche by supplying pharmaceuticals, injectables, vaccines and other products to physicians, clinics and specialty pharmacies.
“We are capable of supplying complex treatment regimens to cover a full range of disease states,” the company says.
H. D. Smith’s level of service to its customers would not be possible if not for the company’s emphasis on internal investment. “The investment in technology is closely tied to the company’s emphasis on investing in its greatest resource – its people,” Smith says.
The company invests heavily in internal training and professional development programs, and provides staff members with benefits including investment and retirement programs, he adds.
The immediate future for H. D. Smith will see a continued focus on offering services to different types of healthcare customers while retaining a community-oriented focus, Smith says.
“I think that as a company we are uniquely positioned to drive innovation, value and success for the healthcare professionals we distribute to,” Smith says