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Becker’s Healthcare Podcast
Building a High Performing Pharmacy Enterprise at MercyOne with Scott Knoer
00:21:40
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- [00:00]
A
This is Laura Dearda with the Beckers Healthcare podcast. I'm thrilled today to be joined by Dr. Scott Knorr, who is the regional Chief pharmacy officer at MercyOne. Scott, it's a pleasure to have you on the podcast today.
- [00:11]
B
Thanks so much, Laura. I've done a lot of things with Becker's over the years, and I always enjoy, you know, your different venues, your meetings and your podcasts and your daily emails. So it's fun to be part of it.
- [00:26]
A
Oh, absolutely.
- [00:27]
B
Plus, I got a picture with Wayne Gretzky at the last meeting, so that was super cool.
- [00:31]
A
Oh, that's fantastic. How fun and exciting. I know just a legend, Wayne Gretzky and, you know, an inspiring person as well. So glad you were able to see him and get the picture. Are you a big hockey fan?
- [00:43]
B
Yeah, well, it was pretty brief, you know, I was in line. But yeah, it was, it was pretty cool. So, you know, it's. And that's something, Laura, is exciting because there's someone who is the absolute best at what they do in the world. So it's just always fun to spend any amount of time and listen to the wisdom of folks who really are the best in the world at what they do.
- [01:06]
A
Absolutely. That is 100% the case. And I always enjoy listening to those athletes and great business leaders and minds and speakers that we have at our annual meeting. And I know you'll be speaking at the annual meeting as well in our Chief Pharmacy Officer summit coming up. So we'll be excited to dig a little bit deeper there. But for our podcast today, I know we've got some things we're going to talk about. Great project projects you're doing at Mercy One, and you know how you're thinking about the future. But before we dive in, and for those especially who have just discovered our podcast or may not be as familiar with you, can you tell us a little bit more about yourself, background and Mercy One?
- [01:42]
B
Yeah, yeah, I sure can. So I'm. I've been around pharmacy quite, quite a bit. So I took a break from not for profit healthcare, but I was Director of Pharmacy at University of Minnesota Medical center, part of Fairview in Minneapolis. I got recruited to Cleveland Clinic. I was the Chief Pharmacy Officer there for nine years. We opened hospitals in Abu Dhabi, in London, and did some amazing things, had some of the first chemotherapy robots in the country. And I really leveraged the position of the Cleveland Clinic. You know, it's one of the top health systems in the world. Mayo Clinic, Hopkins and the media cared a lot, not about what I thought, but about what the chief pharmacy officer of Cleveland Clinic thought. So I became a voice of hopefully a voice for good on some of the egregious drug pricing issues we've got and you know, was quoted over 100 times in the Wall Street Journal Post in the Times and that it also on PBMs and advocacy against the egregious practice of PBMs. And that got the attention American Pharmacists association who recruited me to be the CEO there. And the American Pharma association is kind of like the AMA of pharmacy. And you know, they'd had some challenges financially and some membership issues and we turned the organization around and dramatically in two years membership went up. Our margins were positive for the first time in quite a while. And, and but then I went to the, I went to industry. I was recruited my time at the Cleveland Clinic. I knew Toby Cosgrove who was one of the, he was a frequent guy on Becker's. He was one of the best known hospital CEOs in the last 20 years. He was on the board at HIMS and HERS. And so he introduced me to Andrew and I became their chief pharmacy officer for a bit of time and learned about the for profit world and telehealth and it was an amazing experience. But now I'm back. I'm originally from Iowa, haven't been here for about 40 years and this opportunity came up and my mom, she's 82, she's doing great, she's healthy, spending time with her and my brother, I'm hunting on my family farm in Iowa and just enjoying Life. And Mercy One's part of Trinity. It's, we've got 40 hospitals in Iowa, part of Trinity which is one of the largest health systems in the country. But yeah, so that's a little bit about Me and Mercy1.
- [04:08]
A
Well that's amazing to hear. You know, as a fellow Iowan, I can definitely attest to being able to be back and be home is always an amazing thing. So Abbott and Merc1 is really lucky to have you.
- [04:18]
B
Well, it's, it's a good place to be. It's a good place to be. And they've, you know, they had some turnover in leadership. I'm the first chief pharmacy officer. They've had that everything reports solid line to me and you know, taking some of the learnings we've done before, it's not my first trip to the rodeo. So we've able to really rapidly develop some programs and some, some profitability on the ambulatory side.
- [04:49]
A
That's great to hear. I would love to dig a little bit deeper into that. I mean, especially thinking about the last year or so. What has been some of the most important initiatives you led? How did you drive that profitability? What did you do and what were the results?
- [05:03]
B
Yeah, well, Laura, you know, pharmacy and everyone, if this is primarily a pharmacy audience, pharmacy lives in two worlds in healthcare, right? On the inpatient side, we're reimbursed by drg. So it's all about cost. So there we're stewards of the drug budget. And you know, I've got a couple hundred million dollar drug budget. It's got as 1.25 billion at Cleveland Clinic. But managing that appropriately, that's not using cheap medications, right? That's using cost effective medications. And that's where the clinical practice fits in. That's where having pharmacists, you know, rounding with physicians, changing things from IV to po, doing renal dosing, formulary management, that's where we are stewards of that drug budget. But pharmacy on the ambulatory world is still a true revenue center. And it surprises me because I've been doing it for a long time. I actually trained with the godfather of specialty pharmacy. Bob Beecher was my mentor at the University of Minnesota. So when I got to Cleveland, clinic built 100,000 square foot, state of the art specialty pharmacy. And when I got here, Mercy One is a little different with Trinity. So we didn't have that capital. So with existing infrastructure we created. My main goal is create ambulatory infrastructure. We did not have anyone in charge of our 19, all 19 pharmacies. There were five different regions created the infrastructure. And we're on track. Net profit right off the income statement to have fiscal year 26 versus 25, we're going to have $20 million more to the bottom line at Mercy One through what pharmacy's done. And I've got strategies in place to probably fiscal year 27 to have another, another 12 to 18 million. So it's really leveraging our providers, right, because our doctors and you know, pharmacy, we just, we have to provide amazing service and prior authorizations and work with our medical staff and, and we've got great relationships with Dr. Olson. Here it are, who's in charge of the medical staff. And my boss, Dr. Carrion is super supportive. So and the other thing with that, Laura, this is a universal truth of management. I've been doing this for a long time. Success breeds success. So you come in, you establish credibility. Senior leadership team says, hey, Scott said he's going to make us $12 million. He's going to make us 20. So then more initiatives come and bring us initiatives. So that's kind of where we're at. It's kind of like the flywheel just starts spinning. It only took. I got here about six months later. We got the business plan established. We're crushing it. The flywheel is moving and success is breeding success like it always does.
- [07:51]
A
That's amazing to hear and, you know, really helpful to understand that kind of concept. Creating that flywheel, getting things off the ground and then, you know, those are big numbers to be bringing into the health system and something that is impressive to see. I'm curious. You know, having the business plan in place is great, but then it only works as well as the people in the team that you're working with are able to, you know, embrace it and bring that into their day to day operating workflows in the way mindset how they're thinking about things. So, you know, how do you approach that, especially with a new team when you're coming in to help them see the vision and be able to make the necessary adjustments so that you can realize what you're trying to do?
- [08:32]
B
That's a great question, Laura. And you know, I've started new jobs as the leader, University of Minnesota Medical Center, Cleveland Clinic, American Pharma association, where, you know, sometimes you come in and you have to fundamentally transfer. Sometimes you have to see who's good and who's not and you have to move some people and get rid of some folks here. I was really fortunate and I've always been fortunate. I found I have an eye for finding raw talent. So I was able to. Within the people we have, I have a leader, a young guy, Craig Ford. He was the manager of the three pharmacies in Des Moines. He was there about a year before I was. And Craig had a background in regional management and specialty pharmacy at Walgreens. So I had someone with that expertise here and he'd already made really good changes in Des Moines, which was actually losing money in our retail pharmacies, if you could believe that. He stabilized that. So part of the business plan I had, I said, I can capture this, but I can't do it with nothing. Okay. I have to have. I've got 19 pharmacies and, you know, little regional leaders who are doing a great job. But. But put Craig into a regional director role and he is just rocking. The guy's on fire and he's great at developing his team. The other thing I had is pockets of excellence. Our Dubuque Specialty Pharmacy group and not Dubuque, I'm sorry, our genesis which is in Davenport. Jason Hansel there had really, you know, and I did a big bang at Cleveland Clinic. I built a hundred thousand square foot pharmacies. He did it incrementally, a little bit over time and has the credibility with the physicians. So I put him in chargeball, especially pharmacy here. So we have the. It's all about infrastructure. Okay. Craig is in charge of all pharmacy. Jason reports to him, is in charge of all specialty. And we didn't have the 340B infrastructure. So Aaron Brownmiller who started with our accounting team in Mason City and did so I put her in charge of all of it. And these guys are just running with it. I mean I can't even keep now I just get out of their way. I remove barriers and I just watch in awe with how they crush everything that they touch.
- [10:51]
A
Wow, that's amazing. It's like you've got a dream team there that you know, is really making big difference. So that's awesome to hear. Now, looking ahead for 2026, what are some of the big priorities and headwinds that you're focused on?
- [11:03]
B
Yeah, you know, healthcare stuff, all your members. Right. I mean, you guys know that the big beautiful bill, the Medicaid cuts, those, those challenges, you know, and I'm not taking sides politically in anything. If it's right or wrong, it just is right. And folks are going to have a challenge with premiums, with the Obamacare subsidies and all. Again, not saying it's right or wrong, but it's challenging. So we, you know, Mercy One has a pretty big goal of, you know, several hundred million dollars of cost containment stewardship over the next few years. And my experience is that we can't cut our way to success. We have to grow our way to success now. You can. And I had to do this when I was at the American Farm association. They were losing money every year. I cut my way to short term, making it financially, not having negative margin, but that's not sustainable. Then you have to grow and we're growing the business by tens of millions of dollars. So we're going to continue to reinvest in the areas that are successful and help Mercy One and Trinity achieve their financial goals. And you know, it's great being part of Trinity because Damon Redding is our chief pharmacy officer there. And I've got great counterparts. I got people in Michigan who are doing really good in specialty pharmacy and Loyola there in Chicago. And we all help each other out and we share things and, and I think the things we're learning and demonstrating here we're going to share with the rest of Trinity and we're going to just keep that flywheel moving and doing what we do in pharmacy. And that's, that's bringing real revenue and control costs, improve quality and safety. And I think the other thing, Laura, is I've talked a lot about the revenue because that's the times we're in. Right. We have to do that. But pharmacy is a clinical profession and we did not have a pharmacist in our ambulatory clinics. And I just put one in neurology and endocrinology. And we're just seeing, you know, amazing things with our patients and patient education. Iowa passed a very important practice act where we can now they call it standard of care. So I can have work with our medical staff, our system P and T committee and say our pharmacists in these ambulatory clinics are going to do this for our physicians. And I don't have to have collaborative where every physician has to sign off. We can just go through PNT and those, those pharmacists can now adjust doses. Eventually we're going to be doing refill authorizations. We did that when I was at Cleveland Clinic. And we're going to really help our physicians who are overwhelmed with lots of work. We're going to take workload off them. And pharmacy, actually, how do I say this? The clinics in my previous job where I put pharmacists, the quality metrics were better everywhere. We put a pharmacist in a medicine clinic, timed therapeutic and hypertension was better. Hemoglobin A1c's were better. Everything was better. So that's that team based care that we're starting to do here in Mercy 1. A lot of people have been doing it for a long time, but we're going to, we're going to be doing it here and growing that clinical presence, expanding our residency program. It's hard to recruit in pharmacy right now. You can buy it or build it. We've been buying it, hiring people. We're going to build it. We're going to, we're going to create our own infrastructure where people want to be students. With us, students become residents, residents become pharmacists. While residents are pharmacists, they become employed pharmacists.
- [14:54]
A
Yeah, yeah, absolutely. Wow, that's, you know, amazing to think about that type of growth and building that type of internal pipeline as well. In Building talent. I can imagine that will create a huge, huge influx of the right type of people, especially if they're brought up through the program and through the health system as well. What does it take to put together a residency program and then expand it into something that you can, you know, I guess grow your pipeline more meaningfully?
- [15:22]
B
That's a great question. And you know, so the American Society of Health System Pharmacists accredits residencies and they've got a lot of rules. And I'll be honest, they used to be really, really onerous. But then Sam Calabrese, who is my associate chief pharmacy officer at Cleveland Clinic, he went to ASHP and he's in charge of residency accreditation now. And he's like, guys, your rules are ridiculous. And you know, in a community hospital you don't have people who've written in peer reviewed journals some of their residency requirements for preceptors were kind of silly and way too academic. So Sam's help them become a little more rational. So it's not so onerous to start a residency, you know, so at the clinic we had 11 residents. When I got there, nine years later, we had 66. We're not as big. We're, we added our work, we're going to add residencies where the growth is in the ambulatory world. All of our hospitals will have them starting a residency. So yeah, so it's. And because now we've got corporate infrastructure, validate some of that, you know, at Cleveland Clinic, Manny Leonard ran all my education and she helped the sites with that. Yeah, I'm passionate about pharmacy. I've been doing it a long time. You know, it's good. Also, Laura, I'm at a stage in my career where I've been around the block. I'm not trying to make a name for myself. I'm really loving growing the team we've got and seeing others succeed. I've been there, I've done it. There aren't many things I haven't done in pharmacy. So now, you know, I've done the Cleveland Clinic, I've done the CEO thing, I've done hims and hers. I can come to Mercy One and just help hardworking people make a difference. And the people here just working their butts off and, you know, it's just great to come in and bring my experience to help elevate our practice at Mercy One. It feels professionally to be this stage of my career.
- [17:23]
A
That's great to hear and, you know, definitely fantastic to have that type of flexibility and credibility in the space. What do you think is the hardest thing you'll have to do next year will be?
- [17:35]
B
Well, you know, I'll be honest, because of the success we're having, I'm not going to have the hard things. The hard things, and I've had to do that when I was at Minnesota are because of these reimbursement challenges, sometimes hospitals and systems have to cut staff and that's like the worst thing you can do from a personal perspective because it's a tough economy. Right. And I'm not gonna have to deal with that because we're, we're making money. So I'm really limiting the negative by, by accentuating the positive. So, so you know, we're going to have, that doesn't mean we don't have to be efficient. That doesn't mean we have to, don't have to question every fte. But we're not going to have to do the terrible things because of the success that pharmacy is bringing to Mercy One and to Trinity. So it's a lot more fun to grow than it is to cut Laura. So we're going to grow.
- [18:36]
A
That's great to hear. It's always nice to be in growth mode. And speaking of that, I can imagine there's a lot of different opportunities out there for MercyOne to keep growing, especially in the pharmacy space. But is there anything you're zeroing in on? Where do you see the most opportunities or the biggest ways that you'd like to grow in the next year or so?
- [18:54]
B
Yeah, yeah, you know, so our regional areas ministries had been doing pretty good but Des Moines was the, it's our 800 pound gorilla and it had not been maximized at all for, for helping fill our specialty prescription. So that's where all my energ been. But now that we've got the infrastructure, it's optimizing, it's looking at different clinics, it's looking at if we change some of our family practice clinics to provider based that gives us more opportunity to maximize some of our capture there. So now it's working with our dedicated medical staff leadership on what is the strategy and how do we, how do we grow more, you know, at some point it'll be do we create mail order to fill our employee health prescriptions because those are not revenue. Right. Revenue is outside it's cost because we're self employed. So and that's more of Damon's job at Corporate Trinity is how do we maximize value. I've done that at Cleveland clinic. We save $20 million a year by filling our own scripts and not letting Caremark siphon our money off. You know, PBMs are. I gotta be a little careful there. I fought PBMS for so many years. I'm not a big fan. They offer really no value. They're middlemen that suck all the profit out, leading to crushing retail and community independent pharmacies. So it's. How do we take on more and more of that ourselves and eliminate the middleman? So. But that's more of a corporate thing. I can't do that at Mercy One because we're part of Trinity. But that's. That's something Damon is looking at doing and that I've done at Cleveland Clinic.
- [20:45]
A
Got it. Absolutely. That's helpful to see. And definitely it seems like it can be a great way to continue to bring the. The pharmacy into the organization and keep the profits there. So thank you so much for joining on the podcast today, Scott. This has been a fantastic discussion. I have really learned a lot as well as you know, enjoyed speaking with you, that your passion for what you do is very clear and it comes through in our conversation. So I really appreciate this and I'm looking forward to seeing you in person in April.
- [21:13]
B
We'll see you in April. Thank you so much, Laura.