A Conversation with Cynthia LaConte, Dohmen Company

A Dohmen Company
A Conversation with Cynthia
LaConte, Dohmen Company
Dohmen pioneers an integrated, ‘conflict
free’ pharmaceutical services company
By Nicholas Basta
In 1858, a German pharmacist, Friedrich Dohmen, set sail for America, with the goal of
opening an apothecary in Wisconsin. That venture became The F. Dohmen Co., which grew to
be a national drug wholesaler by the end of the 20th century. In 1990, fifth-generation Cynthia
LaConte joined the family business, and in 1996, founded DDN Pharmaceutical Logistics as a service
extension of the wholesaling business. A decade later, she was named COO, and initiated a complete
transformation of the company. The $2-billion wholesaling business was sold (to Cardinal Health),
and by 2009, after being appointed CEO, she had set a new vision for the company: to create a more
efficient, affordable, and accessible healthcare supply system for healthcare producers and payers.
The company now has 750 employees, 650,000 sq. ft. of warehouse space, and processes $9 billion in
transactions annually.
Pharmaceutical Commerce sat down with Cynthia to learn what is driving the company forward.
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or a medium-sized company in the healthcare industry,
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Dohmen has been aggressively adding new acquisitions;
what are you looking for, and how do you assess potential
acquisitions?
Dohmen grew historically by building greenfield operations in
response to client needs. Both RESTAT and DDN are successful
examples of that approach. Yet, while having an in-house
development team to bring new capability to market remains an
important part of our growth strategy, it takes awhile. We wanted to
accelerate development timelines in key strategic areas, so we added
acquisition to the mix.
In 2011, we acquired PlanIT, a healthcare analytics firm,
MedComm Solutions, a medical call center, and Centric Health
Resources, an integrated patient-care model for rare disease. This year
we added to our safety offering by acquiring Biosoteria, a regulatory
consulting firm.
Our acquisition strategy is simple. We approach best practice life
science service companies to establish whether they view the world
in the same way we do. If we don’t see a match with our vision of
creating a more efficient healthcare supply system, then we move on.
If we do, then we look for creative and committed leaders that are
passionate about making a difference in healthcare and want to take
their companies to the next level.
Our goal is to provide a service array that can help life science
companies become therapeutic care companies. We provide a
continuum of capabilities to propel their business, protect their brand
and help bring them closer to the patients they serve. This means
anticipating what they’ll need to be successful in the future and then
taking the leap to invest in that future on their behalf. As a private
company, we have the benefit of being able to think about acquisition
more strategically over a longer-term horizon.
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It’s ancient history now, but do you look back on the
decision to leave wholesaling as a good one?
Definitely. Dohmen is still around after 154 years because we’ve
been unafraid to change what we do, but unwilling to change who
we are and what we stand for. We made the decision to exit the
traditional wholesale model in 2006 because the purchase and sale
of mass-marketed healthcare products required an intense capital
commitment to inventory and infrastructure without the opportunity
to provide a sustainable competitive advantage. In short, the model
became highly commoditized.
While there will always be a need for big-box suppliers, we saw
our unique capability as aligning more closely with high touch than
high volume. As the industry paradigm begins to shift in response to
the promise of personalized medicine, creativity, speed and flexibility
become highly valued attributes. These are cultural characteristics
that are often difficult for very large public companies to exhibit.
Reprinted from the July/August 2012 issue of Pharmaceutical Commerce
For over 15 decades, our call to action has always been around
delivering on the promise of pharmaceutical care—one person caring
for another. In a way, this new model actually brings us closer to our
roots as an apothecary.
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ohmen has a rather dramatic stance of “conflict free”
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pharma services—that the company should not be in a
position to be, in effect, both a buyer and seller of healthcare
services. Where does this philosophy come from, and how
are you able to put it into practice?
Healthcare in this country has become unsustainable. We
spend double the rest of the industrialized world, yet we do not
yield a commensurate return on that investment according to most
healthcare metrics. So we have to ask—why? What makes our
system so expensive? Much has been written on the topic and, like
most things, people find data to support their biases, but it’s hard to
dismiss inherent conflict of interest as a contributor. Take the obvious
example of physician-owned MRI. It’s not a coincidence that when
physicians begin billing for MRI, use of MRI goes up an average of
38%.
Here at Dohmen we have a simple, but essential strategic pillar—
remain conflict free. We stay very clear about who our customer really
is, we align our interests with theirs and we remain true to our vision
while serving them.
As a service provider, one way we eliminate potential channel
conflict is by avoiding the purchase and sale of product as a source
of profitability in our economic model. It’s difficult to imagine how
companies like ExpressScripts and Caremark can be neutral to the
objective of lowering the prescription spend for self funded employers
when so much of their profit rests on the purchase and sale of
prescription product. Likewise, it is hard to believe that the Big Three
wholesalers can really be free to provide services in alignment with the
interests of life science companies when they play a dual role as a top 5
customer to those same companies.
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The systemic problems that drove PPACA are not political, they’re
real; and they will remain long after the Supreme Court makes its
decision in June. We cannot continue to ignore the big issues. Of
the $2.5 trillion we spend annually on healthcare in this country, it’s
estimated that $765 billion is wasted on inefficient administration,
unnecessary services and on fraud. This is why our vision statement
focuses on creation of efficiencies within the healthcare supply
system. There are no magic bullets for a problem this large. This is
a problem that will be solved by entrepreneurs with a sense of social
responsibility within all facets of healthcare. The government will
continue to intervene in the absence of private sector solutions.
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Credit: Dohmen
ohmen Co. is also involved in significant charitable work; is
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that a personal mission of yours?
In 2008, we established the Dohmen Company Foundation to
connect people in need with lifesaving healthcare products and
services. I wanted a way to honor Dohmen’s legacy of community
commitment during its 150th anniversary year, but I also wanted a
way to “walk the talk” of our values with our team going forward.
Patterned after the Paul Newman model, Dohmen contributes a
percentage of its operating profits to make the world healthier and
as a result has become one of the most generous contributors in
Wisconsin and among the top tier in the nation.
Major contributions have been made to improve access to
healthcare services globally as well as solving problems like the need
for improving maternal child health and the serious shortage of
pharmacists right here at home.
With more than $8.5 million in contributions since 2008, the
Dohmen Company Foundation has touched more than 123 million
lives in 117 countries, by funding the delivery of lifesaving medicines
to children in Vietnam, providing medical care to disaster-stricken
communities in Haiti, building clinics in Africa, and enabling entire
villages to receive basic healthcare services. In Wisconsin, scholarships
and contributions to two universities will help substantially increase
the number of pharmacists. This year, the Dohmen Company
Foundation is focused on reducing the infant mortality rate in the
communities where Dohmen divisions are located.
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LaConte holds the key to the original Dohmen apothecary building,
maintaining a five-generation family tradition
s this article was going to press, everyone was awaiting the
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US Supreme Court decision on healthcare reform. Is Dohmen
vested in one outcome or another?
any entrepreneurs would look on this track record as a
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complete career; what keeps you going forward?
There’s a special sense of responsibility that comes with the
stewardship of a company with this much history. I’m a driven and
demanding person by nature and I feel a deep commitment to the
hard work of so many people over so many years. I get a lot of energy
from the desire to pass a better, more vibrant company to future
generations.
Reprinted from the July/August 2012 issue of Pharmaceutical Commerce