Forty-seven years into his career, he is still listening, learning and creating
In 1974, a healthcare economist named Dean Ammer was preaching the gospel of healthcare materials management. It was a new concept. Ken Freeman was listening.
In 1980 Intermountain Healthcare offered Virginia Mason an opportunity to market American Healthcare GPO contracts to their Hospital consortium. Ken Freeman was listening.
In 1986, four regional group purchasing organizations merged to form AmeriNet (now Intalere), the first national GPO. And Ken Freeman? Listening.
And in 1993, Affiliated Purchase Services (administered by Virginia Mason Medical Center in Seattle) became Health Resources Services, LLC, whose goal was – and still is – to nurture innovative healthcare ventures, including some in supply chain. And Ken Freeman? Listening.
In fact, Ken Freeman, CEO of Health Resources Services, LLC, a wholly owned subsidiary of Virginia Mason, has been listening to the needs and wants of those in the healthcare supply chain since 1972. That’s the year he became business manager of the pharmacy at Virginia Mason.
Space Needle
Freeman was born and raised in Seattle, Washington. His father, Russ, was a painting contractor, who worked on the Space Needle, built for the 1962 World’s Fair. His mother, Maxine, ran a florist shop in downtown Seattle, kitty-corner from an Edsel dealership. For the shop, Ken watered poinsettias during the holiday season, made deliveries, and even rolled some white carpets down the aisles for church weddings.
In high school, he entertained thoughts of becoming a lawyer. He even took Latin, as was recommended. But his first pre-law class on writing briefs at the University of Washington caused him to change his mind. “I knew I just couldn’t sit behind a desk and do this kind of work,” he says. So he switched majors, did some student teaching at Garfield High School, and got a degree in education. Upon graduation, he went into the Air Force. “I told people I would rather defend the country than take on parents,” he says.
Though he wanted to be a pilot, he couldn’t qualify for flight school because of his vision, so the Air Force steered him into hospital administration. And he liked it. Upon discharge, he got a job as the business manager of pharmacy at Virginia Mason. His job was to establish a procurement system there.
“When I got there, pharmacy was in the dark ages, as it was in most hospitals in 1972,” he recalls. Physicians would come in, pull the drugs they needed, write down what they took, and leave. Drug reps would regularly stock the shelves. The system worked for the doctors, but not for Virginia Mason. “We put in place some methodology and restrictions,” says Freeman. Not all the doctors in physician-run Virginia Mason were pleased with the changes, but Freeman got the support he needed from Austin Ross, who was the hospital’s senior vice president.
Materials management
A year and a half later, Virginia Mason’s director of purchasing, John Mills, was named administrator of the hospital’s research center. Before he left, he suggested that Freeman apply for his old position. He did. And he got the job. It was 1974.
In the latter half of the 1970s, materials management was believed to be an evolutionary step beyond purchasing. At the time, the term referred to the integration of purchasing, central supply, transportation, sterilization, laundry/linen and other support services.
An early proponent was Dean Ammer, whom Freeman heard speak at a conference on the West Coast. It was Ammer who came up with the idea of exchange carts, says Freeman.
Ammer said that materials management’s role was simple: Make it easy for nursing to get supplies. “He believed we were there to support them, but at the same time, we needed to put discipline into the ordering process, the delivery model, and patient charging,” says Freeman.
“Ammer believed we needed to raise ourselves out of the basement, make ourselves valuable to the organization, and provide a service. And if we did that, nursing would become our friend.”
Just a few months after becoming purchasing director, Freeman traveled to Chicago to attend Brien Lang’s logistics/materials management class at American Hospital Supply (now Cardinal Health). It was at that class that he saw firsthand how an exchange cart system could work.
He started incorporating these concepts at Virginia Mason, and soon was providing education on materials management to a consortium of rural hospitals that had been set up by Virginia Mason.
American Healthcare Systems
In 1980, Freeman met executives from Intermountain Health, which had been formed five years earlier in Salt Lake City. Intermountain had joined a number of other non-profit hospitals and health systems to form American Healthcare Systems (AmHS), headquartered in San Diego. And they asked him if Virginia Mason would be interested in joining.
At the time, Virginia Mason was a member of Hospital Shared Services Association, which included most of the Seattle-area hospitals. Freeman was on the board of HSSA. But he was listening.
The hospital members of HSSA got along very well, even though they were competitors, he says. But in 1980, Virginia Mason had just started a construction program on a new wing, and HSSA – like most local or regional groups – lacked capital equipment contracts. “We did our due diligence and found that the savings American Healthcare Systems was offering were high. It was a big decision to leave the group.” But leave they did.
“Our goal was not to upset the group purchasing marketplace,” he says. “We still had a lot of respect for HSSA.” Virginia Mason asked for marketing rights to the AmHS contract portfolio, so the Medical Center could offer those contracts to the hospitals in the rural consortium. AmHS agreed.
That lasted only so long before other Washington-state hospitals wanted access to AmHS’s national contracts. Before long, Virginia Mason was – with AmHS’s permission – marketing the program to hospitals throughout the state. In 1986, Intermountain merged with three other groups to form AmeriNet, expanding the portfolio and geography Virginia Mason could market in the Pacific Northwest.
In 1993, Freeman began yet another new chapter in his career by stepping away from supply chain operations and becoming vice president of Virginia Mason Medical Center Enterprise Business Development and president and CEO of Health Resources Services, LLC, a wholly owned subsidiary of Virginia Mason Medical Center. He remains in that position today.
National Purchasing Partners LLC
One of his proudest accomplishments has been HRS’s creation of National Purchasing Partners, LLC, a business-oriented GPO with approximately 300,000 members. In 2018 HRS created Networx Health, LLC, a consulting group focused on bringing quality interim staffing to rural hospitals, board/trustee training and other offerings to rural healthcare organizations. In 2018, HRS launched a specialty pharmacy, which provides specialty medications to patients upon discharge. (With its recent URAC Specialty Pharmacy Accreditation, the specialty pharmacy will soon be able to offer refills to patients at home.)
“The other fun thing I get to do is help bring innovations to market,” he says. A recent example is a physical therapy product developed by the rehab department, which is now in a major distributor’s catalog. “Our goal is to stand up more companies, to find and evaluate more business opportunities,” he says.
Freeman is celebrating his 47th year in the Virginia Mason organization. (The only longer commitment is his 48-year marriage to his wife, Angela.)
“If you find an encouraging work environment, you can find your own pathway to opportunity and success,” he says. “It is possible to find change and growth within your own organization.”