NCPA Executive Update

NCPA Executive Update delivers insights on legislative, regulatory, policy, and industry developments from NCPA CEO B. Douglas Hoey, Pharmacist, MBA, to NCPA members and pharmacy leaders every other Friday.

WAR: What is it good for? | NCPA Executive Update | November 22, 2019

by NCPA | Nov 22, 2019

Dear Colleague,

Doug Hoey

Regular readers may remember that I am a lifelong baseball fan. One reason I follow baseball is because of the statistics. Possibly more than any other mainstream sport, numbers drive baseball strategy. The same is true for pharmacy. Numbers in the form of data rule in many areas.

The use of data has become a lot more sophisticated and is driving more decisions everywhere we look, including America's pastime. For example, last week baseball's Cy Young Award winners were announced. The awards, of course, go to the best pitcher in both the National League and American League. Not that long ago, a pitcher credited with 20 wins or more had a great chance to win the award. That was before Billy Beane, the general manager of the Oakland Athletics, created "Moneyball," and Hollywood made a movie by the same name. Nowadays, the number of wins a pitcher is credited with are way down the list of statistics that matter to baseball stat heads. What matters is WAR!

A quick explanation of Wins Above Replacement: It takes nine players to field a baseball team. A person has to play third base. A person has to play centerfield. A person has to play catcher. You get the idea. Each player contributes positively or negatively to the team winning. A positive contribution helps the team win. A negative contribution contributes to the team losing.

Beane began evaluating individual players through that lens and determined a value for how much a player contributes to his team compared to that of an average player. For example, if a shortstop was completely average compared to all the other shortstops on other teams, he would have a WAR of zero. If he was below average, his WAR might be -2; meaning that his below average performance caused his team to lose two more games than it would if an average shortstop replaced him. That player is probably looking at a trip down to the minor leagues. Hence the name, wins above replacement. In this example of a player with a -2 WAR, if an average player replaced him, his team would win two more games.

WAR has also been further dissected to estimate that each additional WAR unit is worth $8 million. So, for example, it could be justified to pay $40 million to a player with a WAR of 5. When Mike Trout, universally considered the best player in baseball, recently got a 12-year contract for $430 million, some analysts said he was underpaid. Through age 28, Trout has the highest WAR (71.6) of anyone who has ever played the game at the same age in their career (yes, fellow baseball-geeks, even more than legends like Cobb, Mantle, and Hornsby).

I find the WAR concept fascinating because if wins can be substituted for different measures of value, what about a WAR equivalent for pharmacy? Think about the interchangeable big-box stores having a baseline of zero. Most independent pharmacies would have a positive WAR. The annual J.D. Power 2019 U.S. Pharmacy Study seems to back up that way of thinking, as do the periodic Consumer Reports pharmacy surveys. (Note: There is a popular business measure that has some similarities called Net Promoter Score, but it's not nearly as fun to write about as WAR!)

What about your team at the pharmacy? Are you fielding an all-star team at each of your positions when you compare them to your expectations of an average contributor? Or, do you have some members of your team who would have a negative WAR and should be sent to the minor leagues?

In my Little League glory days, I memorized baseball statistics like batting average, home runs, RBI, slugging percentage, etc. on the back of a lot of baseball cards. But WAR may be the most important way to measure the ultimate goal of the game — wins — and it could have some interesting applications for managing and measuring your pharmacy's performance.

Best,

Doug Hoey

 

Douglas Hoey, Pharmacist, MBA
NCPA CEO