What if there was a way to expand healthcare services, improve patient outcomes, generate new revenue streams and increase efficiency of personnel providing care?
What return on investment (ROI) would your organization consider as successful? 5:1? 10:1? What if you were presented a business case that realistically generated between 10:1 and 20:1?
Too many organizations view pharmacy as simply a cost center with no way to add to the bottom line. Using this perspective, they miss the greater potential to generate new and real revenue and margin through outpatient prescription services operated by the organization. These services can include retail pharmacies, home delivery (mail order) pharmacy, specialty pharmacy, home infusion and medication therapy management programs. Providing patient care under this new approach requires a clear vision and understanding of costs, margin, ROI, outcomes, and a realistic approach for implementation and management.
Consider patients being discharged from a hospital: Approximately 80% of their primary, follow-up treatments will involve medication use. Integrating outpatient prescription services into ongoing care provides new options to enhance continuity of care across inpatient and outpatient settings, allowing for a holistic care management process. The integrated team approach requires several combined initiatives -- a "Meds to Beds" discharge prescription program embedded within a decentralized inpatient clinical pharmacy program, medication reconciliation procedures linked to transitions in sites of care, comprehensive ambulatory pharmacy services that meet individual patient needs ̶ plus an entrepreneurial spirit. In this manner, the entire pharmacy team is focused on producing the best possible healthcare outcomes while driving business through the hospitals owned outpatient pharmacy programs. Major side benefits of this approach are reduced fragmentation of health information and more complete patient health records.
So, why is this important? Clearly, financial risk is growing within hospitals and health systems. Currently, one in five Medicare patients is readmitted within 30 days of discharge.1 The readmission rate grows to 35% within 90 days of discharge. Together, readmissions add an estimated $17 billion to the cost of care.2 More post-discharge adverse events can be traced back to medication-related issues than any other cause.3 A primary reason for these events is lack of adherence to medications prescribed at discharge. Almost every patient being discharged from the hospital receives at least one prescription, yet as many as 30-40% go unfilled once the patient leaves the hospital.4 This not only predicts a failed health outcome, causing patients to re-enter the health care system, but also represents a missed opportunity for health systems to create and realize margin from outpatient prescription services.
Specialty pharmacy programs are being developed and implemented at more hospitals than ever before. There are at least three key reasons for this:
• Specialty pharmacy represents a new revenue and margin opportunity, which can be significant given the escalating prices for specialty drugs and the availability of discounted drug costs for hospitals.
• Hospitals are assuming more financial risk for their services, causing them to look for ways to optimize clinical outcomes. This includes outpatient pharmacy services and specialty pharmacy, in particular.
• Hospitals and health systems that provide self-funded employee benefit plans may be able to take advantage of lower costs for specialty drugs (through 340B or own-use contracts), providing savings opportunities for their in-house health plans and their employees.
However, just implementing a specialty pharmacy program doesn't guarantee success. Hospitals need to offer services that are competitive with other specialty pharmacies in their markets, have access to payer and drug company networks, and integrate their programs with other parts of their care teams. In an industry experiencing rapid change and unparalleled growth, hospitals lacking focus and planning could easily fall behind their competitors. Consider that specialty drugs are not just used or dispensed for outpatients, nor are they only billed to pharmacy benefit plans. Specialty drugs are also administered in outpatient clinics and infusion suites, and are billed under medical benefits as often as pharmacy benefits. When building your specialty drug management program, take a look across your system to ensure that the drugs being used provide a cost-effective result. And, make sure your billing department has policies and procedures for verifying benefits, filing appeals for short-paid or unpaid claims, and collecting past-due amounts from plans and patients.
Hospitals that self-fund their employee health benefits have opportunities for collaboration between their health plans and owned specialty pharmacies. Because these pharmacies often have better purchasing power (through 340B, own-use or Group Purchasing Organization contracts), they may be able to provide a better price to the plans. The plans may see significant savings by using in-house pharmacies for specialty drug prescriptions and can drive member utilization through copayment incentives or exclusive provider arrangements. This, in turn, helps these pharmacies lower their operating costs because of the larger prescription volumes.
Although these elements may seem simplistic and easy to achieve, very few healthcare organizations have done them all well. Many have tried to run these elements as siloed efforts with one area covering inpatients and the other outpatients. Others have tried to operate all segments as an inpatient operation, in an effort to reduce costs. Few have been able to harness an entrepreneurial spirit to compete successfully in the retail pharmacy world. Let's face it: The competition is strong and growing.
Where and how to begin depends on your current capabilities. You will need to carefully assess your internal resources, skill mix and expertise to take on this type of endeavor. You must also consider "time versus value," in that you may be able to do "it" but how long and how costly will "it" take you to do? Organizations often enlist consultants when tough decisions need to be made to cut services, but fail to consider the upside of hiring consultants to get programs and margins faster. Done correctly, this type of initiative can enhance patient satisfaction, improve health outcomes and coordination of care while contributing to the bottom line margin of the organization.
References:
1. Jencks et al. Rehospitalization among patients in the Medicare Fee-for-Service program. N Engl J Med 2009; 360:1418-28. http://www.nejm.org/doi/full/10.1056/NEJMsa0803563
2. Beckett RD, Sheehan AH, Redden JG. Factors Associated with Reported Preventable Adverse Drug Events: A Retrospective, Case-Control Study. Ann Pharmacotherapy. 2012; 46(5):634-641. http://www.medscape.com/viewarticle/763804_3
3. Foster, AJ, Murff, HJ, Peterson, JF et al. (2003). The incidence and severity of adverse events affecting patients after discharge from hospital. Ann Intern Med, 2003 Feb 4; 138(3): 161-7. PubMed PMID:12558354. http://www.ncbi.nlm.nih.gov/pubmed/12558354
4. Schnipper JL, Kirwin, MC Cotugno, et al. Role of pharmacist counseling in preventing adverse drug events after hospitalization. Archives of Internal Medicine 2006, 166: 565-571. http://archinte.jamanetwork.com/article.aspx?articleid=409914
Gregory Burger, MS, RPh, FASHP – Vice President, Hospital and Health Systems, Visante Inc. Greg has particular skills in the areas of hospital pharmacy operations management, drug diversion prevention, standards and compliance, patient safety, multiple facility redesigns and launches, outpatient prescription pharmacy administration, automation, and specialty pharmacy including the 340B Drug Discount program. He is a certified Six Sigma Green Belt in performance improvement methodology. Prior to joining Visante, Greg was Executive Director of Pharmacy Operations at Indiana University Health (IU Health) in Indianapolis, IN. He was responsible for all aspects of pharmacy operations at four hospitals, 6 outpatient infusion center pharmacies and 21 outpatient prescription pharmacies in the IU Health system. This involved overseeing an operating budget of $150 million in expenses and $800 million in revenue plus a staff of 585 full time employees. As Director of Pharmacy at UC Health–University Hospital in Cincinnati, he managed all aspects of pharmacy practice including annual pharmacy budget preparation, administering the hospital's residency program and overseeing 125 FTEs. Greg developed a "best in class" drug diversion program while in Cincinnati, working collaboratively with the DEA, local law enforcement and Board of Pharmacy investigators to detect and convict 73 drug diversion cases over 8 years. Before this, he was with the University of Iowa Hospitals and Clinics in Iowa City, Iowa, where he was Assistant Director of the Department of Pharmaceutical Care and Director of Pharmacy for the Ottumwa Regional Health Center.
Tony Zappa, PharmD, MBA –Vice President, Visante Inc. Tony has an extensive history of leading a number of companies spanning an array of pharmacy-related industries. This experience includes 9 years with PBMs, including 3 years of international experience in London and South Africa; 9 years with specialty pharmacies, both mail order and community-based; 3 years with 340B administration; and shorter stints with home medical equipment, internet pharmacy and prescription claims auditing. Most recently, Tony was part of a new leadership team at Wellpartner that turned around its 340B administration business into a profitable company. He helped grow Fairview Pharmacy Services, LLC over 3 years as its CIO and Director, Specialty/Infusion Operations. Dr. Zappa spent 5 years at BioScrip/Chronimed leading its retail and mail-based specialty businesses, nearly doubling revenues to over $500 million. His PBM experience includes 3 years of international work, including 14 months in London developing managed care and PBM programs in 4 countries, including Argentina, New Zealand, Japan and South Africa. He then moved to Johannesburg to lead the start-up of Interpharm/HMS, a U.S.-style PBM and mail order company. As part of that experience, Dr. Zappa built pharmacy networks, set claims format and processing standards and created formulary and clinical review programs.
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