With hospitals around the nation facing unprecedented financial burden related to COVID-19, and more people becoming uninsured, it's critical for healthcare leaders to identify sources of revenue and execute cost-saving strategies. Leaders should not overlook pharmacy to help capture savings.
Jeremy Hastings, vice president of business development, Health Systems, at McKesson Medical-Surgical; Andy Wilson, vice president of McKesson's 340B program; and Laura Amirales, senior manager of patient assistance services at McKesson, recently spoke with Becker's about ways health systems can utilize pharmacies and drug programs to drive revenue and cut costs.
Editor's note: Responses have been edited for length and clarity.
Question: Given the current environment with COVID-19, how do you see the 340B program playing a role in the non-acute space for health systems?
Jeremy Hastings: The 340B program is a government-administered program. Manufacturers that participate in the program discount drugs for eligible patients and health care facilities. Qualified health systems that build an effective strategy for maximizing the benefit of the 340B program outside the walls of the hospital — whether through a contract pharmacy relationship or through efficiently managed in-office dispensing — may see a benefit with positive health outcomes for their patients. Meeting your patients where they are, either in their neighborhood pharmacy or in a physician's office, is a key aspect to medication compliance. No matter where your 340B eligibility comes from, you're going to be dealing with a patient population with a greater risk of serious complications from COVID-19, as well as a larger population of Medicaid-eligible or indigent patients given the high levels of unemployment.
Q: What are some of the hallmarks or pitfalls of an effective 340B program in the non-acute space?
JH: If you're a disproportionate share hospital, cancer hospital or pediatric hospital looking to push your 340B program into non-acute facilities, you really need to focus on program compliance. Figuring out how to effectively sequester your medications to adhere to the 340B GPO exclusion in the clinic setting can be a daunting task, but it is one that can be achieved with planning, strong distributor relationships and technology solutions. If your facility isn't subject to the GPO exclusion, then your focus should really be on inventory control. Sequestration is still important, but your facilities are likely dealing with physical space and budgetary constraints that can make it difficult to get the medication to the patient at the time it is needed. In that case, you'll need to focus on running a very lean, just-in-time inventory that doesn't leave you with thousands of dollars of unused product on your shelves.
Q: What are ways that 340B hospitals are having to adapt to the ever-changing environment and how do you think this will affect them financially moving forward?
Andy Wilson: The systems and processes hospitals use to support care delivery have been recalibrated amid COVID-19. The challenge there is that the sheer volume of patient treatments has led to drug shortages, and that has a downstream impact not only on the hospitals, but also on the 340B program. Specialty pharmacies, hospital-owned retail pharmacies and many ambulatory clinics have adjusted to social distancing and other requirements for post-COVID-19 care delivery, and 340B is helping to sustain the costs of that. 340B is a focus because it helps keep hospitals financially viable in the face of a lot of other financial pressures and supports the delivery of necessary care as opposed to more discretionary care.
Q: Can 340B hospitals rely on different 340B solutions to help them recoup costs lost due to COVID-19?
AW: 340B is actually designed to help drive savings for a hospital rather than recoup a loss. We've watched our hospitals make sure they're capturing what’s available through 340B. The 340B program is fairly widespread, with half of the hospitals in the country benefiting from participation in 340B for their ambulatory services.
Q: Many health systems' financials have been impacted drastically by reduced patient volumes. What can health systems do to lessen the financial burden?
Laura Amirales: First, I think health systems need to start bringing patients back for treatment. Deferment of care has had a huge impact on the health of patients with chronic health conditions and patients can't continue to postpone care, so hospitals should make patient access simple and work closely with their teams to reassure patients that it's safe to seek treatment. Second, prescription assistance programs (“PAPs”) are not solely for uninsured patients, and it's important to recognize that during these times of job loss and the changing economy, financial need looks very different for patients.
Q: What revenue capturing and/or cost reduction initiatives could health systems utilize or implement in response to current challenges?
LA: Health systems should prepare for a surge in underinsured or uninsured patient populations by establishing PAP systems and revenue solutions strategies and team up with experts that are knowledgeable in this area if necessary. It's also critical to understand your utilization costs as well as the differences in reimbursement for inpatients and outpatients.