The ins and outs of mail order pharmacies — How to boost patient convenience without raising costs

As healthcare shifts toward a more consumer-centric approach, some hospitals are developing their own mail order pharmacies to ship prescriptions right to patients' doors.

The process offers healthcare consumers a high level of convenience and creates cost-savings opportunities for hospitals if done correctly, according to Jonathan Kernya, director of non-acute operations for OptiFreight® Logistics, a Cardinal Health company.

Successful mail order pharmacies require a strong knowledge and stringent oversight of freight and logistics management — components hospital pharmacies are not always familiar with.

Mr. Kernya spoke with Becker's Hospital Review about the growing trend of mail order pharmacies and shared how hospitals can work with freight and logistics experts to ensure they are shipping pharmaceuticals via financially responsible methods.

Editor's note: Responses have been lightly edited for length and clarity.

Question: Why are more hospitals shipping pharmaceuticals to their patients?

Jonathan Kernya: We can all acknowledge healthcare is moving away from the hospital and starting to gravitate toward the patient's home. That's no different for the pharmaceutical delivery networks. Shipping pharmaceuticals directly to patients eliminates the need to go to pharmacies to pick up a prescription, it is a convenience factor. It can also be more cost effective if the delivery network is set up appropriately.

In the last several years, hospitals and integrated delivery networks have become bigger players in the mail order pharmacy space, although some hospital systems have been doing this for more than a decade. Building these mail order pharmacies allows hospitals to compete with commercial mail order pharmacies and better control costs, since they are in charge of both purchasing pharmaceuticals and delivery them to the patient.

Q: What are the largest pain points for a hospital when shipping pharmaceuticals?

JK: When a hospital decides to initiate a mail order pharmacy, it typically builds the pharmacy from the ground up. Most hospitals choose to go in this direction due to their expertise in pharmaceutical procurement. They can leverage their purchasing power with the manufacturers and distributors to receive lower costs than if they went through a commercial vendor. While hospitals excel at this process, they can often overlook the logistical and freight components of what it will take to build the delivery network and get the right prescription to the right individual.

Q: Are hospital pharmacies shipping pharmaceuticals through the postal service or a national carrier? How should a hospital choose their method for shipping?

JK: We often see a mix of utilization of the United States Postal Service or a national carrier such as FedEx or United Parcel Service. The type of carrier is largely driven by what the delivery network is trying to accomplish. When shipping inexpensive drugs or pharmaceutical products within local delivery areas, USPS will often provide the lowest cost of freight. However, pharmaceuticals that require temperature control — like insulin —can be problematic in the USPS network. These products require a more time-sensitive delivery, which is something a common carrier like FedEx, excels at.

If the chain of custody is important for the pharmaceutical product being shipped, a national carrier is typically the best option. These carriers have a more robust in-transit visibility mechanism to track a package during the delivery process and offer requirements for a signature upon receipt. These functions are often used when mailing controlled substances, such as narcotics, that have age restriction on who can receive the product.

Q: How can a hospital pharmacy keep their expenses low when shipping pharmaceutical products?

JK: In a mail order pharmacy environment, freight and logistics will be one of the most expensive costs for a hospital. The best way for a hospital to control these costs is to find an expert to weigh in on the logistics, supply chain and freight component of the delivery network. Look for someone who can provide expert consultation and share advice on which carrier to use and when to use it.

The expert should also provide carrier management services. This is an important cost control mechanism because it allows for invoice auditing to ensure hospitals are getting the right price for the right transaction. Hospitals can use this information to build a network of metrics to measure a carrier’s performance to hold them accountable. This expert can also continually monitor the mail order pharmacy and identify additional value or cost reduction opportunities as the hospital's network grows and evolves.

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