A well thought-out outpatient pharmacy service can improve patient care, increase revenue, and enhance employee benefits. However, only about 38% of hospitals nationwide currently operate an outpatient pharmacy.1 While facility size has a distinct influence on the likelihood of a hospital offering outpatient services, it is possible for facilities of all sizes to undertake such a project, particularly if they participate in the 340B program. An extensive evaluation of patient care benefits and possible revenue streams is necessary to determine the feasibility of operating an outpatient pharmacy.
SwedishAmerican Hospital (SAH) is a 333-bed teaching hospital, part of the two-hospital, not-for-profit SwedishAmerican Health System (SAHS) that serves 12 counties in northern Illinois and southern Wisconsin. Twenty years ago, SAHS operated an outpatient pharmacy, but because it did not generate revenue—the pharmacy was located in an offsite facility that made it difficult for patients and employees to utilize, and at that time 340B had not yet been enacted—it had been closed. Since that time, no outpatient pharmacies have existed within SAHS or in any other health system in the area. Recognizing that SAH was not optimizing purchases off our 340B contract, SAH recently began evaluating options to better capture 340B revenue. In addition, we aimed to improve the patient discharge process by developing a med-to-bed program, wherein pharmacists and/or technicians deliver medications to the patient’s bedside prior to discharge.
Evaluating Outpatient Pharmacy Options
We considered three options for opening an outpatient pharmacy: entering into an agreement with a contract pharmacy (or pharmacies); having a local retail pharmacy come into our hospital to develop and run an outpatient pharmacy; or establishing and operating the outpatient pharmacy ourselves.
The first option was attractive, given the Health Resources and Services Administration’s recently revised guidelines clarifying the requirements that 340B entities must meet when utilizing contract pharmacy services. The guidelines now permit covered entities to contract with more than one pharmacy or to have both an in-house outpatient pharmacy and a contract pharmacy to provide outpatient pharmacy services. Covered entities may contract with multiple pharmacies or multiple retail pharmacy locations. However, we felt this option was untenable for a few reasons. Because we would have had to pay the contract pharmacy a dispensing fee for each prescription filled, our profitability would suffer. In addition, as our hospital would have been responsible for ensuring the compliance of these contract pharmacies, and we did not possess in-house expertise in retail pharmacy, we felt that this option was not ideal.
Similarly, contracting with a local retail pharmacy chain to manage an outpatient pharmacy within the hospital was equally undesirable. Relying on a vendor to manage the outpatient pharmacy would not provide us with the peace of mind that our program would be managed effectively and that patient care would be the top priority. In addition, while our hospital would benefit from 340B pricing, we would need to pay the retail pharmacy a dispensing fee. Although this option would be convenient and would avert the need to hire additional staff, we wanted to capture the greatest savings possible by avoiding the dispensing fee.
After careful evaluation, it was evident that developing, implementing, and managing the outpatient pharmacy in-house would be the best choice for our hospital. This option would allow us to capture the savings for discharged 340B patients without paying a dispensing fee to an outside pharmacy chain. In addition, managing the pharmacy ourselves would allow us to develop and implement a med-to-bed program, and filling hospital employees’ prescriptions could become an additional revenue stream. As we are self-insured, it makes sense to incentivize employees to utilize more cost-effective prescriptions. Although employees could still access any medication, we would be able to incentivize cost-effectiveness by providing many medications at a lower price point. Finally, we anticipated that the ability to fill prescriptions in the onsite pharmacy would be a significant time and convenience benefit to employees.
Developing the Program
Because we did not possess significant retail pharmacy experience in-house, to properly plan and implement the outpatient pharmacy we chose to work with a consultant who specialized in outpatient pharmacy. RFPs were sent out to three vendors, including our GPO and wholesaler, to identify the best match for the outpatient pharmacy project. The consultant chosen provided templates to benchmark the costs of developing, implementing, and running the program. The director of pharmacy gathered the required metrics—for example, the number of patients we expected to serve, the estimated number of prescriptions per patient, how many refills would be expected, and a conservative estimate of the number of employees who would participate in the program and how many prescriptions each would fill.
An accurate estimate of costs and potential revenue are vital elements to planning for a successful outpatient pharmacy. A business plan for the outpatient pharmacy was developed by pharmacy and presented to the C-suite, including the chief medical officer, chief financial officer, chief quality officer, chief nursing officer, and a representative from human resources. After reviewing our plan, the C-suite gave the go-ahead to begin the implementation.
Shortly after we began, we were faced with a significant barrier to implementation—the state of Illinois announced it was modifying its use of the federal 340B program. The Illinois House of Representatives introduced an amendment that required enrollment by all organizations eligible for the 340B program. The amendment also stated that 340B participants could not exclude Medicaid-covered outpatient medications and must submit claims for the actual acquisition cost of those drugs.2 Because we were unsure how these changes might affect the implementation of the outpatient pharmacy, the decision was made to put the project on hold until more information was available.
After we were sure the changes would not negatively impact the implementation and management of our outpatient pharmacy, enough time had gone by that we were required to have the proposal reapproved. However, the reapproval process was uneventful, and we received reapproval in May 2013, had the implementation kickoff meeting in September 2013, and opened the outpatient pharmacy in February 2014.
One of our in-house clinical pharmacists had some experience working in the retail setting and also was familiar with the discharge process. She agreed to become the manager of the outpatient pharmacy, and also served as the project manager for the implementation process, while the director of pharmacy facilitated and managed the overall project.
Our outpatient pharmacy consultant was helpful in creating timelines, gaining the required licenses, and setting up insurance companies. Although locating a suitable space within the hospital can be challenging, we were fortunate that another unit had recently vacated an area that was ideal for an outpatient operation, and minimal changes were required to facilitate an effective layout.
Evaluating Automation Systems
To identify which outpatient pharmacy management system would best meet our needs, the pharmacy director networked on a listserv to learn which systems were being used in outpatient pharmacies and how satisfied users were with their choices. We also sought input from our consultant. After we narrowed our options down to two potential systems, we conducted site visits at hospitals in our area that were using these systems. The site visits were an important step in the process, as witnessing how technology operates in real-world scenarios is preferable to simply viewing a vendor’s demonstration of the technology. During the site visits, we found it helpful to query the users as to the aspects of the system they did not find useful. For example, users commented on customer service challenges, concerns about the longevity of the product or company, and cost issues. Their input led us to identify the ideal outpatient pharmacy management system for our facility. The product we ultimately chose offered superior technical support by an exceptional local representative.
Outpatient Pharmacy Med-to-Bed Program
Implementing a service wherein medications are delivered to a patient’s bedside prior to discharge ensures the patient has access to their prescriptions when they return home, can improve medication adherence, and has the potential to reduce readmission rates. Data indicate that only about 40% of patients fill their prescriptions the day of discharge, and 22% have not fill their prescriptions by a median of 12 days after discharge.3 Patient-reported barriers included lack of transportation, difficulty affording medications, and long wait times in the pharmacy. A service whereby pharmacists and/or technicians go to the patient’s bedside prior to discharge, double check the medications they are taking, verify insurance coverage, process copays, and deliver the medication overcomes many of these barriers.
Pharmacists are notified in one of three ways when a patient is 24 hours from discharge:
- Patient Care Rounds. All of our clinical pharmacists participate in patient-care rounds, and can thereby identify which patients are close to being discharged.
- Fax from Nursing. In some of the procedural areas, such as the catheterization lab and same-day surgery unit, nurses will notify pharmacy by fax that a patient is ready to be discharged.
- Patient Flow Dashboards. Nursing uses patient flow software that identifies when a patient discharge order has been placed. A monitor in the pharmacy displays this information.
Once pharmacy is aware that a discharge is imminent, the pharmacist, pharmacy resident, pharmacy student, or pharmacy technician visits the patient in their room to explain the med-to-bed program and the services we provide. While any of these pharmacy staff members can perform these services, a pharmacist will typically handle high-risk patients and other targeted patient populations—for example, COPD patients, who may have a higher rate of readmission within 30 days. In addition to offering to fill their prescriptions in-house prior to discharge, the pharmacist double-checks that the medication reconciliation process was performed correctly. Pharmacists also can answer any medication-related questions the patient has and explain possible side effects. Other services the med-to-bed service provides include a verification of insurance reimbursement for the ordered medications and on-the-spot copay processing using a credit card reader that is attached to the pharmacist’s notebook computer. After a medication has been prepared, it is delivered directly to the patient’s room by outpatient pharmacy staff.
We projected that the outpatient pharmacy would fill approximately 200 prescriptions per day by the end of its first year, and based on this number, it was important to ensure our pharmacy would be adequately staffed. We estimated the need for two pharmacists, three technicians, and 0.5 of an administrative FTE for optimal management of the pharmacy and the med-to-bed program.A common reason outpatient pharmacies fail is that they are not adequately staffed. Attempting to initiate such a program utilizing only existing staff may be insufficient. Proper planning and accurate staffing estimates for the projected volume of prescriptions filled is a vital component of a successful program. When hiring pharmacists and technicians for a med-to-bed program, it is valuable to hire staff members who are comfortable providing hands-on patient care—they should be capable of communicating and counseling patients in their hospital beds. A pharmacist or technician whose past experience includes little direct patient care—for example, someone who has primarily compounded medications—may not be an ideal fit. The med-to-bed pharmacist serves in a unique setting, with job duties that resemble those of a clinical or decentralized pharmacist. Effective customer service and communication skills are particularly critical.
Since going live in February of this year, the outpatient pharmacy—and the med-to-bed program in particular—have exceeded expectations. Initially we anticipated a break-even point—based on estimates of the first year’s operational costs, all capital costs, startup expenses, and inventory—after 11 months of operation. We now expect to break even in about half that time.
From an employee satisfaction perspective, the implementation of the outpatient pharmacy and med-to-bed program has been one of our hospital’s most successful programs. We recently presented an update to hospital leadership during a town hall meeting, and the president of the hospital reported that hospital employee satisfaction for the program has been extremely favorable. Employees are pleased with the low-priced medication options and with the time-savings that results from picking up all their prescriptions while they are at work. The money generated by the outpatient pharmacy is reinvested in the program, so we are able to continually lower the cost of employee prescriptions. Moreover, prescribers are pleased with the reduced volume of phone calls and faxes they receive due to a patient’s ordered medication not being covered by their insurance plan.
Patient satisfaction with the program is similarly high, particularly in the same-day surgery unit. The convenience of having all prescriptions in-hand when patients return home has proven invaluable; there is no need for the recovering patient or a caregiver to make a separate trip to the pharmacy.
We are confident that patient care also has improved, but as the pharmacy has been operational for only three months, its effect on 30-day readmission rates is still unknown. We look forward to quantifying the program’s effect on readmission rates in the coming months.
The program has been extremely well received and has proven cost-effective; nonetheless, we realize it is unlikely that we are capturing all possible prescriptions. Therefore, we anticipate entering into an agreement with a retail pharmacy to provide contract services for those prescriptions that are not being filled in our facility. We also plan to track readmission rates, particularly to compare the experience of patients who received their medications through our med-to-bed program versus those who did not. It is hypothesized that the extra services and enhanced patient care proffered by the med-to-bed program will positively impact readmission rates. Other future goals include leveraging the outpatient pharmacy to optimize various public health initiatives, including increasing vaccination rates, and to compile a drug manufacturer discount database, which will centralize the various discounts offered for different medications (see SIDEBAR).
For hospitals that participate in the 340B program, it is imperative to optimize 340B purchasing. A well-designed outpatient pharmacy service—including a med-to-bed program—can improve patient care, provide a new revenue stream, and increase patient and employee satisfaction.
- Outpatient Pharmacy. State of Pharmacy Automation Survey. Pharm Purch Prod. 2013;10(8):88-90.
- ASHP Pharmacy News. Medicaid Reform Causes Major 340B Program Changes in Illinois.http://www.ashp.org/menu/News/PharmacyNews/NewsArticle.aspx?id=3762 Accessed May 14, 2014.
- Kripalani S, Henderson LE, Jacobson TA, Vaccarino V. Medication use among inner-city patients after hospital discharge: patient-reported barriers and solutions. Mayo Clin Proc. 2008;83(5):529-535.
E. Thomas Carey, PharmD, received his doctorate in pharmacy from Creighton University in 1996. He has been the director of pharmacy services at SwedishAmerican Hospital in Rockford, Illinois, since 2000. Thomas’ professional interests include infectious disease, cardiology, medication error prevention, hazardous medication exposure prevention, and pharmacy management.
Future Outpatient Pharmacy Initiatives
Increasing Vaccination Rates
SwedishAmerican Hospital pharmacy students are currently developing algorithms to identify patients who are candidates for vaccination. For example, if an elderly patient is in the hospital to undergo an orthopedic procedure and is visited by their grandchildren, we could counsel the patient regarding the importance of having a pertussis vaccine, as children are most likely to acquire pertussis from adults. Through the med-to-bed program, we could offer the pertussis vaccine to the patient while they are in the hospital for another procedure or condition.
Identifying Drug Discount Programs
Pharmacy students also are developing algorithms to identify the various drug benefits available from drug companies to ease the financial burden on our patients. Pharmaceutical companies oftentimes offer vouchers, discount cards, and rebates to patients, but this information is currently not available in a cohesive database. Consider the example of a patient who is prescribed Brilinta after receiving a stent, but whose insurance does not cover this medication—we could offer an alternative drug that is covered by their insurance or provide a coupon card that allows the patient to purchase the medication at a discount.
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