Avoid Pitfalls in Opening an Outpatient Pharmacy


June 2020 - Vol. 17 No. 6 - Page #6

Q&A with James A. Jorgenson, RPh, MS, FASHP
Chief Executive Officer and Chairman of the Board
Visante, Inc, and Visante Limited

Pharmacy Purchasing & Products: What are strong reasons for opening an outpatient pharmacy?

James A. Jorgenson, RPh, MS, FASHP: The delivery of retail and mail order prescription services for patients, employees, and the general public can help hospitals and health systems leverage their internal expertise and extensive brand recognition to enhance both quality and financial outcomes, while also supporting the organization’s overall mission. Reasons to consider a hospital-based outpatient program may include the following:

  • Reduce fragmentation of care around medicines
  • Support population health and chronic disease management strategies
  • Design a program that complements the organization’s specialty pharmacy and pharmacy benefit manager (PBM) strategy
  • Create a program to ensure access to medications for all patients regardless of their ability to pay
  • Reduce 30-day readmissions (In a study of 30-day readmissions, 26% were noted to be medication related and preventable.1)
  • Create a system to capture and utilize prescription data across the enterprise to improve patient care and outcomes
  • Enhance brand recognition and patient satisfaction for the organization
  • Reduce employee prescription costs
  • Maximize revenue potential around ambulatory prescriptions

PP&P: What steps should be taken to incentivize employees to consistently utilize the internal prescription service?

Jorgenson: Simply building a retail pharmacy does not ensure that employees will choose to use it; an effective marketing and incentive plan is necessary. There must be a clear What’s In It For Me component to generate employee interest and utilization of the service.

Hospitals should recognize that offering a retail pharmacy program means entering a market with intense competition. To be successful, the retail pharmacy cannot be operated in the same manner as the inpatient pharmacy. Retail services must be nimble and able to react to changing market conditions to stay abreast, and ideally ahead, of the competition. To optimize employee and patient utilization, hospital-based retail programs must be better than the competition. Some elements to consider include:

  • Convenience. The location(s) and hours of the pharmacy must meet employee needs
  • Cost. Ideally, the hospital should design a program wherein use of the outpatient pharmacy costs the employee less than external options
  • Service. Turnaround time, medication counseling, and Medication Therapy Management services should be superior to external options
  • Communication. Timely and useful information about employees’ prescription benefit and hospital-based retail services should be a regular program feature

PP&P: In what situation would a robust volume of 340B-eligible patient prescriptions be guaranteed?

Jorgenson: Having a significant volume of 340B-eligible patient prescriptions is an important contributor to the financial success of a hospital-based retail pharmacy program. However, it is important to structure any such program first around compliance with Health Resources and Services Administration/Office of Pharmacy Affairs (HRSA/OPA) requirements and the intent of the 340B program, to extend care to vulnerable patient populations; finance should be a secondary consideration. Simply using 340B to leverage greater profitability for the hospital should not be the primary reason organizations offer retail services.

That said, even if clinic sites and physicians are eligible for 340B use, similar to employees, there is no guarantee that patients will use the outpatient pharmacy. One of the most successful approaches to capturing that prescription volume is to place pharmacists in key clinics to offer medication management and support to patients. This creates a personal connection between the patient and the pharmacist. To best support and manage those patients longitudinally, their pharmacist needs to have access to the prescription data, and that is only available if patients use the hospital’s retail pharmacy.

PP&P: How can pharmacy project the feasibility for success with the outpatient pharmacy?

Jorgenson: When Visante provides consulting support for organizations evaluating, offering, or expanding retail pharmacy services, we utilize an algorithm-based proforma that highlights a variety of elements, such as prescription volume, prescription type, payer mix/revenue, cost mix (ie, 340B, GPO, WAC), operating expenses, gross/net margin, and capital requirements.

PP&P: What do you see as the future of outpatient pharmacy?

Jorgenson: As care continues to shift from the acute setting to the ambulatory environment, I would like to see an expanded recognition that the primary treatment modality for the majority of patients is medication, and that medications are one of the fastest growing elements of US health care costs. From a quality of care and cost perspective, a well-defined retail pharmacy strategy should be a vital element of the larger hospital and health system strategy.

While the retail/mail-order pharmacy industry is concentrated and highly competitive, there is room for hospital-based programs due to some of the unique competitive advantages hospitals enjoy. Examining some important industry trends, hospital-based retail pharmacy programs have significant opportunities to differentiate themselves from the competition and create a niche market to serve their own employees, populations for whom the hospital has assumed risk, chronic disease populations requiring longitudinal care, as well as select self-insured employer groups where there is a strong relationship. Health care delivery is centered on the provision of medical care by physicians and other providers, and not in drug store, PBM, or insurer operation. Opportunities exist for hospital-based programs to improve the experience of care and medication adherence, as well as other aspects of self-management. As long as hospitals are the source of care delivery, they have a distinct market advantage in the retail pharmacy space.

Reference

  1. Pellegrin KL, Lee E, Uyeno R, et al. Potentially preventable medication-related hospitalizations: A clinical pharmacist approach to assessment, categorization, and quality improvement. J Am Pharm Assoc (2003). 2017;57(6):711-716.

James A. Jorgenson, RPh, MS, FASHP, is chief executive officer and chairman of the board of Visante, Inc, and Visante Limited. Before joining Visante, Jim was chief pharmacy officer and vice president of Indiana University (IU) Health, where he was responsible for the design and operation of the system’s pharmacy services supporting IU Health’s integrated delivery network. He is a member of PP&P’s Editorial Board.

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