Value is not just about controlling costs; it also means increasing revenues. Health systems expect it, and pharmacy departments deliver.
Health-system pharmacy leaders are now looking at the value their pharmacy departments can bring to their organizations - not just to control costs, but to grow revenue.
The McKesson Pharmacy Optimization team, headed by Mark Eastham, senior vice president and general manager, discussed five health-system pharmacy trends for 2016, during the ASHP Midyear meeting in New Orleans last month. These included the continued growth in the specialty pharmaceutical market, revenue-generation opportunities in health-system pharmacy, the need for supply chain efficiency, more oversight of the 340B program, and the need to leverage pharmacy analytics to make better financial, clinical, and operational decisions.
Mark Eastham"The growing movement toward value-based reimbursement continues to have a tremendous impact on health systems as they increasingly look to pharmacy as a source of revenue growth," said Eastham. "This need for health-system pharmacies to identify new initiatives that can increase revenue without compromising patient outcomes or safety is indicative of key trends and opportunities facing health-system pharmacies in the coming year."
The specialty pharmaceuticals market has continued to grow at an outstanding rate. In 2014, specialty drug spending increased 31%, and according to an Express Scripts forecast, this trend will continue at an annual rate of 21%-22% for the next three years.
"By 2019, we anticipate that percentage could increase to nearly half of a plan's total pharmacy spend," noted the PBM's Specialty Medications in Development report, published in October 2015.
Health systems have an opportunity to capture some of the revenue associated with specialty pharmaceuticals by becoming a specialty pharmacy provider.
"Health systems providing this service are late to the game. Large specialty pharmacies and PBMs with their own specialty pharmacies have been in this market for some time, and some drugs are only available in limited networks and others part of exclusive distribution channels," said Eastham.
However, there are a number of medications within the pharmacy distribution channel that are classified as specialty drugs that health systems can access. Systems should take advantage of the clinical managers in ambulatory outpatient settings, such as oncology or rheumatology, Eastham said.
The McKesson team can offer health systems education about the clinical activities that should be performed and the need for a call center to support patients 24/7.
"We can provide that support to get them started, to at least capture this revenue that today is walking out the door," he said. "As they progress in their specialty pharmacy footprint, we can provide the support of getting them into the limited networks. Data is king - everywhere - but especially in this area."
In the ambulatory setting, health systems can generate revenues by encouraging employees to come to their own pharmacies.
"Some health systems have taken on the role of the traditional PBM, and they manage their own employee prescription drug benefit through the health system. They provide the clinical service and formulary service - capturing that in their own pharmacy, instead of it leaving the health system," Eastman told Drug Topics.
To ensure that employees continue to use the health-system pharmacy, McKesson can help health systems set up and run their own mail-order operations. Additional services, such as medication therapy management, also can be offered with potential reimbursement from payers.
Supply chain efficiency can help to streamline workflow, improve productivity, and enable tighter inventory management. The McKesson team has developed its Drug Spend Intelligence tool to analyze all purchases, including drugs, supplies, and consumables, which account for almost half of a hospital's overall operating expenses.
"The value of this [tool] is it gives them a way to analyze all pharmacy purchases, so that they can see where the trends are. They can even drill down all the way to a specific drug itself," Eastman said. "Health-system leaders don't have to wait for the pharmacy director, who would need hours to analyze the information in Excel. With this, in seconds, they can see the trends and help manage the formulary and see the outliers."
The McKesson team offers consultative services throughout the supply chain, starting with the basics, such as ordering and receiving, and tracking expired medications. They also help the pharmacy department with strategies to handle drug shortages, as well as strategies to manage inventory in the automated dispensing cabinets out on the floors.
The 340B Drug Pricing Program Omnibus Guidance released last August included two significant changes that will affect covered entities participating in the 340B Program: the revised definitions of a covered outpatient drug and of an eligible patient, said Ned Milenkovich, PharmD, JD, Drug Topics' legal expert and editorial board member.
In our October issue, Milenkovich noted that if the proposed changes to these definitions are adopted, fewer drugs will be eligible for 340B pricing and burdensome administrative and financial safeguards will need to be implemented in dispensing and inventory tracking systems.
More than two years ago, McKesson acquired Macro Helix, a company whose mission is to provide innovative software solutions for covered entities to participate in the 340B program. Macro Helix is the leading provider of split-billing software, enabling hospitals and contract pharmacies to capture those prescriptions from contract billing relationships.
"We can work with customers for as long as they need that hand-holding to understand the ramifications of the 340B program. We help them bridge the gap of the covered entity to the contract and how to manage that relationship in an effective way," Eastham said.
The integration of pharmacy analytics is important for health systems to track and monitor drug spend and use, patient care, and quality, according to the McKesson team.
Besides the Drug Spend Intelligence tool, McKesson also offers ERP (Enterprise Resource Planning) integration solutions for health systems. These solutions can be used to support the hospital supply chain management, provide fiscal control, and help with human resource management.
"Organizations can leverage analytics information to make better financial, clinical, and operational decisions, and drive improved outcomes," Eastman said.