Improving Business Performance Through Data Driven Solutions


Caring for patients requires a successful business.

drug spending
Chuck Reed

Chuck Reed

Phyllis Houston, MSOL

Phyllis Houston, MSOL

Independent community pharmacy is all about patient care, but caring for patients requires a successful business. That’s where business-oriented tools such as Good Neighbor Pharmacy’s Managed Care and Business Performance value centers make a difference.

As an example, Elevate Provider Network members saw an extra $7 per claim in one plan compared to independents who belong to other PSAOs, said Chuck Reed, AmerisourceBergen Vice President of Pharmacy Innovation and Solutions. That increase is the result of data-driven contracting that has seen Elevate pull out of a growing number of high-volume, low reimbursement preferred pharmacy provider contracts. 

“As we know from the NCPA, 92% of revenue for the average independent pharmacy is from prescription products,” Reed said. “And of that 92%, roughly 90% is paid by a third party, while 10% is paid by cash. So, it’s really important that the payments received by pharmacies for medications allow them to operate profitably.”

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The typical PSAO approach is to contract with as many preferred networks as possible to maximize the potential patient pool, Reed continued. The thought is that patients choose their health coverage, then choose their pharmacy from the plan’s preferred list.

Elevate analytics suggested otherwise, at least for Good NeighborPharmacy patients, which showed that some contracts guarantee poor financial outcomes. In 2018, the Elevate opted not to be a preferred provider in the largest plan in the marketplace. Opting out of bad contracts turned out so well that Elevate opted out of additional preferred networks for 2019.

“It’s not to say that we are not in any preferred networks,” Reed said. “But we only want to be in the ones that truly make sense to our members. That willingness to say no has differentiated us in the marketplace. And it is earning our members more dollars overall.”

Better contracting is just one step to strengthening the core business of independent pharmacy. Better management of DIR fees is another key element. Good Neighbor Pharmacy offers a suite of business performance tools, including a DIR estimator that helps pharmacies better plan for fees and reduces the clawbacks by PBMs by advising stores on purchasing patterns, star ratings, and other factors that go into DIR calculations. Data makes it possible. “Without data, you have to work on soundbites and simple gut reactions,” Reed explained. “Having the data gave us the gumption to make that initial change to our posture on preferred networks.”

Data also helps track the consequences of decisions. It’s easy to assume that opting out of preferred status on a major contract would reduce growth. Instead, Elevate members showed 2.4% year-over-year growth in Rx volume over the past 12 months while the industry-wide Rx market declined by 0.4%. 

“Patients who go to an independent pharmacy have self-selected into a different site of care, they have a different pharmacy relationship,” Reed said. “The data tells us that Good Neighbor Pharmacy patients pick their pharmacy and then pick their plan.”

One reason is Good Neighbor Pharmacy’s focus on adherence. Participating pharmacies have access to the Business Performance value center, which focuses on store-level data, and EQUiPP, the Electronic Quality Improvement Platform for Plans and Pharmacists, which collects patient-level data. 

The Business Performance value center recently added a new safety net program to help boost adherence. The program automatically sends text messages to patients who are at risk for nonadherence. That includes patients who were late on prior refills or late on a current refill. 

“We really encourage pharmacies to have a strong adherence program,” explained Phyllis Houston, AmerisourceBergen Vice President of Program Development and Market Intelligence. “It’s good for the patient, improving outcomes, and it’s good for the pharmacy, improving refills and inventory management.”

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Member pharmacies also get a monthly Star Rating Report Card that compares store performance against other pharmacies and similar industry benchmarks. Business coaches can help individual owners pick and choose the tools that are most appropriate for their specific business operations and set goals.

“There are huge amounts of data coming out of your pharmacy,” Houston said. “It’s coming out of your pharmacy management system, your point of sale system, EQUiPP, and other sources. What we do in Business Performance is boil all that data down to meaningful metrics you can act on. Data drives improvement and helps you recognize opportunities.”

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