After a few slow years, experts believe that there's reason to hope that 2013 might bring some recovery.
Pharmacists are approaching 2013 with tempered optimism as the economy seems to be slowly rebounding and consumer confidence is the best it has been since 2009. However, compared with last year, community pharmacists are not quite as confident that 2013 will outperform 2012 for sales volume and net profits. Health-system pharmacists, on the other hand, are more optimistic about 2013 with expectations that their pharmacies will reach their financial goals and be able to contribute positively to net revenues.
These were some of the findings from Drug Topics’ 2013 Business Outlook Survey, an annual survey of more than 600 community and health-system pharmacists that examines the current climate and future prospects. This year’s survey was fielded for two weeks in October 2012.
Community pharmacists ranked the top five factors that contributed positively to their businesses last year as
follows (Figure 1):
There was little difference compared with 2011, although medication therapy management (MTM) made the list and healthcare reform did not.
In terms of the factors that negatively affected community pharmacists in 2012, the top ranking factor was mandatory mail-order programs, followed by lower reimbursements from third parties, $4 generics from competitors, the completed merger of Express Scripts Inc. and Medco Health Solutions, and healthcare reform (Figure 2).
Approximately three quarters of community pharmacists (73%) of the 436 pharmacists who responded to Drug Topics’ survey expected a good, very good, or excellent business year in 2012. However, their expectations dropped for 2013 with approximately two-thirds (67%) predicting a good to excellent business climate (Figure 3). One third of community pharmacists expect sales to increase this year and one-third expect sales to remain the same. However, 17% expect sales in 2013 to decrease and 17% don’t know what to expect. This is in sharp contrast to last year’s survey in which 40% expected sales to increase, 32% expected sales to remain the same, 15% expected a dip in sales, and 13% did not know what to expect.
Only 20% of community pharmacists expect net profits to climb in 2013 compared to 25% last year. Approximately 31% expect net profits to remain steady in 2013 compared to 24% last year. Almost 32% expect net profits to go down in 2013, compared with 35% last year.
For community pharmacists, Medicare Part D, which has been in effect since January 1, 2006, was considered a positive factor by one quarter of survey respondents for 2012; yet it also ranked as a challenge in 2013 by one-third of those surveyed. Obviously, more lower- and middle-income Medicare beneficiaries are able to have prescriptions filled, providing better and cheaper care for more seniors.
“This program has been instrumental in getting people to buy prescriptions they could not have otherwise afforded. This has lead to increased compliance,” according to one survey respondent.
Some of the Medicare Part D plans offer limited formularies, so patients really need information about their coverage and the step therapy requirements, according to pharmacists who responded to our survey. In addition, the coverage gap, known as the donut hole, has continued to pose problems for many patients.
“Many seniors do not understand the [Medicare Part D] program and do not refill medications when they reach the donut hole,” explained another survey respondent.
Pharmacists will need to work with patients to ensure that they remain compliant with their drug regimen. The Affordable Care Act of 2010 provided a 50% discount in 2012 on brand-name drugs for beneficiaries who reached the donut hole of $2,930 to $4,700. By 2020, the discount will reach 75%, with Medicare beneficiaries paying 25% of the cost of their drugs up to the annual out-of-pocket spending limit.
In addition, some community pharmacies are taking a hit with the increase in Medicare Part D beneficiaries as the number of cash customers has declined and Medicare reimbursements provide decreased profit margins.
“Many cash customers are now covered by low-profit Medicare,” said another survey respondent.
Others who responded to the survey blamed pharmacy benefit managers (PBMs) for low Medicare payments.
“PBMs squeeze margins to increase their profits. [Medicare] Part D gives more power to the PBMs,” a pharmacist wrote in the survey.
With the increased volume of prescriptions and lower returns, pharmacists note that they have no time to “thoroughly counsel every patient” who fills a prescription.
Other challenges that community pharmacists face include mail-order competition, which continues to rank as one of the top five factors that negatively affect these pharmacies.
Some survey respondents explained that PBMs that are administering the Medicare Part D plans still continue to promote mail order and preferred networks of the pharmacies that they own.
“Medicare Part D is good for Humana, Express Scripts, and the like,” said another respondent.
More community pharmacists (45%) are getting involved in MTM services under Medicare Part D, a slight uptick from last year’s participation of 43%. However, only 28% of the surveyed pharmacists who are offering MTM services under Medicare Part D are getting paid.
The majority of pharmacists delivering MTM (55%) received between $0 and $249 during 2012 for these services. One quarter reported payments received between $250 and $999, 15% reported payments between $1,000 and $4,999, and 10% said payments were $5,000 and above.
The biggest hurdle to effective MTM services is inadequate reimbursement, according to Randy McDonough, PharmD, MS, CGP, BCPS, at Towncrest and Medical Plaza Pharmacies, Iowa City, Iowa. He spoke about compensation for MTM services during a program at the American Pharmacists Association annual meeting last year.
“Payments generally vary depending on insurance coverage, initial time required, and follow-up visits needed,” said Dr. McDonough. “MTM is covered by some Medicare Part D plans.”
Dr. McDonough believes that dispensing and MTM are usually regarded as separate functions by pharmacists, but “this doesn’t have to be the case.” MTM activities occur across a continuum of patient care from dispensing to the comprehensive medication review.
However, survey respondents said that companies need to be realistic about the actual time available to provide MTM. Both MTM and immunizations take time to perform. A number of pharmacists responding to our survey complained that the working conditions for pharmacists needed to be addressed.
“Too much emphasis is placed on MTM. We’ve done that for years (it’s called taking care of patients). How about the work conditions pharmacists have to deal with on a daily basis?” said another survey respondent.
Hospital pharmacists (73%) are as
optimistic as last year about reaching their hospital financial goals and contributing to their hospital net revenues in 2013 (Figure 3).
Compared with their 2012 drug budget, about 41% of hospital pharmacists said that they expect their 2013 drug budget to increase, and 43% said that their 2013 drug budget will remain the same-which is similar to last year’s survey.
In terms of 2013 salaries for hospital pharmacists, approximately 58% believe their compensation would remain the same, 30% believed it would increase, 6% anticipate a decline, and 7% are not sure. For those who believe that salaries will climb in 2013, the average increase will be about 1% to 3% according to 95% of those surveyed.
The top five actions that hospital pharmacies took in 2012 to improve patient care were:
In 2013, the top five actions that hospital pharmacies are expected to perform to improve patient care include many of the same actions as last year (the first four are the same). However, hospital pharmacies are using pharmacists to go on hospital rounds and are allowing pharmacy technicians to take over more functions that were previously performed by pharmacists (Figure 4).
The American Society of Health-System Pharmacists (ASHP) and ASHP Foundation have been working on the Pharmacy Practice Model Initiative (PPMI), “to advance the health and well-being of patients by developing and supporting a futuristic practice model that efficiently utilizes pharmacists as direct patient care providers,” according to David Aguero in his blog on the ASHP website.
Hospitals that are interested in the PPMI and advancing the role of health-system pharmacists can complete a self-assessment known as the Self-Assessment Tool to assess a hospital’s alignment with the PPMI recommendations. The tool has over 100 questions, which assess the adoption of the PPMI recommendations at the hospital level. Following the self-assessment, hospitals can see how they score and then can create an “action list” to move forward with the PPMI. More information about the PPMI tools can be found at http://www.ashpmedia.org/ppmi/tools.html.
Hospital pharmacists continued to face a number of challenges in 2012, with the top 3 still being (Figure 5):
According to a number of survey respondents, the pharmacy associations have helped on the drug shortage issue by increasing awareness, and by expanding opportunities for pharmacy, such as immunizations given by pharmacists. However, “more legislative action is needed on billing, scope-of-practice expansion, training, and advancing pharmacy tech education and scope of practice,” said one respondent.
One survey respondent said that associations should promote the value of the pharmacist in patient care both in and out of the hospital. Several pharmacists surveyed also would like pharmacy organizations to work toward the goal of recognition of the pharmacist as a practitioner. Until that occurs, “pharmacists will continue as a nonentity and at best a super tech with a doctoral degree,” said another pharmacist who was surveyed.