From The Editor | August 6, 2014

It's Time To Change The Provider/Pharmacy Paradigm

ken congdon

By Ken Congdon

Ken Congdon, Editor In Chief of Health IT Outcomes

Why aren’t pharmacists a more integrated part of my medical team? Why and when did pharmacies evolve to become retail establishments rather than true extensions of the health provider ecosystem? It doesn’t make much sense. Most other care paths and treatment plans (e.g. specialists/physical therapy appointments, etc.) are referred and monitored by my family doctor. However, when it comes to which pharmacy I use, I’m free to choose from any of the dozens of retail locations in my geographic area. Truth be told, I don’t even know who my pharmacist is. I doubt most people do. My pharmacist is whoever is working the counter at Rite-Aid today. This doesn’t seem right to me.

While we’re on the subject, why do I need to go to my doctor’s office for a prescription and then make a separate trip to a drug store to get that prescription filled? It seems to me that it would be more convenient (and logical) to leave my doctor’s office with my prescribed medication in hand.

I believe that pharmacists play a vital role in ensuring the ongoing health of patients. However, I believe their expertise is largely underutilized because of the separation that currently exists between doctor’s offices and retail pharmacies. Statistics prove that this division is not only an obstacle when it comes to care coordination, but also highly detrimental to patient outcomes.     

For example:

  • According to a 2013 report by the NCPA (National Community Pharmacists Association) titled Medication Adherence In America, 30% of prescriptions in the U.S. are never filled
  • Failure to adhere to prescribed medication plans causes up to 50% of treatment failures annually
  • These treatment failures lead to repeat office visits, increased hospital admissions, and up to 12,500 deaths a year
  • In total, these consequences of medication non-adherence cost the healthcare system $290 billion annually  

How many doctors do you think know if a patient failed to fill or refill his or her prescriptions? Likewise, how many retail pharmacies currently alert a physician to this fact? My guess is not many. Think of the lives and money that could be saved if communication between physicians and pharmacies were improved in this one key area alone.

Many will argue that technologies are emerging (e.g. EHRs, HIE, mobile apps, etc.) that will inherently improve information flow between doctors and retail pharmacies, thus improving medication adherence. However, I would argue that simply throwing technology at the problem is not enough. In my opinion, a paradigm shift is needed — one that brings the pharmacy under the umbrella of the health provider. It’s time for more hospitals, group practices, and other healthcare facilities to establish their own point-of-care pharmacies.

Diversify Practice Revenue, Improve Interaction With An Onsite Pharmacy

The concept of a point-of-care pharmacy doesn’t just make sense from a care coordination perspective, but a business perspective as well. For example, today’s physicians’ practices are being hit hard by reimbursement cuts, healthcare reform, and government-spurred technology investments. Their revenues are dwindling as a result. A point-of-care pharmacy can provide a new service line and profit center for a group practice.

Furthermore, retail pharmacies are actively looking to play a bigger role in the healthcare picture. Many have established retail clinics that are taking business away from traditional group practices. Physician groups can fight fire with fire by establishing their own in-house pharmacies.  

The benefits of such a move are numerous for providers and patients alike. For example, having a dedicated pharmacist on the medical staff will inherently improve physician/pharmacist communication. A point-of-care pharmacist is focused on filling prescriptions solely for the patient population of the group practice (not the multiple physicians’ groups a retail pharmacy must serve). As such, the pharmacist can develop direct relationships with the physicians in the practice and play a more active role in the ongoing wellness and treatment of these patients. Likewise, doctors can interact directly with their in-house pharmacist(s) to design and monitor medication plans. Moreover, technology interfaces can be implemented that provide a direct exchange of data between the pharmacy system and the patient records stored in the practice’s EHR. The result is that physicians and pharmacists finally have the information and interaction necessary to ensure closed-loop medication adherence.      

Can I Afford A Pharmacy Investment?

This is all well and good, but is owning and operating a point-of-care pharmacy even feasible for most healthcare providers from a cost and resources perspective? Believe it or not, it is. While certainly not an inexpensive endeavor, there are several vendors, including Walgreens and PharmaPoint, that specialize in providing the design, licensing, construction, staffing, management, and inventory services necessary to get your onsite pharmacy up and running.

According to Michael Plaia, CEO of PharmaPoint, his company has developed point-of-care pharmacies for group practices with as many as 120 physicians and as few as 3 physicians. “The average cost of establishing an onsite pharmacy for a health provider is between $250,000 and $350,000,” he says. “However, it can be profitable for a practice by its third month of operation and provide a physicians’ group with 100% payback in as little as one year. After that, the pharmacy’s profits contribute directly to practice’s bottom line.”

A point-of-care pharmacy doesn’t even need to capture the majority of its patient’s prescriptions to be successful — not even close. Most of PharmaPoint’s business plans have a provider profiting from an onsite pharmacy investment by filling less than one-third of its patients’ prescriptions. This is largely possible due to the reduced overhead an onsite pharmacy takes on compared to a retail pharmacy. For example, when it comes to inventory, a retail pharmacy must carry just about every medication under the sun. A point-of-care pharmacy, on the other hand, only needs to carry the medications that are most commonly prescribed by the physicians in the group.  

West Virginia Group Practice Proves Onsite Pharmacy Concept

The Huntington Internal Medicine Group (HIMG), a Huntington, WV-based group practice consisting of 57 physicians and 20 allied partners, is one provider that has recently invested in its own point-of-care pharmacy. The group used to be dispersed among 13 different office locations, but consolidated all physicians and services into one 155,000 square-foot facility (that it calls a Medical Mall) in 2006. It was around this time that the practice decided it needed to diversify its revenue stream.

“Our physician group wasn’t saving for tomorrow,” says Mark Morgan, CEO of HIMG. “Instead, doctors were simply applying their reimbursements to overhead and income, and these payments were on the decline. With over 1,000 patients visiting our building on a daily basis, we needed to provide more services to not only round out the patient experience, but also contribute to our bottom line.”

In response, HIMG invested in a dialysis unit and partnered with a local hospital to provide MRI services. Both initiatives were successful. The practice then set its sights on adding an onsite pharmacy to its Medical Mall facility.

The provider was introduced to PharmaPoint through an email marketing campaign and began to work with the vendor on a business plan in 2013. After 120 days for construction and logistics, HIMG went live with its point-of-care pharmacy on January 5, 2014. To date, the results have been promising.

“PharmaPoint’s pro forma set a realistic expectation that we would eventually fill 28% of our patients’ prescriptions,” says Morgan. “After seven months of operation, we currently fill about 4% of our patients’ prescriptions and are on pace to hit 10% by the end of the year. Even with these small conversion rates, we should have our first breakeven month at the pharmacy in July and should be profitable in the months going forward. With the data at hand, we expect to achieve a full payback on our initial investment in 18 months.”

HIMG is currently using a variety of tactics to convince patients to use its onsite pharmacy instead of a retail chain. For example, group physicians discuss the advantages of the point-of-care pharmacy with patients during office visits and patients are provided with handouts promoting the pharmacy as they check out.

For the patients that have taken advantage of HIMG’s onsite pharmacy to date, the benefits are clear. “Our point-of-care pharmacy offers patients unparalleled convenience,” says Morgan. “Our prescription drug prices are competitive with the retail chains and medications are ready for patients to take home with them as they leave our facility. Plus, we even offer programs that automate refills and mail them directly to patients free of charge.”

However, according to Morgan, it’s the improved physician/pharmacist interaction that is the ultimate benefit of the point-of-care pharmacy. “Our pharmacist is part of the care team,” says Morgan. “He regularly communicates with our doctors (and vice versa) when drug dosage, interaction, or affordability questions present themselves. Ultimately, this increased interaction positively impacts medication adherence and patient outcomes.”