Editor's note: This is the second installment in a series on transforming pharmacy services across the continuum of care. The first article introduced the new role of pharmacies and pharmacists in hospitals and health systems.

A profound shift in the role of hospital pharmacy is under way, as health systems seek new revenue streams and new means of building a more complete continuum of care. Owning outpatient retail pharmacies is one way to capture prescription volume from the big-box chains, to help ensure adherence to medication use, improve transition of care processes and to potentially reduce readmission rates.

“As we make this transition from inpatient-centered care to an emphasis on outpatient care, and from episodic care to population health management, sooner or later every health system is going to need a retail outpatient pharmacy strategy,” said Tracy W. Becker, PharmD, MBA, divisional vice president of Outpatient Pharmacy Services for Comprehensive Pharmacy Services (CPS), a national provider of hospital pharmacy management and consulting services.

Like many hospital-owned retail pharmacies, the major focus of CAMC Pharmacy in Charleston, W.Va., was initially to serve as the primary pharmacy for dispensing prescriptions to employees and dependents of Charleston Area Medical Center Health System (CAMC). “However, there were multiple other opportunities to serve the needs of the patients and community. Therefore, the pharmacy services were more fully expanded to capture a larger percentage of 340B eligible patients of CAMC through the development of a more robust discharge and clinic prescription program,” said Brian Sayre, PharmD, health system director of Pharmacy for CAMC.

Its three community pharmacies include one at CAMC Memorial Hospital, home to one of the highest-volume heart programs in the United States; one at an urgent care center; and a new facility at CAMC Cancer Center.

Hospital Retail Pharmacy Programs and 340B

A big reason for a retail pharmacy strategy is to ensure that patients leaving the hospital fill their prescriptions and understand how to take the medications. Nationally, studies show an average of 20 percent of prescriptions go unfilled. Of those that do get filled, only about 50 percent of patients take their medicines as prescribed. This can lead to readmissions and worse outcomes.

CAMC and other 340B eligible entities have a built-in advantage over other retail pharmacies: Under the federal 340B Drug Pricing Program, drug manufacturers are required to provide outpatient drugs to eligible health care organizations at prices that typically run half the usual wholesale cost. This allows the hospitals to provide lower cost drugs to underinsured, uninsured and indigent patients, and all patients of the hospital who meet the 340B eligibility requirements.

The health system's outpatient clinics may be covered as part of the parent 340B organization or child site under the program, so 340B-eligible prescriptions can be dispensed at these facilities. “Often, our cash price is lower than any other pharmacy's,” Sayre said. “Additionally, we provide no-charge medications to many patients in order to help facilitate patient care, timely discharges and patient satisfaction. The 340B price helps to mitigate those losses.”

If recent Health Resources and Services Administration proposed guidance remains intact after the public comment period, it will place additional conditions on the program. One proposed condition defines a 340B-eligible patient as one in which an employed staff member or independent contractor of the covered entity provides care for the patient, and the hospital may bill for services on behalf of the provider. That requirement prohibits physicians or other providers from prescribing drugs under the program if they have an arrangement in which they only have privileges or credentials with a 340B hospital.

Another condition prohibits hospitals from prescribing 340B-discounted drugs to inpatients at discharge, which may require patients to make an outpatient appointment before a prescription is eligible under the program.

“The recent guidance is concerning, as it could limit the number of patients that qualify for 340B medications, especially discharge patients,” Sayre said.

Competitive Advantage

Regardless of the final version of the 340B guidance, however, hospital-owned outpatient pharmacies retain a clear advantage over traditional retailers through their access to the patient's electronic health record. “In order to monitor medication adherence, the pharmacist needs to be able to fully understand the patient's health history, who on the care team has reached out to the patient and what messages need to be delivered,” said Stanton G. Ades, PD, division vice president of Outpatient Services for CPS. “Most large chains don't have this ability.”

Often, patients are unaware a hospital has an outpatient pharmacy on the premises or that substantial discounts are available. At CAMC, pharmacy technicians round on the floors and talk to all patients nearing discharge about pharmacy services offered and how to access them. Nursing staff discusses pharmacy options with patients as well. Every patient receives a pamphlet outlining the service.

Potential Impact of a Hospital-Based Outpatient Pharmacy

The return on investment (ROI) in outpatient pharmacy for the hospital is hard to fully quantify. However, it is clear that a single avoided readmission, for example, can save costs in amounts that reach six figures. In terms of revenue, CPS data show that a 300-bed hospital system with 225,000 annual patient encounters requiring 450,000 prescriptions sends more than $25 million of revenue and $750,000 in gross earnings out the door to off-site retail pharmacies.

If a health system has a health plan, the potential impact of the outpatient pharmacy is even greater. “The only new dollars in the hospital space are coming from the ability to take on risk with premium dollars, so having control over your outpatient drug costs is key to managing that risk,” Becker said.

Indirect ROI is equally if not more important, Sayre said, including higher patient satisfaction. “Patients appreciate not having to stop at their local pharmacy on the way home from a stressful hospital visit and potentially not get a prescription filled. If there are issues with prescription coverage, dose, strength, interactions, etc., it can be difficult to get back in touch with the prescribing physician. We are able to take care of that before the patient leaves the institution. Many patients have recognized these efforts in working to provide them their needed medications.”

Implementing a Retail Pharmacy Strategy

The skill set needed to manage an outpatient pharmacy business differs significantly from that needed to manage an inpatient pharmacy department, Becker said. Managers must train staff on interfacing with customers, understand and manage third-party insurance requirements and maintain an inventory of non-pharmaceutical items.

It is critical to get all internal stakeholders aligned behind the single vision and advantages of a hospital-owned outpatient pharmacy, Becker and Ades said. Everyone from the C-suite to physicians, bedside nurses, discharge planners and the inpatient pharmacy team need to have a seat at the table in the planning and implementation process of an outpatient pharmacy.

“Everybody needs to fully understand this is a revenue-generating department of the hospital, with a huge potential to improve outcomes, reduce readmissions and improve patient satisfaction,” Becker said.