Sponsored by: Comprehensive Pharmacy Services

As health systems seek new sources of revenue and means for improving performance under value-based payment, some are turning to an unlikely source: their own pharmacies. Typically seen by chief financial officers (CFOs) as a cost center on the balance sheet—and unseen by almost everyone else—pharmacy is now regarded as a hidden asset by many forward-looking organizations.


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The first in a series on transforming pharmacy services across the continuum of care, this article introduces the new role of pharmacies and pharmacists in hospitals and health systems.

A sharp upturn in drug costs and new regulations make optimizing pharmacy a virtual mandate for most providers. The bigger story, however, may be pharmacy’s potential in improving quality of care, especially the management of chronic disease, which often involves multiple medications, and in helping to reduce readmissions through more systematic and rigorous medication reconciliation from the emergency department (ED) to admission to discharge and well beyond. Where these efforts are encouraged, pharmacists are becoming important clinical and financial players.

Rod Recor, vice president of Product Development and Marketing for Comprehensive Pharmacy Services (CPS), a national provider of inpatient and outpatient pharmacy management and consulting services to hundreds of hospitals, has seen a surge of interest from large health systems. “They are asking us to help them think through how pharmacy can be leveraged across the continuum of care to improve quality, reduce costs and even become a profit center by opening hospital-branded retail pharmacies.”

Certainly, the need to rein in costs is the biggest driver. Fed by new cancer and hepatitis C drugs and a spike in generic drug prices, drug costs per admission at community hospitals rose a stunning 63 percent, from $336 in 2012 to $535 in 2015, according to data from the Lazarus Report, a pharmacy benchmarking survey firm.

Pharmacy-related regulations also are piling up:

  • In fall 2014, President Obama issued an executive order on antibiotics stewardship, and in March 2015, his administration spelled out details of the plan. By 2020, all acute care hospitals will have to have established antimicrobial stewardship programs and reduced inappropriate antibiotic use by 50 percent in outpatient settings and 20 percent in inpatient settings.
  • Seven of the 32 measures on the federal HCAHPS (Hospital Consumer Assessment of Healthcare Providers and Systems) patient satisfaction survey are directly influenced by pharmacy, such as communications about medications.
  • Most of the clinical process-of-care measures in the Hospital Inpatient Value-Based Purchasing Program are medication related, including quality of discharge instructions.
  •  Centers for Medicare & Medicaid Services (CMS) penalties for unnecessary readmissions are also looming large. With the full implementation of Affordable Care Act, hospitals now face penalties of up to 3% of CMS Inpatient Prospective Payment System payments for higher than normal readmission rates in several disease states. Health systems are rapidly seeking ways to reduce, eliminate or avoid these significant penalties.
  • The Health Resources and Services Administration has vastly expanded its audits of hospitals’ accounting under the 340B Drug Discount Program, which requires drug manufacturers to provide outpatient drugs to eligible health care organizations at significantly reduced prices. Failure to comply with rigorous audit requirements can lead to fines of up to a half million dollars as well as expulsion from the program, costing a provider many millions more in lost revenue. One CPS analysis for a large health system found 20 percent of its facilities had negative or failing marks on audit readiness.

Analytics at Play

As with almost everything else in health care today, data are needed to get a grasp on costs and quality in the pharmacy. Unfortunately, the widespread absence of information technology systems that support and track interventions and of reporting analytics to monitor initiatives adds to the challenges care providers face. Buying or creating these systems is expensive and lacks sufficient benchmarking.

CPS’ RX Clinical Analytics and purchasing program platform tracks factors such as what a hospital has paid for a medication versus a therapeutic alternative, whether it adhered to contract price, what are the top utilized drugs and how much can be saved by a change in formulary. “In many cases, we actually see a better patient outcome by not using the more expensive drug,” says Marvin Finnefrock, PharmD, CPS’ vice president of Clinical and Purchasing Services.

Antibiotic utilization is also tracked by drug and clinical application—critically important given how often these drugs are inappropriately prescribed, and the federal mandate to limit their use in both inpatient and outpatient settings.

The software generates analytics that provide real data for supporting a drug switch through the pharmacy therapeutics committee and helps with educating medical staff on the benefits of the change.  .

Recognizing that C-suite understanding and support is essential to success in transforming pharmacy, CPS has built a mobile app that provides dashboards of information appropriate for senior leadership, who often lack basic pharmacy performance information such as adjusted patient days for cost of pharmacy. “CFOs are very aware that pharmacy is driving 10 percent to 15 percent of their expenses, so when they see the possibility of having key performance metrics [for] pharmacy right at their fingertips, their eyes light up,” Recor says.

Having this information is changing the profile of the director of pharmacy, Recor says. “They can really seem like a hero, being able to prove that there's a better way to do something. They are improving the flow of information across the system so everyone is working from the same playbook.”

Reducing Readmissions

There's a lot more to this transformation than cost savings and managing formularies, Finnefrock says. “We are playing a central role in reducing readmissions and in managing chronic diseases, which now affect nearly half the population and often involve the administration of two or more drugs. The potential to avert adverse drug events and work with patients on proper use of medication has a huge impact on patient satisfaction and quality of care.”

For CPS-managed pharmacies, the readmissions piece starts in the ED, where real-time access to inpatient, mail order and retail prescription claims data is available through tablet technology, ensuring physicians are aware of all medication regimens the patient may be taking and can factor that information into the diagnosis and treatment. At discharge, face-to-face coaching by a hospital pharmacist eliminates medication redundancies and lets patients know about potential side effects.

It doesn’t end there, though. Within 48 hours after discharge, a pharmacist follows up by phone, first asking the key question: “Did you get your medication?” Nationally, one in five patients fail to do so. Pharmacists then ask if patients still understand dosing and side effects. And they also call back a few more times in subsequent weeks.  After that, CPS may continue to keep in touch with the patient by providing MTM (Medication Therapy Management) services. 

Recor says CPS has data on more than 1000 patients who have experienced the program in client facilities large and small and covering a range of disease states. It shows the work is correlated with a better than 30 percent reduction in readmissions in those hospitals and over a 13% percent improvement in HCAHPS scores.

Looking to the future, Finnefrock sees a far more expansive role for pharmacy. A number of health systems are already reaching out to retail pharmacies, either within the hospital or out in the community. “In-house, these facilities can generate thousands in additional revenue, improve outcomes post-discharge in reducing   readmissions and reduce hospital employee benefit drug costs,” he says. “In the community, they provide the pharmacist with the opportunity to perform some health care functions such as immunizations, smoking cessation and chronic disease state management, and do so while capturing [prescription] volume that would have gone to other pharmacy retailers.”

Within the new health care landscape, health systems will need to develop and leverage the pharmacy asset across the entire continuum of care in order to optimize clinical, financial and patient quality goals.

Disclaimer: This content is created by Health Forum Custom Studios and Comprehensive Pharmacy Services, not Health Forum editorial staff.