Organizational Procedure
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Jun 11, 2024

Soaring drug prices are putting the squeeze on pharmacies, but you have the power to resist the trend. Advanced analytics can help your pharmacy loosen hyperinflation’s grip.

From 2022 to 2023, drug prices surged by 15.2%, on average, on top of an 11.2% increase the previous year, significantly outpacing inflation. This past year’s increase constitutes an average difference of $590 per drug, putting big pressure on providers nationwide.

The increases are especially bad news for rural hospitals, where over 600 facilities, or 3 in 10, were at risk of closure in 2023 due to financial instability.

Mitigating the impact of rising costs is an industry priority: 71% of hospital pharmacy participants recently stated that streamlining pharmacy purchasing and procurement was an essential priority for them this year. 

The good news is they can do just that.

Where’s the opportunity?

There’s plenty of opportunity among the 40,000 to 60,000 NDC prices hospitals must evaluate daily, given nearly 2,500 preferred NDCs and eight NDC options per therapeutic group.

Most hospitals have been managing this supply chain with low-tech tools like Excel. Many also rely on traditional siloed GPO tools, wholesale portals, and TPA software. Despite pharmacies’ best efforts, this fragmentation hampers data-driven decision-making, creating gaps, deficiencies, and waste.

Traditional procurement approaches also prioritize compliance over financial performance, missing potential improvements in fiscal optimization and sustainability. Even hospitals using newer analytics focus mostly on inventory tracking and supplier consolidation.

Cost-reduction reality

Pharmacy supply chain teams need more. In my view, they need integrated analytics created specifically to optimize spending through blended prices, real-time cost pricing data, and clear visibility into potential savings.

Hospital executives generally understand this need and intend to address it. More than half say data-driven improvements in supply chain management can improve margins by at least 1% to 3%, according to a Sage Growth Partners Survey. The challenge, however, has been creating the right solution.

Fortunately, some hospital systems are adopting purpose-built innovations that surface potential cost savings and elevate the highest-potential opportunities to the top of an integrated dashboard.

These solutions provide transparency around all available drug options to ensure a hospital system gets the best prices and is fully stocked with the drugs it needs. From 2023 to 2024, there was a significant increase in the adoption of new software technologies to help combat purchasing problems, with 25% of respondents turning away from their wholesaler tools compared to 8% the previous year.

Millions of dollars recouped

We looked at 140 hospitals using state-of-the-art purchasing-optimization technology and workflows developed by pharmacists. These leaders saved $27 million in 2023 through real-time data-driven recommendations for better purchasing options. The recommendations considered preferred NDCs, GPO compliance, availability, and WAC, GPO, and 340B ratios.

For the pharmacy professional, a useful real-time purchasing-optimization dashboard provides three simple workflows:

  • A direct savings workflow that flags overcharges and recommends lower-priced options for identical products and hard-dollar ROI.
  • A cost avoidance workflow that flags 340B insights, contract management opportunities, and impending price increases, preventing overcharges before they happen.
  • An oversight workflow that monitors spending, shortages, and GPO compliance.

Relief is in reach

Now, any hospital system can have a bird’s-eye perspective of these workflows in their organization, viewing similar sites in “groups” and facilitating standardized buying practices where applicable. Buyers can dive deeper into any recommended change with a simple click.

Developing such a system doesn’t have to be a major IT undertaking. It’s more about gathering primary data: a wholesaler account list, a 12-month inventory history, 340B covered entity status, and GPO’s preferred NDC list. Standard templates help pharmacy departments connect to major wholesalers.

As a hospital pharmacy, there’s not a lot you can do to prevent drug prices from rising. But you can do more to find the best available price for every purchase. Analytics, dashboards, and the data you already have point the way. 

transform making change
May 28, 2024

In an evolving time for Pharmacies across the nation, picture a blank canvas. You may ask why? What does this have to do with pharmacy and healthcare? I want you to take a journey with me to the small beginnings I did not despise when it came to our Pharmacy department.

Insight Hospital Chicago is the oldest hospital in Chicago. Its located on the south side of Chicago in a community where the age expectancies vary between 10 minutes of each other. The hospital is a safety net and prizes on the 340B drug program. The spring of 2022 presented the real test. Insight was 100% independent from the previous company. The pharmacy department was a blank canvas with great potential for success.

One of the first discussions was to become dually accredited as a specialty pharmacy. My physical perception of that goal was questionable. We were only an outpatient retail pharmacy servicing a lower number of the hospital and community every week. My inward perception was based on faith that all things are possible. This was the passion that drove us to achieve this vision. When it came to specialty accreditation, we decided to pursue Utilization Review Accreditation Commission (URAC) first. The blank canvas was beginning to have color now. URAC accreditation was very extensive and intense. We rebuilt and reshaped the outpatient pharmacy in many ways. The policies, procedures and workflow were targets that help to provide infrastructure to the department. Within less than one year the outpatient received approval for full accreditation with no findings. This was a mark in history for the pharmacy department and for the hospital. Who would have thought the pharmacy would be able to achieve this in such a quick time. The doors were opening now in many ways. We were now able to get access to limited distributions drugs (LDD), had the payors open more to the pharmacy which helped to support the business. The hospital also gained more awareness in the community. The canvas was becoming fuller and more colorful.

The next accreditation we received for 9 months was Accreditation Commission for Health Care (ACHC). After this second accreditation, the outpatient pharmacy was put on the map. To become dual accredited within one year served as a success and legacy. Our Insight Chicago Pharmacy has gained more traction and notoriety. The canvas went from being blank and empty to full, vibrant and history in the making. Our pharmacy department considered the small beginnings and used that as a guide for the legacy we have now.

Telehealth is a program that has taking off with the Pharmacy at Insight. Through the Collaborative Drug Therapy Management (CDTM) program, the team is able to partner with providers and give the best patient experience. With this program in place, our prescription volume has exponentially increased from where we started. We can now firmly say the pharmacy department at Insight Chicago is flourishing. This also provides great support for the hospital, which is a big pillar in the community. The canvas is now filled and beautiful. It is diverse and versatile. It wouldn’t have gotten this way without a team. Everyone in the pharmacy department worked as a team. From the pharmacy technician to the Chief Pharmacy Officer (COP), there was communication and teamwork. This is what made the vision manifest and come to life!

To conclude, all things are possible when it comes to new beginnings. Health systems across the nation have pharmacy departments that have been long standing and already build our full workflow and operations. The question becomes, what happens when you meet a pharmacy department that is not? Where do you start on making it fully functional, unique and with purpose?  Consider the blank canvas journey that I went through and know there are open skies of opportunities. One can start with an vision and believing from within.

patient care
Apr 30, 2024

The inclusion of virtual pharmacy in the inpatient hospital setting is a significant shift towards integrating technology with healthcare, presenting unparalleled opportunities to elevate patient care. As we progress towards the 2030 American Society of Health-System Pharmacists (ASHP) healthcare initiatives, the adoption and optimization of Virtual Pharmacy stand out as key priorities for integrated health systems.

Strategic Implementation and Focus Areas

The strategic deployment of Virtual Pharmacy has revolutionized traditional pharmacy roles by transitioning aspects of order verification to environments with fewer distractions. Virtual Pharmacy associates are equipped with a focused work queue that aligns with the organization's strategic goals. This approach has allowed Virtual Pharmacists to concentrate on high-volume orders needing quick turnaround times, specifically targeting departments such as the Emergency Room, Surgery, Maternity, Postpartum, and Nursery. By reallocating these tasks off site, on-site pharmacists are afforded the bandwidth to focus more on operational duties and specialized clinical care, perfecting the balance between efficiency and quality patient care.

Operational Efficiency and Patient Care

An extensive review of hospital operations in one health system from January 2018 to June 2023 illuminates the substantial impact of Virtual Pharmacy, particularly within the Emergency Department (ED).

Efficiency in Order Verification

A notable achievement within the Virtual Pharmacy initiative has been the significant improvement in the order verification process. Order verification within 10 minutes significantly improved by 16.7%, jumping from 73.6% to 90.3%. This progress not only met but exceeded the system's target, confirming over 90% of orders are verified within a critical time limit. This is only made possible by the improved efficiency of Virtual Pharmacy.

Accelerated Antibiotic Administration

The efficacy of Virtual Pharmacy extends to enhancing the timeliness of antibiotic administration for critical cases:

  • Pre-Virtual Pharmacy: 28.2%
  • Post-Virtual Pharmacy: 50.9%
  • One specific Location:
    • Baseline: 35.3%
    • During Virtual Pharmacy: 68.6% (↑33.3%)
    • After Virtual Pharmacy Removal: 54.9% (↓13.7%)

These statistics highlight Virtual Pharmacy's vital role in speeding up essential interventions, thereby improving patient outcomes.

Expansion Opportunities and Patient Engagement

Virtual Pharmacy's existing structure offers significant potential for growth and expansion to the outpatient settings. Examples include Medication Therapy Management (MTM) and patient counseling. By providing personalized care through tailored MTM and counseling, Virtual Pharmacy could significantly boost patient engagement, promote shared decision-making and adherence to treatment plans. This approach not only elevates patient safety and outcomes but also presents scalable opportunities for the further integration of Virtual Pharmacy services within the healthcare delivery framework.


Virtual Pharmacy is not an entirely new concept but is at the forefront of healthcare innovation and is strategically positioned to fulfill the ambitious goals of the 2030 ASHP healthcare initiatives. Through strategic implementation, operational efficiencies, and expansion opportunities, Virtual Pharmacy is reshaping the healthcare landscape, setting new benchmarks for efficiency, clinical outcomes and patient engagement. As the healthcare sector continues to evolve, the ongoing enhancement and integration of Virtual Pharmacy will be crucial in realizing a more efficient and patient-centric healthcare ecosystem.

AI in healthcare
Mar 26, 2024

Drug shortages are becoming a pervasive global issue.  In the United States alone, there were 309 active drug shortages at the end of the second quarter of 2023 — the most in nearly a decade and close to the all-time high of 320 shortages, according to a report by the American Society of Health-System Pharmacists. Causes of these shortages are varied and complex, ranging from manufacturing and quality issues to unexpected demand surges, posing significant risks to public health. However, the responsible use of evolving technology, especially Artificial Intelligence (AI), can be a valuable asset in addressing the drug shortage crisis. The National Artificial Intelligence Act of 2020 defines AI as “a machine-based system that can, for a given set of human-defined objectives, make predictions, recommendations or decisions influencing real or virtual environments. Here are a few ways in which healthcare systems can utilize AI-driven approaches to mitigate the impact of drug shortages.

AI-Driven Forecasting and Inventory Management: One of the most significant ways AI can combat drug shortages lies in its ability to forecast shortages before they occur. Conventional methods of demand forecasting rely on manual analysis and decision making and often fall short in capturing dynamic factors influencing supply and demand. In contrast, AI algorithms swiftly analyze diverse data sources such as historical shortage data, production capacity, regulatory trends, and market dynamics, achieving high accuracy in predicting potential shortages. By capitalizing on these predictions, healthcare systems can take proactive measures to mitigate shortages, such as increasing production capacity or securing alternative suppliers. Furthermore, AI-powered epidemiological models can forecast changes in disease prevalence and treatment demand, enabling healthcare systems to anticipate shifts in medication requirements and adjust procurement strategies accordingly.

Supply Chain Optimization: Pharmaceutical supply chains are complex and are notoriously susceptible to disruptions. However, AI’s data analysis prowess holds promise in optimizing the pharmaceutical supply network. Through predictive analytics and machine learning algorithms, AI can identify vulnerabilities in the supply chain, anticipate disruptions, and recommend strategic interventions to minimize risks, preventing shortages from happening in the first place.

Production Optimization/Quality Control: Manufacturing quality issues and production inefficiencies are major reasons for drug shortages. AI can enhance production processes within pharmaceutical manufacturing facilities, minimizing drug shortages. By analyzing production data in real-time, AI can identify inefficiencies, optimize manufacturing workflows, and reduce waste. Furthermore, AI-driven quality control systems can enhance the reliability and safety of pharmaceutical products by detecting defects, anomalies, or deviations from specifications in real-time, minimizing the likelihood of production delays due to regulatory compliance issues.

Alternative Therapies/Enhanced Clinical Decision Support: AI can support clinical decision-making in managing drug shortages. Though still in its early stages, AI-driven clinical decision support systems (CDSS) can analyze patient data, treatment guidelines, and drug availability information to recommend alternative therapies or dosing regimens when preferred medications are unavailable. By integrating clinical expertise with real-time data analytics, AI-driven CDSS can empower healthcare providers to navigate complex treatment scenarios and optimize patient outcomes amidst drug shortages.

Overall, AI presents a promising path forward in addressing the persistent issue of drug shortages. By integrating AI-based tools, healthcare systems can not only predict and prevent shortages but also optimize supply chains, streamline production, and support informed clinical decision-making. While challenges remain, responsible implementation can ensure that AI’s potential in tackling drug shortages is fully realized, achieving better patient outcomes and improving the global public health. 

Feb 21, 2024

The responsibility to uphold the sterile compounding standards set forth by The Joint Commission (TJC) and the updated USP Chapter <797> is paramount. The revised guidelines, which came into effect in late 2023, necessitate a proactive approach to ensure compliance and safeguard patient health.

With an eye on the latest pharmacy research and expert guidelines, below are some steps and recommendations to help ensure your hospital pharmacy is up to date on the requirements:

1.) Policy and procedure review

Begin with a thorough review and revision of your current sterile compounding policies and procedures. Ensure they are in strict alignment with the updated USP <797> guidelines. This includes clear definitions and protocols for CSP categorization, beyond-use dating, and personnel qualifications. Emphasize a culture of continuous improvement, encouraging feedback from your team members to help refine these processes.

2.) Empower your team through education and competency

Invest in providing ongoing, comprehensive training programs for your staff. The programs should cover critical aspects, such as aseptic techniques, garbing procedures, and environmental monitoring, and aligning them with the latest standards. Consider utilizing innovative training tools like simulation-based education to enhance and improve learning outcomes. Regular competency assessments are crucial to ensure that all pharmacy personnel are not just trained, but proficient.

3.) Environmental monitoring and control enhancements

Adopt a zero-tolerance policy toward lapses in environmental quality within compounding areas. Implement state-of-the-art environmental monitoring technologies to track air quality, surface cleanliness, and temperature/humidity levels in real-time. These systems can provide actionable data to prevent contamination risks.

4.) Establish a robust quality assurance framework

Quality assurance (QA) is the backbone of sterile compounding compliance. Develop a comprehensive QA program that encompasses all aspects of the compounding process, from material sourcing to final CSP verification. Regular audits, both internal and external, should be part of your QA strategy to identify and rectify compliance gaps promptly.

5.) Advanced garbing and hand hygiene protocols

Reinforce the critical importance of proper garbing and hand hygiene among your team members. Consider implementing interactive training sessions and routine competency checks to ensure adherence. Consider the adoption of newer, more effective garbing materials and hand hygiene products to further reduce contamination risks. 

6.) Documentation

In the world of sterile compounding, we know that documentation is king. Maintain comprehensive, easily accessible records of all training sessions, competency assessments, environmental monitoring results, and QA audits. These records not only demonstrate compliance during TJC surveys, but also provide invaluable data for ongoing process improvements.

7.) Engaging leadership and fostering a safety culture

Active engagement from hospital leadership is essential to drive compliance initiatives and to assess the current plan. Present compelling cases for the resources needed to meet TJC requirements, emphasizing the link between compliance, patient safety, and organizational reputation. Foster a culture of safety and excellence, where every team member feels empowered to contribute to compliance efforts.

8.) Continuous improvement through feedback and innovation

Adopt an open-door policy for feedback on sterile compounding practices from your team. Encourage innovation by staying abreast of advancements in compounding technology and practices. Participate in professional forums and networks to share insights and learn from peers across the industry.

9.) Prepare for TJC surveys with mock inspections

Consider conducting regular mock TJC surveys to prepare your team and identify any potential compliance issues. These simulations should cover all aspects of the survey process, including document review, staff interviews, and direct observation of compounding activities. Use the findings to make immediate corrections and long-term improvements.

By considering and following these recommendations, you can ensure your hospital pharmacy meets the requirements set forth by TJC and USP<797>. This proactive approach to compliance will safeguard patient health, enhance the efficacy of compounded medications, and solidify your pharmacy’s reputations for healthcare excellence.

Achieving and maintaining compliance is a continuous journey that requires dedication, adaptability, and a relentless commitment to excellence. By empowering your team, investing in advanced technologies, and fostering a culture of continuous improvement, you can navigate the complexities of sterile compounding regulations and improve patient care. 

Feb 13, 2024

Pharmacy leaders at hospitals and health systems juggle a variety of issues and activities every day. From my decades of experience, I’m familiar with the operational, clinical, financial, and regulatory responsibilities we manage. It’s challenging but rewarding.

While we can’t solve all challenges overnight, we can make progress in one area: regulatory compliance. Let’s start by focusing on accreditation. We’ll look at specific (and perhaps lesser known) standards issues I have seen surveyed, with practical strategies to prepare.

Policies and documents required for compliance

These are items I call “easy A’s,” or foundational policies you should just have in place. While they may seem like you’re just “checking a box,” if you don’t have these, your hospital may be at risk for citation. I recommend three areas to focus on:

  • POLICIES: Do you have policies, SOPs, or written processes that address medication shortages, recalls, patient self-administration of drugs, investigational drug continuity, automatic stop orders, and ADRs? These are common policies that get overlooked.
  • DOCUMENTS: Do you have criteria for drug selection (formulary), performance improvement plans and data?
  • REGULAR REVIEW AND APPROVAL: Do you have processes in place to consistently review your formulary, LASA list, high-alert list, override lists, emergency medication supplies, policies, order sets, and standing orders?


  1. Policies don’t necessarily have to be full policies, but they should be written documents and must match your practice.
  2. Formulary demographic sheets or logs should have standardized information for each drug that is proposed for addition, and all should be filled in or marked NA to show they were considered.  Work with your hospital Quality department to ensure there are medication-related PI projects being tracked and reported.
  3. Not all reviews are required every year but start by establishing a cadence to keep them current.

Medication security considerations

CMS says medications are secure if they cannot be accessed by unauthorized individuals. Controlled substances must be locked. These considerations are probably compliant in most of your hospital areas, but some might slip by.

  • CRASH CARTS: Most of us use the breakaway numbered seals on our carts, but these ensure integrity of the drugs inside, not security. For this reason, controlled substances cannot be stored in them unless the cart is locked with a padlock, which could present a patient safety risk when trying to access emergency drugs.
  • NON-CONTROLLED DRUGS: Are your crash carts under constant observation? Are they parked where they cannot be seen (like alcoves or halls)?  If so, you may be at risk for non-compliance, as the seals aren’t locks and they can be opened undetected, which is a security concern.
  • UNLICENSED PERSONNEL: Materials Management, EVS, and others may need to handle and/or be around non-controlled medications pursuant to performing their job duties. This is compliant, provided you have a policy that states so.


  1. Ensure that no padlocks are used on crash carts. Any controls that might be needed during a code should be kept in separate, locked storage that can be quickly accessed.
  2. Placing crash carts in a locked room or in a place with close supervision will solve the challenge of unmonitored access.
  3. If any non-licensed individuals enter medication rooms or handle drugs as a regular activity (such as transporting cases of IV fluids), identify them in an approved policy. 

Whether you’re getting ready for an accreditation survey next week or months down the road, you can never be too prepared.  Compliance with the standards of accrediting bodies reduces the risk of patient harm, and isn’t that the ultimate goal?

Jan 24, 2024

It's amazing how quickly an industry can change. Thinking back to the early 2000s, hospital pharmacy procurement had successfully transitioned from a break-bulk/surplus purchasing style to just-in-time (JIT) purchasing and maintaining minimum inventory on the shelf.

AmerisourceBergen, McKesson, and Cardinal Health (the "big 3") had consolidated much of the wholesale and distribution industry and made improvements to their operations, largely alleviating the pressure of hospitals to maintain a large stock of medications. Pharmacy buyers, in turn, spent a good part of their day calculating inventory turns and working to get them as high as possible, only ordering what they needed to maintain a 72-96-hour on-hand inventory.

The success and capital efficiency of the JIT model along with continued adoption of pharmacy automation helped to reduce the need for medication storage space in most hospitals — so much so that rooms that had been used for storing medication were repurposed or taken by other departments. Health systems were confident that they could rely upon their pharmacy supply chain to distribute the medications they needed across their system in a timely manner, and central operations were focused on repackaging, IV compounding, and other labor-over-drug-cost initiatives where utilizing technician labor could bring medication costs down.

Forced to Adopt a Hybrid Model

Fast forwarding to today, confidence in JIT purchasing has flagged as medication availability disruptions have increased. Recalls, manufacturer shutdowns, bankruptcies, overseas logistics challenges, and even simple market economics have led to major medication outages and pharmacies simply running out of drugs.

This shift in stability is motivating hospitals and buyers to look for ways to create supply guarantees or reserve stock for vital medications, many times opting for additional on-site physical inventory — the exact opposite direction from JIT models. We're seeing a growing number of hospital systems building their own warehouses and taking on the burden of self-distribution to ensure additional days of drug on hand.

Compounding and repackaging efforts have seen a similar reversal of strategy. Given the severe labor shortages in the hospital pharmacy space, many hospitals are eager for a partnership with a 503B compounding pharmacy to outsource labor-intensive IV admixture processes. Similarly, outsourcing repackaging efforts or simply purchasing higher cost pre-mix products over products that require manual labor for manipulation is almost a foregone conclusion. The additional cost of medications is moot if there is no one available to do the work.

Repackaging and compounding channels have shown their own vulnerabilities as quality, supply, and lead-time issues have plagued the industry. In past years, the decision to "build versus buy" an IV product could be thoughtfully approached, and the transition planned and plotted. These days, this decision to insource or outsource a product is immediate and driven by unpredictable factors in both medication and labor availability alongside recurring 503B facility shutdowns.

One thing that has remained consistent: the mindset of reducing costs by better utilizing people and technology is as salient today as it was 20 years ago. Pressure on hospital pharmacy to "do more with less" has always been there, but the context of "supplying more medications at lower costs" has shifted to "performing more services with fewer available people."

The Greatly Changed — and Expanded — Role of Pharmacy Procurement

With these developments, pharmacy procurement jobs have exploded in complexity. Instead of simply walking the shelves, identifying gaps in inventory, and filling in the blanks, today's pharmacy buyer is burdened with managing questions like: Will this hurt my group purchasing organization compliance? Is this product built in our systems? Does this medication need specific accommodations for 340B issues? Are the correct contracts and prices loaded for our class of trade? Will we meet our committed volumes and achieve tier discounts?

A pharmacy buyer today is not only the inventory manager but an operator with proficiency in regulatory and contractual obligations, dynamic inventory flows, channel relationship management, analytics, and business intelligence. With so many responsibilities, it's become more difficult to track where money is moving, and more challenging to keep up with market dynamics that affect purchasing decisions and acquisition.

For these reasons, the role of buyer is no longer a simple add-on responsibility for a technician or pharmacist to complete in their downtime. Despite the lack of formal training options in the market, procurement has become a specialized position requiring significant investments in training, recruiting, and retention. Centralized purchasing — a model health system pharmacies are largely moving toward as hospitals consolidate — places these duties on dedicated buyers to ensure optimal procurement and distribution of drugs. This model has demonstrated that the appropriate authority and accountability invested in proficient pharmacy buyers can result in ongoing and meaningful outcomes at significant scale.

Achieving An Optimal Balance Between People and Solutions

While pharmacy procurement has become more complex over these last two decades, we are seeing health systems navigate these increased responsibilities successfully leveraging technology and partnerships. By identifying solutions that empower a leaner pharmacy team and help them to prioritize and complete their work efficiently, hospitals can eliminate much of the menial analysis from a buyer's job and help to focus on the 20% that really matters. When considering approaches in this space, there are a few approaches seen most commonly.

The most traditional approach is to use outsourced labor to complete the lower impact work. In the growing field of pharmacy procurement where expertise is hard to come by, there is tremendous value in the perspective gained from working with multiple health systems, but the questions remain: How do you ensure third parties work exclusively in your interest? How fast can you turn around someone else's employee to focus on your highest need in a market where hours matter?

Depending on the firm, there may be inherent conflicts between an outsourcing entity's financial interests and those of the health system. Finding objective and impartial assistance can be difficult, and the higher the degree of dependency on external talent, the higher the chances are that system-specific decisions and safeguards are at risk. Loss of control, lack of accountability, and the inability to shift priorities effectively, especially in a health system pharmacy, can feel like a tremendous disadvantage in a fast-paced market.

On the other end of the spectrum, we hear of "total automation" (i.e., "single pane of glass") solutions touted for so many processes, but more often than not these solutions require tremendous technical resources to implement and maintain. For large teams working in revenue cycle, the ratio of technical resource to claims processors have been advantageous. In pharmacy, we've more often seen these additional technical responsibilities piled onto an already-busy EHR, pharmacy IT, or pharmacy operations teams, and the additional channels needed to push change causes delays in execution. If you perform any critical analysis to select medications for a hospital, someone will have to teach the machine why you choose the way you do and how to handle the many exceptions you consider along the way.

Rather than subsidizing labor with low-accountability outsourcing or attempting to replace it entirely with high-complexity, high-maintenance total automation, the key to making progress while maintaining ownership has been identifying crucial touchpoints that cannot or should not be performed by an external vendor or technology and helping employees execute on these touchpoints rapidly with high-context guidance and oversight.

This is not a new idea - to reduce fraud, the group at PayPal was able to scale using automation to screen billions of dollars in transactions, identify those with the highest likelihood of fraud, and pass those transactions to a team for manual review. More recently, Latent Health advertises using artificial intelligence to identify and automate steps for prior authorization that are trivial or duplicative, leaving just those components that require trusted clinician review. Claims processing automation tools that forward exception cases to specialist teams have made tremendous impacts for health systems and spawned several publicly traded and successful companies in the process.

For all these tools, it's all about getting the information that needs to be "touched" to the people who need to see it, while ensuring those same people don't spend valuable time slogging through things they do not need to see. When done right, this makes the people involved more useful, enables them to use more of their valuable skillset, and gives them ownership of these important processes. For the complex, volatile world of pharmacy purchasing, where flexibility, context, and timeliness are paramount for getting medications safely to your patients, choosing the correct path on your quest to "do more with less" will pay significant dividends.

small rural hospitals
Jan 10, 2024

The 340B Program provides eligible hospitals and health systems resources not associated with federal subsidy, to administer comprehensive healthcare to patients and communities disproportionately affected by social, economic and environmental disparities. The program requires drug manufacturers participating in Medicare and Medicaid to provide outpatient drugs to covered entities at significantly reduced prices.

The last three years have placed extraordinary strains on hospitals, and for many smaller hospitals, the 340B program is critical to survival. Without 340B program savings, many smaller hospitals might need to lay off workers and shutter needed programs, such as those that help to detect and treat patients suffering from chronic conditions. Consequently, underserved populations will need to travel further away to receive care.

For smaller hospitals and those serving rural communities, many of which do not operate their own outpatient pharmacy, the only avenue for patients to access drugs covered under the 340B program is through a contract pharmacy arrangement. However, there are several disadvantages to relying solely on contract pharmacies to meet patients’ specialty medication needs. With a robust in-house specialty pharmacy program utilizing 340B savings, financially challenged hospitals can recover funds quickly while reducing the administrative burden on staff and improving patient outcomes. Could more small and rural hospitals fully utilize the 340B drug pricing program?

Perceived Barriers

Some of the perceived barriers for smaller hospitals to open an outpatient pharmacy and recognize the most benefits out of 340B include:

  • The belief that starting their own specialty pharmacy is too expensive, risky or complicated considering the perceived restrictions.
  • The myth that there is a threshold of pharmacy spend required.
  • The myth that specialty pharmacy programs require a large patient base of specialties such as oncology.

Disadvantages of Contract Pharmacy Reliance

Contract pharmacy restrictions that manufacturers placed on 340B hospitals have limited eligible health systems from reinvesting 340B funding into improving their services and communities. These increasing manufacturer restrictions on specialty medications make owning a specialty pharmacy a critical step toward maximizing savings. When dispensed in-house, the hospital saves money on fees it otherwise would pay to the contracted pharmacies. Community-based health systems, especially those serving rural communities, find it difficult to implement integrated specialty pharmacy programs due to payer or PBM restrictions, drug distribution limitations and absence of the necessary resources and infrastructure.

This results in specialty prescriptions being filled by external pharmacies that are unaffiliated with the health system leading to care fragmentation and inconvenience and frustration for patients. Health systems that do not provide retail or specialty pharmacy services also miss the opportunity to achieve healthy financial margins that are often associated with dispensing specialty medications. The improved margin opportunity for health systems who choose to own their own pharmacy is significant and can allow more hospitals to keep their doors open, while providing an expanded service to patients in a familiar care setting.

Overcoming Barriers with Data

When determining if opening an in-house specialty pharmacy is a good fit, there are many unknowns. It is necessary to understand the landscape of the community, the behaviors and demographics of the patient populations and have a long-range view for the needs of the health system and community. Anticipating industry and pharmaceutical pipeline trends provides an additional advantage in projecting the long-term growth and viability of the program. Executives should have access to their organization’s data and the resources needed to analyze the benefit of this investment. Many hospitals and health systems turn to a specialty pharmacy services company with expertise in these assessments for detailed analyses.

Opening an in-house specialty pharmacy helps hospitals provide superior clinical care, increase revenue and better support vulnerable communities. Incorporating specialty pharmacy services and utilizing the 340B program within the hospital’s clinical programs greatly enhances the patient and provider experience -- delivering an integrated program that drives revenue and reduces the total cost of care.

drug shortages
Nov 07, 2023

Craig Wright, Vice President of Pharmacy Services at Advantus Health Partners, says the one of the biggest obstacles our industry faces today is the national drug shortage crisis.

“There’s a lot of disruption that’s happening and it's indiscriminate of the continuum of healthcare,” Wright says. “We've seen shortages in the physician office space, retail pharmacy, specialty pharmacy and home health. There are drug shortages in every therapy class — medications used for anesthesia, oncology and pediatrics, for example.”

What concerns Wright the most is the randomness of it.

“One day, it might be a shortage in one therapy class and another day, it could be another class,” Wright says. “It’s difficult to forecast exactly what shortage is next.”

But even though it seems random, drug shortages are historic, Wright says.

“Shortages were here before the pandemic,” Wright says. “But that has continued, post-pandemic. Add the labor shortage issue to the supply chain disruption — it’s no wonder why drug shortages are at the worst levels we’ve ever seen.”

Oct 24, 2023

Biosimilars can provide significant savings and revenue for health systems, but how do you operationalize a streamlined workflow for providers and pharmacy to best support your patients?  Baptist Health found success by dedicating a resource to lead a cross-functional workgroup consisting of Providers, Nursing, Data Analysts, Prior-Auth, Patient Assistance, and Pharmacy to build out an automated strategy for biosimilars within their Electronic Medical Record, which is Epic.

While biosimilars are highly similar to their FDA‐approved biologic reference product, there are very few that are considered therapeutically equivalent.  Therefore, each biosimilar has its own billing code and reimbursement, which would necessitate a new prior authorization with the patient’s insurance if you want to switch a patient across products. For this reason, the scope of this initiative was limited to new patients initiating therapy.

One of the first challenges you face is insurance dictating what products you can use on a patient. The dedicated resource was able to pull the top 80% of insurance plans for patients that received the biosimilar reference product and identified which biosimilar(s) and/or reference products were covered by each insurance company.

Next a Request-for-Proposal (RFP) went out to manufacturers for sub-340B, sub-WAC, and discounted GPO pricing.  Once those were received, a financial evaluation was performed by the data analytics team.  The financials will be specific to your institution, since pricing, charging, and reimbursement will vary across health systems. Biosimilars will not always be the most cost advantageous agent and sometimes a reference product makes the most fiscal sense.

Armed with what products are available under each insurance plan, and the profitability of each of those agents, Baptist identified the preferred agents for each insurer.  The Epic Beacon team then built the preferred agents as the default in the treatment plan.  So, when a provider is initiating therapy the preferred biosimilar or reference product for that insurer will default in the order.  The provider can still change the product, if for example a pegfilgrastim patient was more appropriate to receive the Neulasta OnPro onbody device because they have travel concerns, and it will save them a subsequent trip for their second dose.  Providers loved this solution, as this required no additional steps to their workflow, and they have the flexibility to change the order to a different agent if they deem appropriate.

While this has been a very effective and efficient solution for Baptist’s providers and patients, this is not a one-time exercise. Reimbursement and pricing changes quarterly, so every quarter a new financial evaluation is performed.  Automation is key to continually evaluating the profitability of outpatient therapies, like biosimilars, because of the constant changes and the lack of resources to perform all the necessary financial evaluations.  More to come around automating analytics in a future article.  Hope you enjoyed and please comment below or reach out directly with any questions.