Category: Business

Old School is Still Cool

[dropcap color=”white” background=”black” style=”rectangle” size=”big”]A[/dropcap] recent series of issues at our pharmacy highlighted a communication gap between our staff and our patients. The story starts with the patient phoning in to refill prescriptions and being disappointed when they came to pick then up. They found several omissions in what they were expecting. It took the staff several minutes to track down why some of his order was not complete, and the inefficiency of this spontaneous fact-finding mission was even more embarrassing to me as a pharmacy owner.

I quickly looked to assess our workflow and found the one process that was likely the culprit. In our pharmacy, if a patient elects to bypass our Interactive Voice Response system (called an IVR, which allows the patient to key in prescription numbers that are automatically recorded and put in our system to be processed), and instead wants to speak with staff, the patient’s order is transcribed to a piece of scratch paper. Typically, multiple orders make it onto a single sheet of paper.

Our current workflow consisted of “scratching off” each Rx as it was completed and then shredding the paper once all orders have been adjudicated and passed down the counter to be filled. Events like expired or exhausted prescriptions, prior authorization in process, insurance denials (too early etc) and special order items were being recorded in various places in the workflow. The problem was that these notations were separated from the order once the written note and patient order were divorced. Worse yet, with our method, there was no way to be sure that all prescriptions ordered were accounted for once they reached the will call area.  I refer to this as our “order record problem.”

Anyone who knows me will immediately peg me as a tech guy. I routinely leverage technology to solve workflow and business problems. Sometimes, I am even accused of making things more complicated than they really needs to be. Here I sit, guilty as charged.

Obviously, the “old school” scratch paper could easily be upgraded with some fancy new technology, and I am just the guy to do it! But I have to consider several question first.

  • Is this really a good use of time and resources?
  • Will others be willing to use a new approach?
  • Is there an non-technological or “old-school” approach that will solve the problem at a fraction of the time and cost?

Unfortunately for the my inner techie, the answers to these questions did not lead me to a technology oriented solution. Here, “old school” really had some potential advantages.

FrontWhile considering our communications problem, I recalled that we already leveraged a Will Call Form we purchased from The Onnen Company to communicate issues with a given Rx to the patient. The solution to the “Order Record Problem” was  actually staring me right in the face. The back side of the Will Call Flags form is designed to record inbound refill calls, with 10 slots for rx numbers or drug names, a place to designate pickup (will call, delivery, mail out) and additional instructions.

A few weeks ago we put a new policy in place and educated all of our staff. We increased our stock of this form and began implementing the solution. Each phone refill request would be taken directly onto these forms. These forms would follow the order from beginning to end (pickup). The technician or pharmacist waiting on the patient now has a complete history of the order from start to finish.

BACKHIPAA ramifications

While I would categorize this new policy as a success to date, I would be remiss if I did not mention one issue that was not considered in our original plan. Each of these forms has the potential to contain Protected Health Information, or PHI. I found several employees were discarding the forms at the register trash receptacle. A quick re-training in PHI and HIPAA had to be done to ensure that all of these forms, without respect to PHI, were placed in the shred bin.

While on the surface, this problem and solution may be something that other pharmacies have already dealt with (and many may have even better solutions in place), the take home lesson for me, at least, is not to dismiss “old school” approaches. Sometimes, “old school” is best.

Software as a Service: the changing face of pharmacy software

[dropcap color=”white” background=”black” style=”rectangle” size=”big”]O[/dropcap]ver the last several years, we have watched many software companies struggle with paid upgrade cycles. As feature sets for applications have matured over the years, it has become harder and harder for companies to convince its users that they need the new features only available with the newest version.

For example, I am an amateur photographer. I occasionally need the power of Adobe Photoshop. I decided a long time ago, however, that I did not need to always have the most current version. To Adobe, I am a bad customer, as I am not supplying them with the necessary sales and revenue a for-profit company needs. If it were just me, the software companies would have nothing to worry about, but my choices with respect to upgrades have become very common, even among professionals.

Enter “Software as a Service.” This new model is slowly becoming mainstream, despite initial and continued resistance to the implied concept that we don’t own the software, but simply rent it. Microsoft Office and Adobe Photoshop are two major software platforms that are now available as subscription services with monthly or yearly agreements.

The sales pitch for “rental” or subscription software is that you will automatically receive updates as they are released, theoretically saving  you money in the long run (based on the assumption that you would always upgrade to the newest version). Because this concept has not been a huge success, some companies have even stopped selling traditional software licenses to push customers to the new model.

Eventually, I need to bring the discussion back to a pharmacy focus. You see, Pharmacy Management System (PMS) software has traditionally leveraged a subscription model: You purchase the hardware / software and then pay a monthly maintenance fee for support and upgrades. This maintenance fee is usually non-trivial and can cost thousands of dollars a year for even a small volume store.

The other day, I was speaking with my PMS vendor about a feature that I would like to see. The support person indicated that they already offer that feature. I was ecstatic. In the next breath, however, the support person indicated that this was a separate service with a monthly cost. Wait just one second, don’t I pay a steep monthly maintenance fee for upgrades and support? Why is this feature not included?

Taking a step back and looking at the pharmacy software landscape, this model has gradually crept into the marketplace. Companies like Mevesi and Prescribe Wellness along with platforms like EQuIPP offer cloud based services that integrate and extend your traditional PMS. Each of these is adding to the pharmacy overhead when the service is added. Often these services can cost thousands of dollars per year.

Many of these service packages can add a great deal functionality to your pharmacy and may be well worth their cost(s). The concern for the pharmacy owner, however, is the rapid increase in software costs in an era where reimbursement for their service and product is at an all time low. Any new feature or service must be able to create more new revenue than the service costs the pharmacy. Today’s pharmacy owner has a fine line to walk.

 

Having Skin in the Game

Independent pharmacies are in a difficult position in today’s health care climate. By themselves, they have little power to negotiate with larger companies, especially the predominant Pharmacy Benefit Managers (PBMs) that represent well over 90% of all patients in most markets.  In business, there is power in numbers. Enter the Pharmacy Services Administrative Organizations (the PSAOs).

Historically, pharmacy owners paid little attention to their PSAO. The PSAO did their job signing contracts and negotiating on the pharmacy’s behalf, allowing the independent pharmacy owner to take care of their patients. Today, however, the face of pharmacy and reimbursement has changed dramatically, bringing the PSAO into the crosshairs of pharmacy owners everywhere.

If you were to ask the upper management of a PSAO what their job is, they would likely state that they are responsible for providing access to lives for their constituent pharmacies. Pharmacy owners, on the other hand, are more worried about their bottom line. What good does having access to lives do for the pharmacy if those lives do not make the pharmacy money, or worse, lose the money [See “A Dual Edge Sword” for a related discussion].

The disconnect is clear. The PSAO, representing a large number of pharmacies, must find a balance acceptable to all of its members. The PSAO looks to:

  1. Negotiate the best possible contract terms for their pharmacies
  2. Maintain the customer base of member pharmacies to the best of their ability and
  3. Grow the potential customer base of the member pharmacies.

None of these are easy for the PSAO as they have to represent a diverse group of stores representing a variety of geographic regions and economic climates. Even though the PSAO may represent thousands of member pharmacies, the Pharmacy Benefit Managers often dictate terms. The PBMs have a monopsony like position in the market.

Pharmacy Owners, on the other hand, are much more likely to be myopic in their view of a contract. They have significant personal risk in the form of payroll and inventory. Having “skin in the game” tends focus them on reimbursement details and the bottom line. With such a difference in goals, it is no surprise that some pharmacy owners are critical of their PSAO. How can a PSAO sign contracts for its constituent pharmacies that may cause them to go out of business? To some pharmacy owners, the PSAO might be considered to be as harmful to pharmacies as the PBMs. The PSAO does not appear to have any skin in the game, and therefore appears to have little to lose.

Recently, it was revealed that a number of PSAOs had opted out of one specific Medicare Part D preferred network for 2015. Only one larger PSAO signed this contract. Obviously there was something in the contract that effectively persuaded most PSAOs from signing with the network on behalf of their member pharmacies.

In the above case, it was not just reimbursement rates that were the problem. The network contract also specified that the pharmacy needed to maintain minimum Generic Dispensing Rates (GDRs) during the course of the year. Failure to do so would result in penalties enforced at the end of the year. This type of contract is potentially catastrophic to a pharmacy that fails to meet the requirements. The resulting chargebacks from such a failure have the potential to cause significant pressure on cash flow and liquidity for the business.

a PSAO that puts its own skin in the game, however, is a game changer

So why did one PSAO elect to sign this contract? The answer is surprising. The PSAO that signed the contract decided to put some “skin” into the game itself. The PSAO determined that they were confident that they could monitor their stores and help coach stores in jeopardy, effectively working together to maintain the minimum GDR during the course of the year. At the end of the year, if a pharmacy fails to maintain the minimum GPR, the PSAO, not the pharmacy, would pay the penalty.

Access to lives is important. Access to a PSAO that puts its own skin in the game, however, is a game changer. I hope that more PSAOs realize that they need to have skin in the game as well.

The Stripped Down Model of Pharmacy Practice

What does a pharmacist do? The answer to this question depends on who you ask, with patients, health care providers other pharmacists, PBMs and insurance companies offering a wide array of responses.

Maybe a better question to ask is this: “What is a pharmacist paid to do?” Based on reimbursement from Pharmacy Benefit Managers (PBMs), pharmacists are only paid for the product they dispense, and then, only the most inexpensive generic medications. Many times, pharmacies are not even receiving a dispensing fee for their work, let alone a professional fee for services rendered.

In other words, over the past 20 years, pharmacy has evolved into what we call the “Stripped Down Model” of pharmacy practice. This model has become the de facto prototype for pharmacies in the United States. Unfortunately, a low-cost model is not synonymous with patient care and lower overall healthcare costs.  Pharmacists concentrating only on dispensing the correct medication to the patient are doing little to improve patient outcomes and healthcare quality and, in fact, may easily be replaced by automation or less expensive providers.

This shift to a volume driven profession is not optimal  for patients or the health care system, and all of us are all to blame for this. Pharmacists have precious extra time to perform patient care services in many practices for a variety of circumstances including  pharmacy management emphasizing metrics of wait time and volume to their staff, patients wanting their medications to be cheap and fast, and PBMs and Insurance companies wanting to maximize profits and their bottom lines.

The Stripped Down Model doesn’t really use a pharmacist, and in truth as mentioned previously,  pharmacists can potentially be replaced by robotics or technician based dispensing models, creating additional savings for the “system” thru mitigation of expensive pharmacist salaries.

…the profession of pharmacy needs to work to create a network of truly high performing pharmacies and pharmacists.

While I believe that the above scenario is possible, I see another direction for pharmacy. Despite the oppression of this stripped down model, pharmacists across the country still work to apply their clinical skills and make interventions on behalf of the patient. Pharmacists can and are impacting healthcare by decreasing costs and more importantly improving patient outcomes.

Even Medicare is starting to understand, with the new emphasis on quality indicators. Pharmacists and pharmacy performance are about much more than prescription volume. It is the patient outcomes that matter.

As the paradigm of pharmacy changes, the emerging model should leverage the pharmacist for what they can do. In other words, a model that pays pharmacists to care for patients through appropriate mediation management. Pharmacists should be financially recognized for ensuring that patients are using safe and effective medications in the most cost-effective way so that they achieve optimal therapeutic outcomes.  In the coming days, weeks, months and years, the profession of pharmacy needs to work to create a network of truly high performing pharmacies and pharmacists. Pharmacists will need to work to become recognized for what they do and they will need to be paid to do it.

Pharmacists will need to “make every encounter count” with their patients!

A Two Edged Sword

An  recent informal poll asked pharmacy owners to decide between two choices for their pharmacy practices:

  • Being in as many preferred networks as possible, regardless of the financial reimbursement, OR
  • Not participating in preferred networks that charge Direct / Indirect Renumeration (DIR) fees, regardless of the volume decrease my business will see. 

Ignoring any middle ground for a moment, neither of these options are particularly appealing. I would venture that most independent pharmacy owners would have a difficult time answering the question. Both options are difficult roads that have the potential to bankrupt a pharmacy in the long-term. I do not see preferred networks becoming less popular, and expect that they will become even more prevalent in years to come.

If I have to choose, I will always choose access. I feel that access will offer the most likely path to the long-term survival of the profession of pharmacy. I am not alone in my thoughts on this, either. This question is essentially the one that Pharmacy Services Administrative Organizations (PSAO) have to make on behalf of their constituents. And looking at the current landscape of preferred networks and independent pharmacies in the United States, PSAOs have, more often than not, chosen access to lives.

If I have to choose, I will always choose access.

Yet I hear pharmacy owners wanting to opt out of preferred networks giving them access. I have heard some owners argue that their patients are so loyal to them that they would not lose their customers if they were not in the preferred networks: their patients will pay more to continue to support “their” pharmacy and pharmacist. I am certain that I have a large contingent of very loyal patients, but I am unwilling risk my business on this type of experiment. Even if all of my current customers were completely committed to my stores without respect to price, I would gradually lose business thru natural attrition. Attracting new customers would be a significant challenge as a provider outside the preferred network. Potential patients without previous experience with my practice would need to be willing to pay more for what they may otherwise perceive as the same product. Without ready access to new customers, there is virtually no hope for growth and sustainability.

The way I see it, the Pharmacy Benefit Managers (PBMs) are driving pharmacy to a stripped down model. As pharmacists and pharmacy owners, we can either we can accept this model, or fight back to change the future of pharmacy. At least if I have access, I can work with my current and new patients to generate other streams of revenue,  to grow the practice, and to define what pharmacy is and why it is important to patients and the health care system. This fight will be difficult given the anemic reimbursement and DIR fees offered by preferred networks. In my opinion, though, being in the game and working to change the profession of pharmacy is a lot more likely to be successful in the long run. The alternative is downright frightening.

 

I don’t like the current landscape of pharmacy and healthcare,  and it is going to take hard work to change it. Giving up access, to me, is simply wrong.   Micheal Lefoeuf once said “Every company’s greatest assets are its customers, because without customers there is no company.”  Access to our patients is our lifeline!