Value-Driven Care: Transforming the B2B Side of Pharmacy

Brad Tice, PharmD, MBA, FAPhA
Published Online: Friday, March 21, 2014

The quest for increased value and cost effectiveness will shape transactions among pharmacies, suppliers, and service providers.

Health care’s movement toward value-driven care is transforming how care is delivered to patients and reimbursed by payers. That’s readily acknowledged. Yet what’s less appreciated—and equally important—is how this change is transforming our industry’s business-to-business (B2B) world. Value-driven care is trickling down to every nook and cranny of health care, into seemingly routine pharmacy transactions and into the relationships between pharmacies, suppliers, and service providers.

At Cardinal Health, our presence across multiple health care segments gives us a unique perspective on how the industry is adapting to the value-driven model. We deliver medications to more than 10,000 retail chain locations and nearly 8000 retail independent pharmacies—not to mention thousands of hospitals. Yet we also provide products and behind-the-scenes business and consulting services that touch the entire continuum of care.

Five key industry trends are driving this transition to value-based care. They are shaping the way our customers interact with and serve their patients, and in turn, those trends are shaping the way we serve our customers.

Trend #1: Demographic, economic, and industry forces are requiring a health care system that places a high priority on efficiency and cost-effectiveness.

Yes, efficiency and cost-effectiveness have always been important components of delivering value in any business. Yet in an environment when all health care providers are being asked to deliver more services to more patients—with less reimbursement, and oftentimes with less staff support—it’s clear that providers now need to have an even more intense focus on containing costs and operating as efficiently as possible.

With our roots in distribution, delivering medications to thousands of points of care each day is the foundation of what we do. We are passionate about the art and science of inventory management and distribution. We’ve taken that expertise and customized solutions for community pharmacies at the store level. For example, we’re constantly delivering improved technologies like the Cardinal Inventory Manager.

This tool helps community pharmacies manage their biggest asset, their drug inventory, with little to no manual intervention. It helps improve cash flow, freeing up dollars to be spent in other critical areas, such as developing new services that can deliver real value to patients and to the pharmacy’s bottom line. It also reduces waste by preventing the expiration of outdated products, and it improves patient service by ensuring that the right medications are available when patients need them. The result? Community pharmacies can optimize a complex and costly behind-the-scenes function easily, and focus their time and efforts on other, more valuable components of patient care.

We know that patients need more one-on-one time with pharmacists—time pharmacists can spend making product recommendations, providing medication counseling, and delivering health care services. With greater demands for increased patient interactions, pharmacists have less and less time to dedicate to important, albeit administrative, tasks such as tracking down whether or not they’ve been fully reimbursed for the hundreds of prescriptions they fill each day. However, in order to succeed in this increasingly cost-conscious environment, pharmacies need to ensure they’re focused on collecting every dollar of reimbursement they’re owed. Solving this challenge is at the heart of my next example: tools that help pharmacies improve back-office functions like reimbursement tracking.

Our reimbursement consulting services tool reviews data for all medications dispensed at a specific pharmacy, and flags transactions that were inaccurately reimbursed. Reimbursement consultants then help pharmacy owners understand which reimbursement errors can be corrected immediately, and which may require staff or additional training to address over time. The result is that pharmacies can save hundreds, and sometimes thousands, of dollars each month, and equally important, pharmacy owners can rest assured that big profitability drivers, such as inventory and reimbursement, will be managed as effectively as possible.

Trend #2: Care will need to be more coordinated and delivered in multiple settings, leaning toward those settings that are most cost-effective.

This is a trend that presents tremendous opportunity for community pharmacy.

At last year’s Retail Business Conference, Cardinal Health’s annual trade show for independent pharmacies, former Centers for Medicare & Medicaid Services chief Mark McLellan, MD, PhD, told pharmacists that as the industry increasingly shifts to a more value-based care model, they need to take advantage of their unique and undeniable strength. They are the most accessible health care provider in nearly every community and often the most cost-effective location for care delivery.

Value-driven care is now driving community pharmacies to take it to the next level: to find new ways to connect more intimately with and deliver real value to other providers in the care continuum. The goal? To “follow the patient” through various care transitions, and to ensure the Holy Grail in value-based care: the best possible patient outcomes.

We’re inspired by the many community pharmacies we see answering this call for greater connectedness. For example, an innovative partnership between Western Maryland Health System and its local retail pharmacy, PharmaCare, implemented a new patient discharge process. Among other program components, PharmaCare pharmacists deliver “bedside concierge” services to patients before discharge, which include in-depth medication plan reviews plus specific directions for post discharge follow-up. This includes a review of each patient’s chart to go over key information, such as the patient’s admitting diagnosis and any other diagnoses, as well as admitting medications and home medications.

The pharmacist reviews this information to ensure that no home medications were duplicated or missed, and also counsels each patient and walks him or her through the full medication regimen. Each medication is shown directly to the patient—an opportunity for the pharmacist to explain the drug’s purpose, schedule, directions, and potential side effects. Overall, the process increases the likelihood that the patient, along with family or caregivers, will understand the need for each medication, how to realistically maintain the treatment regimen, and what side effects to expect. PharmaCare is then available to support the pharmacy needs of patients after they are discharged.

The goal of this program was for the hospital and local retail pharmacy to work hand-in-hand to improve medication adherence as patients transitioned from hospital to home, while reducing hospital readmissions, which can lead to penalties for hospitals in a value-driven care model. After the program was implemented, the percentage of hospital patients who positively rated medication education and discharge instructions improved from about 65% to more than 90%. This unique hospital-retail pharmacy partnership created value for everyone—the hospital, the pharmacy, and most important, the patient. Moreover, it reduced the burden on Medicare by lowering the hospital’s readmission rate by 28% in the first year alone.

This is just 1 example of how pharmacies are innovating to develop new models for delivering value-based care. Community pharmacists are on the front lines every day—and are creating new models, new services, and new approaches for delivering better-coordinated care. A few years ago, Cardinal Health began hosting a “best practices” forum and competition for community pharmacies. Each year, community pharmacies are nominated for best practices in retail pharmacy, and the best of those stories selected by other community pharmacists are published in an annual best practices publication.

Year after year, the program’s finalists all seem to have 2 things in common. One is that they’re implementing new, innovative ways to deliver better-coordinated, more cost-effective, more valuable care to their patients. And the other common thread? They experience tangible business results, such as diversified revenue, increased patient volume, and loyalty.

Trend #3: People will want and need care in the home, and they will become increasingly knowledgeable and involved in their own health care.

The Affordable Care Act, when fully implemented, is expected to give 32 million more Americans access to health care. A growing number of those Americans will require treatment in their homes. And, as more of those patients begin to manage chronic conditions, they’ll also have to better understand the care they receive, and they’ll increasingly demand more value and convenience from health care providers.

This trend also presents an outstanding opportunity for community pharmacists, who are often their patients’ most accessible, most trusted care provider, to diversify their revenue by offering convenient, local access to patient care services and health care products their patients need.

We see it as our role and responsibility to help pharmacies tap into emerging trends like this, which is why, for example, last year Cardinal Health invested $2 billion in the purchase of Assuramed, a home health care distributor that offers 30,000 stock keeping units from 500 manufacturers. This acquisition makes it possible for our community pharmacy customers to diversify their revenue by offering patients a broad range of home health care products their patients need, from compression stockings to breast-feeding pumps to wheelchairs.

This trend is also driving pharmacists to develop expertise in patient care services that improve overall population health, including immunizations, flu shots, and diabetes education classes. And it’s another reason why Cardinal Health is developing a suite of services to make it easier and more time and cost efficient for community pharmacies to deliver the medication therapy management (MTM) services that patients need to better understand and adhere to medication regimens.

We’re also leveraging our role as a trusted business advisor to help our community pharmacies appreciate the strategic value and importance of providing MTM services for their patients. We believe it’s critically important for community pharmacies to understand how MTM services can help them improve patient outcomes, how these services can help them improve their Medicare Star Ratings, how MTM services can help them build patient loyalty and trust, and also, ultimately, help them diversify revenue. After all, patients with chronic conditions need more than just medications to manage their health. And in a value-driven health care model, community pharmacies are in an ideal position to provide easy access to many of the health care products and services that can be identified with a thorough MTM consultation.

Trend #4: Our health care system not only will need continued innovation of pharmaceutical and medical products, but also cost-effective alternatives to mature products.

The explosion of growth in consumer-driven health plans is changing health care and community pharmacies. When consumers pay directly for health care through higher-deductible plans, they are more price sensitive and more deeply involved in care. This is as true for knee replacements as it is for prescription heart medications and OTC products. Overall, this is good news for retail pharmacists, who have accessible hours and convenient locations for patients in need of basic care. In addition, patients place an immense amount of trust in their pharmacists. A recent Gallup survey found that pharmacists ranked second in trust among 22 professions, behind only nurses, and ahead of physicians.

Community pharmacists’ unique relationship with patients puts them in an excellent position to diversify their revenue by offering cost-effective alternatives to brand name OTC products and home health care products, while they diversify their own revenue. They’re also in an excellent position to deliver real value to the broader health care system by helping drive down the costs of care for both patients and payers. For example, this includes recommending generic substitutions when appropriate and other times it even involves communicating with the patient and prescriber to help patients take fewer medications or a more efficient and effective mix of medications.

Trend #5: As part of the system shift from fee-for-service to payment-for-outcomes, hospitals, integrated delivery networks (IDNs), and community providers will increasingly look to partners with specialized expertise in this new environment.

As “the business behind health care,” we see the transition toward value-based care as an opportunity. An opportunity to do what we have always done, albeit in increasingly new and innovative ways: help our customers improve efficiency and effectiveness, while improving quality.

Health care is truly transforming. Demographics, public health, economic challenges, and the implementation of health care reform are powerful forces for change. All providers, including community pharmacists, are under enormous pressure to improve quality while decreasing costs. The traditional fee-for-service model is shifting to more of a fee-for-value system where incentives will encourage a focus on outcomes and care is increasingly coordinated across delivery settings.

It’s our belief that community pharmacies are truly poised at the crossroads of this transformational change. As the patient’s trusted advisor, they are especially important in helping patients adjust and respond to a new world of health care. To succeed in the future, community pharmacies should look to their suppliers and other service providers to bring them innovative tools and services that raise the bar on efficiencies and cost-effectiveness—tools that help them diversify their revenue, tools that help them free up time to focus on patient care, and tools that help them understand and improve the value they deliver to patients and to the broader health care system. Community pharmacies should challenge their providers to partner with them to help them succeed. 


Brad Tice, PharmD, MBA, FAPhA, serves as the medication therapy management (MTM) product leader at Cardinal Health, where he develops services to empower payers and community pharmacists to implement successful MTM programs. He has been a national leader in the development of MTM, helping to develop models for the delivery and reimbursement of MTM with Medicare Part D and with self-insured payers. He has also personally implemented MTM services in community pharmacy practice settings, focusing on the areas of hyperlipidemia, hypertension, diabetes, osteoporosis, asthma, and immunizations. Dr. Tice has been extensively involved in national quality initiatives, serving the Pharmacy Quality Alliance in several capacities and on technical expert panels for the Centers for Medicare & Medicaid Services and the National Committee for Quality Assurance. He also served on the industry panel, facilitated by the American Pharmacists Association (APhA) and the National Association of Chain Drug Stores, which developed the initial core elements of MTM. Dr. Tice has served in numerous professional capacities, including speaker of the house and a board of trustees member of APhA. 



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