Michael J. Alkire

According to the US Centers for Disease Control and Prevention (CDC), chronic diseases—such as heart disease, stroke, cancer, type 2 diabetes, obesity and arthritis&mdash;are among the most common, costly, and preventable of all health problems.

Today, about half of all Americans suffer from at least 1 chronic condition, and 86% of all US health care spending is devoted to the medical care associated with managing them. Increasingly, providers are looking for new ways to better manage the complexities of chronic care, particularly as they move further into value-based payments that hold them accountable for their total costs and outcomes.

One of the key ways to achieve that goal is through the strategic use of specialty drugs that can cure such complex, chronic conditions in some cases, or dramatically reduce their medical costs in others. Despite the potential benefits of specialty drugs, most providers have poor visibility into the pharmacies that dispense specialty medications for these complex patients.

Few of them deploy advanced analytics and reporting capabilities to alert prescribers in real-time when a prescription hasn’t been filled, leaving the providers to find that out later, often after it’s too late to intervene. Others may not do an effective job of providing patient education and side-effect management, which can lead to patients taking medications improperly or foregoing therapy altogether.

Last, many specialty pharmacies lack true connections into the community to provide patient engagement and financial services to those who lack the funds for high-cost specialty drugs, which in turn leads to poor adherence with prescribed therapies. Frustrated by this blind spot in care delivery, health systems have started to consider operating their own outpatient specialty pharmacies.

But it’s not a business to enter without caution.

The capital investment required to establish a robust, credible, and high-performing specialty pharmacy is easily tens of millions of dollars. There is staff to hire, including pharmacists, nurses and care coordinators to manage incoming patients.

There is technology to purchase, including inventory management software, care management software and analytics to measure and report performance. There is inventory to buy and carry, as well as infrastructure to support specialty drugs, including temperature-controlled facilities and mail-order distribution.

There are mandatory accreditation programs to comply with, and high-touch clinical services to develop. All of this overhead translates into razor-thin margins for any new specialty pharmacy venture. 

As one executive recently put it, “you can put yourself out of business by getting into the specialty pharmacy business.”

In addition, the barriers to entry are extremely high. Today, the business is dominated by a handful of pharmacy benefit managers (PBMs).

These dominant players often dictate to health plans how the specialty pharmacy benefit is structured, which locks out most pharmacies, including those managed by health systems. To break through, new entrants need to prove their ability to improve quality, create positive patient experiences, and drive outcomes that are as good, if not better, than the incumbents; capabilities that take years, significant effort and resources to develop. 

For health systems that want greater control, but do not want the headaches of operating their own specialty pharmacy, a good compromise solution can come from outsourcing. In outsourcing to a single, qualified specialty pharmacy, health systems can eliminate upfront capital costs, leveraging their partner’s pre-developed infrastructure, staff, payer networks, and inventory to prevent revenue leakage and begin offering services to patients, often in less than a month.

In the process, they can shop around and only provide their patient volumes to those with the ability to provide in-depth communication and reporting on clinical indicators that are crucial for health systems to know. The Mount Sinai Comprehensive Cancer Center in Miami Beach, Florida is a leading provider of oncology treatment.

While they wanted greater control of their patients’ experience and insights into their pharmacy care, they recognized that a self-run operation would be a significant investment of time and money, detracting from their core mission to provide top-quality cancer care. Pursuing an outsourced approach, Mount Sinai selected a partner that clears insurance benefits to get cancer patients onto therapies in about 2 business days, a job that used be handled by their own nurses.

Moreover, Mount Sinai’s partner has deep connections into local charities and prescription assistance programs, and has been able to reduce or waive co-pay expenses for 80% of their patients. They also benefit from their outsourced partner’s extensive care management team, which monitors prescription fill rates, conducts patient outreach and education, and provides instruction on how to properly take oncology medications and manage side effects.

With extensive, high-touch services and careful coordination with the nurses and doctors at Mount Sinai, they have achieved a medication adherence rate of 95%, well above the 60% compliance rate experienced nationally. The key is selecting the right partner.

In evaluating partners, health systems should pay careful attention to those that provide high-touch services above and beyond mere medication management. A good set of metrics to use in specialty pharmacy evaluations includes patient satisfaction ratings, medication adherence rates, speed to get new patients on prescribed therapies, and effectiveness in securing financial assistance for patients who have difficulty paying.

When these programs are implemented effectively with the right partner, there is nearly no end to the benefits.

Michael J. Alkire is the Chief Operating Officer of Premier, Inc. (NASDAQ: PINC), a healthcare performance improvement alliance of 3,600 health systems and 120,000 other providers. As COO, Alkire leads the continued integration of Premier’s clinical, financial, supply chain and operational performance improvement offerings, helping health systems provide higher quality care at a better cost.

Dr. Scott Pope is Vice President of Strategic Marketing - Pharmacy at Premier, Inc.  In this role, he leads strategy design and fosters innovative growth across a wide range of pharmacy based solutions. Prior to Premier, Dr. Pope was an infectious diseases clinical pharmacist practicing at Carolinas Healthcare System, Moses Cone Hospital and Duke University Medical Center.  He serves as adjunct assistant professor of pharmacy at the University of North Carolina at Chapel Hill.  Dr. Pope earned his PharmD and a minor in business administration from Ohio Northern University.  

Articles

â€œYou can put yourself out of business by getting into the specialty pharmacy business.â€ 