Large integrated delivery networks and academic medical centers with specialty clinics and infrastructure should consider building in-house specialty pharmacy capability.
AS HEALTH CARE PAYMENT MODELS SHIFT TOWARD RISK-SHARING, pay-for-performance, and accountable care organizations (ACO), hospitals and health systems are waking up to the realization that decisions they make regarding specialty pharmacy could affect clinical outcomes, color the patient experience, and impact the bottom line for years to come.
While not every hospital or health system has the population base or infrastructure to build in-house specialty pharmacy capability, every large integrated delivery network and academic medical center with specialty clinics and existing ambulatory pharmacy infrastructure should, in fact, must, consider the possibility. Every hospital and health system should look at the issues and act decisively, whether the decision is ultimately to build internally, partner with a regional or national specialty pharmacy, or continue in the current environment controlled by payers and manufacturers.
A number of health systems have already awakened to the impact and opportunity of specialty pharmacy, and have seized control of their destiny in the rapidly evolving specialty environment. Their successes and challenges will reshape the landscape of this segment of health care, and perhaps, redefine what the industry considers to be the preferred model. Certainly, there is plenty of specialty pharmacy spending to go around.
Pharmacy revenues from specialty drugs may have reached $98 billion in 2015.1 But, a study of 7 academic medical centers indicated that, on average, each center captured less than 15% of the more than $200 million in prescriptions that it wrote annually.2
Only 10.6% of accredited specialty pharmacy locations in 2015 were owned by health care providers, a figure that includes physician practices, as well as hospitals, health systems, and provider group purchasing associations.3 But the trend is growing. In October 2015, more than 2 dozen health system pharmacies were in the process of seeking specialty accreditation from URAC, which, if completed successfully, would triple the number awarded this designation.4
Health systems are actively reaching out for support as they develop their specialty pharmacy functions. Specialty pharmacy networks that provide services and support to health system pharmacies have emerged: UHC, the consortium of academic medical centers, added a specialty pharmacy program in 2014; Excelera, a network exclusively dedicated to specialty pharmacy that launched in 2011; along with 15 academic health systems and medical centers are members.
These early adopters have determined that health systems not only can match, but can improve upon, the set of services typically provided by the dominant for-profit specialty pharmacies. Very briefly, here are some points to consider as the sleeping giant awakens:
•Access to the EMR
Access to the electronic medical record is critical to managing the specialty patient population. As part of the care team, the pharmacist can gain immediate access to all relevant patient data, including laboratory test values, progress notes, and clinic appointments. Pharmacists can also communicate with the rest of the care team regarding compliance, financial hardship, or adverse drug events. When an outside pharmacy dispenses the drug, there is a gap in the EMR, and the care team becomes blind to where and when the drug was dispensed or whether there was an adverse event, unless the event results in hospitalization, for which the health system then becomes responsible in an accountable care environment.
•Clinical integration and point-of-care access
Ideally, specialty pharmacy should not be an isolated bubble in the health system. Clinically, health systems have a unique opportunity to serve as the central hub for patient care and research into complex illnesses. In practical terms, a specialty program run by the health system can create ease and efficiency by, for example, assuming management of activities that the system’s clinics may struggle with, such as managing benefit investigations, obtaining prior authorizations, completing reimbursement hub forms, and preparing letters of medical necessity.
•Payment model changes and the specialty market
Retaining and effectively managing the care of specialty patients is critical to managing costs and outcomes in the evolving payment environment. In a further layer of complexity, more health systems are merging with health plans and specialty physician practices. The significant financial challenges posed by the cost of specialty drugs and the structure of the remote, for-profit specialty payment model weigh heavily on both the provider and payer sides of the equation as they try to serve their patients and employer-customers effectively.
Global payment models put health systems at risk for the cost of care, while health plans must increase value for their customers; just as payers with integrated pharmacy benefit managers (PBM) may argue for the benefits of that arrangement in terms of access to spending and utilization data. Therefore, health systems with integrated specialty pharmacies can point to the advantages of access to the EMR and care team integration, as well as the benefits to the financial health of the enterprise, especially in an accountable care context.
•Data and results from early adopters
Health systems that develop specialty pharmacy programs are in a unique position to provide data reporting and analysis that payers and the pharmaceutical industry require for ongoing partnership. Health systems can provide a complete picture surrounding a drug’s real-world use, while outside specialty pharmacies generate retroactive claims reports that create more questions than answers. Without access to the EMR, they cannot provide a clear, seamless picture of what is happening at the point of care.
Clinically, these health systems have the opportunity to develop innovative programs, such as the cystic fibrosis (CF) therapy management program at Fairview Specialty Pharmacy. As part of an integrated health system, Fairview goes beyond refill reminder phone calls to address the root causes of non-adherence. The program screens and refers patients with depression, for example.
It also helps college students transition to managing their own health and medications, at a time when many lack daily parental oversight and are far away from their childhood CF treatment centers. The development of data on patient outcomes in the context of health system specialty pharmacy is in its early stages, but progressing quickly. The leading health system specialty pharmacies and networks are making substantial investments in clinical data analysis and financial tracking, considering it essential to supporting overall operations and long-term program viability, as the payer marketplace shifts to outcomes-based measures.
Patients appreciate the convenience and continuity of care that health system specialty pharmacy provides. In conversations with pharmacy directors from health systems across the county, I’ve heard dozens of stories about patients who thanked their health system pharmacists for cutting through paperwork, keeping refills order on track, helping patients find ways to reduce side effects, and helping them understand the value of their complicated drug regimens.
Conversely, I’ve heard numerous cautionary tales about patients who experienced a breakdown in their medication therapies upon leaving the health system and becoming reliant on non-affiliated, remote specialty pharmacies that had no direct stake in the patient’s health and outcomes. As last July’s article on specialty pharmacy in the New York Times made evident to a wide readership, the structure of the dominant specialty pharmacy model can lead to inconvenience and dissatisfaction.5
The business case for health system specialty pharmacy The financial case is compelling. In the current climate, health systems are becoming more responsible for the cost of care, while being forced to bridge the gap in continuity of care and the diversion of revenue, as payers carve out the specialty pharmacy benefit. The missed gross profit opportunity is estimated to be as much as $14.87 million per 1 million patients served. The financial benefits to for-profit PBMs and specialty pharmacies accrue to their shareholders and not to the entities, often non-profits that are providing patient care.
Furthermore, health systems can focus and scale their specialty pharmacy services to those disease states and specialties they serve most. Transplant and HIV drugs are relatively easy to access, and thus, an ideal entry point into specialty pharmacy if the patient population is appropriate. Drugs for these conditions may not be classified as “specialty” from a payer perspective, but present similar requirements and challenges.
Fairview Health Services, which includes the University of Minnesota Medical Center, ventured into the specialty arena with transplant drugs. It has since become one of the most robust health system pharmacies in the nation, dispensing drugs for nearly every specialty condition. Once a foothold has been established, it is important for a health system specialty pharmacy to expand its access to specialty medications, without getting too discouraged in the process. Keep in mind that no pharmacy, including the largest national players such as CVS Caremark, Accredo, and Walgreens, provides, or has access to, every possible medication that can be classified as a specialty drug.
Build, partner, or cross your fingers?
Despite the barriers to entry, from competing priorities to drug access issues to payer contracts to limited specialty experience, many health systems have natural points of entry to leverage into the specialty space, and the benefits in terms of patient care and cost can be substantial. With appropriate planning and resourcing, and assistance from pharmacy networks, many health systems can be operational with specialty pharmacy in a matter of months, not years.
Should a health system choose to build, there are special considerations to maintain service levels. Being competitive in the market requires capital investment for financial management (including both budgeting and accounts receivable management), systems personnel (for diversification of roles, including patient management and drug dispensing), and facility space (including refrigerated product and shipping supply storage). Integrated health systems and academic medical centers are the most likely candidates for building a specialty pharmacy function.
Small-to-moderate size hospitals with limited specialty populations may find that helping their specialty physicians find a specialty pharmacy partner or hub service is a sufficient solution. One such option may be a joint venture with a regional or national specialty pharmacy to private-label the hospital’s specialty prescriptions.
Clarifying their approach to specialty pharmacy must be a strategic priority for health systems. The role of health systems in specialty pharmacy is important for everyone in the industry to consider—payers, manufacturers, PBMs, and competing specialty pharmacies, no less than health systems themselves.
About the Author
KYLE SKIERMONT is the Chief Operating Officer for Fairview Pharmacy Services, a leading health system based pharmacy organization in Minneapolis, MN. He received his PharmD from the University of Nebraska Medical Center College of Pharmacy. As COO, Kyle is responsible for strategy and overall operations of Fairview Pharmacy’s specialty pharmacy, retail, mail order, long term care, compounding, home infusion and community infusion business units. Kyle has spent 19 years in pharmacy including traditional retail, clinic based retail, outpatient pharmacy at an academic health center, community and home infusion, specialty, and mail order. In addition, he is a frequent media and professional spokesperson on a variety of pharmacy topics.