Financial Planning: Building the Business Case for Expanded Services August 12th, 2016 Tripp Logan, PharmD Senior Quality Consultant- MedHere Today Vice-President Logan & Seiler, Inc. (L&S Pharmacy, Medical Arts Pharmacy, New Madrid Pharmacy) tlogan@medheretoday.com
Disclosures Tripp Logan, PharmD is receiving an honorarium for this program. Tripp Logan is a board member of the NCPA Innovation Center. The conflict of interest was resolved by peer review of slide content. 8/19/2016
Learning Assessment Question 1 When considering adding new expanded pharmacy services, what should be developed first? a) A business plan b) Workflow modifications c) Software d) A timeline
Learning Assessment Question 2 What is a key component of expanded pharmacy service sustainability? a) Staff buy in b) Profitability c) Strategic targeting d) All of the above
Learning Assessment Question 3 Who is looking for pharmacies that offer expanded pharmacy services? a) Health plans b) PBMs c) Providers d) All of the above
A Tale of Two Professions
How Can I Afford This? Expanded Pharmacy Services Pharmacist time is valuable Pharmacist time is expensive Expanded pharmacy service reimbursement is not always available My dispensing reimbursement is shrinking and my DIR fees are rising
Not a New Problem. Medicare Part D MTM Great idea created FOR pharmacists Why FOR and not BY? Doesn t fit in typically pharmacy dispensing work flow Intervention FFS reimbursement doesn t cover cost of service Not enough volume to justify hiring resources
Service Model Challenges: Rx Dispensing vs Pharmacy Services Prescription gross profit: About $12.50 per prescription 15 prescriptions * $12.50= $187.50 gross profit MTM Pharmacist services: $2 per minute 1 hour MTM= $120 Approximately 50% greater profit dispensing prescriptions vs. doing MTM work Pharmacy Profitability What s Over the Horizon? Don Dietz, R.Ph, MS, Vice President; Pharmacy Healthcare Solutions Inc. American Society for Automation in Pharmacy 2014 Annual Conference; January 2014 *2014 NCPA Digest Sponsored by Cardinal Health
MTM: What happened? CMRs now included in Medicare Part D Star Rating Program CMRs now tied into many Pay for Performance Programs CMRs now tied into many Quality based DIR programs MTM platforms are full of intervention opportunities CMS is testing MTM expansion for broader adoption Now we can t afford not to complete our MTMs
Where do we go from here? Health care system is quickly evolving To thrive, pharmacies must be well positioned Coordinating patient care and partnering with other stakeholders is vital to our survival Patients Providers Pharmacists Payers
Expanded services MUST start with a business plan How much time will this service take to implement? Can I start small and scale? What is my target market? What will this cost in labor? What will this cost to implement? Will this service also provide advertising? What is the short term & long term program budget?
Expanded services MUST start with a business plan How much time will this service take to implement? Can I start small and scale? There is a difference between What is my target market? What REIMBURSABLE will this cost in labor? What will this cost to implement? Will this service also provide & advertising? What is the short term & long term program budget? PROFITABLE
Offer Services that are Profitable and/or Marketable Profitable Marketable Adherence monitoring program with packaging Chronic disease management Transition of care with hospital Care coordination with mental health provider Immunizations Medication Therapy Management Clinical services (blood pressure, blood glucose, etc.)
Expanded Service Litmus Test What Makes A Successful Program?
Successful Pharmacy Program Good for Prescriber Good for Third Parties Good for Employers Good for Pharmacy Staff Good for Pharmacy Good for Patients
Ask yourself: Is this expanded service? Good for my patients? Revenue producing & profitable? Good for my pharmacy s image? Something my staff will buy in to? Is this sustainable? If the answer is NO, that s OK. Don t force it.
Remember You don t have to do everything, JUST DO WHAT YOU DO WELL! Partners are looking for expanded service providers, not ALL service providers
Maximize use of staff, don t overload the pharmacist Train staff to coordinate refills Train staff to contact patients Train staff to sell expanded services Train staff to prep pharmacist for patient care Doesn t have to be technicians, clerks & other staff can help too!
Expanded Services Can: Increase Patients & Volume Target high volume patients Target high volume providers Target high margin payers Target local providers Advertise why you are different Sell your expanded patient care services as going the extra mile for their patients
How Do I Know Who to Target?
Expanded Service Calculator Provider / Payer Assessment $17,880 Total Rx Margin Per Month from Provider / Payer 1000 Rx Volume Per Month from Provider / Payer $17.88 Provider / Payer Value per Rx
Choosing your Target.. Provider / Payer Assessment Provider/ Payer A Provider/P ayer B Provider/P ayer C Provider/P ayer D Value to your Pharmacy $8.48/Rx $10.55/Rx $4.81/Rx $17.88/Rx Provider / Payer Value per Rx
Choosing your Target.. Provider / Payer Assessment Provider/ Payer A Provider/P ayer B Provider/P ayer C Provider/P ayer D Value to your Pharmacy $8.48/Rx $10.55/Rx $4.81/Rx $17.88/Rx Provider / Payer Value per Rx
Expanded Service Calculator DIR Assessment $17.88 Avg Rx Margin per claim per plan member $20.16 Avg DIR fee per claim per plan member -$2.20 Average Margin Per Plan Member with DIR
Choosing your Target.. Payer Assessment Payer A Payer B Payer C Payer D Value to your Pharmacy $8.48/Rx $10.55/Rx $4.81/Rx $17.88/Rx -$20.16 DIR $-2.20/Rx Payer Value per Rx WITH DIR
Choosing your Target.. Payer Assessment Payer A Payer B Payer C Payer D Value to your Pharmacy $8.48/Rx $10.55/Rx $4.81/Rx $17.88/Rx -$20.16 DIR $-2.20/Rx Payer Value per Rx WITH DIR
Expanded Service Calculator Adherence Monitoring 100 29 Number of patients enrolled in program * Additional Rxs per patient annually 2,900 Increase in ADDITIONAL program-driven Rx volume *Armstrong T., Impact of the MedHere Today Program on Persistence and Adherence, A Descriptive Report; Pfizer, May 2011.
Expanded Services Can: Increase Efficiency & Communication Manage inventory with just in time fills Push high volume patient filling to down time Create a predictable pharmacy work environment Create free time for MTM, immunizations, etc. Create free time to coordinate care with providers Create free time to counsel patients and caregivers
Expanded Service Calculator Inventory & Cash Flow 20 $500 # of Patients Cost of Filling 1 Rx each Rx per Month of for $$$$ $$$$ Med Med $10,000 Cash flow savings for pro-active medication management of these 20 patients
Expanded Service Calculator Inventory & Cash Flow 20 $500 # of Patients Filling 1 Rx per Month of $$$$ Med Cost of each Rx for $$$$ Med $10,000/mo = $120,000/year $10,000 That s a Pharmacist Salary!!!! Cash flow savings for pro-active medication management of these 20 patients
Key Investments in Expanded Services: Trust in your pharmacy staff, they can do it Create an environment of efficiency Strategic marketing to potential partners What you believe in and what fits your model Invest in patient care management tools that fit your practice
Expanded services to consider: Services that impact Quality Measures Services that result in additional MTM opportunities Services that impact Mental & Behavioral Health Services that include Transition of Care Compliance packaging with strategic targets Wellness programs 340B programs
Who s looking for expanded pharmacy services? Health Plans Family Practice Providers Hospitals & Health Systems Federal and State Programs Chronically Ill Patients & Caregivers Home Health Workers Mental Health Providers Pharmacy Benefit Managers
I m SOLD.Now What? Start with a Business Plan
Business Plan: Step 1
Business Plan: Step 1
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Business Plan: Step 3
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Business Plan: Step 7
Business Plan: Final Step
Take Home Message Choose expanded pharmacy services that are sustainable, profitable, and meaningful
Learning Assessment Question 1 When considering adding new expanded pharmacy services, what should be developed first? a) A business plan b) Workflow modifications c) Software d) A timeline
Learning Assessment Question 1 When considering adding new expanded pharmacy services, what should be developed first? a) A business plan b) Workflow modifications c) Software d) A timeline
Learning Assessment Question 2 What is a key component of expanded pharmacy service sustainability? a) Staff buy in b) Profitability c) Strategic targeting d) All of the above
Learning Assessment Question 2 What is a key component of expanded pharmacy service sustainability? a) Staff buy in b) Profitability c) Strategic targeting d) All of the above
Learning Assessment Question 3 Who is looking for pharmacies that offer expanded pharmacy services? a) Health plans b) PBMs c) Providers d) All of the above
Learning Assessment Question 3 Who is looking for pharmacies that offer expanded pharmacy services? a) Health plans b) PBMs c) Providers d) All of the above
Questions? ThankYou!!! Tripp Logan, PharmD Senior Quality Consultant- MedHere Today Vice-President Logan & Seiler, Inc. (L&S Pharmacy, Medical Arts Pharmacy, New Madrid Pharmacy) tlogan@medheretoday.com