Financial Changes to Hospital Pharmacies for the New Year

Healthcare workers bringing financial changes to hospital pharmacies

Hospitals Continue to Battle Drug Shortages and High Drug Prices

The coming year is already shaping up to be a challenging one for hospitals and their pharmacies. With profits tightening as drug prices increase dramatically and shortages continue, it’s incumbent upon pharmacy managers to stay current on ways to contribute to their hospital’s bottom line.

Consulting firm Deloitte predicts value-based contracts to physicians and hospitals will begin to play a larger role in the U.S. health care market in 2018 compared to fee-for-service (FFS) contracts.

Steve Burrill, vice chairman, U.S. health care providers leader at Deloitte LLP believes hospital adoption of value-based payments will accelerate in 2018 with new final regulations from the US Centers for Medicare and Medicaid Service (CMS) for the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA).

An ongoing and uncertain operating environment will continue to make profitability a challenge, particularly with recent changes to the 340B program. Deloitte says CEOs are expecting a steep reduction in pharmaceutical margins for hospitals that participate in the 340B program.

Battling drug shortages, high prices

Another sign of change: A group of large hospital systems combined resources to found a non-profit generic drug company. The goal is to give hospitals better access to generic medications that are frequently in short supply or subject to market manipulation.

Consolidations among pharmaceutical manufacturers have left many drugs made by only 1-2 companies and therefore at higher risk of shortages and dramatic price changes, which cost hospitals millions. Recent examples of shortages in critical generics include injectable morphine and sodium bicarbonate, while dramatic, and artificial, price increases have disrupted availability of drugs such as Nitropress, Isuprel and Daraprim.

Five health systems, including Intermountain Healthcare, Ascension, SSM Health, Trinity Health and the U.S. Department of Veterans Affairs, representing 450 hospitals, are participating in the effort.

The new nonprofit company will provide a number of generic drugs to hospitals. And as of last week, there were 148 drugs currently facing shortages, according to the American Society of Health-System Pharmacists.

Optimism ahead

Despite the rapid changes predicted for 2018, hospital leaders remain largely optimistic about the coming months, according to a survey by B.E. Smith. The firm surveyed more than 800 hospital directors, and c-suite level executives and found that 47 percent considered themselves optimistic about 2018 and beyond.

Surveyed hospital leaders expected their efforts in 2018 to focus on fostering stronger collaborations and partnerships, advancing clinical initiatives to improve patient care and improving operational efficiencies to reduce financial risk.