As health systems wrestle with the cost of healthcare, innovative hospital executives are taking a closer look at their pharmacies – historically considered a high-cost center. With a bit of creativity and some savvy choices, administrators are finding ways to reduce costs and grow pharmacy revenue.
Cut Costs by Optimizing Your Pharmacy’s Business Operations
Increasing pharmacy revenue is moot if you can’t keep costs under control. Pharmacy costs are among the top 5 expenses for hospitals, so it pays to operate your pharmacy as efficiently as possible.
First, assign dedicated purchasing staff to stay on top of fluctuating drug prices and drug shortages. They must also maintain oversight of contract changes, location-based pricing, and programs that offer the best fit for hospital needs.
A proactive purchasing team can protect the hospital from unexpected costs and seek out hidden savings opportunities, reducing the pharmacy’s drain on your budget.
Next, audit your reimbursements to shorten the time between billing and payment. Clerical errors like incorrect NDCs and HCPCS codes can lead to denials, and mistakes in how the chargemaster is set up can drag out reimbursement timelines.
Before negotiating new contracts with insurance providers, consider how reimbursements vary from company to company. Breaking down reimbursement by provider for the top 20 drugs your pharmacy bills can be an eye-opening experience.
When contract negotiations come up, bring the pharmacy to the table from the start. A pharmacist adds valuable clinical insight to the conversation, helping to build a contract that minimizes reimbursement denials and delays.
Also, make sure the hospital pharmacy and the finance department are aligned on provider pre-approval. When provider descriptions meet financial requirements, payment denials are easier to resolve, while some delays can be avoided altogether.
Many hospitals overlook their chance to maximize pharmacy revenue by optimizing day-to-day workflow. A carefully designed workflow boosts efficiency, improves patient outcomes, and increases staff satisfaction.
Inventory management is another often-neglected cost center. An overstocked pharmacy loses money on expired products and lost storage space. An understocked pharmacy is in continuous drug shortage mode – increasing labor costs throughout the hospital and jeopardizing patient safety.
In an infusion center or retail pharmacy, poor inventory management can force a patient to take their prescription elsewhere – leading to lost sales and a negative perception that lasts long after the inventory shortage is addressed.
Increase Inpatient and Outpatient Pharmacy Revenue
Improving the bottom line at your hospital pharmacy doesn’t stop at cutting costs. Innovative hospital administrators also implement programs to elevate the pharmacy’s revenue streams.
Grow Inpatient Pharmacy Revenue
Hospital pharmacists are in-demand professionals with valuable expertise. One way to increase inpatient revenue is by monetizing their professional knowledge.
The time pharmacists spend consulting with patients and doing rounds with clinical teams may be billable time. How these services are coded and reimbursed depends on your hospital’s location and the scope of pharmacy services.
Hospitals can also leverage their pharmacists’ knowledge by offering Medication Therapy Management (MTM). Pharmacists can conduct personalized medication reviews while patients are still in the hospital.
MTM consultation fees and medication recommendations create a revenue stream for the hospital, while patients gain the knowledge to achieve better long-term health outcomes.
Increase Outpatient Pharmacy Revenue
As outpatient services continue their upward trend, the hospital pharmacy is perfectly positioned to build revenue from those services.
To start, capture the pharmacy business of patients before they’re discharged. A meds-to-beds program benefits the patient and the hospital by reducing readmissions, improving HCAHPS medication information scores, and building customer loyalty.
If your health system includes outpatient clinics and other treatment areas, funnel discharge and outpatient prescriptions to the hospital pharmacy. Hospitals with a 340B program can also capture outpatient prescriptions from outside specialists who are not 340B eligible.
Under 340B, a “covered entity” like a hospital can buy outpatient drugs at a discount price. If your providers refer patients to private specialists who are not 340B eligible, any prescriptions written by those specialists may still be eligible for your pharmacy to fill at a reduced rate.
Another way to capture prescriptions written by unaffiliated providers is by partnering with medical facilities without pharmacies of their own. Develop relationships with local healthcare providers like assisted living facilities, rehabilitation centers, and nursing homes.
Finally, look beyond your own patients. Increase pharmacy revenue and decrease the cost of your employee health plan by offering health system employees incentives to fill their prescriptions at the hospital pharmacy.
Improve the Patient Experience at Your Retail Pharmacy
A retail pharmacy is an opportunity for your hospital to strategically grow its revenue streams. The most critical factor in a retail pharmacy’s success, according to the JD Power US Pharmacy Study, is the quality of the patient experience.
If a patient has difficulty locating the pharmacy, that experience is off to a bad start before they ever walk in the door. Make the pharmacy easy to find.
If possible, locate it near the building entrance with the heaviest foot traffic. If your pharmacy is in an existing building and moving is not an option, make sure signage showing the way is abundant and clear.
Distribute clear, compelling signage about pharmacy services in waiting areas throughout the hospital.
This information helps ease a stressful situation as patients and caregivers are reminded of how easy it will be to get the medicine and supplies they need.
Excellent service comes from happy employees, yet more than half of hospital pharmacists report experiencing burnout. To provide the best patient experience, take care of your staff.
Give your pharmacists space to operate at the top of their license. Delegate or automate low-value tasks so pharmacists have time to focus on delivering direct, empathetic care.
Extend that empathy by making it as easy as possible for patients to pick up a prescription. Many hospital pharmacies introduced drive-up, delivery, and curbside pickup during the pandemic.
If your hospital pharmacy offers these services, market them to patients as a convenient option. If you discontinued pickup options post-pandemic, consider what it would take to reinstate them.
Build a Culture of Continuous Improvement
Enhancing pharmacy revenue is not a one-time project. Hospitals that successfully manage costs and maximize revenue long-term have baked continuous optimization into their business model.
To identify current and ongoing opportunities to grow your hospital’s pharmacy revenue, get in touch with our team.
by Dana Fox, CompleteRx Director of Quality & Compliance