Hospital executives are coming to the realization that you cannot cut your way to prosperity. We are now seeing many signs that CEOs are beginning to focus equally on improving revenue growth while keeping costs in check. The hospital pharmacy can play an important role in both areas: revenue growth and cost control.
A recent story in Modern Healthcare highlighted this shift in priorities. It reported that an Advisory Board Co. survey found that hospital executives are dedicated to growing revenue by improving ambulatory access, minimizing clinical variation, boosting primary-care alignment and more.
The good news is that hospital pharmacies can play a vital role in helping their organizations reach higher revenue targets. There are two main areas where the hospital pharmacy can play a starring role in boosting revenue.
- Master the CDM.
Maintaining the accuracy of your Charge Description Master (CDM), or chargemaster, sounds simple, but billing accurately can radically improve hospital revenues. If your pharmacy doesn’t already have software to automate and track its inventory, it’s time to make that investment to improve the accuracy of your CDM.
Even if you do have software, you’ll need to make sure every drug in stock is properly designated with its correct National Drug Code and billable units. Then, you’ll need to confirm that inventory aligns with purchasing. This ensures the hospital accurately bills for the medications used for a patient and avoids the delays and lost billings that occur with improper coding.
Mastering the CDM is especially important for non-profit hospitals working under the 340B program since falling reimbursements mean you need to capture every available penny. The Modern Healthcare article reported a bright spot for these operations. “Not-for-profit hospitals’ revenue growth beat expense inflation in 2018 for the first time since 2015, but their margins are still low.”
- Create new revenue streams.
As necessary as CDM management is to profitable pharmacy operations, finding non-traditional revenue streams is probably getting more attention. Of course, any new pharmacy services must align with that hospital’s patient population and the surrounding community’s needs, but as hospital admissions slow, ambulatory and primary care services offer interesting areas of expansion.
Many hospitals are stepping into retail pharmacy services that fill prescriptions for discharging patients. It’s a smart way to capture dollars that otherwise would be spent at neighborhood pharmacies. It also provides a value-added convenience to patients and help reduce readmission rates.
Other hospitals are adding specialty pharmacy services, such as compounding for children’s medicines. Dialysis services and infusion centers may be excellent revenue streams for hospitals with robust nephrology or oncology specialties. Outpatient orthopedics surgery, and the medications that go with it, are particularly popular areas of expansion right now.
In fact, the Advisory Board survey found that 57% of executives ranked improving ambulatory access as a primary focus when asked to rank multiple topics. It’s a competitive arena, so any forays into these services must be carefully aligned with your hospital’s mission and marketplace. When you expand, let your pharmacy take center stage in building new revenue steams.
By Terry Andrus, President and CEO of CompleteRx.