To remain competitive and continue their record of providing needed community health care services, independent pharmacies must recognize and respond to the changes that will affect their market in 2018. Here’s what we see as the five trends defining the market for independents in the year ahead.
1. Persisting pressure on prescription reimbursement rates
Prescription reimbursement declined in 2017, and the trend will only accelerate in 2018. Reimbursement rates continue to be pressured by the competitive pricing environment, proliferation of preferred networks and direct and indirect remuneration (DIR) fees. Pharmacies are accepting lower reimbursement rates to the right networks in exchange for potential access to patient lives, increases in prescription volume and performance-based payments.
Margins will be squeezed further in 2018 by rising DIR fees. Profitability is complex to manage as DIR fees can vary widely from pharmacy to pharmacy and are affected by a variety of operational and clinical performance metrics. Pharmacies can take steps to prepare for and mitigate the impact of DIR fees. They can estimate DIR fee liabilities, budget and set aside DIR fees to be paid. They also can focus on performance measures directly tied to DIR fees and reduce their potential exposure.
2. Focus on performance metrics that pharmacies have the most ability to impact
The performance bar will continue to rise in 2018 for pharmacies. Pharmacies should focus on the performance metrics they have the most ability to impact. It’s critical to review plan specific requirements which may include operational metrics (e.g. formulary compliance, 90-day fills, generic efficacy) and clinical metrics (e.g. adherence, gaps in care such as statin-use in diabetes, comprehensive medication review completion rates).
For example, independent pharmacies should continue their focus on adherence measures for blood pressure, cholesterol and diabetes medications.
Pharmacies made progress on these measures in 2017 but should take steps to improve their performance in each of them in 2018. That means using processes to identify outliers—patients who are nonadherent or at risk of nonadherence to their medications—and taking steps to overcome adherence barriers. Actions could include leveraging motivational interviewing, medication synchronization and medication therapy management.
3. Continuing transition from pharmacist to provider to serve patient health needs
Revenue from expanded services is critical for independent pharmacies, including existing services like immunizations and medication therapy management, and new services as pharmacies’ scope of practice expands. Pharmacies made progress in 2017 on convincing state lawmakers to recognize pharmacists as providers, but independents still have a way to go on this issue in 2018.
To be recognized as providers, pharmacists must have an expanded scope of practice in their states to offer additional clinical services and increase patient access to care. In addition, they also need to be able to be reimbursed for the services they provide. Pharmacists, for example, in every state can administer vaccines. But that’s not happened universally with other services, such as prescribing medications for contraception, tobacco cessation, allergies and other point of care testing and services.
The catalysts for expanding pharmacists’ scope of practice in 2018 will be increasing patient access to care in underserved areas and the need to lower overall health care costs. Ideally, we will continue to see traction on both the state and federal level.
4. Increasing need to improve efficiency through technology for better outcomes
To respond to and overcome the challenges of improving quality measures, providing additional clinical services and dealing with declining prescription margins, independent pharmacies will increasingly need to improve their efficiency in 2018, including looking at ways to leverage technology. For example:
- Pharmacies can use technology to identify patients at risk of nonadherence or nonadherence to their blood pressure, cholesterol or diabetes medications.
- Pharmacies can leverage their pharmacy management system or other technology to help them run programs like appointment-based medication synchronization and medication therapy management.
- Within pharmacy workflow, pharmacies can leverage technology to create and share electronic care plans which align with standards prescribers use in electronic medical records. Pharmacist eCare plans document patient’s current medications and health concerns, pharmacy’s interventions and outcomes over time. Anticipate wider creation and sharing of Pharmacist eCare plans in 2018.
5. Collaboration with other stakeholders to enhance the coordination of patient care
Changes in the way health care is financed—particularly when it comes to value-based reimbursement models—demand that stakeholders work more closely together to coordinate patient care.
In 2018, independent pharmacies increasingly will need to collaborate with others to improve clinical outcomes, lower costs and create more value for patients, providers and payers. Pharmacies can identify specific pain points for providers in their communities, such as patients not taking their medications and being readmitted to the hospital. Or pharmacies can offer services that help prescribers maximize practice revenue while improving patient care such as chronic care management. There are many opportunities for independent pharmacies to be care extenders in their communities.
For independent pharmacies, 2018 will be challenging. The five trends present opportunities for forward-looking independent pharmacies to continue to reinvent their traditional business models. Those that do will not only survive but thrive, while at the same time keeping patient care at the heart of their businesses.
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