Exploring the Potential of Entity-Owned Specialty Pharmacies in Strengthening Hospital Revenue Streams Amidst Challenges
Hospital Systems Eye Specialty Pharmacy as a Beacon in Financial Storm
In recent months, hospital operating margins have shown signs of recovery, sparking a glimmer of hope across the healthcare landscape. Yet, the path to financial stability remains fraught with challenges, including persistent staffing shortages and escalating expenses. Hospital leaders are now at a crossroads, seeking innovative revenue streams to navigate through these turbulent times. Amidst this backdrop, the burgeoning demand for specialty drugs emerges as a promising avenue for bolstering revenues through the establishment of entity-owned specialty pharmacies.
The statistics paint a compelling picture: 60% of Americans live with a chronic disease requiring complex therapies, and an additional 14 million are expected to be diagnosed with chronic conditions by 2030. This surging demand is further intensified by a national drug shortage, complicating access to essential medications. Moreover, pharmaceutical companies’ restrictions on 340B discounts for contract pharmacies have tightened the noose, limiting patient access to specialty medications. In this context, entity-owned specialty pharmacies stand out not just as a strategic move to circumvent these barriers, but as a critical mechanism to ensure that vulnerable populations, especially low-income patients, maintain access to life-saving treatments.
The Case for In-House Specialty Pharmacies
Transitioning to an in-house specialty pharmacy model offers a myriad of benefits, addressing several pain points in the current healthcare delivery system. When patients are forced to seek specialty drug prescriptions outside their health system, the continuity of care is disrupted, leading to what is known as patient leakage—a challenge for 76% of health system leaders. By integrating specialty pharmacy services within the hospital’s ecosystem, there’s a seamless connection between the pharmacy and care teams, enhancing patient experiences and ensuring a holistic approach to healthcare delivery.
Moreover, the rise of chronic diseases nationwide underscores the urgent need for personalized, high-quality care. Entity-owned specialty pharmacies enable hospitals to meet this demand, shortening the treatment journey for patients with chronic and complex conditions. This is particularly crucial for safety net hospitals and rural facilities, where access to specialty drugs can be a lifeline for communities.
A Financial Lifeline in Challenging Times
As outpatient services and telehealth offerings expand in response to patient preferences for care closer to home, health systems are compelled to diversify their revenue streams. With U.S. pharmacy-dispensed specialty drug revenues hitting $243 billion in 2023 and projected to account for 65% of all drug expenditures by 2025, entity-owned specialty pharmacies represent a strategic investment for health systems aiming to capture a larger share of the national drug spending.
Navigating the Path to Specialty Pharmacy Success
The journey to establishing a specialty pharmacy is complex, necessitating a multidisciplinary approach that includes internal and external expertise. From navigating accreditation and payor contracting to managing 340B compliance, the expertise of external partners can be invaluable. Additionally, leveraging innovations in automation and data analytics can streamline the launch process and enhance long-term operations, ensuring that health systems can effectively manage high-cost medications and improve patient outcomes.
Looking Ahead
Despite the potential hurdles, such as access to medications and logistical challenges, the current economic landscape presents an opportune moment for health systems to explore new revenue streams through specialty pharmacy. By doing so, they can not only improve patient care but also fortify their financial health against future headwinds.
As the healthcare sector continues to evolve, the integration of specialty pharmacy services within hospital operations stands out as a beacon of innovation and resilience, promising a brighter future for both providers and patients alike.
This analysis is brought to you by Carmine DeNardo, R.Ph., a seasoned expert in pharmacy services and a leading voice in the MedCity Influencers program.