Last week, we explored five market trends that should drive health system leaders to accelerate a specialty pharmacy strategy. In this article, we outline key competencies health system leaders should evaluate to decide whether self-development or partnership is the best approach to implement a specialty pharmacy service line at their organizations.
As more health systems offer specialty pharmacy services, hospital leaders are recognizing the strategic importance of accelerating this critical service line at their organizations. However, when implementing a specialty pharmacy, many leaders mistakenly approach it as a pharmacy initiative and not from a system-wide perspective.
In our experience as consultants to health systems nationwide, we have seen many health system-owned specialty pharmacies fail to achieve their full potential. Like IT or quality improvement initiatives, starting a specialty pharmacy service line is a complex undertaking that requires domain expertise and multidisciplinary support.
A lack of necessary pharmacy-specific and organizational competencies can delay, or worse, inhibit your program’s success. It may also cause your health system to miss opportunities to enhance clinical outcomes and improve patients’ experiences with your brand.
Health systems that don’t approach specialty pharmacy as a system-wide initiative also forfeit significant financial benefits. For example, a medium-sized health system with specialty practices may generate up to $50 million in associated prescription revenue annually. If the hospital is 340B-eligible, it could miss up to $2 million in savings opportunity each month. (Request an estimate of your health system’s clinical and financial opportunity here.)
Given the potential clinical and financial impact of a specialty pharmacy, accelerating success is critical. Health system leaders must carefully determine which approach – self-development or partnership – will most rapidly enable growth. This decision should be guided by your health system’s organizational and pharmacy competencies.
Organizational competencies critical to a specialty pharmacy service line
Organizational competencies health systems need to rapidly build and scale a world-class specialty pharmacy program include:
- Risk tolerance: The specialty pharmacy market is complex and ever-changing. To build or rapidly grow a program, your organization must make pre-revenue investments and take on significant financial, operational, recruiting, and invested capital risk – which may be challenging when success isn’t guaranteed. Health systems with low risk tolerance may fail to invest appropriate resources, preventing your program from reaching its full potential.
- Access to start-up funding: Specialty pharmacies’ start-up expenses can easily reach millions of dollars. Health systems must have significant financial resources available to hire talent, develop integrated technologies, build-out and operate a pharmacy, manage drug inventory, establish call centers, and more.
- Cross-functional collaboration: As outlined above, a specialty pharmacy service line must be a system-wide initiative, not solely a pharmacy program. Given this, it is critical that your program has cross-functional support at all levels. Leaders across the organization – including C-suite executives and physicians – must be engaged in planning, implementing, and operating a program. Organizations lacking integration or system-based thinking inevitably create delays in program development and growth.
- Staffing and recruiting competency: Growing a clinically-based specialty pharmacy program, requires your health system to rapidly hire and train skilled clinical pharmacists and pharmacy liaisons. Don’t assume your current team can simply pivot or fill the gap. Specialty pharmacy teams require a different skill-set than inpatient or retail teams. Many health systems struggle to find local talent quickly enough and lack capacity or resources to recruit and relocate talent from other areas.
Pharmacy competencies required to grow a hospital-owned specialty pharmacy program
In addition to the organizational capabilities outlined above, your health system pharmacy program requires specific competencies to accelerate a specialty pharmacy service line. These include:
- Specialty pharmacy-specific expertise: Developing and operating a specialty pharmacy program is a complex initiative that requires broad expertise. This includes health plan benefits, clinical services, revenue cycle management, contracting, purchasing, data management, accreditation, and dispensing and fulfillment operations. These competencies are different from those needed in inpatient settings and other outpatient service lines. While it may seem obvious to say health systems need domain expertise, we have seen many specialty pharmacy initiatives fail or stall because health system leaders assumed their current pharmacy team could also manage this service line.
- Integrated technology: Identifying and managing patients requiring specialty medications is fundamental to growing your specialty pharmacy program. Streamlining communication between the specialty pharmacy team and your clinicians is key. Successful organizations will need to license or build a software solution that integrates with your electronic health record.
- Specialty physician practice structure and leadership: Many organizations take provider participation for granted. They assume employed physicians and extenders will simply embrace a new service line. Properly implemented specialty pharmacies must become an integral part of clinics’ workflows, requiring substantial change management and physician buy-in. Furthermore, the financial viability of your specialty pharmacy program will depend on your physician specialty mix and practice structures within the clinics. Understanding your physicians’ prescribing patterns, knowing patient volumes, and reviewing clinic 340B eligibility is critical.
- Current retail network: Quick initiation of specialty drug therapies can be critical to patients’ clinical outcomes. Statistics show 28% of new prescriptions are never filled1, leading to therapeutic failures and disease advancement. Having an internal network of pharmacies is crucial to reducing “lost” prescriptions and shortening “Rx-to-mouth” time.
- Leadership: A successful specialty pharmacy program must be operated as a business within a business, requiring a dedicated leader who understands specialty pharmacy and has strong business acumen, change management experience, and relationship development skills. He or she must be able to communicate skillfully with healthcare professionals and patients, and possess marketing skills to promote the program internally and externally.
When partnering helps health systems accelerate specialty pharmacy success
Health system leaders have likely used buy-build-partner frameworks to assess the best approaches to implement other service lines at their organizations. Traditionally, acquisition or partnership is the best strategy if an opportunity is significant, time-to-market is important, and key capabilities to drive success are lacking.
As we outlined in our last article, speed-to-market is essential to ensure health systems fully recognize the benefits of a specialty pharmacy program. If your organization lacks the capabilities above, partnering with a specialty pharmacy services firm will allow you to more quickly build and scale a specialty pharmacy service line, driving faster and stronger clinical and financial results.
Health systems that choose to partner must carefully consider the clinical approach and business model of potential partners. See our list of recommended questions to ask potential partners here.
Contact us to discuss how Trellis Rx can partner with your health system to develop and grow a specialty pharmacy program under your brand.
Ernie Anderson and Tony Zappa both have over 30 years of experience in pharmacy, including inpatient, ambulatory care, managed care, and specialty pharmacy. Mr. Anderson has held pharmacy leadership positions at Steward and Lahey Clinic Medical Center in addition to teaching at Northeastern University. Dr. Zappa has held pharmacy leadership positions at Fairview Pharmacy Services, Visante, Wellpartner, BioScrip, and more. Dr. Zappa is Co-founder and Chief Solutions Officer at Trellis Rx, and Mr. Anderson serves on Trellis Rx’s health system advisory board.