Today’s health care and business environment is challenging. The economy continues to move slowly with a variety of thought on how long it will take before the housing market and job growth will recover. Health care is one growing component of the economy, but pressures to contain costs are a continual focus on the part of all types of payers. Cost containment efforts create margin pressure on the product dispensing side of the pharmacy business. Additionally, uncertainty exists over the implementation of new reimbursement models based upon “average manufacturer price” or AMP. On a positive note, opportunities for service-based revenue are available and growing. Maintaining a healthy pharmacy business requires continually scanning for new business opportunities that can generate multiple revenue streams beyond traditional dispensing services.
Pharmacy-related Revenue Streams
Providing new patient-care services or expanding dispensing services can lead to new revenues on the pharmacy side of the business. Disease state management and medication therapy management (MTM) services are two primary service-based revenue streams that independent pharmacists may consider offering. MTM services are an outgrowth of pharmaceutical care and disease state management efforts of the 1990s and the term MTM service was coined as part of the 2003 Medicare Modernization Act. Medicare Part D prescription drug programs must offer MTM services to their beneficiaries according to CMS regulations. But there are opportunities for pharmacists to provide MTM services beyond Medicare patients. Many self-insured companies offer MTM services and these types of companies have been more open minded to offering these services. Some state Medicaid programs will reimburse for MTM services as well. Pharmacists should stay involved with their state pharmacy association and local schools of pharmacy to learn of new opportunities.
Several nationwide MTM service vendors can also be sources of this business, for example Mirixa (www.mirixa.com) and Outcomes Healthcare (www.getoutcomes.com). MTM opportunities are growing. The American Pharmacists Association (APhA) annually provides an outlook of MTM services from both a pharmacy provider and payer perspective called the MTM Digest. Visit www.pharmacist.com and click on MTM Central to learn more. MTM Central also features MTM Connection, a service developed by the APhA and the Academy of Managed Care Pharmacists that provides a link between health plans and pharmacists providing MTM services. MTM Connections features two components: (1) the MTM Resource Library, a searchable database with more than 650 annotated bibliographies of published articles and reports on MTM and (2) the MTM Locator, a self-reported and searchable directory of MTM provider and payer program profiles.
In addition to MTM services, immunization and vaccine travel clinics are a growing revenue opportunity for community pharmacists. Another potential area of new service growth is contracting with local hospitals and long-term care facilities to offer medication reconciliation services for patients who are transitioning between facilities and their home because of illness. Hospice care and pain management are also areas worth consideration.
Compounding services may be an opportunity for revenue growth and differentiation. Pharmacists should research whether local physicians are writing for individualized patient therapies and then detail their compounding services to those physicians as well as other practices. Individualized hormone replacement therapy is a big area of focus within the compounding space as well.
Expanding dispensing beyond the pharmacy’s walls can also create new revenue sources. America is aging and baby boomers began turning 65 years old in 2011. Providing services to an expanding population of geriatric patients where they live is an important consideration for independent pharmacists. Consider providing dispensing and consultant services to long-term care facilities. Additionally, assisted living facilities and senior housing complexes offer new areas to outreach for both dispensing and patient-care services. Expanding immunization delivery to these sites is an example. Consider partnerships with state/local visiting nurse or home health care agencies to offer MTM services. Explore potential funding created by the Accountable Care Act and the CMS Innovation Center which may be more easily accessed through partnerships with area agencies on aging which may be state or regionally-based. Grant opportunities through the CMS Innovation Center are accessible to APhA members at MTM Central, www.pharmacist.com.
Front End-related Revenue Streams
In addition to offering over-the-counter health products in the pharmacy’s front-end, a variety of other service departments and products might be considered based on the pharmacy’s surrounding demographics and location. The list of possibilities is long and may include:
Durable medical equipment
Home healthcare products
Gifts and cards
Coffee shop/soda fountains
Convenience food items
Mini-business centers with computer stations/printers/internet access
Health and wellness kiosks/resources
Books and magazines
Independent community pharmacies are cornerstones in their communities and this offers them a unique opportunity to expand service and product offerings that bring in new revenue. Creating multiple revenue streams can help strengthen the pharmacy’s bottom line. To do so, a pharmacy needs to understand it local demographics and unmet health care needs in the community. This will help the pharmacist identify the most promising market segments or niches. Pharmacy staff expertise and other internal factors also need to be considered, including what new resources might be required for expansion.