Specialty pharmacy: business or care model?

It’s “show and tell” day at The Specialty Sage. I’ve been getting similar feedback over the last week at contact@thespecialtysage.com. I wasn’t planning on blogging about the perception of specialty pharmacy but based on recent articles and some good feedback from all of you, it seems appropriate.


From: Dr. Hospital Executive in Chicago (took her name off as a courtesy)

Subject: Debate resolution needed

Dear Mr. Sage, (quick pause here, I’m Matt Conway,¬†short profile in the About section, and I thought The Specialty Sage was a catchy blog title. Call me whatever you want but I didn’t think someone would call me Mr. Sage. I sort of like it though ūüôā

I like where you are going with your recent blog posts. (X Hospital System) has been struggling with Specialty as we started down this road years ago. There are too many hurdles in specialty pharmacy to list here from a structural standpoint. We have seen the payor complexity and payor lockout which has led us to great internal debate.

Post-discharge¬†care, this is the care that is really provided through the specialty pharmacy, is potent and our providers love it. There isn’t one, not one, in-clinic specialty doc that asks how much money the pharmacy returns to the hospital. ALL OF THEM ASK FOR MORE PEOPLE ON THE CARE TEAM. Pardon the caps but it is a point worth reinforcing.

The debate is about what IS the specialty pharmacy business. ¬†Is it more of a care model or more of a revenue-centered business? It is important for (us) to take a critical look at where our resources are being consumed. Specialty pharmacy is tricky because it requires a large amount of human capital and the benefit isn’t as clearly measured in patient outcomes, as it is in dollars. As a not-for-profit hospital, we don’t really say that we are in the business of care as much as we say we are in the caring business. It is clear that not everybody we deal with believes the same as evidenced by our payor relationships.

Can you help us resolve our debate?

Best wishes,


Firstly, thanks for the email and the debate means that good things are happening at your health system. ¬†It is a bifurcated conversation depending on where you sit in the hospital. If you are in the C-suite, then the benefit of the in-house specialty pharmacy is abundantly clear – it’s in the additional dollars that help plug holes for the hospital. If you are the specialty chief, then you think specialty pharmacy is a care model and you know it helps your patients become more adherent which leads to better health outcomes.

An additional fact here should be noted for total clarity, “ExpressScripts, CVS Caremark, and OptumRx control a combined 75 to 80 percent of the specialty market” and “ExpressScripts’ adjusted profit per prescription has increased by 500 percent since 2003.” per a great article in¬†The Week¬†by Ryan Copper titled “The secret monopoly behind America’s outrageous drug prices”.¬†The Secret Monopoly Behind Americas Drug Prices

My sarcastic side would like to jump in here and say that it is definitely a business if each of the aforementioned businesses are in the Top 22 of the Fortune 500, duh! Wait, hold on though! I agree with the emailer, not-for profits are in the “caring business.” It does seem like tighter data integration and analytics would help give this particular healthcare system better metrics that support the argument that care is what specialty is all about. I would go on to also note that being able to profile, assess, run prior authorizations, test claims, get financial assistance and properly classify patient encounters is the well spring to tie specialty pharmacy care to the business. It will tie bottom line dollars to drug adherence, reduction of financial toxicity and reducing patient readmission and costs to the hospital.

Hospitals that take on specialty pharmacy in house, not creating a network of contract pharmacies or consider in-house infusion on the hospital benefit as “doing specialty pharmacy,” but the outpatient pharmacy benefit, oral and self-injectable drug segment of specialty pharmacy are taking on behemoths. Regardless of where you classify the business in the context of the hospital; you have now picked a fight with a Fortune 22 company on their turf. Hospital systems have to be ready to compete or you could have greater patient leakage, a lower standard of care and lose money. Specialty pharmacy is about care.

Are not-for-profit hospital systems going to be able to hire the call support staff, create the data-analytics, keep on top of changing co-pays, changing drug information, changing drug interaction, changing payor certifications and audits, changing 340B rules, changing revenue cycle management, changing intricacies of patient intervention and 100 other things and still keep their core focus of giving superior care to a needed patient population?

This was a great topic and I want to keep the debate going in future posts. Please send your ideas on how the business of specialty pharmacy in-house at not-for-profits should be classified and what the greatest benefit you see as a hospital system. Send to contact@thespecialtysage.com.




My payor contract doesn’t include Specialty…why?

A large healthcare system in Northern California recently asked the Specialty Sage,”Do I have to renegotiate my commercial payor contract now that we are opening a specialty pharmacy?” The short answer is yes and it is not easy.

Hospital-owned, integrated and managed specialty pharmacy is one of the most effective ways hospitals have to improve patient care post-discharge. “Pharmacy Today”, an official publication of the American Pharmacist Association, says that “[adherence strategies]are the linchpin of specialty pharmacy and the driving force behind improving patient care and satisfaction.” What better place to get care then the hospital, right? Then why do commercial payors exclude or “carve out” specialty?

If patients get better care, then it is reasonable to believe that readmission to the hospital system would go down. If readmission to the hospital goes down then it is reasonable to believe that adherence to prescribed specialty drugs may be a factor. This means there’s a more effective use of the drug regimen and avoidance of other factors that may complicate patient care resulting in a lower cost of care with better patient outcomes. Why would a payor negotiate specialty separately?

Now that I have asked twice, here is a¬†great RA patient blog post¬†that makes this issue come to life. Basically, this patient’s insurer forces her to fill at a particular specialty pharmacy. The care she receives isn’t meeting her needs and she is left without any choices. Why would the payor do this?

Let’s ask the question differently – if payors believe that care through the hospital produces better outcomes then why would they be difficult about including specialty¬†pharmacy in their contracts? This is an issue touched on in a previous Specialty Sage post¬†here.

Let’s use another analogy – let’s say that you are buying a new construction home. ¬†Your new home was¬†built by a reputable builder that believes in quality and craftsmanship. The builder happens to also have a realtor associated with them and a lawyer that can draw up the papers. ¬†Although convenient and not illegal, it does beg the question as to why everyone is employed or associated with the builder. Of course the builder wants to sell as many houses as they can and retain as ¬†much of the revenue for themselves. ¬†This is called vertical integration. ¬†It happens in most industries and it has already happened in healthcare.

You, the healthcare system, want to give better, more cost effective care and retain revenues. The smart folks at the payors want to retain revenues as well. This now makes you, the healthcare system and the payor competitors. So, what is the best way to get access to those patients?

The short answer is to look at the entire contract. The long answer is make sure that you have an expert on your side.

Contact me at contact@thespecialtysage.com with your solutions and feedback – all my posts come from you the readers!








Up ↑

%d bloggers like this: