“Once you’ve wrestled (with the big 3), everything else in life is easy.”

The quote I modified above is from Dan Gable, the Michael Jordan of wrestling. Gable, is the retired head coach of the University of Iowa wrestling where he won 15 NCAA titles and as a collegiate wrestler at Iowa State, Gable lost only 1 match and won gold in Munich in ’72 while only giving up one point.  The theme is that wrestling makes you tough and that nothing in life is as hard as wrestling.

The same goes for wrestling with Express Scripts, CVS Heath and OptumRX. Hospital Systems have to get into great shape, train with a team and have a clear game plan to out hustle, outwit and out execute the big three. Last week a hospital system in the mid-west said that they would just contract their Specialty Pharmacy. This is the equivalent of asking someone else to do pushups for you. They get all the benefit and you, the hospital system, get nothing. Contract pharmacies are not a hospitals’ friend for Specialty Pharmacy. They are very profitable scavengers that prey on hospital systems that are looking to provide better care through their pharmacy.


This illustration is one of the best I have seen at explaining why Contract Pharmacies don’t return any value back to the hospital.  Exclude Medicaid, Managed Medicaid, 340B savings on LDDs, most payors, most LDD drugs, don’t forget to take out the dispensing fee and 20% Contract Pharmacy Fee and hospital systems are left with very little. There is also no way that a contract pharmacy can help the hospital with care.  Huge promises from contract Pharmacies abound. All those promises all amount to a call center with robo calls. 3 Levers That Separate Good from GREAT in Hospital-Owned Specialty Pharmacy details how Specialty Pharmacy requires a fit organization. No one other than YOU, the hospital system, can do the pushups!

Why would a hospital system stand for many exclusions? Where does all the money go? I can’t tell you where the money actually goes – that is the secret sauce of PBM spread pricing, reimbursement, rebates and total lack of transparency that these drug middlemen thrive off. Great article here about Express Scripts exposure on drug pricing during their very public break up with Anthem, the largest for-profit managed health care company in the Blue Cross Blue Shields Association. That topic is for another day.

Here’s the sage advice of the day: co-develop, co-develop, co-develop! It is the only way to get fit fast, be in shape to wrestle with the PBMs, avoid the contract pharmacies and drive greater care and revenue back to the health system. Shields Health Solutions, as you know is my proud home, is THE ONLY Specialty Pharmacy and Care Integrator in the world that focuses on bringing the Specialty Pharmacy in-house, owned by the hospital.  I usually tackle topics without the plug but this one is a must. http://www.shieldshealthsolutions.com or contact me below and I will make sure that Shields helps you get in shape to tackle the PBMs.

As always, keep the feedback coming at contact@thespecialtysage.com.


3 Levers That Separate Good from GREAT in Hospital-Owned Specialty Pharmacy


Last week was a watershed week for The Sage. As I repeatedly listened to healthcare executives at Becker’s Hospital Review 8th Annual Meeting from the nation’s largest and most prestigious systems talk, all I kept hearing was, “Help Me”. This was both literally and figuratively. Conversation after conversation about Specialty Pharmacy started with “We do this already” and ended with “we need help with x, y and z”. It was all rinse and repeat conversation after conversation.

The x, y and z were always the same and almost every system says they have it taken care of. How can this be? Specialty Pharmacy is a complex industry that is clearly dominated by Fortune 50 companies that know how to compete at the highest level. How can every hospital “do it” well but almost none really do it at all? The real answer is that there is no way that real outcomes are possible unless care is at the center of the business model. This is the GOLDEN RULE OF SPECIALTY PHARMACY – period.  Not a lever but a rule for sure. If care isn’t at the center you will never be able to work the 3 essential levers.

Soooooo are you skipping ahead for the 3 levers? As long as care is at the center of the model these are the 3 indisputable levers of hospital-owned Specialty Pharmacy:

  1. Clinical Pharmacy Liaisons: EVERY health system needs to have someone that offloads all of the care associated with the pharmacy to an individual that is a REAL person in the specialty clinic. Drug adherence is significantly dependent on the patient’s first interactions with someone from the pharmacy. This person should provide the same level of care to EVERY patient regardless of where they fill. The liaison is way more than someone to do benefits investigations, prior authorizations, test claims, financial assistance and communicate with the pharmacy. The Liaison is the face of the hospital post discharge and a personal relationship should be developed to ensure the highest level of care.
  2. Access to Limited Distribution Drugs on the Pharmacy benefit and Payors: This sounds like the most obvious of the 3 levers but it is rife with confusion, hidden rules, unknown certifications and rules that are all set by the PBMs, drug manufacturers and payors. Just like the 1st lever – it isn’t simply doing this one function. Hospital systems have to be able to transform themselves to become tough market competitors – they are going up against the Fortune 50 here and the Fortune 50 doesn’t mess around. Do you have a purpose-built analytics package for driving access to LDDs? Which certifications should you do? URAC? ACHC? JCAHO? All three? How long to you have to be in business for? When do you have to renew? Hospital systems need someone on their side. This is critical to competing at this level.
  3. Purpose-built Specialty Pharmacy Platform: Go back to the opening of this post – everyone is doing it but not really doing it and how can that be? It’s because the big Fortune 50 monopoly PBMs want health systems to believe that if they are going to create their own specialty pharmacy that all that is required is a pharmacist, maybe a low hanging commercial payor, Medicare and the no barrier Hep-C, Transplant and HIV drugs. That way hospital systems will always need the PBM.
    • Purpose Built means that every part of the infrastructure is focused on maximizing the hospital and patient benefit in Specialty Pharmacy. Here are the critical elements of the platform:
      • Patient Support Center: The center must be staffed by disease-specific pharmacists and pharm techs that know how to take the burden off the liaisons. It is critical that the call center and liaisons create a team around how to treat patients. Great outcomes come from a great foundation – the customer support center is the foundation.
      • Purpose-built AI patient identification: Artificial Intelligence or AI simply means an engineered platform that “learns” as you interact with it. The more time the system has in production, the more efficient the system becomes and the hospital outcomes become better. In Specialty, the environment demands AI because hospital systems have to identify who can fill at the hospital and how to intervene with that person. It sounds simple but a hospital needs to interact with every patient. If you don’t know who can fill at the hospital, identify evolving financial toxicity, socio-economic, drug-drug and tens of other critical factors that affect patients ability to fill and stay adherent, the hospital system is going to have fill rates in the 10%-15%, care will suffer and readmissions will rise.
      • 340B Validation: at least 20% of all encounter files have flaws that cause the splitting software to reject legitimate claims. Without a system and methodology to identify these errors, average hospital systems lose millions of dollars a year in real bottom line margin by purchasing LDDs at too high of a cost.
      • Accreditation Team: URAC, ACHC and JCAHO are anything but easy. The real complexity isn’t the time or ability for most hospitals to file but it is the reasoning behind why they need it. Who is demanding is?  Which payors demand it and what do THEY need to qualify you into their network? It takes a significant investment to realize all the parts that are required for comprehensive accreditation.
      • Billing and Collection: Because you want to get paid, right? Well, this isn’t the strong suit of most hospital systems and you need a strong program in place to figure out how much you REALLY are making for the hospital.  This, like everything else in Specialty, is complex but super essential.

The hospital owned Specialty Pharmacy market needs awareness of the three levers: 1. World class care, 2. Access to Payors and Drugs and 3. Purpose-Built Specialty platform that supplies are the information, billing, patient identification, adherence and patient support that drives outstanding patient outcomes.

Please keep the questions coming for the Sage at contact@thespecialtysage.com. I will continue to address them in future posts.


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