“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.


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 🙂

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!








Are Academic Medical Centers the next Blockbuster Video?

Who doesn’t remember Blockbuster Video? Millennials for one have no idea what a Blockbuster Video is. The hell you say – it wasn’t that long ago and I loved that place! Blockbuster, founded in 1985, grew to over 8,000 stores across the United States. If your town was cool, you had a Blockbuster. However, the market shifted and some very savvy companies came along and were able to squeeze Blockbuster out. Namely Netflix came along and started delivering DVD movies in the mail. No longer could your title get sold out – you just had to create a list and as Emeril says (good 90’s reference)….Bam! You had a video. No personal touch – just convenience. Netflix and Video On Demand services pushed Blockbuster out, and they ended up filing for bankruptcy in 2010. Blockbuster never successfully adapted, they didn’t know how to serve the changing demands of their customer base, and ultimately lost all of it customers to competition.

And all of that is a distant memory…so could be your Academic Medical Centers.

So how does that tie into Academic Medical Centers (AMCs)? AMCs provide the vast majority of clinical care nationally to the most chronically-ill patient populations – oncology, multiple sclerosis, infectious disease, rheumatoid arthritis, transplant and cystic fibrosis. However, Fortune 100 companies like the big three – Caremark, Express Scripts and Optum – have successfully carved-out a $200 billion per year market related exclusively to the care of these same chronically-ill patients. That market is referred to broadly as “specialty pharmacy”.

Right now you’re saying that AMC’s do so much more than the act of selling videos and you are totally right, but it’s clear that Fortune 100 companies have aligned with health plans and drug manufacturers across the country to establish very narrow, and in some cases exclusive payor and drug networks, leaving AMCs on the outside looking in. AMC’s are getting “Netflixed” by payors and PBMs – they are aligned with keeping AMCs out.

This is a simple description of the alignment…


Here’s the really good news!!!! Care matters, patient outcomes matter and AMCs matter. AMCs are the only providers positioned to properly and effectively care for these patients through fully integrated clinical/pharmacy care. An AMC-owned onsite specialty pharmacy program permits seamless therapy management via shared EMR access, customized clinical/pharmacy integration and high-touch patient care interventions.

The specialty market is evolving once again and it is demanding that AMCs take back all components of clinic and pharmacy care for their most chronically-ill patients. Shifting this market back to AMCs is a must for improving patient outcomes while lowering the overall cost of care.

How else can we take patients back for AMCs?

All ideas welcome at contact@thespecialtysage.com

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