The Sleeping Giant: Health Systems Awaken to the Opportunities and Risks of Entering the Specialty Pharmacy Arena

AS HEALTH CARE PAYMENT MODELS SHIFT TOWARD RISK-SHARING, pay-for-performance, and accountable care organizations (ACO), hospitals and health systems are waking up to the realization that decisions they make regarding specialty pharmacy could affect clinical outcomes, color the patient experience, and impact the bottom line for years to come.

While not every hospital or health system has the population base or infrastructure to build in-house specialty pharmacy capability, every large integrated delivery network and academic medical center with specialty clinics and existing ambulatory pharmacy infrastructure should, in fact, must, consider the possibility. Every hospital and health system should look at the issues and act decisively, whether the decision is ultimately to build internally, partner with a regional or national specialty pharmacy, or continue in the current environment controlled by payers and manufacturers.

A number of health systems have already awakened to the impact and opportunity of specialty pharmacy, and have seized control of their destiny in the rapidly evolving specialty environment. Their successes and challenges will reshape the landscape of this segment of health care, and perhaps, redefine what the industry considers to be the preferred model. Certainly, there is plenty of specialty pharmacy spending to go around.

Pharmacy revenues from specialty drugs may have reached $98 billion in 2015.1 But, a study of 7 academic medical centers indicated that, on average, each center captured less than 15% of the more than $200 million in prescriptions that it wrote annually.2

Only 10.6% of accredited specialty pharmacy locations in 2015 were owned by health care providers, a figure that includes physician practices, as well as hospitals, health systems, and provider group purchasing associations.3 But the trend is growing. In October 2015, more than 2 dozen health system pharmacies were in the process of seeking specialty accreditation from URAC, which, if completed successfully, would triple the number awarded this designation.4

Health systems are actively reaching out for support as they develop their specialty pharmacy functions. Specialty pharmacy networks that provide services and support to health system pharmacies have emerged: UHC, the consortium of academic medical centers, added a specialty pharmacy program in 2014; Excelera, a network exclusively dedicated to specialty pharmacy that launched in 2011; along with 15 academic health systems and medical centers are members.

These early adopters have determined that health systems not only can match, but can improve upon, the set of services typically provided by the dominant for-profit specialty pharmacies. Very briefly, here are some points to consider as the sleeping giant awakens:



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