Retail pharmacies run by hospitals at risk of extinction

Intermountain Healthcare’s shutter decision most of their outpatient pharmacies underline the growing reality that hospital-owned retail pharmacies are a dying breed.

Health systems have shown that they are increasingly willing to outsource outpatient pharmacy services to CVS Health or Walgreens and part ways with what is often a money loss effort. Only about a quarter of health systems had a centralized retail or mail-order pharmacy in 2019, according to the American Society of Health System Pharmacists.

“I haven’t seen too many of those who have left, to be honest,” said Brian Tanquilut, a health services analyst with Jefferies.

For their part, the pharmacy giants are more than happy to oblige, including store inventories and prescription records and ushering in a wave of new customers. CVS and Walgreens have not disclosed how many similar agreements they have, but the chains have become ubiquitous across the country. CVS said nearly 85% of Americans live within 10 miles of one of its 10,000 stores.

This is also another area where convention is king. Healthcare retail pharmacies are usually located in hospitals or primary care clinics. They provide only outpatient medications, unlike in-hospital pharmacies, which dispense medications to hospitalized patients.

They’re just not as easy to get as a CVS or Walgreens. They also don’t have extended hours or drive-throughs and their shelves aren’t full of Band-Aids, shampoos, cosmetics and snacks.

“They’re a little losing their niche in terms of convenience,” said Randy Seifert, associate dean for student and professional affairs at the University of Minnesota College of Pharmacy.

Stemming the losses

In the case of Intermountain, the health system sold inventory and prescription sheets for 25 of its 26 retail pharmacies to CVS. It will close those pharmacies, which are located in outpatient clinics and hospitals, and send patients to nearby CVS stores. Neither side will say how much Intermountain did for the deal, but analysts studying the industry said it probably wasn’t much.

“For them it’s probably more about eliminating losses,” Tanquilut said.

Intermountain, based in Salt Lake City, said its retail pharmacy business, which it has run since the 1980s, lost $ 6 million between January and May 2021 and $ 11 million in 2020. Intermountain has generated $ 743 million in operating income over more than $ 10 billion in revenue by 2020.

In the closure of its retail pharmacies, Intermountain is following a well-used path, although not all businesses are widely disclosed. HealthPartners, an eight-hospital system based in the Minneapolis area, closed 30 retail pharmacies last year.

Swedish Health Services, a Seattle-owned Providence system, sold five retail pharmacies to Walgreens in 2015. Walgreens has since closed four of those.

Healthcare systems are not the only ones to have a hard time with the retail pharmacy. In 2015, CVS acquired the pharmacy and clinic business of Target Corp. for $ 1.9 billion, adding nearly 1,700 Target pharmacies to its portfolio. CVS now manages CVS brand pharmacies through a one-stop shop format.

The COVID-19 pandemic has likely accelerated the death of hospital-selling pharmacies by slowing the amount of traffic entering the clinics and hospitals that host them and increasing the use of telehealth for drug management, said Seifert. In Minnesota, a new law allows pharmacists to bill Medicaid for managing medications via tele-health at the same rates as in-person visits.

CVS or Walgreens are not intended for a specific number of agreements such as that with Intermountain; Business is more opportunistic than anything, said AJ Rice, a health services analyst with Credit Suisse. And since few health systems still operate retail clinics, things like this probably won’t happen often, he said.

CVS has acquired health insurance company Aetna in 2018 and this year, former Aetna executive Karen Lynch becomes its CEO. This shows that the company wants to integrate the healthcare plan into its retail pharmacies and pharmacy benefits manager, CVS Caremark, Rice said.

“But when they see business like this, he also says they should always look for opportunities to improve their position on an autonomous basis of retail pharmacies,” he said.

Effects on patient care

Some experts have questioned whether outsourcing of retail pharmacies could hurt patient care if CVS pharmacists did not have access to all the patient records that a healthcare system pharmacy would have.

For his part, Seifert of the University of Minnesota said he was not interested. Pharmacists, whether in a retail chain or in a hospital, will have access to all relevant information about these patients and can help them manage their medications, he said.

Michael Ganio, ASHP’s senior director for pharmacy practice and quality, is not convinced. When Intermountain pharmacists monitor these prescriptions, they can access medical records with details about patients ’health conditions or hospital pharmacist notes, he said.

“This is not to say that some of the programs that are not managed by the health system do not have access to those, but it is a barrier in many cases to ensure that the transition is not as seamless as possible,” he said. said Ganio.

In a statement on the Intermountain decision, the Utah Society of Health System Pharmacists said such closures eliminate certain prescription delivery services for patients who have recently been discharged, which include medication recommendations aimed at preventing readmissions.

“As an organization focused on the health care system, we can’t hide our apprehension about the trend of closures of community pharmacies,” the group said, noting that Intermountain’s decision also affected 250 employees. in the pharmacy.

Providence, a 52-year-old hospital system based in Renton, Washington, is expanding its retail pharmacy operation, and the system’s pharmacy chief said it prevents readmissions and ensures patients get the right drugs. appropriate doses are the main factors.

Providence operates 20 retail pharmacies – mostly in hospital lobbies but also in clinics – in five states under its entirely possible subsidiary, Credena Health. Elie Bahou, pharmacy head of the health system, said Providence plans to add two more retail pharmacies a year under the Credena brand for the next few years.

The health care system used to manage its retail pharmacies like many of its peers: under the direction of an internal pharmacy executive and focused less on sales and more on acute care, Bahou said. . That is why several years ago he created Credena, which also offers specialized pharmacy.

Bahou said Credena is profitable, but more importantly, working toward better results.

“There are other reasons besides financial ones,” he said. “It’s about providing great results for your patients.”

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