Blog

The success and profitability of hospital outpatient pharmacies vary widely. Some hospitals are enormously profitable and capturing the majority of discharge patients, employees and outpatient visitors. Other hospitals are barely covering their costs.

Here are three ways to ensure the success of your organization’s outpatient pharmacy:

1: Location, Location, Location

The least successful hospital pharmacy that we have worked with was located across the street and around the corner from the hospital, thereby making a made a meds-to-beds program impossible. The pharmacy manager had no logistically sound way to deliver the medications to the patient before discharge efficiently.

Further, the pharmacy was not convenient to hospital employees, and there was no drive-thru option. So, despite the $5 copay incentive that they received by using pharmacy, most chose to pay the extra few dollars and use a competing retail pharmacy due to its convenience.

The locations that work best for hospital pharmacies are prime lobby areas of the hospital, or major foot traffic thoroughfares. These types of locations mean that it is convenient for both patients and employees.

2: Senior Management Support

The hospitals that we have seen struggle do not typically have deep support from the senior management team.

The two key customers of a hospital outpatient pharmacy are patients and employees, and the right message from the hospital’s most senior executives can drive purchases by these groups.

In working with two hospitals within the same system,, we saw bedside discharge capture rates of 17% at one location and 54% at another location. The one and only difference between the two pharmacies was that one has a CEO that firmly supports the pharmacy, while the other mostly ignored it. The hospital that has the CEO acting as their head cheerleader also enjoys several rewards from the pharmacy operation, which includes: lower readmissions rates, higher patient satisfaction scores, and a highly profitable pharmacy.

3: Employee Incentives

Having an HR Benefit Plan that incentivizes employees to utilize the outpatient pharmacy for their medication needs will mean that the pharmacy is not only convenient (assuming it is located within), but also cheaper. Additionally, there are often significant financial benefits to a hospital that can leverage its outpatient pharmacy for employees (see article: How Hospitals Can Lower Employee Benefit Expenses)

However, it is important to ensure that there is a financial balance between HR and Pharmacy; as many hospitals provide benefits to employees, but it is done at the expense of the pharmacy’s P&L. Pharmacy managers tend not to appreciate this when they are measured on the pharmacy’s financial performance.

While there are many critical success factors to successful outpatient pharmacy operations; by ensuring that these three are in order, the likelihood of a profitable pharmacy is greatly increased.