Four reasons why a hospital should open an integrated pharmacy


When is retail right? Consider these four benefits that will impact the bottom line.

Hospital leaders may have long realized the benefits of owned retail pharmacies, including the opportunity for improved patient satisfaction and outcomes; however, until recently, conversations around whether or not to actually open one may have been short-lived.    

There’s no doubt about it: Opening a retail pharmacy is expensive, and with an average 3% to 5% profit margin, that upfront cost can be hard to swallow. Recently, though, with the country’s mandated shift to value-based healthcare, hospital leaders may find this topic warrants a second look.

In today’s healthcare climate, there are many ways owned retail pharmacies may have a significant, albeit indirect, impact on a hospital’s bottom line. Strategic leaders may consider whether new benefits-such as those outlined below-may have changed the equation for their hospital:

·       Improved patient satisfaction. Since 2006, the Centers for Medicare & Medicaid Services (CMS) have, in part, determined financial reimbursement based on Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) performance. While many hospitals are still determining the “secret recipe” for HCAHPS success, they may find that the convenience onsite pharmacies offer patients-many who dread taking an extra stop to refill a prescription on their way home from a stressful hospital visit-boosts their scores.

·       Care team collaboration. Owned retail pharmacies offer care teams the opportunity to collaborate with one another to improve patient outcomes. Pharmacists with access to complete patient histories-including the physicians they saw, the medications they took, and more-are better able to counsel patients on safe usage. Collaboration may also cut down on outpatient medication errors, a huge risk when patients jump from pharmacy to pharmacy post discharge, which costs $4.2 billion annually (NEHI). If needed, pharmacists can more easily get in touch with prescribing physicians to answer any questions that arise when filling prescriptions.

·       Potential hospital revenue. While most onsite retail pharmacies aren’t major revenue drivers, struggling hospitals may appreciate even a modest margin-especially if, as experts suggest, it has the potential to grow year over year with time and scale. Hospitals with retail pharmacies may also capitalize on revenue traditionally lost to external pharmacies. For example, by offering specialty drugs, hospitals may provide a welcome brick and mortar alternative to mail order pharmacies. The face-to-face conversations this arrangement enables may also give pharmacists the opportunity to recommend additional services, such as vaccinations. 

·       Leverage 340B program. For many hospitals, the growth of the 340B Drug Pricing Program, launched by the federal government in 1992 to provide outpatient drugs to eligible healthcare organizations/covered entities at significantly reduced prices, has made the idea of an owned retail pharmacy more feasible. ·       Not only may the program provide a competitive advantage for owned hospital pharmacies by allowing them to offer discounted prices, but this practice may also improve medication adherence for patients who don’t take their medications because they can’t afford to.

Next: Other special considerations



While for many hospitals, these new benefits may make owned retail pharmacies seem like a no-brainer, the decision of whether to open one likely merits additional discussion. Among other unique considerations for their hospital, leaders should weigh potential benefits against questions such as:

·       Is everyone on the same page? Any serious discussion of whether to open an onsite retail pharmacy should be interdisciplinary. Hospital leaders should be sure to seek the input of everyone who might touch the project-physicians, pharmacists, discharge planners, and more – to make sure the team is considering all possible outcomes, and is aligned on project goals. If a decision is made to pursue an owned retail pharmacy, hospitals should be sure their teams are prepared to capture all of its benefits to maximize ROI-for example, by offering trainings on how to leverage new data to improve patient outcomes.  

·       Will it make enough money? Even weighing the above financial benefits, every hospital has a “number”-the amount of revenue it needs to make the project feasible. Hospital leaders should determine their number, and realistically consider the challenges that may be involved in meeting it. For example, economies of scale may mean it costs more for smaller hospitals to maintain the inventory they need, while hospitals of all sizes may struggle to retain the loyalty of healthy patients who find it more convenient to refill routine prescriptions close to home. 

·       Is the infrastructure in place? Hospital executives who begin to price out onsite retail are sometimes caught off guard by hidden costs and considerations. For example, many don’t realize that it takes a very different skill set to staff an onsite pharmacy, and so they may not always be able to pull talent from their current inpatient operation. Whatever staff is put in place will need access to training resources to stay abreast of relevant laws and keep the pharmacy in good standing with regulatory bodies.

·       Is there a better solution? Some hospitals might not be able to afford to open a retail pharmacy, but there are many other ways for these organizations to reap the benefits listed above. For example, some hospitals partner with chain retail or independent pharmacies-who also have an interest in making sure patients fill their prescriptions-renting out onsite space or otherwise sharing data. Regardless of their situation, hospitals may also consider seeking the help of a third-party expert or pharmacy consultant to help them weigh their options.


Dana Fox serves as program development manager at CompleteRx, a pharmacy management company. In his role, Fox overseas the enhancement of current solutions and the launch of new services-such as onsite pharmacy implementation-to meet the needs of hospitals and pharmacists across the country.  

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