PBM as a Health Care Company


Karthik Ganesh, CEO of EmpiRx Health, discusses how its technology and clinical focus provide strategies for patient management that results in lower costs for clients.

EmpiRx Health aims to provide value-based care in pharmacy benefits, improving health outcomes for patients and financial outcomes for its clients.

Karthik Ganesh

Karthik Ganesh

“Every metric tells us we have a suboptimal healthcare ecosystem,” Karthik Ganesh, CEO of EmpiRx Health, said in an interview. “The volume-based model in healthcare has resulted in 25% of dollars being wasted. The pharmacy benefit is now 30% of healthcare spending. About 40% of Americans have comorbidities and are taking multiple drugs. Additionally, 20% of American adults between the ages of 40 and 69 are on five or more drugs.”

But Ganesh said that the volume-based PBM industry with rebates and discounts is not helping to improve health outcomes patients or financial outcomes for employers.

A better way, he said, is to use analytics and AI technology that creates a tailored approach for managing a population of patients that is focused on doing the right thing clinically for patients that also helps to keep costs down for clients.

EmpiRx Health has created a population management model that helps clients target a clinical strategy in almost real-time for that client’s patient population. The PBM uses the Johns Hopkins ACG System, which is population health analytics software that uses diagnosis, pharmacy and lab data, and big data tools. The information and insight the system produces can be used in population health, patient care, finance and budgeting, and performance analysis.

EmpiRx Health uses the ACG system to create a risk profile, both clinical and financial for its clients. The company then wraps its own AI around the ACG model to bring clinical evidence and personal risk factors such as comorbidities in to the picture and creates a profile for each patient within a group. This is able to bring precision to patient-based modeling, Ganesh said.

The system is updated nightly with claims data, which is then used to create a list of patients who might need clinical intervention. “It has a very high degree of curation of the information to make sure it is creating very precise case summaries for our pharmacists,” Ganesh said.

EmpiRx Health’s pharmacists then work with physicians to switch or optimize medications to lower cost alternatives that are also clinically appropriate, Ganesh said. “Our engagement rate with physicians is 88%. We are able to engage in a live conversation and we have a 64% switch rate because of the precision and quality of our clinical conversations.”

Doctors, he said, are receptive to these conversations because the pharmacists are not making administrative calls. They are providing clinical information to the doctor about that doctor’s patient. “We are essentially embedding our pharmacists in the patient’s care team, providing the doctor with a pharmacist to bounce things off. They are extremely receptive, and we found this level of receptivity across both urban and rural parts of the country. We have been equally successful in Manhattan, as we have been in rural Fresno, California.”

Ganesh said this value-based approach goes across the entire program. EmpiRx Health doesn’t develop clinical programs for patients with diabetes, for example, and most contracts are open formularies with no exclusions. “Third-party actuarial analysis has told us that clinically, 93% of our clients are performing better on an open formulary than you would expect them to perform on a restrictive one or an exclusionary one,” Ganesh said.

For clients, the value-based approach focuses on pay-for-performance contracts where the PBM does well only when the client does well. Most of EmpiRx Health clients have pay-for-performance contracts. “We have financial skin in the game on 95% of our contracts,” Ganesh said. “Our income is dependent on our clients’ outcomes.”

Ganesh said the PBM has a 99% client retention rate.

EmpiRx Health in July 2021 received backing from Nautic Partners, a private equity. Ganesh said this investment will allow the company to increase investment in technology to bring even more precision to clients. “We are assessing the opportunities for intervention, and how precisely we are able to deliver on clinical intervention. That's where we've continued to invest both in terms of talent and in terms of technology,” he said.

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