• Blog Post

In-house, pharmacy management partnership or outsource? Questions to ask before choosing an on-site pharmacy model

Sep 13th, 2023

Want to compare your options quickly? Download this overview.

You’ve probably heard the benefits of adding a pharmacist to your care team. On-site pharmacies help break down barriers to care, improve patient and provider satisfaction, reduce total cost of care, and even drive better outcomes.1

Are you considering adding an on-site pharmacy to support your 340B program or simply make life easier for your staff and consumers? Ask yourself these questions before deciding between your three options: having an in-house pharmacy, pharmacy management partnership or outsourced pharmacy within your organization. 

In-house pharmacy

Your organization owns and operates an independent, on-site pharmacy. While this model lets you realize and benefit from all pharmacy profits, you’ll have to take on all costs, responsibilities and risks with operating it.

Do we have the capital needed to operate and stock our own pharmacy?

Costs for opening and operating your own pharmacy are likely much higher than you anticipate. Payroll accounts for nearly 60% of these costs, with a recent study finding that the average cost for dispensing a prescription is $12.40 and the average cost for dispensing specialty medications is $73.58. Other factors — like packaging, insurance, licensing, mailing and delivery, computer systems and equipment, and general operating and facility costs — drive the rest.2

As you weigh the costs of in-house pharmacy operation, you should also consider purchasing costs, which highly depend on the amount of medication you buy. Independent pharmacies have a difficult time purchasing specialty and limited-distribution medication at competitive rates because they lack specialty pharmacy status and have a relatively small purchase volume.3,4

Are we ready to take on a new set of risks and challenges?

Pharmacies are heavily regulated businesses, so your team will have to secure and maintain various state and federally-issued licenses if you decide to open your own pharmacy. You’ll need to form a legal entity, apply for a pharmacy permit, have your new pharmacy inspected and complete federal registration requirements. You’ll also have to complete a controlled substance and Drug Enforcement Administration registration if you plan to distribute controlled substances and apply for additional state licenses depending on the services you plan to offer.

Beyond that, you’ll need to ensure you have comprehensive insurance policies in place. You can protect your pharmacy with policies like property and casualty insurance, general, professional and product liability insurance, workers’ compensation, commercial auto insurance, cyber-risk insurance, and employment practice liability insurance. Many pharmacy benefit managers also require additional insurance coverage requirements to protect against potential fraudulent claims.

If you choose to open your own pharmacy, you’ll also be solely responsible for considering and mitigating other risks, like personnel challenges, HIPAA violations, medication errors, failed inspections and audits, and cyberattacks.

Do we have the capacity to tackle medication and staffing shortages?

Operating your own pharmacy means taking on challenges related to medication and staffing shortages. A recent study found that nearly 70% of independent pharmacies say they’re having a difficult time filling open pharmacy positions.5 If your clinic is already dealing with staffing shortages, consider whether you’re able to handle the addition of pharmacy staff to the mix.

Drug shortages in the U.S. are also approaching record levels, and a recent study found that 98% of community pharmacists are experiencing drug shortages.5 Keeping shelves stocked is a worry among independent pharmacies, so before choosing to open your own pharmacy, consider whether you can add this to your list.

Will our pharmacy team specialize in serving our consumers’ needs?

You know your consumers better than anyone – and know the needs and barriers that come with their behavioral health and other complex conditions. If you choose to operate your own pharmacy, you’ll need the resources to both train your team behind the counter and equip them with the offerings necessary to support the people you serve. These costs – plus those resulting from stocking, filling and dispensing non-340B and non-specialty prescriptions – will affect your overall revenue.

Do we need additional support with the 340B Program?

Interested in having an on-site pharmacy to better leverage the benefits of 340B? While operating your own pharmacy means saving on dispensing fees from your contract pharmacy partner, it also means having to navigate the changing landscape of 340B without a partner who has the experience and background needed to help you fully realize its benefits.

Pharmacy management partnership

Your organization partners with a pharmacy management company to offer an on-site pharmacy, and shares all profits, costs, responsibilities and risks with its operation.

Do we have the capital needed to operate and stock our pharmacy?

When partnering with a pharmacy management company, your organization remains accountable for partial start-up, build-out, and staffing costs for your pharmacy. As you begin dispensing, you’ll also have to profit-share with your pharmacy management partner. In addition, pharmacy management companies often charge separately for individual pharmacy services, such as packaging and delivery services.

While pharmacy management companies have a larger footprint than independent pharmacies – which helps them secure greater access to drug savings and limited-distribution medications – few have the level of purchasing power that larger pharmacy chains do. As you consider partnering with a pharmacy company, ask them what type of drug savings you can expect with them and if they have access to the limited-distribution medication your consumers need.

Are we ready to take on shared compliance challenges and risks?

Partnering with a pharmacy management company means sharing the legal risks and responsibilities that come with managing an on-site pharmacy, including securing necessary licenses, permits and insurance plans. You’ll also be partially responsible for addressing other risks, like personnel challenges, HIPAA violations, medication errors, failed inspections and audits, and cyberattacks.

Do we want to navigate the challenges of a pharmacy management partnership?

While partnering with a pharmacy management company means you won’t have to operate your own pharmacy alone, doing so can have its challenges. It requires navigating the complexities of decision-making and profit sharing with another organization that may not share your unique values and visions for the future.

Do they specialize in serving my consumers’ needs?

While pharmacy management companies can offer your partnership pharmacy expertise, not all specialize in serving people living with behavioral health and other complex conditions. The people you serve have unique needs and barriers to care, so, as you consider operating a shared pharmacy, make sure your pharmacy team will have the background and training necessary to support them.

Can they help us maximize our 340B savings?

A pharmacy management company may specialize in supporting covered entities, but that doesn’t mean they can provide your clinic the 340B savings you expect. Before partnering with a pharmacy management company, make sure they have plans in place to help you fully realize the benefits of 340B.

Outsourced pharmacy

Your organization offers an on-site pharmacy through an external pharmacy partner. By outsourcing to a partner like Genoa Healthcare, you get to experience all the benefits of having an on-site pharmacy without all the stress, costs and risks that come with operating your own or shared pharmacy.

Is there a cost to outsourcing to Genoa?

There is no cost to outsourcing your on-site pharmacy to Genoa. If you qualify, Genoa will build, staff and operate a pharmacy right within your organization – all at no cost to your center.

Does Genoa take on all the risks and challenges that come with an on-site pharmacy?

If you choose to outsource your pharmacy to Genoa, you will not be responsible for pharmacy-related risks and challenges because it operates independently from your organization. Genoa takes on 100% of the risks and challenges regarding compliance, licensing, insurance, staffing and medication shortages.

Can Genoa secure us savings and limited-distribution medications?

Partnering with a large external pharmacy partner is your best bet for securing savings and limited-distribution medications. Genoa’s nationwide footprint of 700+ pharmacies drives better cost savings for drug procurement and important services like delivery and packaging, which helps make sure your consumers can get – and stay on – the medication they need.

Does Genoa specialize in serving my consumers’ needs?

Your consumers living with behavioral health and other complex conditions have unique needs and barriers to care. Genoa has specialized in serving this community for over 20 years, requires specialized training for its teams behind the counter and provides high-touch, stigma-free pharmacy care.

Does Genoa offer 340B expertise?

Looking for an on-site contract pharmacy you can trust? Genoa has specialized in 340B dispensing for over 20 years, securing maximum reimbursements for clinics across the U.S. Click here to learn five traits to look for in a 340B pharmacy partner.

Let’s connect

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About the author

Joy Holman, RPh, is Genoa Healthcare’s Senior Vice President of National Pharmacy Services. As a part of her role, she ensures top-notch operation and performance across Genoa’s national pharmacy footprint and leads strategy for the organization’s implementation and compliance programs.

  1. https://www.pharmacytimes.com/view/key-metrics-that-support-the-integrated-specialty-pharmacy-model
  2. https:/www.nacds.org/pdfs/pharmacy/2020/NACDS-NASP-NCPA-COD-Report-01-31-2020-Final.pdf
  3. https://www.pharmacytimes.com/view/consolidation-reshaping-pharmacy-and-beyond
  4. https://www.drugtopics.com/view/independent-pharmacies-chains-enter-specialty-pharmacy  
  5. https://ncpa.org/newsroom/news-releases/2022/11/03/survey-nearly-all-community-pharmacies-experiencing-drug#:~:text=(Nov.,National%20Community%20Pharmacists%20Association%20says

The information provided in this blog post does not, and is not intended to, constitute legal advice. All of the information, content, materials, and links to third-party websites provided are intended for general informational purposes only.

 

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