This article explores one of the most interesting questions that hospitals should be asking themselves? How could Pharmacy Revenue Management help?
With the cost of prescription drugs continuing to spiral out of control, hospitals face rising expenses and declining yet uncertain reimbursements. Many health-system pharmacies are not inclined to improve revenue due to limited time and increasing service demands. However, today’s economic climate coupled with the advent of new technologies make this an opportune time for hospital pharmacies to start taking a proactive approach to information and financial management. It takes a bit of a leap of faith to commit the time and resources to improve pharmacy financial performance, but doing so puts pharmacy in the position to enhance its positive impact on organizational financial metrics, safety, and success.
In the past, financial management of the pharmacy was an important because pharmacists are trained to make the right choices for the best clinical outcomes, and as medications represent such a significant percentage of a hospital’s overall supplies expenditure, it became imperative to find ways to better control pharmaceutical costs and ensure medications are being accurately billed and reimbursed. To achieve hospitals need to realize how vital it is to update our processes and systems.
A few ways are to find solutions that would:
Efficiently capture facility-administered pharmaceutical charges at the appropriate ration Maintain efficient administrative oversight of pharmacy procurement, dispensing, and billing
Automate the transfer of data between various revenue systems both within and outside the pharmacy, to help identify processes that had broken down after leaving the pharmacy Facilitate staff communication and education
Hospitals lose millions of dollars as a result of missing, incomplete, and inaccurate pharmacy data in the billing system. Most hospitals do not realize this but the solutions is to manage the problem by manually tracking the data that moves from the pharmacy system to the financial billing system. This is a very labor-intensive process. Moreover, hospitals have found no practical way to keep data current as billing codes and regulations continually change. As a result, reimbursement and compliance suffer. Also, the hospital would have to maintain-automated linkage between the pharmacy system and the hospital’s billing system. This approach has resulted in pharmaceutical claims that are filed more accurately and reimbursed more promptly by both government and private insurers. It also allowed pharmacy to demonstrate and expand its role in driving hospital revenue.
As pharmacy procurement costs have historically risen by an average of 6% to 9% a year, according to the American Society of Health-System Pharmacists, many hospitals have resigned themselves to accepting slim pharmacy margins. Without full reimbursement for all pharmacy-related expenses, it can be challenging to find the necessary capital to attain clinical objectives. By gaining full visibility of reimbursable pharmacy charges, we have been able to transform pharmacy’s financial management for the better.
Written by Donald Chew, MBA | January 29, 2014