Health-systems may quickly become the “new” community pharmacy

Did I get your attention? Earlier this week as I was reading Becker’s Healthcare Review, I was struck by the lead story: “The Delicate ‘Needle’ Systems Are Trying to Thread”. It reflects the downward financial pressures that hospitals and health-systems are facing due to government payment reforms. Rather than rehash the article, let me reflect for just a moment on the issues.

Like any business, hospitals face rising personnel costs—their largest expense. And increasingly, America’s health care professionals are feeling the strain. Salaries have been flat or declining in the fields of medicine and pharmacy. In many parts of the country, wage growth pressures are forcing hospitals to make tough choices about closing departments (such as labor and delivery and behavioral health/psychiatric care) or even closing hospitals. As margins shrink, hospitals begin laying off staff and reducing hours.

If that sounds familiar to pharmacists, it should. Community pharmacies have been living with this reality for years. Thin reimbursement rates, staff reductions, and shuttered stores have become part of the landscape. Now, hospitals are finding themselves in the same storm.

For pharmacists, it’s hard to imagine a health-system role not tied in some way to 340B revenue. More than 3,000 hospitals participate in the program, and roughly 31,000 community pharmacies—nearly two-thirds nationwide—serve as 340B contract pharmacies. Facing changing manufacturer rules, HRSA oversight, and possible congressional action, many hospitals are opening or buying community pharmacies to retain control. The issue is so contentious that 12 states, starting with Arkansas in 2021, have passed laws to preserve access to contract pharmacy networks.

I recently spoke with an independent pharmacist who said that an area hospital is opening its own community pharmacy to directly compete with the independent pharmacy and to take advantage of the 340B program. It’s a sad commentary on economics in a rural area—and I wonder if either the independent pharmacy or the community hospital will end up surviving.

While you won’t find this in a manuscript, I can assure you that many conversations with independent pharmacies that are functioning as contract pharmacies report that the only reason they are open is because they are a 340B contract pharmacy. Without that spread between the 340B purchase price and the reimbursed price, the pharmacy would be out of business, given the compounded negative economics of existing pharmaceutical reimbursements.

So, we have hospitals with thin margins reducing services and staff. And we have community pharmacies closing across the country at an alarming rate, and those that remain open have reduced staff.

Reality check, this entire column has been about product payment and distribution systems. The pharmaceutical payment system is badly broken, to the point that regardless of whether you are a hospital or a community pharmacy, chances are that you are either trying to figure out how to make a profit or you are seriously worried about the near- and long-term impacts of changes to 340B.

There’s a lot of money at stake around pharmaceuticals. Which is why we, as pharmacists, truly need to double down on the value of our care services. A pharmaceutical without a pharmacist is like a bucket of nails without a carpenter. Someone might figure out how to use the tool, but odds are they will use it wrong and possibly create a catastrophe. I appreciate that associations have been fixated on solving the 340B and PBM payment for pharmaceuticals. But if our profession doesn’t take advantage of this moment in time to secure payment for the care services of the pharmacist, we are going to find that the next 5 years are far more painful than the last 5.

Our time is now to make the strong value proposition that the system must independently value pharmacists, cover our services, and ensure every consumer regardless of where they engage with the health care system has access to the lifesaving care we provide.

APhA believes both the pharmaceutical and the patient care payment systems need to be reformed, but we refuse to simply focus on the pharmaceutical reimbursement side of the equation. We must be paid for our services. We need every pharmacist and pharmacy technician to join us in this fight.

The system may be broken, but our purpose isn’t. Together, we can rebuild it—and redefine what care truly means. The clock is ticking, and our opportunity is now. Will you join us?