Posts By: Beth Osborne

The Impact of Amazon on the Pharmacy Industry

Posted October 24, 2019 by Beth Osborne & filed under Pharmacy.

No industry wants Amazon to become a competitor. Amazon has completely revolutionized the retail experience, causing many brick and mortar stores to go out of business. Numerous high-profile brands have even gone out of business while others have had to redefine their business models. The impact of Amazon on the pharmacy industry is being felt since it acquired PillPack in 2018.

Amazon Doesn’t Enter into a Market without a Plan for Domination

Amazon doesn’t enter markets on a whim. They see opportunities. In this case, an opportunity to take a share of the $560 billion prescription drug industry. Amazon had previously been interested in the market but ran into hurdles with securing pharmacy licenses in each state. With their acquisition of PillPack, they no longer have this challenge, as the online pharmacy had already secured these.

Amazon chose PillPack because of its pharmacy acumen and its investment in technology. PillPack hasn’t yet become a top player in the pharmacy market, with about $100 million in revenue in 2017.

PillPack had also, after some struggles, been able to develop working relationships with major benefit managers and insurers. This was no easy feat considering, many of those companies have mail-order businesses that directly compete with PillPack.

All of these things made it an attractive purchase for Amazon and an easier way to get their foot in the door versus building something on their own.

But are patients willing to shift their prescription purchase online?

Prescription Drugs Remain a Brick and Mortar Type of Business, But Will Disruption Cause a Shift?

While most Americans have embraced online shopping for a variety of items, hence the rise of Amazon, pharmacy remains a brick and mortar type of business. According to research firm Iqvia, almost 90% of prescriptions are filled at the pharmacy counter.

But can Amazon change patient’s minds? One thing to consider is that younger generations, who are digital natives, are quickly aging and may have the need to take regular medications. They are attracted to convenience, and Amazon certainly offers this.

Also, most major pharmacy chains have the same capabilities as PillPack. They aren’t currently seeing any major transitions from patients seeking to have medication delivered. While the major chains may not feel a threat from Amazon yet, they certainly have it on their radar.

But do they have the marketing touch that Amazon has?

Independent pharmacies may be feeling the impact of Amazon on the pharmacy industry even more significantly. While patients turn to filling short-term medications like antibiotics at their pharmacy, the reality is that 85% of prescriptions filled in the US are for refills, per Iqvia.

That’s a substantial percent of prescription fills, Thus, patients may find that it’s both easier and less expensive to turn to online pharmacies. While PillPack has not aggressively competed on price, with it now part of Amazon’s ecosystem, that could change.

The effect of this could create new pains for independent pharmacies. So, what’s the answer for independent pharmacies? It may come down to relationships, which these types of pharmacies put a significant focus on to ensure patient retention. A little old school patient engagement could keep their customers coming back and not looking for other options.

However, many chain and independent pharmacies also offer delivery of medications, enhancing the convenience factor. Although this comes with additional costs. This disruption in the industry may spur more innovation and ideas by pharmacies looking to hold their market share.

Traditional Pharmacies Can Leverage Data to Remain Competitive

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One thing is for certain is that any pharmacy can learn more about their operations and how they compare by having access to their data. Data delivers insights, which then compels action. With pharmacy data analytics, you can discover things like:

Top prescribers, allowing you to cultivate stronger relationships
Patient retention stats, providing you a 360-degree view of if you are losing or acquiring customers
Top scripts filled, helping you manage inventory better

With this business intelligence, you can optimize your operations and be better prepared for the impact of Amazon. Learn more about how we can help with you with pharmacy data analytics today.

Pharmacy Deserts Offer Unique Challenges and Opportunities

Posted October 22, 2019 by Beth Osborne & filed under Pharmacy.

In the modern world, where it seems almost everything is immediately accessible, that’s not always the case with prescription medications. Pharmacy deserts describe areas where there is limited access to prescriptions. While you may think they exist only in rural areas—that’s not the case. Research has shown that pharmacy deserts exist in metro areas like Chicago, Philadelphia, and Los Angeles. They present both unique challenges and opportunities.

Majority of Americans Live Near a Pharmacy

According to NACDS, 92% of the U.S. population lives within five miles of a pharmacy. Five miles may seem nominal to must, but it can be a struggle for those without transportation. In these areas, there may be inconsistent public transportation, or a host of other reasons make those few miles seem almost impossible.

So, what are the alternatives in these situations or pharmacy deserts?

For chronic medications, many patients turn to mail-order services, including PillPack. They prefer the convenience and may also be able to get 90-day supplies more easily with this channel.

There are also alternatives to get to a pharmacy with rideshare options. Both Uber and Lyft are already participating in providing transportation to medical appointments and non-emergencies. It only makes sense that patients might use them to get their meds, especially if they have just had an office visit.

Uber recently noted that they plan to expand Uber Health with the delivery of medications. Both chain and independent pharmacies offer delivery as well, but this may only be in larger metro areas and usually comes with a cost.

Who Is Most Underserved?

According to theCDC, 48.9% of Americans take at least one prescription medication daily. These numbers are likely to increase as the population ages on top of an increase in chronic illness diagnoses.

Because there has been much consolidation in retail pharmacy as well as independent pharmacies that have shuttered due to competition, accessibility is not a guarantee in the 21st century.

Studies have estimated that over 100 million Americans may not have adequate access to pharmacies, while another 100 million have challenges getting to a pharmacy. Much of this is due to economics. Areas in the country that are below the poverty line, and have more residents that are on Medicaid, Medicare, or are uninsured, typically have less accessibility to pharmacies.

Why Are There Pharmacy Deserts?

While less availability to healthcare isn’t new in rural areas, as sparse populations don’t support multiple retail businesses; pharmacy deserts are a relatively new phenomenon. Much of it can be tied to the closure of independent pharmacies.

According to the Rural Policy Research Institute, 1,231 independently owned rural pharmacies closed between 2002 and 2018. This change equates to 16% of the total rural store count.

When these rural pharmacies close, there aren’t usually any alternatives, creating instant pharmacy deserts.

These closures can be due to acquisition by larger chains that simply transfer patients to their location, which may or may not be convenient for the patient. Their inability to stay open is also linked with reimbursement, specifically Medicaid and Medicare Part D. While Medicaid spending has increased in some states, much of that money is wiped out before hitting the pharmacy level.

Independent pharmacies are the only closures. Large retail chains are consolidating and shuttering unprofitable stores. While the two biggest chain leaders have made closures, they are financially sound. The closures by struggling chain Rite Aid have made more of an impact on the pervasiveness of pharmacy deserts.

Closing the Gap

Pharmacy deserts don’t have to be a trend that continues. And the answer isn’t purely mail-order script fills. After all, most patients still desire in-store face-to-face pharmacy services, according to a J.D. Power survey on pharmacy customer satisfaction.

However, satisfaction with pharmacy services applies only to those that can actually get to one. Regardless of where patients live, they should have accessibility to pharmacies. So, what’s the solution?

One possibility is new financial incentives for pharmacies in underserved areas via the Federally Qualified Health Centers (FQHC) subsidies. Most FQHC’s are, however, without a pharmacy. NCPA (National Community Pharmacists Association) is involved as well, pushing for better pharmacy access at both state and federal levels.

Some states are increasing dispensing fees and improving accessibility to help independent pharmacies. States with programs include Oregon, California, Arkansas, Louisiana, and Virginia. With reimbursement being the leading cause of pharmacy deserts, these states are taking a proactive approach.

Telepharmacy is another opportunity. Telepharmacy works to help the underserved in both rural and urban settings. Telepharmacies are being opened in FQHCs, helping control skyrocketing delivery costs when patients are substantially far away.

When a town has an FQHC but no pharmacy, it impacts the patient’s ability to get the care and treatment they need. Telepharmacy creates an opportunity to turn a pharmacy desert into a profitable business that offers better availability. The biggest reason why the costs are lower with a telepharmacy is that the heftiest expense, the pharmacist, is out of the picture.

Can Pharmacy Deserts Become Obsolete with Better Data?

At the root of any pharmacy’s ability to remain competitive and in business is understanding its data. Key metrics could provide pharmacies with insights on the demographics of their patients, including where they are located and which payer they use.

By tracking pharmacy analytics, independent and chain pharmacies can determine trends that may help them be more agile in their service model. This flexibility can ensure profitability, allowing them to remain open to serve those patients who need them most.

Want to see where pharmacy analytics can take your business? Get in touch today to explore how we can help.

HIPAA Trends and Emerging Challenges: What to Expect in 2020

Posted October 15, 2019 by Beth Osborne & filed under Healthcare.

HIPAA is now over two decades old. In that time, much has changed. When it was written, the Internet was in its infancy, and most healthcare data was still on paper only. The objective of HIPAA was to modernize the flow of healthcare information and protect patients from fraud and theft. HIPAA compliance is critical to every healthcare organization, but that doesn’t mean it’s easy to keep up with HIPAA trends and emerging challenges.

To help you prepare for any changes in 2020, we’re breaking down what to expect in the next year regarding HIPAA regulations.

National Patient Identifier

As part of HIPAA’s passage in 1996, a National Patient Identifier was to be established. However, Congress overruled the legislation and restricted funding to develop it. In June of 2019, the House voted in favor of lifting this ban. There are two sides to the argument.

Most health IT leaders believe that creating an identifier is vital to solving challenges with patient matching and has the potential to minimize medical errors and misidentification. The American Health Information Management Association (AHIMA) supports the lift of the ban and development of the identifier.

The identifier could help reduce interoperability issues, as well. The fierce objections to the identifiers are still coming from politicians, namely Sen. Rand Paul, R-Ky. He introduced a repeal act of the identifier in Congress recently. Paul argues that the national identifier would threaten patient privacy. Critics say his arguments are without merit and don’t align with the current reality of healthcare data needs.

A healthcare identifier for Medicare beneficiaries has been approved and goes into effect on January 1, 2020. This is a HIPAA trend that will continue to be a hot topic in the next year.

Compliance and Enforcement HIPAA Trends

Enforcement of HIPAA by HHS OCR has been picking up speed in 2019. After a record-breaking year of recovery of over $28 million, the OCR started 2019 with a $3 million settlement related to two breach incidents.

Later in the year, the OCR announced its first settlement under the Right of Access Initiative. The case involved a healthcare organization that failed to respond to a patient’s request for medical records in a timely manner. With this settlement, it sends a clear sign that entities will be held accountable for not providing access to patients per HIPAA requirements.

The largest settlement in 2019 will reportedly be a fine of $145 million paid by Allscripts Healthcare Solutions. The settlement is in reference to Practice Fusion, an entity purchased by Allscripts in 2018 that was under investigation regarding HIPAA’s anti-kickback statutes.

Data breaches continue to be an Achilles heel for healthcare. Healthcare again leads all industries in cybersecurity attacks and data breaches. What’s interesting and provides context to this statement is that most incidents originated inside the organization.

Healthcare organizations must begin to evolve and modernize their infrastructure to combat this. They should also think of HIPAA compliance as a baseline and exceed requirements for better protection.

More Risk Assessments Will Occur

Healthcare organizations often think, incorrectly, that general insurance will cover a data breach. This is rarely the case. To ensure companies have insurance, they’ll likely need to perform risk assessments, which are already part of HIPAA audits. While you can undergo a risk assessment internally, it’s often a good idea to work with an experienced third-party expert.

Social Media Continues to be a Compliance Miss

There have been many tales associated with social media and HIPAA noncompliance. Social media is another channel for communication and must be treated with the same perspective. Under HIPAA, violations on social media networks include:

Gossip or hearsay posted to unauthorized individuals even if no name is disclosed
Sharing any patient photos without express permission
Posting pictures from your office that contain any visible patient files
Directly publishing any PHI

Much of this noncompliance challenges comes to appropriate employee training. Organizations need to have a clear and accessible policy on social media, so there is no room for misinterpretation.

State AGs Ramping Up General HIPAA Enforcement

While the healthcare industry generally thinks about the OCR as the agency to be concerned about the most, they can’t overlook state attorney generals. State AGs are becoming more active and have begun to band together to initiate multi-state suits.

In addition to OCR, states are bringing their own actions on entities found to be in violation of HIPAA. The OCR is profoundly encouraging state AGs to take a stand. They were once not really a party. That all changed in 2010 when the Connecticut AG took aim at a company responsible for the breach of 446,000 patient records in the state.

Since then, multiple state AGs have sued noncompliant businesses and recouped monies on behalf of their impacted residents. That isn’t expected to decline. Research has shown that of the enforcement actions taken by state AGs, much of the time ePHI is the risk. Yet another reason to strengthen cybersecurity programs.

As technology advances and new innovative tools like AI and blockchain become part of the healthcare infrastructure, there will be new HIPAA trends to consider. Healthcare organizations must be proactive, rather than reactive, in sustaining HIPAA compliance and data security. We’ll keep you updated. Stay in touch by subscribing to the blog.