Abstract
Objective: To calculate the return on investment (ROI) for a targeted medication intervention program developed by corporate management of a community pharmacy. Design: Retrospective analysis and cross-sectional survey. Setting: Regional community pharmacy chain in North Carolina. Participants: Targeted medication interventions completed from February 1, 2010, to July 31, 2010, were included in the retrospective analysis. Community pharmacists employed by the pharmacy chain that completed the questionnaire were included in the cross-sectional analysis. Intervention: Targeted medication intervention services were provided to the patient and documented by the pharmacist. Main Outcome Measure: The ROI for a community pharmacist-provided targeted medication intervention program. Results: Of the 180 pharmacists, 69 completed the questionnaire (38% response rate). The average time to complete one targeted medication intervention was calculated to be 22.63 minutes. The total cost for providing a targeted medication intervention program during the study time frame was $15 760.86. Total revenue was $15 216.00; therefore, the program resulted in an ROI to the pharmacy chain of negative 3%. Conclusion: This 6-month study resulted in an ROI to the pharmacy chain of negative 3%. Under the current reimbursement model, for this program to break even, the average time to complete one targeted medication intervention must equal 21.85 minutes or less.
Keywords
Introduction
Medication Therapy Management (MTM) programs are emerging in community pharmacies to optimize therapeutic outcomes through improved medication use and reduce the risk of adverse events, including adverse drug reactions. 1 Medication-related problems remain a significant public health issue with 1.5 million preventable medication-related adverse events occurring each year in the United States. 2,3 These medication-related problems account for annual costs of at least 177 billion dollars. 2,3 With the implementation of pharmacist-provided MTM programs in community pharmacies, medication-related adverse events may be prevented resulting in reduced health care costs.
The MTM programs allow pharmacists the opportunity to be reimbursed for providing patient-centered care. Pharmacists are responsible for identifying, resolving, and preventing medication-related problems, documenting and communicating recommendations to patients and their providers, providing education on the appropriate use of medications, and monitoring the patient’s response to therapies. 4 The core elements of MTM programs are outlined by the pharmacy profession and include a medication therapy review (MTR) that can be comprehensive or targeted to an actual or potential medication-related problem, a personal medication record (PMR), a medication-related action plan (MAP), intervention and/or referral, and documentation and follow-up. 4
Targeted medication intervention programs are one potential service offered in the spectrum of pharmacist-provided MTM. Targeted medication interventions can be focused on specific patient populations or on specific medications. The intervention can focus on a single medication-related issue such as compliance, proper administration, drug interactions, or cost. The pharmacist evaluates the appropriateness of the patient’s medications with respect to each targeted intervention. If, for example, a more cost-effective drug option (such as a generic) is available for the patient and the patient accepts the pharmacist’s recommendation, then the pharmacist documents the intervention, sends a note to the prescriber for authorization, and informs the patient of the change (if approved by the prescriber). The pharmacist follows up with the patient via telephone in a few days and then bills the service through the third-party administrator/payer.
Several studies have examined the positive economic impact of pharmacists’ interventions. 5 –7 The effect of these interventions on patient out-of-pocket expenses, health care systems, and managed care environments is well documented. 8 –11 What is missing from the literature is information regarding a targeted medication intervention program and the financial aspects of such a program in a community pharmacy. There is a growing interest in MTM services in the community pharmacy setting, but few studies exist to document the return on investment (ROI) of these services. It has been reported that rates of reimbursement from third-party payers for dispensing prescriptions will continue to decrease and that the future of community pharmacy depends less on dispensing and more on patient care services like MTM. 12 A study by McDonough et al reported that providing MTM services in an independent pharmacy resulted in a small financial net gain of $3.28 to the pharmacy based on a revenue of $11 195.00; this is an insignificant positive ROI for the pharmacy. 13 Furthermore, the revenue gained was a result of comprehensive medication reviews, follow-up appointments, and 2 new problem visits per year; there was no mention of a targeted medication intervention program. 13 Consideration as to the financial aspects of such a program, including the revenue such a program may produce, is warranted. A targeted medication intervention program may offer an additional source of payment for the services provided. A program specific to targeted interventions may be easily incorporated into pharmacy work flow and can help motivate and guide pharmacists with minimal MTM experience. Analysis and discussion of the financial components of a pharmacist-provided targeted medication intervention program are critical to evaluate the potential profitability of this service and to increase awareness in the community pharmacy profession of additional sources of revenue.
Objectives
The objective of this study was to calculate the ROI, from the perspective of the pharmacy chain, for a targeted medication intervention program implemented in the community pharmacy setting.
Methods
This study was conducted at Kerr Drug, a regional pharmacy chain in North Carolina. Kerr Drug has 76 pharmacies located throughout the state in rural, urban, and suburban settings. Kerr Drug specializes in immunizations (influenza, pneumococcal, and herpes zoster), MTM services, point-of-care health screenings, diabetes education programs, and health and wellness initiatives. Kerr Drug pharmacists are beginning to implement many of the above services into their work flow; the company first started with immunizations in 2004 and on February 1, 2010, implemented a targeted medication intervention program.
Each month, as part of the program, the Kerr Drug corporate office provided pharmacists with a specific targeted medication intervention. A list of patients taking the medication of interest was also provided to each pharmacy. The pharmacists were given (1) a detailed instruction sheet providing directions for completing the targeted intervention, (2) talking points for the pharmacist to use when communicating with the patient and/or the patient’s prescriber, (3) a fax template to use when communicating with the patient’s prescriber (if applicable), which helped ensure consistency among pharmacists and provided an effective means of communication with the prescriber, (4) a billing template with instructions on submitting the specific claim to the third-party administrator/payer, and (5) background readings for the pharmacist regarding the therapeutic issue being targeted with the intervention (if applicable). An example of a cost-efficacy management targeted medication intervention is provided as Appendices A –D. Pharmacists utilized the list provided to reach out to patients and assess the potential medication issue at hand, such as adherence, proper use and administration, and cost savings. The pharmacists, at a minimum, had to perform the targeted interventions specified for the corresponding month. Pharmacists could complete other targeted medication interventions in addition to those provided by the Kerr Drug corporate office.
This research study received approval from the institutional review board of the University of North Carolina at Chapel Hill. The design of this study includes both a retrospective analysis and a cross-sectional survey. Claims data were collected retrospectively by generating a report from the third-party administrator/payer, OutcomesMTM™ (formerly, Outcomes Pharmaceutical Health Care®). 14 Interventions were included in this study if they were conducted on a patient who was 65 years of age and older, a resident of North Carolina, and a Medicare Part D beneficiary with a documented comprehensive MTR; one of the targeted medication interventions identified by the Kerr Drug corporate office; documented during the study period of February 1, 2010, through July 31, 2010; and were accepted or rejected by a patient and/or prescriber. All targeted medication interventions occurred pursuant to a comprehensive MTR within the past year. Interventions were excluded from the study if they were not a targeted medication intervention (ie, a comprehensive MTR) or were a targeted medication intervention not supplied by the Kerr Drug corporate office.
To determine the economic impact of the pharmacist-provided targeted intervention program, the ROI from the perspective of the pharmacy chain was calculated. Total revenue was calculated based on reimbursement rates of the third-party administrator/payer. There were 4 potential reimbursement rates, $20.00, $10.00, $2.00, and $0.00. In our study, the pharmacy was reimbursed $20.00 for each intervention that was accepted by a prescriber and involved a change to a less costly medication (cost efficacy management) or addressed medication safety (drug interaction). The pharmacy was also reimbursed $20.00 for each intervention that was accepted by the patient and involved a correction to medication use (administration/technique) or compliance with a prescribed medication (underuse). The pharmacy was reimbursed $10.00 for each intervention that was accepted by the patient and addressed use of nonprescription medication therapy (over-the-counter [OTC] therapy). If an intervention required prescriber consultation but was rejected by the prescriber, the pharmacy was reimbursed $2.00. Before consulting a prescriber, the pharmacist needed to receive authorization from the patient; if the patient did not authorize the pharmacist to contact the prescriber, this attempt was noted as “patient did not authorize pharmacist to contact prescriber with recommendation.” If an intervention only required patient consultation and this intervention was rejected by the patient, the pharmacist was not paid ($0.00). Total revenue was calculated by summing the total amount of reimbursement received for each intervention billed by a pharmacist. All targeted interventions submitted to the third-party administrator/payer received reimbursement at one of the aforementioned values ($20.00, $10.00, $2.00, or $0.00).
Various costs were included as part of the expenses for the pharmacist-conducted targeted medication intervention program: pharmacist time, telephone/fax/Internet service, drug information references, and office supplies. In order to assess pharmacist time, a cross-sectional survey was conducted utilizing a 9-question questionnaire. The questionnaire was mailed to 180 licensed community pharmacists employed by Kerr Drug and examined pharmacists’ experiences providing MTM, number of targeted interventions submitted per week, and time to complete an intervention. Pharmacists were provided with a postage-paid, return address envelope to submit their completed questionnaires. Pharmacists voluntarily consented to participate in the study by completing the questionnaire and returning it via mail to the primary investigator. In order to calculate pharmacist expense, the pharmacist’s hourly rate of $52.43, which was provided by corporate management of Kerr Drug, was multiplied by the average time to complete one intervention (as determined from questionnaire responses) multiplied by the total number of submitted interventions. Since pharmacies already require a telephone line and fax line as part of their daily business operations, it was estimated that one-half of their costs should be allocated to MTR services for a total cost of $35.00 per month. The cost of Internet service was estimated to be $130.00 per month; since one-half of its costs should be allocated to MTR services, the total monthly cost was $65.00. The phone line and Internet costs were estimated from local AT&T Inc rates for a Kerr Drug in Zebulon, North Carolina. The cost of Clinical Pharmacology, an online drug reference, was determined to be $162.00 per year (based on rates provided by Gold Standard/Elsevier). The cost of Physicians’ Desk Reference, a hard copy drug reference book, was determined to be $96.95. Because these references are used for other services, based on proportion of use, it is estimated that one-half of their cost should be allocated to the MTR services for a total cost of $88.98. A computer and all-in-one printer were estimated to cost $1200.00, which was depreciated at $200.00 per year, for a total cost of $100.00 for the 6-month study period. 13 Other costs included manila folders at a cost of $25.00. Total expenses were calculated by summing the totals of the pharmacist time, telephone/fax/Internet service, drug information references, and office supplies. Kerr Drug does not incur any costs for working with the third-party administrator/payer.
Results
The retrospective analysis revealed that a total of 797 targeted medication interventions were submitted to the third-party administrator/payer during the 6-month study period. Table 1 notes the targeted medication intervention for each month, the type of intervention associated with the claim, the type of consultation required for that claim, and the number of claims submitted during that month. The largest number of claims was submitted during the first month of the program, which involved a targeted medication intervention on proper administration of statin medications. The next highest number of claims was related to switching from a brand name angiotensin receptor blocker (ARB) to a recently available generic ARB.
Targeted Medication Interventions.
Abbreviations: PPI, proton pump inhibitor; H2RA, antihistamine 2 receptor antagonist, ARB, angiotensin receptor blocker; OTC, over-the-counter; ICS, inhaled corticosteroid.
aAs defined by OutcomesMTM™ (formerly, Outcomes Pharmaceutical Health Care®). Encounter Worksheet. Accessed at http://www.getoutcomes.com/userdocs/Encounter_Worksheet_201010.pdf, October 2012.
For the cross-sectional survey, 180 questionnaires were mailed to all Kerr Drug pharmacists practicing in the 76 stores, of which 69 were completed and returned, yielding a 38% response rate. Questions were developed to assess the average number of interventions performed and time spent for completion of interventions. All questionnaire responses were anonymous. Table 2 provides the results from the questionnaire. Approximately 27% of the pharmacists reported providing MTM to patients for less than or equal to 6 months, which encompassed the time frame of this study; these pharmacists did not have any experience providing MTM prior to the targeted medication intervention program. Among the remaining 73% of the pharmacists, 43% reported having 9 months of MTM experience, with 30% reporting 12 months of MTM experience. Pharmacists’ MTM experience was not limited to this specific targeted medication intervention program or to Kerr Drug; Kerr Drug pharmacists could have been providing MTM services prior to this program or pharmacists may have provided MTM services with a different pharmacy employer. About 80% of the pharmacists reported submitting 1 to 4 targeted interventions per week, with the remaining 20% reporting submission of at least 5 interventions per week. Time spent identifying an eligible patient was minimal, with the majority (65%) of pharmacists reporting 3 minutes or less for this process. Approximately 83% of the pharmacists reported taking less than 6 minutes to counsel patients on an intervention. Sixty-four percent of the pharmacists reported requiring 5 to 10 minutes to contact a prescriber with a recommendation. Eighty-seven percent reported taking less than 10 minutes to follow up with patients concerning the intervention. Approximately 50% of the pharmacists reported that a prescriber or patient declined one or less of their targeted interventions per week; this percentage self-reported from the pharmacist questionnaire is consistent with the percentage of rejected claims submitted from the third-party administrator/payer. The average time for a pharmacist to complete one intervention (from identifying an eligible patient to submitting for reimbursement via the third party administrator/payer) was calculated to be 22.63 minutes. Average time was calculated by taking the number of pharmacists’ responses for each response category and multiplying by the middle range of the response category and then summing them all together.
Pharmacist Responses to MTM Questionnaire (n = 69).
Abbreviations: MTM, medication therapy management; Outcomes, OutcomesMTM™ (formerly, Outcomes Pharmaceutical Health Care®); min, minute(s); PCP, primary care provider.
Table 3 provides a breakdown of submitted interventions and revenue. Total revenue of $15 216.00 was earned during the study time period, split fairly evenly between accepted prescriber and patient consultations. Three interventions that required prescriber consultation were rejected; all of these interventions involved Cost Efficacy Management suggestions—2 with switching from atorvastatin to an equivalent simvastatin dose and one intervention involved switching from a brand name to a generic ARB. One intervention requiring patient consultation was rejected; one patient rejected the pharmacist’s recommendation regarding proper administration of calcium and vitamin D intake. Nine patients did not authorize the pharmacist to contact the prescriber with a recommendation; 4 of these claims related to a potential interaction with a proton pump inhibitor and clopidogrel and 5 claims related to a potential change from a brand name to a generic ARB.
Revenue From Targeted Medication Intervention Program.a
Abbreviation: OTC, over-the-counter.
aFor study time frame of February 1, 2010, to July 31, 2010.
bAs defined by OutcomesMTM™ (formerly, Outcomes Pharmaceutical Health Care®). Encounter Worksheet. Accessed at http://www.getoutcomes.com/userdocs/Encounter_Worksheet_201010.pdf, October 2012.
cNine claims that required prescriber consultation were not submitted, as the patient did not authorize the pharmacist to contact prescriber with recommendation.
Expenses incurred to provide the targeted medication intervention program are listed in Table 4. The greatest expense was pharmacist time at $15 760.86. All pharmacies may not have the necessary supplies to conduct MTM; as such, we calculated those expenses for the study time frame. However, supplies necessary for the provision of MTM were available at all Kerr Drug locations, so these have been noted as “in kind” in Table 4 and were not used in the calculation of the ROI. To calculate ROI, the total expenses were subtracted from the revenue and then that number was divided by expenses, resulting in an ROI to the pharmacy chain of negative 3%.
Expenses for Targeted Medication Intervention Program.
aNumbers based on one Kerr Drug location that needs supplies for study time frame of February 1, 2010, to July 31, 2010.
bNumbers based on one Kerr Drug location with supplies available for study time frame of February 1, 2010, to July 31, 2010.
cDoes not include pharmacist fringe benefits.
dAdjusted for deflation.
Discussion
Based on the results of this 6-month study, a targeted medication intervention program resulted in an ROI to the pharmacy chain of negative 3%. These results do not bode well for pharmacy chains wanting to include MTM as part of their business model. Considerations that pharmacy chains will want to contemplate are the expense side of the equation. The greatest factor in producing a negative ROI is the pharmacist’s expense that is dependent on the amount of time the pharmacist takes to complete an intervention. In order to reduce pharmacist expense, pharmacy chains should consider utilizing supportive personnel such as technicians, clerks, or student pharmacists. The pharmacy chain may also want to consider utilizing pharmacists who have experience providing MTM or providing additional training and education to ensure all pharmacists have the same skill set. In this study, only 30% of the pharmacists had at least 12 months of MTM experience. If the same study was replicated with a higher percentage of pharmacists with MTM experience, the results may have been different. As the pharmacists gain more experience providing targeted medication interventions, the time to complete each intervention will likely decrease; similarly, as the time to complete targeted medication interventions decreases, pharmacists will be able to increase their work productivity resulting in an increased number of submitted interventions. The ultimate goal is to shorten the amount of time a pharmacist takes to complete the targeted medication intervention. The negative ROI also reflects a need for increased reimbursement rates from the third-party administrator/payer; with increased reimbursement rates, revenue would increase resulting in a greater ROI for the pharmacy chain. A recent article from Schommer et al noted that our current business models for MTM may be “insufficient for obtaining reimbursement at required levels.” 15 Our study supports this notion, as we examined some of the costs and time required to conduct a targeted medication intervention program, and our program did not produce a positive ROI to the pharmacy chain. It is not advisable for a company to continue a program that results in a negative ROI.
In this study, the average time to complete one targeted medication intervention should have equaled 21.85 minutes or less in order to achieve a breakeven point. The breakeven point was calculated using the figures for revenue and expenses, including pharmacist pay rate of $52.43 per hour and solving algebraically for the average time to complete one intervention (total revenue − total expenses = $0.00; $15 216.00 – ((X ($52.43/60)797)) = $0.00). As stated earlier, the average time to complete one intervention was 22.63 minutes, and most pharmacists were providing MTM for less than a year. As pharmacists become more experienced in the targeted medication intervention program, the time to complete the intervention may be reduced. Another consideration is the use of necessary expenses such as Internet, telephone and fax lines, computer and printer, and drug references, which are required for daily operation of a pharmacy and therefore may not need to be considered in existing pharmacy planning to start a targeted medication intervention program. This study allocated the proportion of use of these resources to be one-half based on the reasoning that they were already in use for the fulfillment process. McDonough et al utilized a similar thought process in his retrospective analysis of MTM services. 13 When the ROI was calculated without the aforementioned expenses, the result was negative 3%, representing a small financial loss.
A successful finding in this study is the high prescriber acceptance rate (365 of 368, 99%). This may be attributable to the use of prescriber fax templates, providing evidence-based recommendations, and/or maintaining reliable relationships with the prescribers. Pharmacy chains considering this business model should introduce the use of billing templates into their work flow. As mentioned in the methods, the templates are tools that aided pharmacists in streamlining the documentation and billing process. This method can greatly reduce the expense side of the equation and is a highly valued tool in a pharmacy chain setting.
The effect of pharmacist interventions on patient out-of-pocket expenses, health care systems, payers, and managed care environments is well-documented. 8 –11 The targeted medication interventions in this program were associated with an estimated cost avoidance (ECA) that was eventually reported by the third-party administrator/payer to the beneficiaries’ prescription drug plan. Upon submitting every targeted medication intervention claim, the pharmacist was prompted to select an ECA level. The OutcomesMTM (formerly, Outcomes Pharmaceutical Health Care) system provides for 7 ECA levels ranked in ascending order of urgency, where level 1 is improved quality of care and level 7 is a life-threatening emergency. 14 Since this was not a primary outcome of this study, we did not calculate the ECA in the targeted medication intervention program, but our results show that most interventions were categorized as ECA levels 2 to 4 that indicate a mid-range cost avoidance to the beneficiaries’ prescription drug plan, which is consistent with prior studies. This study is unique in that it focused on the economic value to the pharmacy chain that has not been previously studied.
Future Research
This study did not gather information that differentiated the time to perform the specific types of interventions (ie, time to perform a Cost Efficacy Management intervention vs Underuse intervention). Payment was not rendered based on time to perform the intervention (as may be the case with other types of billing such as Current Procedural Terminology or CPT codes); payment is solely rendered based on the type of consultation required (prescriber vs patient) and outcome of consultation (accepted vs rejected). Time to perform the service, however, does impact ROI. For example, if one pharmacist completes an intervention that is reimbursed $20.00 in 1 minute and a second pharmacist completes an intervention that is reimbursed $20.00 in 5 minutes, then the ROI for the first pharmacist will be greater than the second pharmacist. This would be a good area for future studies.
Limitations
The authors recognize that more data could have been gathered if a time analysis had been captured for each individual targeted medication intervention. During the 22.63 minutes for each intervention, the pharmacist may have been conducting other activities not related to the MTM program. For example, the pharmacist may have been verifying prescription orders while on hold with the prescriber. Therefore, the time analysis is subjective, and it is possible that the time for each targeted medication intervention may be shorter. Unfortunately, the study was not designed to be a time motion analysis. Instead, this study highlights the feasibility of incorporating a targeted intervention MTM program into the work flow of a pharmacy chain. This is an important finding, as one of the challenges with MTM is that it may be “a poorly developed concept in terms of a product that fits within currently dominant practice models for the majority of practicing pharmacists.” 15 To ask practicing pharmacists who were learning to integrate a new program into work flow to also record more information regarding time for each intervention was beyond the scope of this project. Instead, pharmacists were asked to submit a time range for the targeted medication interventions as a whole. The authors recognize that the time to complete an intervention can vary based on the type of intervention (ie, Cost Efficacy Management vs Underuse); thus, with varying times to complete interventions, the cost of pharmacist personnel would vary between the interventions. Additionally, the total number of rejected interventions may not have been captured, as not all pharmacists may have submitted them for reimbursement.
In this study, the average time to complete one targeted medication intervention should have equaled 21.85 minutes or less in order to achieve a break-even point. The break-even point was calculated using the figures for revenue and expenses, including pharmacist pay rate of $52.43 per hour and solving algebraically for the average time to complete one intervention (total revenue − total expenses = $0.00; $15,216.00 − (X ($52.43/60) 797) = $0.00). As stated earlier, the average time to complete one intervention was 22.63 minutes, and most pharmacists were providing MTM for less than a year. As pharmacists become more experienced in the targeted medication intervention program, the time to complete the intervention may be reduced.
The business model for Kerr Drug is to have pharmacists submit reimbursement for claims that will get paid. Spending time submitting claims that will not be paid (ie, patient consultation—rejected) is not encouraged. If the total number of rejected interventions were captured, it would likely result in a more negative ROI, as the cost for the pharmacist time to perform the interventions would exceed the reimbursement rate from the payer.
The cost of itemized expenses may vary based on geographic location and any preexisting business relationships between the pharmacy and the vendor. The questionnaire utilized for the cross-sectional survey was developed only for this study and did not undergo testing for instrument reliability or validity. The self-reported nature of the pharmacists’ responses is a limitation of this study, as pharmacists may have exaggerated or underreported responses. Additionally, the low response rate of 38% is a limitation within itself. The true opportunity cost of implementing a community pharmacist-provided targeted medication intervention program may not have been captured; the true opportunity cost may include potential revenue from the number of prescriptions a pharmacist can fill in the same time it takes to complete one targeted medication intervention.
Conclusions
Providing a targeted medication intervention program is an opportunity for the pharmacists to work collaboratively with prescribers to optimize patient outcomes and minimize medication costs. This 6-month study resulted in an ROI to the pharmacy chain of negative 3%. In order to break even under the current reimbursement model, the average time to complete one intervention must equal 21.85 minutes or less. As community pharmacists gain more experience with providing targeted medication interventions, the time to complete interventions is expected to decrease, likely resulting in a positive ROI for the pharmacy chain.
Footnotes
Appendix A
Appendix B
Appendix C
Appendix D
Acknowledgment
The authors wish to thank Ashley Branham, PharmD, BCACP for her assistance in formulating the original research topic.
Authors’ Note
During the study research period, Dr. Rhodes was a PGY1 community pharmacy resident with UNC Eshelman School of Pharmacy and Kerr Drug, and Dr. Reynolds was an employee of Kerr Drug, Raleigh, NC, USA. Previous Presentations: American Pharmacists Association Annual Meeting, Seattle, WA, March 26, 2011, and the Southeastern Residency Conference, Athens, GA, April 29, 2011.
Declaration of Conflicting Interests
The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The author(s) disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: Funding was provided by Kerr Health Care Management and the UNC Eshelman School of Pharmacy.