Building a Future-Ready Health System: The Role of Entity-Owned Specialty Pharmacies in Improving Patient Outcomes

When a health system sets out to launch an entity-owned specialty pharmacy, it commits to a complex, integrated endeavor. These programs, which bring specialty drug dispensing services inside the health network rather than relying on contract pharmacies, enable health systems to better meet the growing demand for high-touch, high-cost medications often used to treat patients with rare or chronic conditions. 

For health systems looking to better serve their patient populations, gain a financial edge, and upgrade their services, the advantages of launching an entity-owned specialty pharmacy are widespread. 

Enhancing Patient Care

Across the nation, patient care needs are diverse and far-ranging, but two characteristics are consistent: patients are living longer than ever before and most (60%) are living with at least one chronic disease. With 8,000 specialty drugs in clinical development globally, manufacturers rapidly supply medications to treat chronic conditions, but often struggle to keep up with demand. Patients need clear pathways for specialty drug access, and equally, support managing treatment regimens across extended lifespans. 

An in-house specialty pharmacy enables health systems to offer a more integrated and patient-centered care experience by providing critical support within their own network. Critical access hospitals such as Blessing Hospital understand this benefit firsthand after developing an entity-owned specialty pharmacy program to close patient care gaps. Rural patients that historically had to travel to distant pharmacies for high-touch medications now can access them locally, helping improve patient access and adherence to these treatments.  

In addition, this integrated model supplies valuable patient encounter data that health systems can use to identify areas of opportunity, such as medication therapy management, critical clinical interventions, and social determinants of health assessments. Paired with platforms supporting digital patient engagement, this data has further utility to inform customized patient outreach. 

Financial Advantages

Specialty drug dispensing accounts for nearly 40% of total U.S. prescription revenues, and in 2023 alone, reached $243 billion. Given the persistent financial headwinds facing the healthcare industry, taking a specialty pharmacy program in-house is an integral strategy to garner cost savings and diversify health system revenues with new growth opportunities. 

As inflation and supply chain challenges result in rising third-party dispensing fees, reducing reliance on contract pharmacies is a chief benefit of an entity-owned specialty pharmacy. Consequently, health systems not only avoid expensive contract fees, but more easily comply with many of the 340B discount restrictions imposed by drug manufacturers on third-party pharmacies. Furthermore, the increased patient volumes from expanded care offerings increases specialty product referral volumes, which is integral for establishing manufacturer relationships, and ultimately helps expand access to Limited Distribution Drugs (LDDs). 

Lastly, by keeping patients in-network, organizations, such as Temple University Hospital, can better support financial needs of patients, leading to lower patient costs. After launching its specialty pharmacy, this health system lowered the average patient copay to under $20 and achieved net positive cash flow within five months of launch. 

Operational Control and Efficiency

Across the healthcare industry, persistent supply chain challenges introduce operational inefficiencies, resulting in delayed, fragmented care. Ongoing drug shortages further exacerbate these challenges and may prevent patients from accessing critical medications. 

Complementing existing contract pharmacy relationships with an entity-owned specialty pharmacy, provides more control over drug dispensing and greater visibility into drug distribution channels resulting in better management of patient medication access. Leading technology platforms play well in this effort, such as inventory management platforms that enable medication tracking from procurement to fill across care sites. This enhanced visibility into medication inventories helps reduce reliance on last-minute orders, rendering health systems less susceptible to supply chain interruptions. 

Additionally, with the option to staff specialty pharmacies with internal talent, standard hospital workflows are maintained, further preventing operational disruptions. 

Integration with Hospital Services

Every healthcare professional knows that when it comes to critical care, every second counts, and this fact is illustrated by data relating quick response to improved patient safety. Similarly, for patients managing chronic or rare conditions, time wasted on redundant and inefficient processes translate to fewer resources spent on direct patient interactions, such as clinical management consultations and interventions. 

The tight integration of in-house specialty pharmacy with a health system’s EHR reduces inefficiency by allowing direct communication between pharmacy and care teams, as patient information flows freely across a health system’s various departments (e.g., oncology, rheumatology, or even transplant services). With visibility shared between all members of a patients’ clinical team, opportunities to identify care gaps across medication access, adherence, and outcomes abound. Through this model, patients have an “express lane” to receive medications – reducing communication lag time between providers. This streamlined approach helps expedite administrative tasks, such as prior authorizations and medical necessity appeals, while also addressing cost barriers through patient assistance programs. 

Implementation Strategies

Realizing the above benefits of launching an entity-owned specialty pharmacy relies on strategic planning that considers the regulatory, infrastructure, and talent needs of this endeavor. While complex, health systems do not have to embark on this journey alone. 

Leveraging the power of partnership enables industry experts to secure necessary accreditations, establish manufacturer relationships, and acquire highly specialized staff while the health system focuses on providing care to its patients. In turn, health systems can customize their specialty pharmacy initiative to meet the needs of their patient populations. The culmination of these efforts sets the foundation for a closely integrated program optimized across the areas of operations, technology, and patient care. 

Conclusion

Taking the leap on launching an entity-owned specialty pharmacy is no small feat, but the clinical, operational, and financial use cases for doing so pave a clear path forward for a health system’s long-term success. From adopting more integrated care models to realizing cost savings and even unveiling organization-wide efficiencies, the versatile advantages present a compelling business case for the initiative. 

As market conditions continually evolve, healthcare leaders will be tasked with leading their organizations through quick and efficient adaptations. Entity-owned specialty pharmacies give health systems the flexibility to respond to changing demands with more integrated, patient-centered care models that embrace the needs of the future.