COVER STORY: Chain Market Report
Chain Market Report
Seventeen chains responded to the 2014 survey, representing over 7,300 locations. Once again, respondents ranged from local multistore operations to regional and national chains. We asked a wide range of questions to get a read on the current state of technology deployed, the trends in patient interactions, current clinical and regulatory priorities, and a look at what the challenges ahead are.
Over 80% of respondents use a pharmacy system from a third-party vendor, while the balance developed and maintain their system internally. A smaller group than in past years (25%) report changing systems this year. Three installed a new pharmacy system, with two of these rolling out the new software in 30% of stores or less and one converting 100% of its locations. Two reported plans to install a new system in the next 12 months.
When we asked about the functionality that chains are looking for in their current pharmacy systems, a number of responses touched on the need for better reporting capabilities. Many chains pointed to a particular need for adherence analytics and reporting. For instance, one respondent noted that the chain has to pull data from the pharmacy system and then work on it separately to generate the necessary adherence reports. Along similar lines, a need for improved reporting of immunizations and documentation of MTM (medication therapy management) services also came up. There were also calls for better incorporation of clinical activities within workflow, specifically further integration with MTM platforms such as Mirixa and more general access to clinical data within workflow. Also on the list of needs were multiple language support and electronic prescriptions for controlled substances (EPCS) certification.
We also checked in on the state of several tools that support the work of the pharmacy management system. In this group, prescription-monitoring program access for pharmacists and prescriber validation/verification services were widely reported as in use. About half are using electronic prior-authorization services, with another 15% saying this is being rolled out this year. Translation services are less common, with only 40% reporting their use. Finally, we asked whether chains are implementing the Blue Button+ guidelines, which provide a recommended structure for allowing patient access to medication records. This is an initiative supported by federal entities and a long list of private healthcare data holders. Among our respondents, only about 20% are ready for this now or will be within the year.
Spotlight on Specialty
One area of pharmacy that’s getting a lot of attention is specialty. With this in mind we wanted to find out in this year’s survey where the chains are, and to what extent they have the technology they need for this market. The trend toward these services is real: About 30% of the chains currently offer specialty pharmacy services, with about 40% in the development stage. Among those currently offering specialty, all but one reported that either they have the features they currently need in their pharmacy systems, or that those features are in development.
Of course, exactly how ready for specialty a pharmacy system is will depend very significantly on exactly which medications and disease states a pharmacy is serving. And these chains may well be finding ways to repurpose existing modules, such as those for long- term care, to support specific specialty programs.
Technology with the Fastest Return on Investment
IVR (interactive voice response) continues to be the number-one choice.
What’s Missing for Specialty?
When we asked what features chains feel are lacking, several of the responses centered on specific workflow needs, including quality assurance, more customizable automatic refills, and tools to better manage electronic prior authorization. Reporting came up several times, both for pharmacy back-end data and for patient-focused data such as an adherence scorecard. There is a need for call center management services to help chains meet specialty requirements for patient access to pharmacies.
Chains are, not surprisingly, big users of point-of-sale (POS) systems for keeping pharmacy operations under control. We asked them to check off what features they’re using, and the top tier in use by close to 60% of respondents includes price updates, customer loyalty programs, and pseudoephedrine (PSE) sales logging and reporting. In the next tier, checked off by about 40% of respondents, comes perpetual inventory and moving inventory between locations. And finally, in the third tier, used by about 20% of chains, are multivendor electronic data interchange (EDI) ordering, delivery management, sales ranking reports for pricing, and mobile POS. The top two tiers appear to show what chain pharmacies see as the core tasks of POS, and demonstrate a significant commitment to getting value out of these systems. The third tier is worth keeping an eye on to see if, for example, a sophisticated approach such as sales ranking for pricing begins to catch on more, or if a newer iteration of the technology like mobile POS gains more widely spread use.
What’s Needed in POS
Despite customer loyalty programs being in the top tier, several chains see a need for more robust programs, with better tools for sending email promotions and rewards and communications based on the specific product lines a customer frequents. Another chain is looking for the ability to house and manage credit-card information securely. Another wants improved delivery management, better PSE sales logging and reporting, and e-commerce capabilities.
Most chains pointed to a particular need for adherence analytics and reporting. For instance, one respondent noted that the chains has to pull data from the pharmacy system and then work on it separately to generate the necessary adherence reports.
The State of Automation
While most respondents reported using one or more types of dispensing automation, the actual installed base continues to be relatively limited, with a few notable exceptions that have made big commitments to it. At the corporate level, this year’s results show that about 80% of chains use countertop counting, about 75% use robotics, and only about 35% use counting cabinets. But when you look at the average percentage of store locations with automation installed and weight it by number of locations to account for the significant variation in chain size, there isn’t any automation in use at more than 5% of locations. Countertop counting is most common followed closely by robotics. Counting cabinets came in a distant third.
The outlook for installation of more automation in the next 12 months focuses on countertop counting and robotics, with 30% and 25% of chains, respectively, reporting plans to do so. Only a little more than 10% of chains plan to add counting cabinets.
Among the reasons for installing more of a given automation technology, chains report looking to countertop counting for small-scale solutions suitable for lower-volume settings; support for required controlled-substance double counting; and the role it plays in perpetual-inventory maintenance. In the case of robotics, consideration is given to higher-volume settings, with one chain specifying that only locations with more than 5,000 prescriptions per month are eligible. Also noted are an increasing need to free pharmacists up for services to enhance adherence and the technology’s capacity to play a role in central fill.
We also asked about compliance packaging at retail, which is either currently offered or forthcoming as a service by 70% of chains. However, only three chains report using automated compliance packaging, with the installed base subsequently being very small. Still, there may be the start of a trend here, since 25% of chains without this technology report plans to add it. And finally, reasons for looking for compliance packaging automation included synchronized refills in which this packaging can play a role; a critical mass of long-term care (LTC) facilities served; and, similar to robotics, the ability to have this automation function in central fill.
Chain pharmacies are prime candidates for centralizing processes. For example, we’ve just noted that several take central fill into account when looking at dispensing automation. In fact, this year’s results show that approximately 35% of chains make use of central fill, with a similar number planning to implement this process in the coming year.
When it comes to the technology that runs central fill, just over half are using robotics specifically, but there’s also a wider range of automation in play. High- volume workflow/workstations, conveying systems, packaging systems/autobaggers, and puck-based and vial-based systems are each in use by around 10% of respondents. Since most chains are using just robotics or counting cabinets, it’s three chains with sophisticated operations that account for the rest of the central-fill technology in use. Finally, two report using compliance packaging at central fill. And it is worth noting that neither of these chains were among those with compliance-packaging automation installed in retail locations.
When it comes to technology that runs central fill, just over half are using robotics specifically, but there's also a wider range of automation in play.
Central processing has come into its own, with just over a third of chains using it to balance the workload of the filling process; another 40% plan to put it to use.
And it seems that when chains are seeing value in centralization, they are seeing it in both central fill and processing: All the chains using central fill either also use central processing or have it in development.
Barriers to Centralizing
What’s holding back those pharmacies that haven’t gone this route? The most common reason cited for not using both central fill and processing is simple lack of volume to justify the investment. Also mentioned were regulatory restrictions, too few locations, and locations that aren’t located near enough to each other to benefit from central fill. There was also a comment about central processing worth relaying. One chain mentioned that while it is migrating to workflow that can support this centralization, it will take time to retrain pharmacy staff around the concept.
Focus on Patients
What are the chains reporting when it comes to connecting with patients and providing them with innovative services?
First, this year’s survey finds that the chains are making extensive use of outbound messaging to stay in touch with patients. Close to 90% currently use IVR for this, with two of those planning to expand use this year. Just over half use email, with two again planning expanded use and two implementing this year. But the growth areas appear to be texts and pushing messaging over mobile apps. One third are currently using text messaging, with three planning expanded use, but five more will implement that this year. And mobile-app push messaging is currently in use by the smallest group, just under 25%, with two of these expecting to expand use this year.
This year's survey finds that the chains are making extensive use of outbound messaging to stay in touch with patients.
The top three messages going out to patients are pickup and refill reminders and Rx-ready notices, with up to 70% of chains checking these messages off our list. Messaging with plenty of room for growth includes pharmacy education announcements, in use by just under 10%, and reminders to take medications, in use by less than 5%.
Mobile apps are in broad use, available to patients from 70% of chains this year. And this is not just the case for the large regional and national players, but for a number of the smaller multistore operations as well. The basics of ordering refills and providing pharmacy location specifics are by far the most popular, with patient access to profiles coming in a distant third. Few pharmacies report use of clinical or general marketing push messaging and patient access to educational materials yet.
Among those with apps, over 80% looked to an outside vendor for the technology, as opposed to developing it in-house. Half of these went with an existing vendor’s offering, and half went with a mobile-app specialist.
Connecting and Brand Building
Since the general population is becoming more and more accustomed to using smart-device apps for any number of daily activities, we wanted to find out how the chains see their apps positioning them in the market. Primarily, the chains appear to view apps as a convenience that patients expect, though not necessarily the key factor in winning new patients. Over 80% of respondents gave apps a rank of 4 out of 5 (important) or 5 out 5 (very important) for connecting with existing patients, while about 65% gave apps either a rating of 3 out of 5 (neutral) or 2 out of 5 (not important) for gaining new patients.
But an app is something you clearly want to have when your patients do go looking for it: Over 80% of respondents judge mobile apps as either important or very important for maintaining a pharmacy’s reputation and branding, with none giving a mark below 3 out of 5.
What’s the Next Connector?
Apps have come on strong in the past few years, moving rapidly from novelty to necessity. And as the technology adoption cycle pushes ahead, what channels are the chains looking to in order to stay connected with patients in the next five years? Responses suggest that mobile will continue to be central, and that real-time, two-way, and social interactions will grow. For example, several chains anticipate that real- time video will be big, including on mobile platforms. Others expect app functionality to increase, making features beyond the basics of refills and pharmacy details more and more central to the app experience for patients.
Star ratings concerned one respondent, particularly because it can be so difficult for a pharmacy to know where it stands: good, bad, or fair?
The Clinical-Care Environment
Ultimately, opportunities to engage patients will need to be leveraged to improve clinical care and outcomes. And the chains recognize this: Almost 85% reported an increased commitment to providing clinical care over the past year. This may well be pushed along by a need to address pharmacy’s input to star ratings, and over 75% report being very focused on this area. However, despite the chains’ acceptance of and focus on a clinical role, they still do not perceive a great deal of acceptance from the broader healthcare community. Nearly 70% gave either a neutral or negative view of the state of acceptance of clinical care.
Chains Participating in...
Health information exchanges (HIESs): two out of 17.
What are the central clinical services currently? Immunizations, adherence programs, and MTM all fell into the top group as being very important and growing. All the chains indicated that they offer these services. The next group by significance includes diabetes education and blood pressure and blood glucose monitoring. The more complex and infrastructure- intensive services of health screenings (e.g., A1c, lipid panel, and bone mineral density) and in-store clinics were deemed less central, though not by much — with a number of chains still ranking these highly, but many not offering them at all.
Clinical Here and Now
With adherence among the top chain clinical priorities, just what technology is driving these programs? Refill sync and automated outbound calls are at the top of the tools that chains report using. Well below come the other outbound communications, areas of texts and emails, as well as access to educational materials. Several chains report using telepharmacy for counseling, and two report using predictive modeling.
The Clinical Wish List
Not all the needs on the chains’ list of efforts to support clinical practice focused on technology. In fact, the need to change the reimbursement model to prioritize clinical activity came up most frequently. Chains need the ability to dedicate more pharmacist hours to clinical care such as adherence programs. This is something that can come in part from technology driving efficiency, but as one respondent noted, there’s also the need for revenue streams that support more time for pharmacist activity outside of the filling process. On the technology side, chains see adherence programs gaining from automated messaging and app reminders for patients to take meds, as well as better exception reporting to proactively identify nonadherence. Technology that supports collaboration by all healthcare providers is also much needed, as noted by one chain, with more integration of patient records between hospitals, pharmacies, and other care settings a necessity.
What's Needed for More Effective MTM?
Lab values, including SCr, lipids, and A1c.
And while connecting pharmacy information systems into the healthcare network is critical, there’s also work to do when it comes to having a place to manage clinical data within these systems. Almost 60% of chains report being able to collect diagnoses in their systems, with 35% noting that the ability is in development, and almost 50% reported being able to accommodate clinical notes; another 25% will be able to do soon. That’s a good start. But when it comes to receiving lab data and discharge med lists, only about 15% can do so. For care plans and continuity-of-care documentation, the number fell to just above 5%. On the plus side, close to half of respondents said that room for all this data is on the way.
Where EPCS Stands
Electronic prescribing for controlled substances presents a challenge to the chains participating in the survey. While 75% of the chains reported using a system that is either audited for EPCS now or will be within the year, most have yet to receive any of these transactions. Only three reported receiving any controlled-substance prescriptions electronically at all, and even then it is only a small fraction of these prescriptions.
Are the Chains Ready for ICD-10?
Ready now: 30%
The issues with EPCS are substantial. Several chains report that physicians in their areas have been slow to adopt approved systems and, even when they do, slow to send these prescriptions electronically. On the rare occasions when CS prescriptions do come in electronically, chains report receiving them from prescribers whose systems aren’t certified.
You won’t be surprised to learn that we got back quite a list of items when we asked about current regulatory and market challenges. There were several responses that focused on issues with payers, both public and private. Preferred networks are posing a real risk, with one chain noting that Medicare Part D preferred networks have driven loyal patients out of the pharmacy. Other public-payer issues included problems billing Part B and states that are cracking down on Medicaid reimbursements even as the Affordable Care Act brings more people into the system. Star ratings concerned one respondent, particularly because it can be so difficult for a pharmacy to know where it stands: good, bad, or fair?
Maximum allowable cost (MAC) pricing continues to be a problem. Now issues are arising around generic pricing and margins. As one chain noted, there’s continued downward pressure on reimbursement, especially generics, even while there are dramatic generic price increases. Another chain concurred, and summed up the situation by saying that market conditions are making generics the new brands in terms of cost and pricing. Payers are also ramping up use of prescriber validation and eligibility checking, as well as prior authorizations.
The tide of operational and clinical challenges has not ebbed in the last year, and the competition seems to have only become stiffer.
And there are still more challenges. Vial labeling is getting more complex because of the variations among boards-of-pharmacy requirements for patient-centric content. Boards of pharmacy are also implementing rules on unique identifiers for pharmacy staff, for example, biometric log-ins.
In this dynamic environment, what then are the technology priorities for the chains for the year ahead? Pharmacy management systems will be the focus for several chains, either conversions or upgrades for workflow and workload balancing. One chain reports that it will centralize its pharmacy systems at a data center and virtualize them for more-reliable data backup and business continuity. Another is focusing on improving its POS-managed customer loyalty program. Still others will look to improve communication tools, building out mobile capabilities for refills and for complete integration of mobile apps. But one area that came up multiple times was a continued push for patients to use and benefit from adherence programs. In this critical and growing area, chains reported that they would focus on implementing refill synchronization, improving automated outbound calling, and enrolling as many patients as possible.
The tide of operational and clinical challenges has not ebbed in the last year, and the competition seems to have only become stiffer. Chains will have to continue to apply themselves diligently and search out the right technology in order to find the opportunities in their local markets and make good on the promising aspects of the changing healthcare climate. CT
Will Lockwood is a senior editor at ComputerTalk. He can be reached at firstname.lastname@example.org.