The takeaway is that pharmacies will continue to tap automated dispensing, workflow systems, and IVR to improve productivity. Even the POS vendors are forecasting a better year, since these systems have become mainstream to the concept of workflow. Talk of a recession notwithstanding, the feeling is that healthcare is not as affected as other sectors of the economy. However, one risk factor that has some companies less than optimistic is the impending government average manufacturer price (AMP) pressure on generics for Medicaid programs, even though there has been a one-year reprieve on implementation. Nobody knows how this is going to play out. As implementation is now designed, pharmacies would be expected to dispense these prescriptions below cost. Tammy Devine, senior VP for QS/1, puts it this way: “With an increasing baby boomer population and new drugs coming onto the market, cash flow will continue to improve. But this improvement is highly dependent on what happens with AMP.”

While the uncertainty surrounding AMP might put a damper on spending plans for those pharmacies with a heavy Medicaid business, the overall pharmacy market should remain healthy.

Plan to Release New Software in 2008: 85%

Tom Rhoads, executive VP for Parata Systems, is one of those voicing optimism and concurs with Devine’s point about baby boomers. “Smart pharmacies are actively repositioning themselves for the coming baby boomer volume, as well as making the shift from fulfillers to providers,” he says. “Those who are focused on patient care are also leveraging technology to facilitate this realignment by automating back-end processes and offering new services that set them apart in a dense competitive environment.”

Independent pharmacies still face challenges, however. We found that while 60% of system vendors found no real change in terms of the number of independents in business in 2007, 25% did report seeing more selling out to chains, with a little over 10% finding more store closings. It is expected that 2008 will mirror ’07. Even so, this is not sending a negative message to the technology companies. The successful pharmacies are expected to continue upgrading systems and adding new technology solutions.

The Priorities

Point-of-sale (POS) systems are a case in point. These systems are among those seen as the buying priorities in 2008. Flexible spending accounts (FSAs) are clearly going to be one of the drivers. This is what Greg Phillips, president of Emporos, sees as the

tipping point for POS this year, with independents looking to prevent loss of this business to the chains. Pharmacies will need not only a POS system, but one that complies with the IRS’s Inventory Information Approval System (IIAS). That’s because, from this year forward, pharmacies using non-healthcare merchant codes for their credit- and debit-card transactions will need to make sure that their POS systems are IIAS compliant in order to successfully process FSA debit-card purchases.

At the Hamacher Resource Group, the company that provides the OTC databases used in pharmacy POS systems, VP Dave Wendland says their priority in ’08 is to provide not only more robust access to OTC product images and content, but to provide eligible product list management to support flexible spending accounts.

Have New Software Modules Scheduled for ’08: 70%

Workflow systems, robotics, and IVR also continue to rank high as priorities. As Alex Phillips, president of Opus-ISM, predicts, there will be more use of robotics, IVR, POS, and workflow because of the operating efficiencies these provide and “allow the same me-too services as the chains.” Many of his peers agree with this assessment. You would be hard-pressed to find a system vendor these days without a workflow system in its product line because of the greater operating efficiencies these systems offer, particularly with high-volume pharmacies. But we can’t overlook the interest in inventory management software. Jim Hall, president of VIP Computer Systems, adds this to his list of what pharmacists will be buying in ’08, along with electronic ordering. The technology that will help rein in costs will continue to have appeal, since the price side of the equation is controlled by the third parties paying for the prescriptions.

Software that can change the inventory dynamics of a pharmacy is getting more attention from system vendors. “This is one of the main reasons prospects call us about POS,” says Brad Jones, CEO of Retail Management Solutions. “Most think of only the front end of the store when they think of this, but through our PMS and IVR interfaces, we can improve their prescription inventory turns, as well as helping better manage the prescriptions sitting in the will-call bin.”

At ECR Software, Andy Voso, director of pharmacy POS, also sees demand increasing for POS systems that can integrate with pharmacy management systems, but he adds that integration with wholesalers’ systems is also important. POS also facilitates loyalty programs that can lead to a better product mix, which gives customers one more reason for buying front-end products from the pharmacy.

Expect More Demand for Web-Based Products: 80%

Mike Coughlin, CEO of ScriptPro, sums it up by saying, “Advanced pharmacy systems should not cost — they should pay. Pharmacies have a distinct advantage in that a large number of people come into the store every day to obtain prescriptions. This provides a large target population for sales and marketing. The key is to have systems that promote this in an organized manner.” Companies are responding to what is perceived as a very high priority for computer-based products that will attract and retain customers. Couple all this with FSAs and you can see why so many are anticipating a good year for POS system sales.

The Safety Factor

While we hear about the need for technology to reduce costs, where the market is trending in this area also can improve patient safety. This technology includes robotics and workflow, document scanning at intake, and electronic prescriptions and pill imaging. But perhaps the most underplayed is bar-code scanning. Use of scanners is expected to increase in ’08. The forecast is that roughly 60% of the chains and independents in this country will be bar-code scanning when filling prescriptions by the end of the year.

One reason is that scanners are standard equipment with workflow and robotic systems and are an easy add-on to legacy pharmacy management systems. In fact, when asked what pharmacists will be buying in 2008, workflow systems — and the scanning tools that come with them — were as frequently mentioned as robotic systems.

Expect More Interest in E-Prescribing: 80%

IVR

Chains clearly have embraced IVR at a much faster rate than independents. Independents have lagged behind for fear of losing the personal touch with customers. The read is that at the end of ’07 two out of 10 independents were using interactive voice response systems. The forecast is that this will climb to more than three out of 10 by the end of this year. Integration of IVR with the pharmacy management system provides a big boost to productivity.

Debbie Sheppard, VP of sales and marketing for Ateb, finds that many pharmacists are looking to upgrade their pharmacy management systems and in the process will upgrade their IVR systems. She also feels that there will be more use of IVR for outbound reminder calls to encourage compliance.

Anticipate Higher Sales of POS Systems: 80%

TeleManager Technologies is enhancing the compliance-calling capabilities of its IVR system in response to growing interest in this feature and is planning to add voice recognition that will make it easier for the consumer to use these systems. That’s the word from Bruce Kneeland, director of business development for the company.

Sunny Skies for E-Prescribing

The outlook in ’08 for electronic prescriptions is encouraging — 80% predict that there will be increased interest as we move through the year. Central to this prediction are two factors: More physicians are coming on board as their practice management systems are upgraded with the capability, and independents do not want to lose these prescriptions to the chains.

Moreover, more than 90% of the pharmacies will be ready to receive prescriptions electronically this year. That is not to say that all will be receiving electronic prescriptions, but the infrastructure will be in place.

Jeremy Hume, VP of sales for KeyCentrix, offers an interesting thought on all of this. “There is a sense of inevitability about it, but not a lot of excitement. I think that as information provided about e-prescribing improves, we will see a shift to excitement,” he says. But he also points to the vendor to build this excitement. “As software vendors we play a large role, in that if we incorporate e-prescribing in a more complete way rather than just tacking it on — which is tempting because it is easier — then they will get excited about it and push for it,” he says.

Expect More Interest in Software to Attract and Retain Customers: 80%

“Electronic prescriptions have passed the initial market evaluation and are ready for prime time,” says Cerner Etreby’s Director of Retail Pharmacy Development Hossam Saleh. Even the long-term care market is beginning to respond. Tim Hutchison, VP of SoftWriters, frames it this way: “E-prescribing is just starting to make inroads in the LTC [long-term care] pharmacy market. Pharmacies tend to think that e-prescribing will reduce the workload, allowing the servicing of more beds with the same-size data-entry staff.”

Expect More Interest in Disaster Recover Systems: 66%

While Gary Schoettmer, president of RNA, agrees that e-prescribing can streamline order entry and is finding higher interest, he also notes that there is a hesitancy in acquiring solutions, as standards are still being developed for long-term care. In addition, the vendors providing software for the long-term care market are now offering Web portals for nursing staff to electronically order prescriptions. Hutchison finds the Web serving a useful purpose here. “We are starting to see the Web replacing fax-based communications for patient maintenance, orders, and other types of facility-to-pharmacy communications,” he says.

Although the outlook in general for e-prescribing is encouraging, it faces competition from the Web in the LTC market.

Internet Appeal

There is no question that the Internet will continue to reshape how products and services are delivered in the pharmacy space. The application service provider (ASP) model is one example. At McKesson Pharmacy Systems, the company’s EnterpriseRx product is an ASP-model pharmacy system, as is its ComplyScan product for PSE tracking. “We will continue to launch these products in ’08,” says Tom Michalski, director of product management. And at QS/1, Devine finds that interest in ASP products is increasing. The ASP model rids pharmacy owners of the need for hardware and software upgrades. Marc Cohen, senior director of marketing for RelayHealth, points out that there is lower cost of ownership, better use of information, and affordable connectivity, all of which are piquing interest.

The Internet is serving as the platform for other purposes as well. One example is Speed Script, where most of its pharmacy services depend on communications via the Web. Heath Reynolds, director of business development, says that they are finding more demand for Web-based solutions. “The Web allows the pharmacy to communicate with its patients in multiple ways, and our virtual private network is designed to allow for more patient services,” he notes.

At Rescot Systems Group, according to Product Manager Tom Weiss, the company is finding that Web-based products make it very convenient for best-of-breed solutions to be integrated into pharmacy automation.

Expect to Add More Interfaces in ’08: 80%

These, adds Weiss, are design- ed around process management. “Even legacy systems can interoperate with Web applications and services that perform key functions,” he says.

Medication therapy management programs are another good fit for the Web. Cerner Etreby’s ApotheCare-MTM product is an example of this. And as QS/1’s Devine points out, “Most MTM software today is Web based, and we see this trend continuing in 2008.

“But it is imperative that ways are found to integrate MTM into the daily workflow of a pharmacy.” QS/1 has been successful in integrating a couple of MTM programs, according to Devine. But in the main, the popularity of the Web in ’08 will be in the long-term care market, with a key component being the electronic medication administration record (e-MAR), which can be updated online at the facility. Steve Wubker, president of Transaction Data Systems, sees this accelerating because nursing homes want to go as paperless as possible, he says.

Expect More Interest in Financial Management Software: 90%

And Clarence Lea, VP of marketing and account management with HCC, reports that his company continues to develop electronic MARs that, as he puts it, “will allow our LTC providers to take advantage of Web-accessible technologies to aid nursing homes in the administration of patient medications.”

More pharmacists having Web access is going to increase demand for more online services. This is what Rick Sage, eRx Network’s VP of business management, sees happening. He gives as examples real-time eligibility checking, online compliance programs, and online management of 340B programs. Also, Brian Garibaldi, president of PanaceaRx, finds that past performance and security concerns with Web applications have been

alleviated. “The industry is catching up with this technology,” he says.

Rx-Net is another company that is finding good use for the Web. “We are transferring all of our

customers to Web-based updates and are installing our own Web server,” says Michael Cannata, founder of the company.

Expect Higher Demand for Thermal Printers: 45%

To round things out, PharmacistsOnLine will be rolling out an educational blog that addresses integrative medicine. “The result of the blog will be to produce a business booster guideline book,” says Karen Sulprizio, pharmacy client associate for the company.

What’s Next?

What’s coming out of Silicon Valley and, in particular, software giant Microsoft that’s likely to benefit pharmacy? Louie Foster, director of product management for Integra, has his eye on data-mining startups. “This could help increase the effectiveness of reporting for large pharmacies,” he says. Then there is the effort from Microsoft to improve the security of its products, which is viewed as a positive. “The more secure and reliable our systems are, the more we can focus on our business,” explains SoftWriters’ Tim Hutchison. Rex Bloom, applications manager for Kalos, likes Microsoft’s Silverlight cross-browser for next-generation interactive applications, Microsoft’s .NET 3.0, and SQL Server 2008, as well as new products coming from Adobe. He sees all as having the potential to benefit the pharmacy market.

Expect to See More Interest in MTM: 80%

There will be plenty of companies issuing new software releases this year — close to 90% reported that a new release is in the works. And a little over 70% will be introducing new modules. Integra is an example of the latter, with plans to add an advanced archiving module that will allow for a real-time look at archived documents and a new viewer that will reduce pharmacist drug-use-review check times. HBS, a division of SXC, will be enhancing its inventory module, according to Scott McClusky, area sales manager, to interface with more wholesalers. “You will be able to order from multiple wholesalers and let the system tell you which wholesaler has the best price,” he says.

Disaster recovery systems will remain a hot item this year. And pharmacy owners can also expect to see more system integration. This is a front-burner item with many companies, since the workflow model depends on different systems being able to talk to each other. As Doyle Jensen, executive VP of Innovation, explains, “We’re continually adding new interfaces. This year we’ll interface to new counting devices and more IVR, POS, and pharmacy management systems. We see a move to a more integrated environment and away from the old island-of-automation model.”

Expect More Interest in Inventory Management Software: 80%

Chris Thomsen, VP of Kirby Lester, stresses the importance of integration, as opposed to interfaces. “Basic interfacing will become a thing of the past, and full-scale integration or interoperability of all technologies will become a requirement,” he says.

On the topic of integration, Clarence Lea at HCC takes it a step further: “Our development emphasis is to continue our business integration of the various pharmacy components that a typical pharmacy uses. Certainly it is one thing to provide a system that takes a prescription from input to final patient delivery, and another thing to be able to understand through the data the missed opportunities during the process. Pain points from the workflow process have to be evaluated easily by senior pharmacy staff, just as accounting and financial resources have to do more than present numbers to pharmacy owners. The focus is on the analysis and the story the data tells.”

Cash Management

This is the area where there was practically a unanimous vote that there will be increasing interest by pharmacists in tools that can help them do a better job of managing cash. This is summed up nicely by Eric Ashby, president of Cost Effective Computers: “Automated reconciliation is a big hit with pharmacists. Most independents feel that they are losing money by not keeping tighter control on third-party billing, but the time required to reconcile often prevents doing this properly. The availability of X12 835 reports is making the automation of reconciliation feasible at the store level.”

Jim Tussey, president of SRS, says, “Cash flow management is coming to pharmacy,” and adds, “When we talk to pharmacy owners, they are asking for help with low margins, and we respond that we can help them make more turns, be more efficient, and identify losing plans.”

Preedit and reconciliation services from companies like eRx Network and RelayHealth have also been enjoying success in the market, as pharmacists look for ways to optimize reimbursement on third-party claims. Both eRx’s Sage and RelayHealth’s Cohen expect to see these programs gain in popularity during the year.

Printers

The laser printer still dominates in pharmacy, and the opinion is that this will continue to be the case in ’08. But thermal printers are finding a niche. First is the area of POS. Rick Coleman, sales manager for CAM Commerce, says that in the past two years 95% of receipt printer sales have been thermal printers. And with more pharmacies expected to install POS systems, sales of thermal printers should follow.

There is another market dynamic at work, and this is in the area of workflow systems. Cathy Russos, corporate accounts manager for Pharmex, reports that she is finding a transition to thermal printers away from laser printers to print both patient information leaflets and prescription labels. She explains that automated dispensing systems use thermal labels, and what she is finding is that pharmacy owners don’t want to use two different types of labels.

Another Bright Spot

There is also good news on the employment front. Three-quarters of the companies will be increasing payrolls during the year. Most of the new hires will be in customer support, followed by IT people, and then sales.

This is a fitting note to close on, as it neatly demonstrates the commitment that technology vendors continue to make to supporting their customers and bringing out new solutions. By all accounts, 2008 promises to be an active year on the technology front, one in which pharmacists will want to stay on the lookout for the next piece of technology they can add that will improve both their clinical and business operations. CT

Bill Lockwood is the publisher of ComputerTalk. He can be reached at wal@computer talk.com.