With the S&P 500 closing the year down close to 40% in 2008 and the country in a recession, what can we expect for pharmacy technology in 2009? Surprisingly, the outlook is upbeat — the vast majority of industry executives responding to our survey are forecasting another good year. These expectations are based on the premise that pharmacists will continue to upgrade systems and invest in new technology as a way to streamline costs. In Stanton McComb's mind, several dynamics are at work. McComb, president of McKesson Pharmacy Systems, sees lower consumer confidence and reduced spending that will "push pharmacies to adopt technology to improve margins." Also contributing, he says, "is the need for regulatory compliance."

McComb hits the nail squarely on the head with regulatory compliance. Here, the IRS requirement for flex-spending accounts is expected to make 2009 a standout year for point-of-sale (POS) systems. The push to eliminate paper processing of FSA transactions is why employers are turning to debit cards and encouraging employees to use pharmacies that can accept them. A POS system with an IIAS-compliant product file and SIGIS-certified software is what pharmacies will need in order to process these transactions at the point of sale. Companies were hard-pressed to keep up with demand for POS systems in 2008 as the original deadline of January 1, 2009, loomed, ending the year with a backlog of orders. However, pharmacies were given a reprieve when the IRS rolled back the compliance date to July 1. As Brad Jones, CEO of Retail Management Systems, explains, "POSsystems today are like pharmacy management systems in the '80s - buy one or fail because the marketplace is demanding it." A big incentive in the '80s to install a pharmacy management system was the need for real-time processing of third-party prescription claims in order to retain these customers. Now we

have a similar market force with FSA transactions, another type of insurance claim — the difference being that the transaction is taking place at the POS register. With FSAs growing, pharmacies do not want to lose these customers. But there is more to the story. According to Heath Reynolds, director of business development for Speed Script, pharmacists benefit from improved inventory and will-call management. But, he says, "with the higher demand for POS systems, pharmacy management systems that fully integrate with the POS system with a bidirectional information flow should also be in demand." Pharmacist buying decisions in '09, according to Steve Wubker, president of Transaction Data Systems (Rx30) will be based on cost savings that the technology can bring to the business, as well as its potential for revenue generation. But he too sees POS systems right at the top of the list as a way to protect the pharmacy's FSA business. While there are other solutions being offered to address flex-spending accounts, the industry consensus seems to favor POS systems.

New Applications, Better Value

One interesting finding behind the positive forecast for 2009 is how companies are coming up with new applications or ways of delivering more value from existing platforms. Many of these innovations improve efficiency or patient safety. Others provide new revenue opportunities for pharmacies. As a result, we continue to see pharmacy system vendors adding more interfaces through new partnerships. At QS/1, EVP Tammy Devine points to partnerships with MethCheck for pseudoephedrine tracking, LDM for MedGuides and patient information, and ScripTalk to help visually impaired patients, as examples of what she feels will help sales in 2009. And she sees more real-time, value-added services from leveraging the company's PowerLine claims switch promising to increase revenue for pharmacies through manufacturer-sponsored programs. "These programs fit better within pharmacy workflow, and manufacturers really like the touch-point with customers," Devine says.

A company like Rx-Net had a sizable increase in the number of interfaces with pharmacy systems in 2008. "In 2007 it was only one interface; in 2008 it was nine," says Rx-Net President Michael Cannata. The reason for this, according to Cannata, is that the pricing service his company offers has demonstrated significant improvement in profit margins for the pharmacies using the service, prompting more pharmacists to ask their vendors for an interface.

And Louie Foster director of product management at Integra says that they are working on interfaces with a growing number of eMAR vendors. He expects to announce four or five of these in the first half of the year. Interfaces like these give pharmacies servicing LTC facilities more options.

CAM Commerce is still another company that's been busy developing interfaces. According to Rick Coleman, sales manager for the company, they built a fully bidirectional interface with SuiteRx. "We anticipate that this interface will help drive system sales to their customer base," Coleman says.

At Innovation, EVP Doyle Jensen talks about newly developed devices based on the company's dispenser technology for high-volume pharmacies. "As part of this, we also enhanced our existing dispenser technology to count almost every oral solid currently available," Jensen says. He expects high-volume systems to see a surge in demand in 2009, with retail chains exploring central fill and mail order to reduce processing costs and increase patient safety. Advances in high-volume automation have been lacking until recent introductions, claims Jensen. "Older systems are hitting the stops of what they are capable of producing, and chains are seriously considering implementing the newest, most advanced automation for central fill and mail order," he says.

What's worth noting is that Jensen sees automated dispensing systems, like POS systems, following the same path as pharmacy management systems. Here's what he has to say: "In the near future most pharmacies will invest in some form of automation to support their patient safety and efficiency goals. We don't believe every pharmacy will need or want a robotic system, because there are other, more affordable, automation options. We also believe that early adopters of automation are finding compelling reasons to replace the technology of yesterday with the faster, more accurate, easier to use, and less expensive technology of today."

The safety issue is also being addressed through barcode scanning, and here the word is that more pharmacies will be deploying scanners as we move through the year. This is seen as a low-cost way of improving accuracy in the dispensing process. As Clarence Lea, VP with HCC/FDS, points out, "This is a required component in any workflow system, as well as POS systems." And at Cost Effective Computers, VP Eric Ashby says that a number of their pharmacies use scanners now and report greater accuracy and efficiency. "Many more will add scanners over time, since they are relatively inexpensive to add to our system and the improvement in efficiency is immediately apparent," Ashby says.

SaaS Looking Good in '09

Across the board, our survey found that companies are investing development dollars in new ways to improve the products offered and deliver the software. Offering software as a service (SaaS) is one example. Most feel that SaaS will see increased interest from pharmacists in 2009. "Pharmacists are more confident with Web-based applications, and I see more customers relying on the vendor to take care of their data, as well as retaining off-site backup locations," says QS/1's Devine. McKesson's McComb finds that pharmacists are looking to pharmacy system vendors to offer the SaaS model to remove the system administration burden and allow them to concentrate on their core business. Following the successful acceptance of its EnterpriseRx system by the chains, McComb expects '09 will be a good year for this model in the independent market.

Steve Hess, VP with HBS, says that while he has seen increased interest in the company's SaaS offering for its retail pharmacy system, most of the interest is from low-volume pharmacies that cannot afford the cost of an in-house system.

Gary Schoettmer, president of RNA, is forecasting a good year for the company's Helix system, which is an SaaS offering. "Our Helix system is a tested, established product now that has been well accepted by our current customers and is generating quite a lot of enthusiasm from pharmacies looking for a new system," he says. RNA has a strong presence in the long-term care pharmacy market. And its AMOS product is a Web portal for direct facility communications with the servicing pharmacy.

This new connectivity between the pharmacies servicing the homes and the nursing staff at the homes is the trend. Tim Hutchison, VP of SoftWriters, a company specializing in long-term care pharmacy, says its flagship product, FrameWorkLTC, is available through SaaS using server-based computing, and its FacilityLink product is built as a hosted application. However, Hutchison strikes a note of caution. "In my opinion, there is a very narrow market space where SaaS makes good technical and financial sense. The larger LTC providers seem to be able to control costs better with internal resources," he says.

But Max Peoples, founder of RxScan, finds that SaaS is the perfect platform for both its hospital compounding and its anticoagulation dosing and monitoring modules, which are barcode driven. He expects to see continued high interest in these Web-based applications in 2009.

IVR is another application that is poised to benefit from SaaS. "We see growth here with our hosted IVR application in 2009, primarily due to the lower cost, scalability, and better support that can be offered," says Paul Kobylevsky, VP at TeleManager Technologies.

However, not all vendors are sold on the SaaS model. Rex Bloom, applications director with Kalos, says his experience is that pharmacists want to have the pharmacy's data in house, and he further feels the Internet is not reliable enough in smaller towns to bet the entire system on.

Niche Areas

When asked which niche areas will grow in 2009, medication therapy management and compliance programs were singled out several times. Companies like Parata see its onePAC medication management system giving pharmacies another way to differentiate the services offered. "The unit- and multi-dose packages offer the advantage of being able to custom print the patient's name, the name and strength of each medication, the time of day the dose is to be taken, and other details that promote adherence," says Parata's EVP Tom Rhodes. "And because the process is automated, minimal labor is required, yet the benefit to consumers is significant enough to generate an incremental revenue opportunity." In the LTC market, Tim Hutchison finds that the "current stir" is about on-site dispensing machines with 200 or so solid oral meds that the pharmacy places in the facility and is able to communicate with from the pharmacy. "Med errors are reduced because of the single-dose packaging, and there is little or no waste when orders change," Hutchison says.

Demand for automated dispensing technology is expected to increase in 2009 — this was the prediction by close to 90% of those responding to the survey. The main reason given was the expected increase in prescription volume that will make this technology very productive for the pharmacy.

Growth Elsewhere

Niche areas such as compounding, 340B programs, vaccine administration, home infusion, and DME also popped up as areas where growth is expected in the pharmacy market. Software that facilitates handling of these areas will likely see more activity. The same is true with long-term care and assisted living, where the forecast is for more pharmacies to go after this business, due to the aging American population.

Two nontraditional areas that came up were in-store marketing kiosks and delivery management. Dave Wendland, VP with the Hamacher Resource Group, sees more pharmacies installing in-store kiosks to give consumers a convenient way to search for the right OTC remedy for their symptoms. Kiosks can also differentiate the pharmacy from its competition in using, as he explains, "cutting-edge technology and applications at the point of decision." As for delivery management, Louie Foster, of Integra, likes this area because, as he explains, "increased audits by insurers have fueled demand for products that bring higher levels of accountability to the pharmacy."

Christopher Thomsen, VP of business development for Kirby Lester, sums it up this way: "With all the challenges facing pharmacy, it is so important that community pharmacists find their own niche so as to remain profitable and keep community pharmacy relevant."

The Forecast for IVR

This is another area that is expected to do well. The reason: Less time on the phone means higher staff productivity. Chains have vigorously embraced this technology because of the quick return on investment. Independents have been slower on the uptake, but the adoption rate is increasing. The estimate of independents using IVR systems at the end of 2008 was about 30%, on target with the forecast we heard for '08. By the end of 2009 this should be in the 40% to 50% range.

MTM

The reading on whether 2009 will be the breakthrough year for medication therapy management was mixed. While some see technology freeing up pharmacists to build this side of the business, there remain doubts as to how aggressive pharmacists will be without convincing evidence that it is worth their time. Max Peoples's observation is that if there is integration of the pharmacy systems with billing platforms such as Outcomes, more pharmacists will want to be involved. However, timesaving technology such as IVR and automated dispensing systems appeared to be viewed more in terms of cost avoidance - that is, filling more prescriptions with the same staff, rather than offering the potential to free up staff for new services. As Steve Hess, with HBS, notes, "I think MTM is still being developed at the pharmacy level."

Pumping Up Revenue

A number of companies have been looking for ways to deliver new revenue to the pharmacy through the pharmacy management system. Speed Script, like QS/1 and others, sees the LDM CarePoints program achieving just this. Speed Script's Heath Reynolds says that the LDM program lets the pharmacist deliver important medication information to the customer at the point of dispensing to help influence positive outcomes. "Best of all, CarePoints provides the pharmacy with an additional revenue stream," says Reynolds. This is a good example of how system vendors are attacking not only the cost side of the business but the revenue side as well.

Summing It Up

Doing what's necessary to improve margins for the pharmacy continues to be an industry goal. This is being accomplished through more partnerships and interfaces that add scope and value to the various systems offered. Clearly, POS systems should be the big winner in 2009. And all the technology that improves efficiency - automated dispensing, workflow, e-prescriptions, IVR, and the like — should continue to flourish. As more services are offered using the SaaS model, pharmacists will benefit from lower operational costs - the right medicine in tight times. While the survey detected a bit of nervousness over the state of the economy, the outlook was more positive than negative for 2009. CT

Bill Lockwood is publisher of ComputerTalk. He can be reached at wal@computertalk.com.