Exclusive Web Content | ThoughtSpot 2015
An interview with AmerisourceBergen’s Chuck Reed
AmerisourceBergen and Good Neighbor Pharmacy’s ThoughtSpot 2015 brought some big news for independent pharmacies, the highlight of which was the introduction of the Elevate Provider Network for AmerisourceBergen customers. In this interview Group Vice President, Pharmacy Technology & Solutions, Chuck Reed sits down with ComputerTalk’s Will Lockwood to talk about how this unique, bundled package of services offers community pharmacies much more clinical and business management muscle, as well as how AmerisourceBergen worked with a variety of partners to create this national provider network.
ComputerTalk: Chuck, Good Neighbor Pharmacy clearly put in a lot of work to bring together all the partners and create the new Elevate offering. Let’s start by talking a little bit about how this all came together.
Chuck Reed: Let me start with some background on where we were, before I get to where we are now. We’ve operated our PSAO [pharmacy services administrative organization] that’s known as the Good Neighbor Pharmacy Provider Network. There was a lot going on within the InSite program that was a service of this PSAO that was very data driven. InSite was available to our PSAO members and was based on partnerships we developed with six leading pharmacy system vendors, which allowed us to collect dispensing data for the business intelligence tools that made up InSite. With the Elevate Provider Network, our goal was to provide our members with actionable data to maximize reimbursement. We wanted them to be able to take just an hour a week and be able to come away with a real grasp of what their business was doing.
And what was really revolutionary at the time, and it still is to a certain degree, was we started looking at patients. I could ask any pharmacist out there, “How many prescriptions did you fill last week?” They could tell you almost exactly. Then I’d say, “Well how many patients did you see?” Often, I’d get a blank stare. They didn’t know if it was 100. They didn’t know if it was 500. They didn’t know if it was 1,000. So, in this way, InSite really anticipated the shift we’re seeing to focusing on patients rather than just on prescriptions.
CT: And this was a popular program, I imagine?
Reed: Absolutely. It has been very successful. We have almost 2,000 pharmacies that share their data through the select vendors. It’s proven to be valuable for pharmacies and AmerisourceBergen. It helps pharmacies better understand their business, and provides us with insight into our members’ needs.
CT: Give us an example of how having this data helps you serve your members better.
Reed: Well, we use the data to help run our provider network. So, before we sign contracts, we can do a lot of analysis on how payers are currently performing and their market shares. Then, we look at the elements of the network. Who’s in the network? Who’s out? Do we want to be at the preferred level? The non-preferred level? I really feel like we are able to make smarter decisions than any other PSAO in business because of this data.
CT: It’s interesting to hear you talk about this, because pharmacy management software systems weren’t necessarily built to manage the overall business, and you don’t necessarily want them to be. It’s a question of balancing out how much you want a specific technology to do versus how fast and easy to use you want it to be.
Reed: Right, and traditionally one result of this is that pharmacists have to make a lot of choices on vendors to get the various tools they needed in addition to the core dispensing functions. They had to decide on a switch, and then maybe an edit service and claims reconciliation. And what other tools might they need? Often, with so many choices to make, an inertia develops. Pharmacists may not be doing things that they should be doing, like pre- and post-edits or claims reconciliation. Yet, these are best practices.
CT: And so this is where the new Elevate program comes in, right?
Reed: Yes. We worked with a wide range of vendors to put together Elevate so that our members can make a single choice and access all these offerings. They won’t have to miss out on these best practices because there are too many choices to make. Our goal was to simplify life. We’ve gone out and searched the market and, through the power of the Good Neighbor Pharmacy brand, we’ve negotiated strongly to pass along competitive pricing for all these services. Now pharmacists who want to implement best practices have a formula and we, as their PSAO, did the hard work of going through and evaluating what’s really needed and setting the plan.
CT: So it goes from being a series of decisions to plug and play.
Reed: And maybe the most critical point is that with the Elevate Provider Network, our members don’t have to use one of the preferred pharmacy system vendors any more. They simply have to use Emdeon, a leading provider of revenue and payment cycle management, which will help reduce claim errors, improve pharmacy profits and provide greater transparency into payer reimbursement. In Emdeon, their data is captured and populated into InSite, with all the benefits that then come from this. We had 2,000 stores participating before because those were the pharmacies using a preferred pharmacy system vendor. Now all 4,500 stores will have the opportunity to get the value from InSite, as well as all the other pieces of Elevate. And just think about what more than double the sources of data will mean as we negotiate on behalf of our customers.
CT: That’s a good point. We talk about big data all the time now, and 4,500 stores worth of pharmacy claims is some pretty big data. Can you give me an example of how this can be leveraged?
Reed: Let’s talk about that patient view again, since it is so important. We need to know what plan cards these patients are carrying. And it’s a dynamic marketplace out there, especially in the Part D spaces. The plans are very different and patients are choosing based on a wide variety of needs. We are going to be able to know exactly which plans patients are using across our entire network, and that’s going to lead to better decisions and a stronger negotiating position.
CT: Okay. What about some other of the other components? There’s a patient engagement center and a provider network app in Elevate, for example.
Reed: Let me start with the provider network app. We do central pay today. So, PBMs send us one check, we break it down, send instructions to the bank every night, and our stores get deposits the next day. That’s a big help for cash flow, which is important to every small business. And since this is so important, pharmacies look all day long to know what tomorrow’s deposits are going to be. What they’re going to be able to do now is if they have this app on their Android device or their iPhone, as soon as we send those instructions to the bank, they’re going to get an alert, “Your deposit tomorrow is $28,342.” If that’s all they need to know, then they put the phone back in their pocket. If they want to know more, they swipe the alert and they’ll see how much is from each payer. This is an efficiency thing, but more importantly it’s an emotional thing. Pharmacists need to know that they’ve got enough money in the bank for tomorrow.
CT: And what about the patient engagement center?
Reed: We believe Star ratings and pay-for-performance are two critical areas that pharmacies need to understand better. We selected PrescribeWellness as the partner to host the Elevate Provider Network patient engagement center for us. Through PrescribeWellness, pharmacies can leverage the engagement center to drive adherence and enhance patient care, ultimately creating the potential to improve CMS Star ratings and increase reimbursements. Pharmacies using Elevate will have their data in InSite to power the PrescribeWellness engagement center platform. They can go in and see their current ratings, for all their Medicare patients, up to the day.
And what’s really cool is you get a little dial that says your rating is 74%, for example, and you can convert that to a Star rating. And, then, depending on where you click, you can look at patients who are already adherent and the patients who are not adherent. But, probably most importantly, you can look at the patients who are almost adherent, because if you want to improve your Star rating, the first thing to do is look at the patients who are already close.
CT: What’s being measured here? That is what are you learning about your patients?
Reed: If a patient is on a 30-day prescription for a maintenance medication, he or she is supposed to get it 12 times a year. The way CMS Star ratings for adherence work, if you get 10 of the 12 you’re adherent, because you’re above 80%. If you get nine of the 12, you’re not adherent. So the easiest way to raise your star ratings as a pharmacy is find the patients who are at nine or maybe eight and get them to 10.
That’s important both for the pharmacy and for the Elevate Provider Network, since it doesn’t do as much good if only half our stores are five-star pharmacies. We need all of them to raise their level.
CT: OK. Now that a pharmacy has a view into which patients are on the cusp of being adherent, what can you do to support the next steps, the steps that get those patients to fill those prescriptions?
Reed: Two other parts of our patient engagement center are a calendaring function and what’s called Pharmacy Now, which is modeled after Google Now. It lets you see which patients are going to be in on a given day and whether they have been assigned a medication therapy management, or MTM, case. But, the key thing is that when you have a chance to review their condition and prescriptions, you can plan to talk about something like a probiotic or a certain vitamin that will benefit a certain patient.
CT: You’ve got quite a few partners working together in this new solution. How did it all happen?
Reed: Well, one thing I want to make sure I touch on is the great vision our partners have shown, especially the pharmacy system vendors. I grew up in the vendor community, and I know most of the owners in the business. The partnership and leadership they’ve shown has been extremely impressive. Today they can sell pre- and post-edits to their users themselves, and they make money. We’ve asked them to look at the greater good and the greater health of the pharmacies and work together on a solution that’s maybe not going to earn them the same revenue on one service aspect, but that will be better in the long run. These vendor partners have shown a really admirable willingness to say, “We have a shared customer, and that pharmacy needs both of us right now.” We recognize that pharmacy needs reliable and safe dispensing system partners they can trust. And the system vendors understand that our mutual customers also need a smarter PSAO to negotiate on their behalf and a powerful program like Good Neighbor Pharmacy, to help them grow their business.
I can’t say enough about how impressed I am by their willingness to change the model. We have more than 20 pharmacy system vendors that have joined the program, and I think we’re going to get more. It shows a lot of flexibility to adapt to changing conditions. And they are doing it for the right reasons: to allow the pharmacist to take care of patients.
CT: A healthy and vibrant community pharmacy sector is really a benefit all around.
Reed: Yes. And I’m proud of the way our model lets pharmacies have their choice of pharmacy system vendor. By having Elevate Provider Network driven by data collected at the switch and then using cloud-based solutions, stores can pick the dispensing system they’re most comfortable with. They don’t have to miss out on the benefits because they aren’t on one of a handful of systems. They can use the one that’s local or the Windows one, or another system for some other reason, and we can still all work together for the betterment of the business.
CT: There’s a lot going on here with the new Elevate Provider Network. What else is a highlight from this year’s ThoughtSpot 2015?
Reed: Another element that’s not related directly to Elevate, but that is one of the projects I’ve worked on and involves the vendors, is what we’re doing with POS data.
You know how you open up the Sunday paper and there’s ads for chain pharmacies? Well those ads are paid for by the manufacturers whose products are in them. The manufacturers make those promotional monies available, and it drives the growth of those businesses. The independents have been locked out of this. A little over a year ago we started working with the select vendors to collect POS (point-of-sale) data. We put together a program and got manufacturers interested. Now every month we’ve got about 150 products from the top consumer goods companies that we put on sale, and the discount doesn’t come out of the pharmacy revenue. It comes from the manufacturers, just like with the big chains.
CT: Walk us through that in more detail. Why is data from the POS important and what do you mean when you say the discount is coming from the manufacturer?
Reed: The ability to collect data from the POS is important because this is a consumption-based model. Pharmacies get paid based on what moves through the register. So if the regular price is $4.99, and you mark it at $2.99, and you sell 50 of them, you’re getting $100 from the manufacturer, keeping your margin whole.
So we’ve worked with POS vendors to ensure that we have the ability to collect the sales data every night. Then we also need to be able to send down promotional batch files to pharmacies so that the price files get updated on the first day of the sale and product sale prices automatically go into effect. Once again the vendors have been excellent to work with.
CT: This is putting independent pharmacy on a more level playing field for front-end merchandise.
Reed: Yes, they’re able to suddenly tap into this money that’s never been available to them before. They now have access to the model that the rest of retail uses, and they are offering competitive prices on the products.
And this is part of a larger goal we have. Today the typical independent pharmacy’s business is 92% prescription and 8% front end. I think given the ongoing pressures on reimbursement, a healthier mix might be 85/15. We’re not going to get to where they, the larger retailers, are around 60/40, but I believe we can get them to 85/15. That’s a nice cushion of profit, and we’ve learned it also drives more prescriptions.
Reed: Yes. For example, last year we introduced a program called Pharmacy Transformation Services, where we had store owners turn over their keys on a Friday night and come back Sunday to a transformed pharmacy, with an emphasis on the front end. We expected front-of-store sales to go up, and they did over 20%, but then we also found that prescriptions started growing too. The overall impact is that customers know that they like the service and the people, and then they see that they are getting the products they want with good prices on many of them through the manufacturer supported monthly sales, and they say, “I like going into my independent pharmacy.” It just all builds on itself then. CT