By ComputerTalk Senior Editor Will Lockwood

Parata CEO Tom Rhoads recently took a few minutes to sit down with ComputerTalk senior editor Will Lockwood to talk about new developments at the company. Rhoads focused in particular on one technology for compliance packaging called Parata PASS. In this interview, he outlines the trends that are increasing demand for this kind of dispensing automation and shares some of the insight Parata gained from its market research efforts.

CT: Tom, we’re going to talk about Parata PASS, which is compliance packaging automation. Parata is well known for its retail automation, of course, so bring us up to speed on where Parata is as a company right now.

Rhoads: Parata has grown its business from a single, vial-dispensing robot to a full line of medication management technology. We continue to innovate and build on our expertise, and we collaborate closely with our customers to improve our products. Six years ago, we began looking at the demographics on the horizon: a growing number of seniors who were managing chronic conditions and multiple medications. We realized we needed to bring to market technology that answered our customers’ requests for a product line that would help pharmacists manage the needs of those patients. Strip packaging was the answer.

We also were seeing our retail customer base begin to grow their businesses by diversifying their revenue streams. They were looking beyond retail and looking at expanding into the long-term care and assisted living markets. Some were looking at group homes, home health agencies, and other markets to help them grow. Some of our customers used vial dispensing technology to automate the base retail business and free time to expand their operations. So in the last few years, we have been working very earnestly to find the right products for our customers and to make sure they are reliable and flexible.

CT: Tell us more about the customers who you found were looking for this kind of dispensing automation. What’s the average one look like?
Rhoads: The average customer is anything but average. They may start out with, for example, an assisted living facility that they serve. Then they may expand by going upstream to a skilled nursing facility or by going downstream to their own retail patient base, because on average, 10% of a pharmacy’s customers are likely driving 50% of that pharmacy’s volume. They are the ones taking multiple medications a day. So we wanted to make sure we offered products that enabled pharmacies to serve all of their patients, whether retail or long-term care, and improve their overall health with better adherence to their medication regimens.

CT: It sounds as if there are different kinds of patients that are looking to compliance packaging. Tell us more about who they are.
In 2008, we set out to answer that question. At the time, our base of customers was primarily retail. We were curious to find out what kinds of patients would find strip packaging appealing. We knew that people were accustomed to using a vial, but we also knew that it is a daunting challenge to manage 10 different vials and maybe 20 different medication administrations a day, especially if the patient is at home. So in a study, we asked a diverse group of patients what they thought about medications organized by time of day in strip packaging. The study included a range of ages, male and female, and those managing chronic illnesses and those who were not. We evaluated the response with something called box scores, and if you get above 60% in this metric it is a very successful product. Parata PASS packaging scored greater than 70% in every box. One of the most interesting results from the study was that patients said they felt if they were using the strip packaging, they would feel “less sick.” This was a groundbreaking finding. They said they’d feel healthier if they were taking their medications organized by time of dose than they would if they rifled through a bag of vials to take their meds. They also noted that they could take their meds more easily in public, and that using the individual pouches seemed more like taking vitamins than medications. We knew this meant people would be more likely to be adherent, which would make them healthier. They’d also feel better, which could have positive implications for their mood and their health.

CT: And has your experience in the market validated these study findings?
What we’re seeing is that our customers are using Parata PASS in all these different markets. They are using it to protect their base, as well as to differentiate their pharmacies from their competition. And they can do both because, while I think there’s a sea change in the market toward this kind of strip packaging, it’s still not prevalent across all markets. So there’s a great opportunity for early adopters to go after it and create a better environment for patients as they grow their businesses.

CT: You mentioned some of the trends driving interest in compliance packaging. How does short cycle fill fit in?
Short-cycle fill is a big priority in the long-term care market, and compliance packaging has been used in that market for a long time. They typically use blister packaging and are starting to look at strip packaging as an emerging offering. What short cycle did is make LTC pharmacies look at their blister packaging and realize that it was an expensive and laborious method for delivering short-cycle fills. So with the advent of the short-cycle dispensing rule, a lot of providers began to ask themselves if they could sustain their current processes filling twice a month, and maybe even four times a month, at the same reimbursement. They started to ask if there was a better way to package that would help them stay competitive in the LTC market. Strip packaging is a great solution. In fact, most of our customers are doing a 7-day cycle over a 14-day cycle, so facilities are returning fewer medications, reducing waste even further. That’s a game changer. Short-cycle fill also has opened the door for retail pharmacies that serve LTC to use strip packaging and automate their compliance packaging process. And now that they have the machine in, pharmacists who are jumping into the conversation about increasing adherence and reducing hospital readmissions are saying, “I already have this system, and I can use it to impact adherence in a retail population too.” That’s another big trend that’s driving interest in strip packaging.

CT: There’s really a suite of technology around Parata PASS. How can pharmacists look at this suite strategically?
Originally the early technology in the industry was geared for LTC, and that’s where it grew up. Our approach has been to look at it as a product that serves both the LTC and retail markets, and we have created a balanced portfolio to address the needs of both. For retail pharmacies getting started with compliance packaging, we have a small machine, the PASS 208. That is a lower cost option to allow you to begin growing into the market with your retail base. The PASS 500 unit holds more canisters for more drugs, to expand capacity for larger scale operations serving LTC.

As the pharmacy grows, our technology grows with it. You can step up to our Parata Safe Loader, which helps manage slow movers such as one-off medications, half-tablets and supplements. Parata Check PASS is an inspection aid to speed the verification process. So if a pharmacy starts processing 20,000 pouches a day, we have the scale and scope of products to handle that. If they are doing 200 pouches, we can do that too.

At ideaShare 2013, we showcased our Parata PASS Ware 2.0 software. It’s a platform that allows flexibility to serve any market, whether it is assisted living, skilled nursing, retail, home health care agencies, group homes and more. The big news at ideaShare this year was the release of our hours-of-administration application that allows retail users to easily convert sig codes for time-of-day out of their host systems back into the packaging format, which was a gap before.

CT: The software component is clearly critical since all the different pieces of technology need to work together. Tell us more about what PASS Ware is doing to facilitate this.
PASS Ware offers different levels of help. On the most basic level, a retail pharmacy with a strong base of patients managing chronic illnesses but without serving LTC, needs to translate the instructions for time of administration. PASS Ware allows them to manage this patient base correctly with strip packaging. It also lets them go after LTC business now, without needing to add a LTC module. If they already have LTC software, then PASS Ware will act as an interface between that software and the PASS unit. PASS Ware joins a pharmacy’s automation platforms to create high-efficiency output.

CT: What do you see as the main motivating factor right now for pharmacies looking at compliance packaging automation or even dispensing automation in general?
One word: growth. I don’t think people come to the conclusion that they need a robot, but they can quickly come to the conclusion that they need to grow, diversify, and stay relevant. And as more Affordable Care Act provisions are enacted, hospitals are seeking partners to help them minimize readmissions. This means that pharmacy is at a tremendous inflection point right now. Some will say, “I’m going to keep doing what I’m doing,” and that will be fine for a while. Others are going to see an unprecedented opportunity to diversify their patient and revenue bases and become more relevant as part of the healthcare system. Parata automates the back-end process, so pharmacists can get out in front with their patients. On the growth side, we’ve seen that we can help both pharmacies that want to get into LTC and those that want to grow their retail operations. Strip packaging is still in an early adoption phase, but it’s new and patients want to use it. It also allows the pharmacy to step up its commitment to counseling and medication therapy management. It also makes the pharmacy more attractive to strategic partners, such as hospitals, insurers, home health agencies and others who want to increase medication adherence among their patients. The healthcare system in the Netherlands combines strong patient counseling with strip packaging, and their adherence rate is greater than 90%.

And you have to take into consideration that about half of patients use more than one pharmacy. So whether you know it or not, even your most loyal customers may not be filling all their prescriptions at your pharmacy. What strip packaging does is aggregate those prescriptions. Parata’s customers are telling us that they are picking up, on average, one additional fill per year and three new medications per year per patient. That’s a significant revenue opportunity for them, but it also helps them protect their patient base, since their competition is looking for ways to lure away their customers. In a healthcare system that is moving increasingly to pay-for-performance, strip packaging helps providers lower costs, helps pharmacies grow their businesses, and helps patients improve their health through better medication adherence.