An Interview with McKesson’s Nathan Mott and Joe Montler

By ComputerTalk Senior Editor Will Lockwood

Mott, president of McKesson Pharmacy Systems and Automation, has been with
McKesson for over 17 years and is currently responsible for all retail pharmacy
software and automation. Joe Montler is VP of marketing strategy and business development
for McKesson Pharmacy Systems and Automation. ComputerTalk‘s Will Lockwood spoke with both during ideaShare 2012
about trends in technology and opportunities for community pharmacy.

CT: What are some of the main trends driving community pharmacy right now that may be prompting pharmacists to look to technology?

Mott: Being in community pharmacy is a little scary right now, because there’s so much change going on in retail pharmacy and in healthcare in general. If you think about it, the government’s the biggest payer now. They have problems paying their bills, so they are taking more control of how healthcare is delivered and the price of healthcare. That in itself is a challenge for an independent community pharmacy, because they are used to being entrepreneurs and delivering niche services for clients, and a lot of this regulation and lower reimbursement is challenging. I’d also say on the private payer side, they are getting more aggressive, too. What we learned from the fight between Walgreens and Express Scripts is that a good portion of the consumer base followed the payer, so that Walgreens saw a 10% reduction in prescription volume. A lot of competitors were glad to take that business. As an independent you look at this and see the lack of power even a Walgreens has against the payers, and then you see another trend where a lot of prescriptions are going to mail, and you wonder what retail pharmacy is going to look like in five years.

Montler: In the users conference we had this year with many of our independent pharmacies, they clearly realize that pill dispensing alone is not going to win the day in the future. They have to change their business model. Their concern is how to do this. The independent has to decide where to place its bets in the changing world of pharmacy. They know that they need to be more clinical, but they aren’t sure how to get out from behind the counter to become more clinical. We talk to these pharmacies a lot about this, because this is the future. We’re going to say this is where we think retail pharmacy is going, and we are going to enable our customers to do these things. We’re focused on streamlining, centralizing, taking work out of the pharmacy, and getting them as efficient as possible so that they can get out from behind the counter. Secondarily, we want to provide them with a tool set to address the changing market. We clearly believe that there’s a clinical foundation to this tool set in some fashion. But that is still the big question: What is this clinical component going to look like?

Mott: I agree. I just talked about challenges and change and apprehension, but I think there’s also a lot of opportunity for community pharmacy. So when we look at them, we know that they aren’t going to equal the big chains and mail order from a cost perspective, but they have to be competitive. I think we have a lot of solutions that will enable them to take costs out of the system and make them competitive. But where they can really differentiate themselves is service and quality outcomes. If you think about it, accountable care organizations [ACOs] are going to be evaluated and reimbursed based on outcomes. In a lot of rural areas, retail pharmacy is perfectly positioned to partner with these ACOs and these health systems to deliver those outcomes.

CT: So you are optimistic that there’s going to be a change in the revenue structure for retail pharmacy where payers will value and reimburse for these services and for a focus on outcomes?

Mott: I really am. Today a lot of these pharmacies provide some MTM, and sometimes they are being reimbursed. Sometimes this reimbursement doesn’t even cover the cost. But I think that will change. With ACOs, hospitals aren’t going to be paid for readmissions, and their payments are going to be based on outcomes. Then think of some of the statistics that show that 10% of hospital admissions are based on medication issues, and 20% of readmissions deal with medications issues. Hospitals are going to realize that they need to partner with community pharmacy to have that comprehensive view of patients’ activity. I think we are positioned well to help them in that regard, with our software, our automation, and our RelayHealth network.

Montler: I think that the nature of the community pharmacy’s business puts them closer to the patient than other models in pharmacy. So they’ve been doing business like this for a while, but getting paid for it is a different story. So they need to be able to take what they do today, document it, and track outcomes so that they can make the case for a different reimbursement model.

CT: So what are community pharmacists looking for from their technology?

Mott: We are essentially trying to optimize the business of pharmacy to free up the clinical capabilities of our users. We’re doing that through our core strategies of automating, centralizing, and streamlining. We just launched mail capabilities within our software that will allow pharmacies to provide this service to their customers. They can get their medications or they can have it mailed or delivered to their home. That’s on the software side. We’ve coupled that with the automation to support doing that. A new product that we just launched is ExpressRx Track, which allows smaller chains, health systems, and even independents to have the automation to allow for mail. This is something we are pretty excited about.

CT: So this will give these pharmacies a way to serve those plan sponsors that perceive mail order as a way to reduce costs?

Mott: Absolutely. Basically, independents and small chains can be excluded from contracts if they can’t offer mail. I think the beauty of this is that our customers will be able to offer that personal clinical service and mail service, which is much more valuable than just sending medications by mail.

CT: Are you seeing a lot of excitement about this?

Mott: Yes, we are. And we are seeing some of our chain customers actually going right to employers and letting them know that they don’t have to contract with a mail provider, that they can have the best of both worlds.

Montler: And that’s another thing community pharmacy is particularly well suited to. The reason that I’m optimistic is that we’re talking about the most entrepreneurial segment of the pharmacy market. They have been told that they are going out of business how many times and for how many years? And they innovate and regroup and go forward. So when you talk to them about mail as a delivery option and about talking to employers about how they can manage disease states, they not only know these patients already, but they most likely know their families as well. These community pharmacies are so well suited for the change, but they are also anxious about it.

CT: What are some of the other strategies you are looking at for community pharmacy?

Mott: Another is to convert data into information. If the community pharmacy is really going to be a key part of the clinical care a patient receives, we are going to need to help them convert the data they have into information on, for example, compliance. One thing we just launched is patient messaging. Someone can come in with a high blood pressure prescription and talk to the pharmacist, and then the pharmacist can actually print out information right about how to manage diet to manage the disease state. Or maybe even some OTC that will complement the prescription and better manage the disease state.

CT: What about tools for tracking outcomes?

Mott: Today we have the ability to capture MTM information for reimbursement, and if you couple that with tools to manage the disease state and document that too, that will allow our customers to have better discussions with payers. Another question is how to connect the continuum of care. So we launched mobile capabilities. A lot of companies want to build their own apps, but I ask if we really want to get into building these applications when all the IVR vendors, for example, have already done this. So we’ve gone application agnostic and created APIs [application programming interfaces] to interface with this. Our customers can use pretty much any of these existing mobile apps to allow refills and status checks.

CT: Pharmacists do like to be able to pick and choose the technology they use.

Mott: That’s very true, both of independents and of chains. Some customers will come to us with mobile apps they are already using, and they do not want to switch. So the APIs are critical for them.

CT: What are some of the things on the radar that you think will bring opportunity?

Mott: Where we see a tremendous opportunity to help our customers is in the clinical capabilities. What that looks like exactly, I think if you talk to 10 different customers, you’ll get 10 different answers. But whether it’s vaccines, specialty, or MTM, the way that we help our customers capture clinical information and then communicate it to providers, payers, manufacturers, and distributors, that’s where we’re really looking into the future.

So from the technology side and the knowledge side of how to manage clinical information, I think we have a leg up. Secondly, we’ve got the most robust workflow in the industry. And we are well positioned to integrate those clinical capabilities into the workflow, which is going to be required by payers. And thirdly, with the RelayHealth network, we already have that connectivity into all those constituents, whether it’s the patient, the provider, or the payer. So you leverage all those assets, and that is really McKesson’s vision in taking distribution, technology, and services and integrating them. That’s where we are excited to go and where we think we can offer something different.

CT: You talked earlier about taking work out of the pharmacy. Are you talking about centralizing certain activities in the pharmacy or simply increasing automation within the pharmacy to reduce the work required of staff?

Mott: We have solutions that run the whole continuum: anything from increasing the efficiency within the pharmacy with dispensing automation to workflow. We also have central fill, mail capabilities, and central processing that allows you to leverage the economies of scale that come from doing all the adjudication calls from one location, as opposed to staffing for it across your network. Then there’s workload balancing. If you are a pharmacy with several locations and one is busy and another isn’t, you can shift the workload because we have software as a service where it’s in the cloud. I think we have flexible, robust solutions that run that whole continuum.

Montler: I think a lot of the work is around connectivity and getting data in the system that would traditionally be entered manually through, say, HL7 connectivity. It’s true integration to automation that allows clean claims to run through the entire automation process – filled, labeled, capped, and ready for verification. If you can use connectivity to bring in clean prescriptions, you reduce the need to spend time on the phone with payers and doctors. This all comes from meaningful integration, not just interfacing.

CT: What are some of the tools pharmacists are going to use to ensure that prescriptions coming in are clean and ready to be processed?

Montler: It all starts with making sure you have mapping and connectivity to other systems. You can’t make another system better, but you can set it up to verify information at certain key steps. Over time you find out who the trusted providers are who are sending you valid information, and then focus on those who aren’t. This is where the RelayHealth network also really helps, with preediting and postediting and safety checks along the way. It is something you are constantly fine-tuning for sure, but it is an area where we believe you can attack manual effort in the pharmacy.

CT: What do you want to talk about to wrap up?

Mott: We just had our users conference, and we got a lot of great input. We have some exciting offerings that we’re launching. I think we are on the right track, and although there’s so much challenge and change going on, I think community pharmacy is going to be an integral part of healthcare in the future.

Montler: Another thing we’ve realized in the last year and a half is that one size does not fit all. This is good news for community pharmacy because they all do business differently. Some are very forward-looking. They want to stretch boundaries and use technology to leverage their business. They see themselves as 10 or 15 stores down the road, maybe doing central fill. They do business differently than a pharmacy that is in a small community and wants to take care of the patients there and be efficient. The same systems don’t apply to these two different models. The good news is that we took a step back and recognized the value of Pharmaserv and PharmacyRx software platforms, and we are continuing to invest in this. I liken it to going in to buy a cell phone. You wouldn’t go to a store that has only one choice. Grandma doesn’t want a smartphone, but maybe I do. We looked at it that way and realized that there are multiple solutions for this environment and we have the assets to offer a choice.

Mott: It’s nice because our solutions can grow with a pharmacy. So as their business evolves they can come to us for the technology to fit their new business model. CT