Pharmacies located in a physician’s practice or a doctors’ office are dramatically on the rise in the US. The pace of physicians and MD’s dispensing prescriptions in their offices and opening a pharmacy on site or in their clinics is rapidly increasing in many geographic areas of the country. There are, however, numerous questions and considerations that need to be answered and addressed before a doctor or physician decides to move forward and open a pharmacy as a part of their business.
Pros and Cons of Pharmacies in a Doctor’s Offices
As with any other business decision, and perhaps even more so in the medical field, opening up a pharmacy in a physician’s office or practice has both pros and cons associated with it. Let’s take a look at both.
- Increased Revenue and Profits – Obviously from a business owners perspective, the primary motivation stems from an opportunity at increasing revenue and making a profit. Doctors have already added additional services to their practices and clinics to accomplish this. Blood and urine lab tests, electrocardiograms (EKG’s) and x-rays at their offices are just some examples of physicians expanding their service lines. A pharmacy simply offers one more way to generate an increase in revenue. According to the CDC’s National Center for Health Statistics the average physician sees about twenty-five patients each day at their office and writes approximately 1.5 prescriptions per patient. One can easily see that filling these prescriptions in their office would immediately result in an increase in revenue, without even escalating the number of patients that they currently see and treat each day.
- Increased Medication Compliance – As everyone is hopefully already aware of, medication non-compliance is the most serious threat to a patient’s health in the entire healthcare “process”. According to a report by the NIH (National Institutes of Health), prescription non-compliance by patients in the United States costs our nation between $100 – $300 billion annually (accounting for upwards of 10% of the total US health care costs). Proponents of Rx dispensing by doctors point to this as a major reason for establishing pharmacies in physicians office. As several studies have revealed that almost thirty percent (30%) of all new prescriptions are currently not filled by patients, having a pharmacy located right at the office or clinic could dramatically increase a patient’s medication compliance.
- Patient/Customer Satisfaction – When looking at this as a business, the patient is obviously the customer. Convenience is a primary goal in customer satisfaction, and what could be more convenient than “one stop shopping” and not having to drive to a pharmacy located elsewhere? For some patients transportation is a real issue and has been cited as a major factor for prescription non-compliance as discussed above. This can be especially true for Medicare and geriatric patients who may be dependent on others or on public transportation to get to and from the doctor’s office and pharmacy.
- Safety – Many feel that dispensing by physicians would result in increased patient safety. Having direct access to the prescriber for questions or clarification would result in better communication between healthcare practitioners. This can be especially true in a clinic setting where a patient typically may see more than one doctor. Additionally, patients would also be able to get certain medications faster than as is currently seen in a traditional setting, thus initiating the drug therapy more quickly. This may be especially true in workers comp patients, where the current system often leads to long delays in an injured patient receiving their medications.
- Legality – The laws regarding dispensing by physicians is dependent on the individual state that the doctor’s office is located in. Currently, Illinois, Texas, Wyoming and Minnesota prohibit it entirely, while Louisiana, Massachusetts, Montana, New Jersey, Utah and Virginia limit physician dispensing to only special exemptions, such as a specific drug or treatment, availability, or usage in a specific surgical procedure or rehab treatment. Even when it is not restricted, it is important to note that the laws do differ from state to state regarding both the dispensing of controlled substances and compensation. As examples, over twenty states changed their rules regarding reimbursement for physician dispensing since August of 2015 and two states prohibited doctor’s from dispensing Schedule 2 & Schedule 3 class opioids from their pharmacies (Florida and Tennessee). The point is that the “rules” can change at any time for the particular state that a physician is located in.
- Conflict of Interest – Many point out that physician dispensing of prescriptions poses a conflict of interest. Some concern regarding doctors over-prescribing medications in order to make additional revenue has resulted in a lot of media attention being focused on this recently. Additionally, with prescription pricing being blamed as a major reason for the increase in healthcare costs, certain states are scrutinizing the pricing and fees for “physician-dispensed” medications. As an example, California recently amended its fee schedule for reimbursement to physicians, applying the same rules that apply to pharmacies in the state.
- Cost – Opening a pharmacy in a physician’s office requires expenditures. Equipment, licensing, drug inventory, modifications to the office space and legal assistance can all add up to a sizable initial startup cost. Additionally, one must then consider the ongoing costs such as staffing that may also be required.
- Documentation – It is important to note that dispensing physicians must comply with the same documentation requirements that retail pharmacies do. This is especially true in regards to keeping records and having an up to date Policy and Procedure manual. In all states that allow for pharmacies in doctor offices and dispensing by physicians, the following holds true:
– Proper record keeping is mandatory and required.
– A written Policy and Procedure manual must be maintained and available for any sate or federal inspectors.
– The doctor must provide patient counseling on the proper usage of the medication (either verbally or in writing) and document that the counseling took place.
- Business Plan – Just like any other business that is started, the execution of opening up a pharmacy requires a solid business plan. According to industry experts, many physician office pharmacies have failed due to a lack of proper planning and the failure to put a realistic business plan in place before getting started. If financing is being sought, then a well thought out business plan is a must, especially if you are seeking funding from a bank or lending institution.
How Best To Proceed
If you are a physician considering dispensing from your office, then you will want to consult with an expert who has been through the process and successfully helped other doctors in their practices. Healthcare Consultants has been in the business of setting up pharmacies for doctors and physicians for over 28 years now. With a professional staff of experienced in-house experts and pharmacy consultants, HCC has helped with more pharmacy startups nationwide than any other pharmacy consulting firm.
There are numerous factors to consider in the planning, execution and long term success of building, opening and maintaining a new pharmacy. Proper planning and execution are crucial to a smooth pharmacy operation being opened and becoming a successful part of a physician’s business. Some of the tasks that are required as part of HCC’s project assessment for a successful pharmacy start-up include:
– The creation and review of a business plan
– Evaluation of your office space
– Floor plan and work flow design
– Assistance and guidance with the DEA & State Board of Pharmacy application process (HCC acts as a liaison to your State Board of Pharmacy and local ACHA inspectors)
– Provide Policy and Procedure manuals
– Provide Continuance Quality Improvement (CQI) manual
– Purchasing the equipment and supplies (for both the Board of Pharmacy inspection and the actual pharmacy operations)
– Security assessment and recommendations
– Arrange and facilitate the final inspection of the facility (including a mock-inspection)
– Provide Board of Pharmacy required internal signs and postings
– Vendor selection
If you are a doctor or physician considering opening up a pharmacy in your office or clinic, or if you’re planning on expanding your existing pharmacy operation, we strongly urge you to get in touch with us today for a free consultation. We offer you the support of an experienced staff who have been through the process many times and know the business inside and out! Call us today at 800-642-1652 or Contact Us Online now to see how we can help you and to get started.