Changes in the hospital landscape

I have spent considerable time with high level decision makers in the last few years reviewing our products, but mostly getting a feel for how this business is changing. With the new Affordable Care Act now law, the acute care business will begin to look different in the next few years. Some of this may be old news to you, but to many its not.

As the cost and coverage implications of the ACA Medicaid expansion is reviewed, it appears that there will be a reduction in the number of uninsured IF all states participate. Participation in DSH (Disproportionate Share Hospitals) programs will certainly increase as hospitals serve more of the population that was previously uninsured but now being covered by ACA provisions. From the pharmacy perspective, hospitals gain a benefit in reduced prices via GPO contractual vehicles when they participate in a DSH program, but maintaining the percentage of eligible patients has been key to status. It appears that the ACA should make it much easier for an acute facility to comply. According to Government Data Services in 2012, about 60% of the DSH payments are aggregated between the Mid-Atlantic, Southeast, and Western portions of the county, so DSH growth in these areas should be expected by October 1, 2014.

Another trend is the integrated delivery network's (IDN) high level of interest in regional clinics. Over the last two years these "doc in a box" operations have flourished, and the trend will be expected to increase further as task forces on preventative services become more interested in wellness rather than treating after the fact. We anticipate that health educational services at clinic level outlets will explode especially with IDN's that are affiliated with universities. With re-admissions being a part of pay for performance at the acute level, hospitals now have a vested interest in keeping a discharged patient improving after they leave especially if they have acquired an ailment as inpatient. As a key feature, the ACA intends to reduce payment to hospitals with high rates of "hospital acquired conditions" (HAC's) therefore the IDN could engage post visit staff (maybe at the regional clinic level?) to make certain that the patient is following their regimen of meds and other close monitoring needed. The importance of partnering with or purchasing these local clinics can't be underestimated, and the amount of news centered on re-admissions shows that this is a hot topic for 2013.

So what does this mean to the drug marketplace? GPO's contracting vehicles will need to expand to include these new clinical operations under the acute facilities' umbrella. The present environment seems to make the operations mutually exclusive, but having a uniform formulary between acute and clinic ops and utilization of the same wholesale channel will lessen the issues of the pharmacy executive and make medication management at the business level easier.

Hot buttons? Clinics associated with hospitals - especially teaching hospitals. Wellness programs implemented via doc in the box operations. Unified pharmacy contracting for acute / non-acute.

So much for now. My next entry will focus on the hospital's involvement with discharge prescriptions as a revenue source.