340B Program Excellence: A Year in Review

SpendMend Team

Written By: Rob Nahoopii

This week marks exactly one year since Turnkey Pharmacy Solutions became a member of the SpendMend team.  If I think back to that hectic time surrounding our transition, I remember sharing the news with several colleagues.  Everyone was supportive but they all asked a similar question, “why make this move in the middle of a pandemic?”

The answer is simple… joining SpendMend enables us to grow faster, to reach more broadly, and to do much more for Covered Entities.

For nearly a decade, Turnkey has been recognized as the industry’s premier supplier of 340B compliance and optimization services.  But I always knew we could do more, and I knew that with a large client base and a great reputation, SpendMend was the right group to facilitate our growth and increase our impact on the market.

It’s been a year now, and despite the difficult circumstances facing hospitals and clinics we have been able to expand our world-class team and serve many more Covered Entities.  We’re extremely proud of the work we do to ensure 340B compliance and to drive a material decrease in annual drug spend for our clients.

The decision to join SpendMend has also come with other critical benefits relating to our product roadmap.  In the last quarter alone, we’ve been able to expedite the development and release of two new solutions to deliver even more value to our clients.

  • 340B Referral Capture ensures that all referral captures will meet compliance testing during a HRSA audit.  We help covered entities identify all existing opportunities, while capturing new opportunities as well.
  • 340B Staff Augmentation helps covered entities manage 340B compliance when staff members are on extended leave, when key positions are vacant or hard to fill, and when new positions are filled but no one is available to train.

If you have any questions about Turnkey Pharmacy Solutions,  SpendMend, or our solutions please reach out to me or any member of the team.  We know how difficult it can be, as a Covered Entity, to manage your 340B Program and we are here to answer your questions and to help whenever possible.

Is 340B Referral Capture Right For Your Organization?

SpendMend Team

Written By: Jake Thompson, jthompson@spendmend.com

Earlier this month we announced that the 340B Referral Capture program has been made available to all current and new clients moving forward.  Since this announcement, we have been receiving calls daily about this service, so we wanted to highlight a few points of interest which arise frequently in these conversations.

How can I learn more?   

Check out our website (https://www.spendmend.com/solutions/pharmacy-solutions/) for more details about the offering.

How do I know if my organization can benefit? 

We can help you assess that. To start, there are a few key items that may help you quickly understand if the service can assist your needs.

1. Clinic Setup: Do you have primary care clinics as part of your 340B Covered Entity (CE)?

  • Having primary care clinics helps you, as the CE, establish patient responsibility of care for any potential referral to a specialist. If you are unsure, we can quickly help you assess this by evaluating your most-recently filed Medicare Cost Report or the services consistent with your scope of grant.

2. Specialists: Are your patients routinely being referred to non-CE specialty clinics?

  • These documented referrals are what we can help track down in order to evaluate potential 340B eligible prescriptions. If you are unsure how to assess, we can help you get the right data out of your EMR to evaluate.

3.  Contract Pharmacy Network: Does your CE have relationships with the pharmacies that fill specialty prescriptions for your patients?

  • Having a contract pharmacy network in place can facilitate 340B Referral Capture savings.  If you do not, we can help evaluate which pharmacies would benefit you to be in contract with and help you with implementation.

4. Documentation: Does your CE receive clinical information back from the prescribing specialist after a patient has been seen?

  • This documentation helps close the loop for a 340B referral prescription.  If you are unsure or lacking in this area, we can help your CE get the necessary clinical information to qualify the prescriptions.

Our team is already overworked, won’t this require a lot of time? 

Our team will do all the work to set up the program and administer it and each month you will get a report of all the prescriptions found!

It may be difficult for us to budget this type of service. How can you help? 

Our model is based on the shared savings of the realized 340B value of each 340B referral prescription qualified.  Therefore, there is no up-front cost, and you only pay us a small portion of the savings when we find 340B savings for your CE.

 

As always, do not hesitate to reach out to us if you are interested and we can discuss all the details and answer any questions.  We would love to help your CE regain any 340B savings that have been eroded during these uncertain times.

Observing Key 340B Program Savings Trends Based on Drug Spend

SpendMend Team

Written by: Jake Thompson, PharmD, MS, SpendMend VP of Pharmacy Services, Growth and Optimization

Industry Observations

In the past two years, my team and I have worked with over 50 distinct hospitals on drug spend optimization projects ranging in size from $300K up to $75M. We partner with these organizations to ensure that they are maximizing the savings opportunities in their drug spend with specific emphasis on their 340B program.

Over the course of this work, patterns have begun to emerge, and although I suspect the sample set is still a little too small to draw final conclusions on the matter, the data has revealed the first signs of some noteworthy trends that are worth discussing.

The chart below demonstrates a sample of the data we are tracking and highlights a cross section of the different Covered Entity types with which we work. We measured the total savings the partnership delivered compared to the total drug spend during that same period. It is important to note a few key definitions:

  • Total Savings: This is realized savings that the hospital captured after our team identified an opportunity and closed the gap, resulting in direct savings measured down to the exact NDC impacted.
  • Drug Purchasing: This is the total drug spend over the same time period the “Total Savings” was measured.
  • Savings/Spend: This is the percentage of savings our team delivered when comparing “Total Savings” divided by “Drug Purchasing”.
  • Client Names:
    • DSH = Disproportionate Share Hospital
    • SCH = Sole Community Hospital
    • CAH = Critical Access Hospital

 

CLIENT NAME                               Total Savings            Drug Spend       Savings %

DSH – Large Health System               $2,509,477               $75,424,689        3.33%

DSH – Academic Health System        $1,920,691                $32,523,751       5.91%

SCH – Stand Alone                             $423,056                  $18,868,569        2.24%

DSH – Stand Alone                             $79,989                    $2,677,901          2.99%

CAH – Stand Alone                             $384,302                  $1,216,320          31.6%

When looking across all our engagements, the results are profound. Our clients realized savings ranged from $11K to $2.5M, which equates to 0.49% to 31.6% Savings/Spend. To dive deeper, we broke up the engagement results into four groups (Small, Medium, Medium-High, High) based on the Covered Entity’s total annual drug spend. This helps break down the average savings based on the size of the hospital’s drug spend. Reflecting on these categories, the patterns begin to emerge, as evidenced in the analysis below:

Range                              Annual Drug Spend             Average Savings

Small                                $0 – $2.5M                                   13.3%

Medium                           $2.5 – $10M                                    4.1%

Medium-High                  $10M – $20M                                  1.9%

High                                 >$20M                                           2.7%

As stated above, we are still likely too early in the data gathering to draw conclusions, however it is evident there are a few interesting trends worth exploring. Most apparent is the trend that savings opportunity as a percentage of drug spend is inversely proportional to annual Drug Spend. Meaning, the more you spend the smaller percentage of opportunity you are leaving on the table. And vice versa – the less you spend the more percentage of opportunity you are leaving on the table. In all cases though, the average savings realized has been significant. In my previous roles, reducing your drug budget 2-4% would gain positive recognition of the executive leadership team.

So why the trend?  And what does it mean for your covered entity?

It’s a great question that you may be asking, “Why would the percentage of savings opportunity be inversely proportional to the drug spend?” My experience as a pharmacy leader and a consultant can help to shed some light on why the opportunity reshapes at each level.

Small

Foremost, I observe that companies with a small drug spend simply have a much higher savings opportunity as a percentage than companies with a large drug spend. To be honest I suspected that the opportunity as a percentage would be higher than in the larger hospitals, but I did not expect the difference to be so pronounced.

Without proper research, it is difficult to say exactly why this difference would be so stark, but at this point, with over 18 years in the market I can offer a few theories as to why this would be. I have observed in my career that most covered entities with a smaller drug spend are only budgeted a single person to manage their drug spend and in these instances this person is typically wearing multiple “hats” and only maintaining the process amongst many other pressing issues.  Hence the large impact when someone from our team solely focuses on drug spend.

What does it mean to these hospitals? Access to experts: By partnering with expert consultants in 340B drug procurement, you can achieve significant savings (or at minimum validate current purchasing optimization). By partnering with 340B optimization experts, you get access to the country’s most advanced 340B experts without funding a full time FTE and recruiting the expertise to your geographical area.

Medium

As we move further up to Medium spend, you will start to see where the program has grown to such a point that a full-time resource becomes necessary. In these facilities, the person leading the 340B program typically is a superstar technician or previous buyer. These individuals are experts in the hospitals’ individual 340B program and positioned perfectly to collaborate with outside consultants. This person often is self-taught 340B through their own organization’s 340B program setup and often is not as well versed on what other organizations are doing. As such, the percentage of opportunity is still significant, but is a lesser percentage than groups with a small spend.

What does it mean to these hospitals? Access to education: By partnering with experts in 340B drug procurement, your dedicated 340B team members are able to learn directly from our consultant team who will share their experience supporting hospitals across the country, in a wide variety of settings. This education helps teach your staff how to prioritize compliance and optimization opportunities. By partnering with a consultant, your internal 340B expert can learn how to identify savings opportunities, but most importantly, provide them with the skillset to help fix financial leakage in the process.

Medium-High

As we climb to the Medium-High drug spend levels between $10M-$20M, these hospitals often have a second 340B team member and the group has invested in additional training on best practices. With the additional resources invested, the internal 340B team has been able to dedicate more time to unearthing savings opportunities and addressed the areas of low hanging fruit. This paves the way for the optimization opportunities of higher complexity to be addressed. As a result, a partnership with our optimization services is still able to drive hundreds of thousands of dollars in savings, albeit a slightly lower percentage than would be seen with the medium-spend level.

What does it mean to these hospitals? Strategic Growth: By partnering with expert consultants in 340B drug procurement, your dedicated 340B team will learn techniques to help maximize and grow your 340B program. These strategies will propel your 340B value and drive practice changes that result in significant financial gains. Through your partnership, you gain insight into opportunity analytics, skilled project facilitation and management, and insightful strategy execution. Because you have partnered with consultants “who have been there, done that” you get strategies implemented much faster than doing it on your own, resulting is more savings faster.

High

Groups with the highest levels of drug spend experience a modest increase in opportunity percentage similar to the Medium-High group. Although conventional wisdom would suggest that groups at these levels would offer a small savings opportunity percentage, the reality is that the dollars are still very large and impactful to the covered entity. These larger facilities are often a lot more complex and thus need much more organization and structure to their 340B team. Even though organizations with drug spend of over $20M will usually have a whole team to support it, they will still miss many of the more nuanced opportunities.

What does it mean to these hospitals? Solutions to complex problems: By partnering with experts in 340B drug procurement, we will collaborate to mitigate the complex and costly challenges your team has identified, but not yet been able to resolve. By engaging with specialized consultants who focus on generating solutions to close financial gaps, you gain insight into industry techniques that have aided other institutions in resolving similar complexities.

Conclusion

Even though it is easy to get caught up in the decreased percentage of savings, proportionate to drug spend, all of the covered entities we have partnered with have realized significant reductions in drug spend that have had tremendous impact on the organization’s bottom line. No matter the size of organization, there are always opportunities.

Reflecting on past optimization partnerships, the key determinant to covered entity success in realizing meaningful savings has stemmed from our team’s ability to break down complex 340B initiatives into actionable steps. Instead of passing a list of possible action items along, our team synthesizes your comprehensive program data to identify realistic and meaningful opportunities, vetted by our experts.

SpendMend Pharmacy leverages Turnkey Pharmacy Optimization by only hiring experts that have successfully implemented 340B opportunities and strategies within their own covered entities. Our no-risk approach means we only get paid when you realize savings (100% contingency model). If you would like to learn more about the potential savings opportunities at your institution, visit the SpendMend website and schedule a free consultation with one of our team members.

Why I Left My Career as a Pharmacist to Become a Consultant and Help Other Hospitals

SpendMend Team

Written By: Jake Thompson, PharmD, MS, jthompson@spendmend.com

Over the past 18+ years in pharmacy, I have constantly been changing roles within the sector. I have held pharmacy technician and intern roles in both retail and hospital settings. I have been a PGY1 clinical resident and PGY2 administrative resident. These experiences positioned me to quickly take on various pharmacy leadership roles in a variety of settings in both the government and private health care arena.  The common trend during these experiences has been the constant rise of drug costs, drug shortages, and new therapies.

These three trends forced me to create teams to focus on medication procurement in each of my leadership positions. The more we dove into medication procurement, the more that opportunities and questions surfaced. As the complexities of drug costs, drug shortages, and new therapies arose, it became evident that we needed external consultants to help us. After many frustrating engagements along the way, I was fortunate to eventually find a true partner in Turnkey Pharmacy Solutions. Turnkey brought the 340B expertise our team needed when managing the complexities of pharmacy procurement.

At the same time, Turnkey was finding that other health systems were not able to focus on the financial opportunities surrounding day to day operations and long-term strategy regarding pharmacy procurement.  They recognized the success our team was having around 340B and they convinced me to change roles yet again, but this time as a consultant.

It was clear to me that if we applied the same principles to medication procurement to other hospitals and clinics, we could make a difference. If we could triple my region’s 340B savings in three years in my previous role, why couldn’t we help other hospitals do this too?  In talking with other colleagues in pharmacy leadership positions, they agreed that they were leaving millions of dollars on the table. These conversations highlighted the opportunity for us to create a team that could help  hospitals return  dollars to their bottom line and allow them to reinvest those funds into quality patient care.

It was my experience of working with Turnkey that led me to leave my career as a pharmacist and dedicate myself to helping other hospitals to optimize their own drug spend.  I thought at that time, and I still believe, that I could do more good by working with covered entities across the country to lift many boats rather than to simply stay in one network and focus my attention on only one patient population.

The decision to join Turnkey (SpendMend Pharmacy) as the head of their optimization and growth services is one I have not regretted for even a single moment over the last two years. I am proud of the work my team has done and now since our recent merger with SpendMend, am looking forward to serving many more networks in the years to come.

My training in pharmacy leadership always taught me to measure, track, and document your success (and failures). This philosophy is vital to ensure that the right solutions are in place for the problems being worked on. It also helps gain trust and confidence from various stakeholders impacted by the change. We are excited to share in our next blog post the analysis on our team’s impact across two years of engagements. For a better look at the savings opportunity in your drug spend, visit the SpendMend website and schedule a free consultation with me or with one of our other expert consultants.

A Bird’s Eye View of the 340B Program

SpendMend Team

Written By: Rob Nahoopii, PharmD, MS, 340B ACE, Senior Vice President of Pharmacy Services

The News

Earlier this week, we announced that both Turnkey Pharmacy Solutions and ELEVATE340B have joined SpendMend.  Read about it here.  We couldn’t be more excited by the announcement and we are confident that our ability to serve Hospitals, Clinics, Grantees, etc. will grow by a magnitude as a result of this news.

So… since the news with SpendMend went public, I’ve been meeting with a record number of people and new co-workers.  Every interaction leads to a great discussion, but I am realizing I may have been in a pharmacy bubble for the last several years.

I find that although most people have a general sense of the 340B program, there are still a lot of questions.  I thought it might be a good exercise to provide a high-level overview of the 340B program to help level set the discussion.

 

What is the 340B Program?

It’s no secret that healthcare is expensive, and many American’s can’t afford it. With costs continuing to rise, including the price of prescription drugs, policymakers in both parties have been working hard to create affordable solutions.

One positive solution, dating back to 1992, is the 340B drug pricing program. 340B helps hospitals, clinics, and health centers extend their resources to treat more patients and provide more services.

Simply put, the 340B program helps hospitals and clinics that provide care to the most vulnerable patients: the uninsured; the underinsured; people with HIV or AIDS; kids with cancer, and more, by requiring drug companies to offer medications at a discounted price.

 

How Does The Program Work?

340B requires drug makers participating in Medicaid to sell outpatient drugs at a discount to eligible hospitals and clinics. These savings are intended to go toward increasing and expanding healthcare services for millions of vulnerable patients.

To take part in the program, covered entities such as hospitals, clinics, health centers and the like must meet rigorous standards to be eligible to receive 340B discounts such as treating a high percentage of low-income patients or those living in rural communities.

 

Is This Unfair For Drug Companies?

This is a question I get all the time, and I am not sure there is a simple answer.

For drug companies, these discounts are a small percentage of the billions spent each year on medicine but for hospitals and their patients, these savings are essential as part of the healthcare safety net.  The truth is, hospitals work off razor thin margins and, in some cases, were it not for the savings from the 340B program some smaller rural facilities may be forced to shut down.

Although, it’s true that the 340B program can save a hospital lots of money, it should be noted that program participation comes with complex regulatory and audit requirements that must be managed carefully to maintain compliance.

So, it’s not really a free lunch for hospitals, they work for the savings, they take on a lot of compliance risk, and they pour a lot of their savings back into underserved communities.

 

What Are Some Ways That Hospitals Use 340B Savings?

340B hospitals provide sixty percent of all uncompensated care in rural America. 340B savings also help hospitals remain open and in communities hard-hit by chronic illness and epidemics like opioid use.

340B allows each community to decide how best to serve its patients’ needs. Many provide free or low-cost drugs while others use 340B to operate trauma centers and provide specialty HIV care.

As I mentioned in the intro, most people are familiar enough with 340B, but if you look closely, you’ll quickly realize how complicated the program has become and how easy it is to fall out of compliance.

Today’s blog is a simple overview of the process with a few of my own opinions thrown in for color.  Any covered entity contemplating how they fit into the program will likely need a much more in-depth overview and discussion… and I am happy to provide that for you.

Please feel free to reach out at anytime and I will make sure to get you the answers you need.

 

Meet Rob Nahoopii

Experienced as a Director of Pharmacy for a 400-bed DSH hospital, also served as a Regional Director of Pharmacy. Rob has presented at many 340B University sessions and on the topic of 340B at numerous other conferences around the country. He has provided many external 340B audits for various covered entity types and onsite support for multiple 340B HRSA audits. Rob is part of our 340B independent auditing team and also supports our maintenance clients and 340B implementation. His perspective is from front line pharmacy leadership and program compliance.