Fifteenth Annual ASHP Conference for Leaders in Health-System Pharmacy
Revenue Optimization and New Pharmacy Business Models
ANTHONY ZAPPA, PHARM.D., M.B.A. STEVE ROUGH, M.S., B.S.PHARM.
SCOTT KNOER, PHARM.D., M.S.
Fifteenth Annual ASHP Conference for Leaders in Health-System Pharmacy
Anthony Zappa, Pharm.D., M.B.A. CIO and Director, Specialty/Infusion Operations Fairview Pharmacy Services LLC Minneapolis, Minnesota
Anthony Zappa, Pharm.D., M.B.A., is currently CIO and Director of Specialty/Infusion Operations with Fairview Pharmacy Services, LLC ("FPS"). He has over twenty years experience in pharmacy benefit management (PBM) administration, hospital pharmacy, and retail pharmacy operations. He is responsible for all outpatient pharmacy systems and dispensing technologies as well as customer service and dispensing operations of FPS' mail order, specialty, home infusion and community infusion pharmacies. Dr. Zappa earned his Bachelor of Science and Doctor of Pharmacy degrees from the College of Pharmacy, University of Minnesota and Master of Business Administration from the University of St. Thomas in Minneapolis. Prior to joining FPS, Dr. Zappa spent five years with Chronimed/BioScrip as Executive Vice President of Operations overseeing 32 retail stores, a high-volume specialty pharmacy and clinical programs. His experience includes eight years in the PBM industry, with three years overseas where he was in charge of international business development and South African PBM operations for SmithKline Beecham. Dr. Zappa's clinical experience includes over five years of hospital pharmacy practice.
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Fifteenth Annual ASHP Conference for Leaders in Health-System Pharmacy
Steve Rough, M.S., B.S.Pharm. Director of Pharmacy University of Wisconsin Hospital and Clinics Clinical Assistant Professor University of Wisconsin-Madison School of Pharmacy Madison, Wisconsin Steve Rough, M.S., B.S.Pharm., is Director of Pharmacy at the University of Wisconsin Hospital and Clinics, and Clinical Assistant Professor at the UW-Madison School of Pharmacy. He is also Director of the two year Health-System Pharmacy Administration Residency Training and Masters Program at UW Hospital. Mr. Rough received his Bachelor of Science in Pharmacy and Master of Science in Health-System Pharmacy Administration from the School of Pharmacy at the University of Wisconsin, Madison, Wisconsin. He also completed the residency training program in Pharmacy Practice and Health-System Pharmacy Administration at the University of Wisconsin Hospital and Clinics. He has coordinated and implemented progressive pharmacy services in virtually all practice settings. He has contributed six textbook chapters and numerous other papers in the pharmacy literature related to pharmacy administration and leadership, medication safety, the application of automation and technology, operational benchmarking and a variety of other management-related topics. He has been an invited lecturer for local, state and national audiences. Mr. Rough recently completed a four-year elected term as Treasurer of the Pharmacy Society of Wisconsin, and he currently serves as a member of the UHC Pharmacy Council Executive Committee. He has served as Chair for the ASHP Section of Pharmacy Practice Managers in 2008, is a member of the ASHP House of Delegates, and has served as Chair for the ASHP Council on Pharmacy Management. In 2003, Mr. Rough received both the Wisconsin Pharmacist of the Year award and an ASHP Best Practices Award for the paper he submitted describing the impact of point-of-care bar code medication scanning technology on medication error reduction. In 2006, he accepted the inaugural ASHP Foundation Pharmacy Residency Program Excellence Award on behalf of the University of Wisconsin Hospital and Clinics administrative residency and masters program. Mr. Rough is also co-creator of the ASHP Managers’ Boot Camp Workshop and ASHP State Affiliate Student Leadership Development Workshop. In July of 2009, he was awarded the UW Hospital and Clinics Presidential Leadership Award provided annually to a department director for exceptional sustained leadership across the organization and in the community. His practice and research interests include pharmacy administrative practice, medication-use safety, work redesign, pharmacy technology, financial management, and implementation of progressive pharmacy services.
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Fifteenth Annual ASHP Conference for Leaders in Health-System Pharmacy
Scott J. Knoer, Pharm.D., M.S. Director of Pharmacy University of Minnesota Medical Center Minneapolis, Minnesota Scott J. Knoer, Pharm.D., M.S., is Director of Pharmacy at the University of Minnesota Medical Center (UMMC), in Minneapolis, Minnesota. He is responsible for planning, implementing, and managing pharmacy services at this three-hospital academic medical center. He is Program Director of the two year Health-System Pharmacy Administration Residency and Masters Program at UMMC. He precepts student clerkships in pharmacy leadership and administration. He is a Clinical Assistant Professor at the University of Minnesota College of Pharmacy and the Graduate Program in Social and Administrative Pharmacy where he teaches the Institutional Pharmacy and Hospital Pharmacy Classes, respectively. Dr. Knoer received his Bachelor of Arts in Psychology from Creighton University and his Doctor of Pharmacy from the University of Nebraska. He completed a two year administrative residency and received a Master of Science in Hospital Pharmacy from the University of Kansas. Dr. Knoer is the Chair of the American Society of Health-System Pharmacists (ASHP) Practice Managers Section where he previously served as Director-at-Large. He is a member of the ASHP House of Delegates, and he has served as Chair of the Section Advisory Group on Leadership Development and as a member of ASHP’s Commission on Affiliate Relations. He serves as Chair of the University Health-System Consortium (UHC) Process Improvement and Compliance Council. Dr. Knoer has also served in a variety of local and state affiliate roles in Minnesota and Texas. Dr. Knoer has published articles related to leadership development, pharmacy management, process improvement and benchmarking. His latest publication entitled, “Lessons Learned from a Practice Model Change at an Academic Medical Center,” is scheduled to appear in the November issue of the American Journal of Health-System Pharmacy. This article is a result of Dr. Knoer’s experience with organizational change management related to practice model innovation. Dr. Knoer frequently lectures on a various topics including pharmacy operations and automation, process improvement, leadership development, change management, and disaster preparedness. He is the co-creator of the ASHP Managers’ Boot Camp, a program designed to teach leadership and management skills to pharmacists.
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Fifteenth Annual ASHP Conference for Leaders in Health-System Pharmacy
ANTHONY ZAPPA, PHARM. D., M.B.A. STEVE ROUGH, M.S., B.S.PHARM. SCOTT KNOER, PHARM.D., M.S. Revenue Optimization and New Pharmacy Business Models ABSTRACT Pharmacy leaders will need to begin looking beyond the traditional business models for their organizations to remain successful. Having the skills to provide entrepreneurial solutions will help continually improve the value the pharmacy brings to an organization. In this workshop, you will develop new pharmacy business strategies for continued success in this changing health care environment. LEARNING OBJECTIVES After participating in this application-based educational activity, participants should be able to
Analyze general trends occurring in hospitals and health systems that impact revenue.
Inventory business opportunities that could be evaluated by your organization.
Determine the revenue cycles of services utilizing medications and/or requiring medication management services.
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The Changing Landscape of Health Care:Cultivating Leadership in Health‐System Pharmacy
The Changing Landscape of Health Care:Cultivating Leadership in Health‐System Pharmacy
Revenue Optimization and New Pharmacy Business
Models
Tony Zappa, Pharm.D., M.B.A., Fairview Pharmacy Services
Steve Rough, M.S., B.S.Pharm, University of Wisconsin Hospitals and Clinics
Scott Knoer, Pharm.D., M.S., University of Minnesota Medical Center
Introductions
• Steve Rough and the University of Wisconsin
• Scott Knoer and the University of Minnesota
• Tony Zappa and Fairview Pharmacy Services, LLC
Agenda• Introductions
• Where can you add value to your system?
– Revenue opportunities and models
• Health care reform: How will accountable careHealth care reform: How will accountable care organizations (ACOs) and case payments change things?
• What do you need to make it happen?
– Infrastructure and processes
• Practical assignment and presentation
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What systems are represented?
1. <100 beds
2. 101‐300 beds
3. >300 beds
1 2 3
0% 0%0%
What systems are represented?
1. For‐profit
2. Non‐profit
1 2
0%0%
What systems are represented?
1. Academic
2. Non‐academic
1 2
0%0%
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What systems are represented?
1. Urban
2. Rural
1 2
0%0%
Do You Have Ambulatory Pharmacy Services?
1. Do not have ambulatory pharmacy services
2 Have ambulatory
1 2
0%0%
2. Have ambulatory pharmacy services
Health System Modelsand Ambulatory Servicesand Ambulatory Services
25 minutes
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UW Health Integrated Pharmacy Care Network
Automation and robotic technologyClinical and translational research
Education and trainingElectronic health record/information technology systems
Entrepreneurial business expansionFinancial management (utilization, contracting)
Medication use policy programN l h i
Community (Retail) Pharmacy
Services Network
i h /
Management of CorporatePharmacy Network
Specialty Care/Mail Service
Pharmacy
Nuclear pharmacy serviceOperations and medication use systems management
Patient care services/practice advancementPersonnel management
Purchasing contract network (Novation/UHC)Quality and safety
Regulatory complianceRevenue cycle optimizationSupply chain management
UW Health Acute and Ambulatory Care Core Pharmacy Services
(UW Hospital, UWMF, DFM)
Unity Pharmacy Program/Prescription Benefit
Management Services
Rural Hospital Management/Purchasing Contracts
and Consulting Services
Home Health CarePharmacy Services
Hospice Care and Other Pharmacy
Service Agreements
UW Health Department of Pharmacy
1. Receives support from and interacts closely with the CCKM in establishment of evidence-based medication use policy initiatives2. Reports to Brad Ludwig for operational responsibilities; reports to Steve Rough for overall departmental integration
UWHC Pharmacy DepartmentInternal Activities
• Inpatient pharmacist services• Clinic pharmacist services and bleeding disorders
– 16 clinics including anticoagulation (4.5 FTE)• 13 ambulatory (retail) pharmacies (67 FTE)
– Specialty and mail service pharmacy program• Vendor Liaison Office (2 FTE)• Clinical and Translational Research Center (13 FTE)• Drug Policy Program (8 FTE)• Informatics team – Epic (10.5 FTE) and Enterprise (2 FTE)• Indigent medication assistance program (2 FTE)• Medication prior authorization program (2 FTE)• Discharge medication specialists (1 FTE)• Nuclear pharmacy service (3 FTE)• ED and infusion center pharmacy services (2.5 and 1 FTE)
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UWHC Pharmacy DepartmentExternal Activities
• Unity Pharmacy Program (5 FTE)• Pharmacy management and consulting programs
– Divine Savior Healthcare (DSH)– HospiceCare Incorporated– Wisconsin Dialysis (WDI) and UW Health Kidney Clinic– Several rural hospital affiliate purchasing contractsp p g– Badger Prairie – After hours medication order review programs
• UW School of Pharmacy– 310 students on rotation within UW Health locations– Master in Health‐System Pharmacy Administration program– All pharmacists are clinical instructors– Extensive teaching involvement with school of pharmacy– Funds 7.7 FTE pharmacist salaries
Pharmacy Department FY11 Expense, Revenue & Statistics
All expenses are in $millions
Inpatient
Clinics + Bleeding Disorders Program Retail Oncology Other Total
Revenues $131.7 $63.8 $72.2 $57.9 $0 $325.6
Drug expense $22 0 $22 6 $40 9 $23 2 $0 $108 7
• 3,342 inpatient medication orders per day • 14,521 inpatient medication doses administered per day (1 dose every 6 seconds)• 99.9% unit dose dispensing• 1,853 retail prescriptions per day
Drug expense $22.0 $22.6 $40.9 $23.2 $0 $108.7
% of total drug expense 20.2% 20.8% 37.6% 21.3% 0%
Personnel expense $12.4 $2.2 $5.8 $1.2 $5.7 $27.3
Total expense $35.1 $25.3 $47.4 $24.4 $5.6 $137.8
Margin $96.6 $38.5 $24.8 $33.5 ‐$5.6 $187.8
FTEs 132.9 24.0 66.6 12.7 65.8 302.0
UW Health Pharmacy Department Challenges and Opportunities
• Shrinking retail pharmacy margins • Ambulatory (retail and clinic administered) medication
reimbursement complexities• Dramatically rising drug costs for small percent of our total
patient population – BMT Hemophilia TransplantBMT, Hemophilia, Transplant
• Pharmacist workforce cyclical hiring pattern and scheduling expectations
• Electronic Health Record (Epic)– All implementations heavily impact pharmacy– Staff and manager time commitment much greater than expected– Achieving theoretical return via improved decision support
• Rising number of pharmacy‐related external quality P4P measures
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University of Minnesota: System Stats• University of Minnesota Medical Center and 6 community hospitals
• 22,000+ employees
• 2,500 aligned physicians
• 44 primary care clinics
• 55 specialty clinics
A ill b i i l di h h b i i• Ancillary businesses, including home care, rehab, senior services
2009 data
• $2.8 billion total revenue
• 4.4 million outpatient encounters
• 80,314 inpatients served
• $425.1 million community contributions
• Total assets of $2.4 billion
Fairview Pharmacy Services Business Model
HomeInfusion
CommunityInfusion
ClearScriptPBM
Consulting32 Retail
Pharmacies
FPS, LLC
SpecialtyPharmacy
Mail OrderPharmacyCompounding
PharmacyMTM
AdvancedTherapies
Clinic
30 Anticoag.Clinics
Fairview Pharmacy Services Revenue
HomeInfusion
CommunityInfusion
ClearScriptPBM
Consulting32 Retail
Pharmacies
$122 MM$40 MM
$24 MM
$1 MM
$55 MM
FPS, LLC$335 MM
SpecialtyPharmacy
Mail OrderPharmacyCompounding
PharmacyMTM
AdvancedTherapies
Clinic
30 Anticoag.Clinics
$70 MM
$16 MM
$5 MM$1 MM
$?
$?
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FPS Organizational Structure
Retail Pharmacy
Mail Order & Specialty Pharmacy
Home Infusion
PBM
Inpatient Directors
FPS President
CIO
CFOHR
Sales and Marketing
Additional Positions:- Compliance- Clinical Services
Discussion: What OtherDiscussion: What Other Models are People Using?
10 minutes
Why Ambulatory Services?Why Ambulatory Services?System Objectives
20 minutes
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Health Systems’ Objectives
Capture, Retain andGrow Revenue
Leverage AssetsGain Positive
Returns on CapitalInvestments
Access All Productsand Therapies
Optimize ClinicalPerformance
Threats and OpportunitiesThreats1. Insurers, PBMs, Specialty Pharmacies
carving out treatments2. Insurers shifting clinic meds to lower‐cost
options3. Low Rx capture rates4. Payors looking for part of the 340B pie
Capture, Retain andGrow Revenue
Opportunities1. Make pharmacy a revenue‐generating
business line2. Incent staff to drive business internally3. Institute policy against brown‐bagging4. Coordinate payor contracts (medical and
pharmacy)
Risks and Opportunities
Threats1. Focus on cost reductions usually leads to
staff cuts2. Hospitals and clinics operating near
capacity, limiting expansion
Leverage Assets
p y, g p
Opportunities1. Refocus cost controls to revenue growth2. Centralize and automate3. Put pharmacy staff closer to the care4. Consider niche offerings in high‐value
conditions
Gain PositiveReturns on Capital
Investments
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Risks and Opportunities
Threats1. More specialty products defined “limited
distribution”• Small populations/markets• REMS (risk evaluation and mitigation
Access All Productsand Therapies
strategy)Opportunities1. Pharma: early and often2. Leverage clinical trials and research
programs3. Partner with local “competitors”
Risks and OpportunitiesThreats
1. ACO and case‐rate payment strategies will force focus on outcomes
2. Payors’ short‐term focusOptimize Clinical
Performance
Opportunities
1. ACO and case‐rate payment strategies will force focus on outcomes
2. Partner with other systems on best practices
3. Use ancillary professionals more upstream
4. Leverage the medical record
5. Start talking with health plan sponsors directly
Revenue Cycle Management
• Managing the cycle is crucial to financial performance
• Starts with contracting– Network access
– Reimbursement rates
The Revenue
Credentialing
RegistrationScheduling Check-in
Patient Encounter, Prescribing and Documentation
Coding /
Contracting
Reimbursement rates
– Prior authorization requirements
– Audit rights and take‐back provisions
– Documentation and retention requirements
Revenue Cycle
Coding / Charge Review
Charge Entry
Claim Production
Payment or Denial Posting (3rd party A/R) Insurance
Follow-up
Self-pay collection (patient A/R)
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Revenue Cycle Management• Getting patient benefit plans correct is “linchpin”
– Benefit investigations
– Patient set‐up verification
• Charge masters must be i d l l
The Revenue
Credentialing
RegistrationScheduling Check-in
Patient Encounter, Prescribing and Documentation
Coding /
Contracting
reviewed regularly– Too easy to underprice claims
• Claims denials and audits need to be proactively and aggressively managed– Fairview: had $3.2 million in
payback requests in 2009
– Paid back $42,000
Revenue Cycle
Coding / Charge Review
Charge Entry
Claim Production
Payment or Denial Posting (3rd party A/R) Insurance
Follow-up
Self-pay collection (patient A/R)
Revenue Cycle Management• Patient A/R needs to be carefully managed
– Don’t do it unless absolutely necessary
– Keep statements to a bare minimum
The Revenue
Credentialing
RegistrationScheduling Check-in
Patient Encounter, Prescribing and Documentation
Coding /
Contracting
minimum
– Be assertive on collections
• 340B programs require higher level of scrutiny– Medicaid exceptions
– Patient qualifications
– Clinic/Provider qualifications
– Drug inclusions
Revenue Cycle
Coding / Charge Review
Charge Entry
Claim Production
Payment or Denial Posting (3rd party A/R) Insurance
Follow-up
Self-pay collection (patient A/R)
Revenue Cycle Management
• Several points in the cycle represent marketing opportunities
• Requirements:The Revenue
Credentialing
RegistrationScheduling Check-in
Patient Encounter, Prescribing and Documentation
Coding / Ch
Contracting
– Good system access
– Clinic staff cooperation
– Marketing collateral
• Value messages
– Good follow‐through by pharmacy staff
Cycle Charge Review
Charge Entry
Claim Production
Payment or Denial Posting (3rd party A/R) Insurance
Follow-up
Self-pay collection (patient A/R)
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Discussion: What Are YourDiscussion: What Are Your Systems’ Objectives?
10 minutes
Health Care Reform:Health Care Reform:Barrier or Benefit?
20 minutes
Have Your Systems Discussed ACOs?
1. Yes
2. No
3. Don’t know
1 2 3
0% 0%0%
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ACOs: Game‐changer?
• Accountable Care Organization (ACO) included in Section 3022 of Patient Protection and Affordable Care Act (“PPACA”)
– Shared Savings Program for Medicare enrollees
• ACOs meeting quality performance standards are eligible for payments (“shared savings”)
• Secretary of HHS must establish the program by 1/12/12
• Separate ACO demonstration project for pediatrics to be established by 1/1/12
Who Can Be in an ACO?
• “ACO Professionals” ‐ physicians, physician assistants (PAs), nurse practitioners (NPs), clinical nurse specialists in group practice settings
• Networks of individual ACO‐Ps
• Partnerships of joint ventures (JVs) between hospitals and ACO‐Ps
• Hospitals employing ACO‐Ps
• Others as the HHS Secretary determines is appropriateIn other words, just about everyone but allied professionals
ACO Requirements1. Accountable for cost, quality and overall care of Medicare FFS (fee
for service) beneficiaries assigned to it
2. Three‐year agreement
3. Legal structure to receive and distribute payments
4. Sufficient number of primary care ACO‐Ps
5. Sufficient number of necessary ACO‐Ps
6. Leadership and management structure including clinical and administrative systems
7. Defined processes to:– Promote evidence‐based care
– Report on cost and quality measures
– Coordinate care
8. Demonstrate it meets patient‐centeredness criteria
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Financial Impact on ACOs
• Additional payments from Centers for Medicare & Medicaid Services (CMS) if average per‐capita expenditures are X% of a benchmark
– Will use three years of per‐beneficiary expenditures to set y p y pbenchmark
– In addition to standard Part A and Part B payments
• Potential abuse will be monitored (avoidance of high‐risk patients) and sanctions may be applied
• Preference given to ACOs participating in similar arrangements with other payors
ACOs: Threats and Opportunities• Threats
– Network exclusion if not included in an ACO?
– Lower payments if not in an ACO?
– Increasing quality and cost benchmarks?
– Savings potential erodes as performance improves?
– Spill‐over into the commercial market?
• Opportunities
– Focus on outcomes and total cost of care
– Preferential network inclusion when in an ACO
– Additional payments, at least in the short term
– Spill‐over into the commercial market
– Include clinical pharmacist on ambulatory primary care team
ACOs’ Impact on Outpatient Services
• While PPACA’s ACO language is focused on Medicare, commercial payors already exploring options
• While PPACA’s ACO language is only for hospital and clinic treatments (Parts A and B), commercial payors are talking about total cost of careabout total cost of careSince drugs are 20% of overall spend…
• Since specialty is 20% of outpatient prescriptions…
• Since home infusion acuity is increasing…
• Since long‐term care acuity is increasing…
• Since outcomes rely on good patient interactions…
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Opportunity to Improve Access
• Residents in critical shortage areas are 1.7 times more likely to experience preventable hospitalization
• Pharmacists are a highly‐trained, readily g y , yavailable workforce capable of rapidly expanding patient access to health care
• Pharmacist involvement in primary care has resulted in high satisfaction ratings from patients and providers alike
Opportunity to Improve Quality
• Studies show that optimum medication use is demonstrated in only 4‐21% of patients8
• Quality benchmarks are nationally‐reported
• Greater pharmacist involvement leads to:Greater pharmacist involvement leads to:
– Fewer hospitalizations9
– Lower health care costs10
– Better adherence to evidence‐based consensus guidelines11
– Better outcomes9‐11,12
Opportunity to Improve Cost Savings and Reimbursement
• Pharmacists have demonstrated benefit‐cost ratios of 2.89:113
• Pay‐for‐performance and Accountable Care Organizations tie reimbursement toOrganizations tie reimbursement to achievement of recognized outcomes measures (higher quality = higher payout)
– Pharmacists have repeatedly demonstrated improved outcomes, thus improving reimbursement under these systems
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Increasing Support for Pharmacist Involvement
• The Wall Street Journal notes that pharmacists are a useful and necessary resource in the primary care teams14
• The American Medical Association recognizes• The American Medical Association recognizes the important collaborative role pharmacists can fill15
Key Benefits of Pharmacist Involvement
• Maximize efficiency for primary care providers• UW Health will share in savings and receive bonus payments
from providing higher‐quality, lower‐cost care to Medicare beneficiariesImproved patient access to comprehensive primary care services
• Improved patient satisfaction with the quality and breadth of health services provided
• More effective management of complex, evidence‐based medication regimens for common chronic conditions
• Optimized quality and clinical process outcomes for high‐performance recognition and external quality reporting
• Cost‐effective treatment including lower utilization rates for ambulatory sensitive conditions
How To Involve Pharmacists
• Monitor medication‐related pay‐for‐performance measures and implement quality improvement initiatives
• Pharmacist‐led prescription renewal service
• Monitoring/dosing high‐risk and/or high‐cost medications
• Pharmacist‐led polypharmacy clinic to identify opportunitiesPharmacist led polypharmacy clinic to identify opportunities for more efficient use
• Optimize patient compliance to improve outcomes
• Manage procedures for conflict of interest
• Provide chronic disease state monitoring services
• Many more…
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Possible Staffing Models
1. As an integral member of the decentral patient‐centered medical home team (microsystem)
2. As a provider of medication management services through a pharmacist‐run medication therapy management clinic
3. As a provider of centralized telehealth services
4. As a hybrid model incorporating aspects of the above three models.
Funding Opportunities for Pharmacist Involvement
• Maximize outcomes for pay‐for‐performance measures, enhancing reimbursement
• Incident‐to and facility fee billing
• Negotiate payment with managed care organizations
• Reduce total health care costs and resource utilization without compromising quality
• Improve throughput (efficiency) of primary care clinics
• Obtain grant funding for demonstration projects
ACO Pharmacist References
1. Office of Shortage Designation, Health Resources and Services Administration, U.S. Department of Health & Human Services. Shortage Designation. http://bhpr.hrsa.gov/shortage/index.htm. Accessed June 7, 2010.
2. Bodenheimer T, Pham HH. Primary care: current problems and proposed solutions. Health Aff (Milwood). 2010;29(5):799‐805.
3. Patient Protection and Affordable Care Act. http://www.aafp.org/online/en/home/policy/ federal/hcrleg2010.html. 2010. Accessed June 7, 2010.
4. Hoven AD. Doctor‐pharmacist teamwork can apply to many settings. American Medical News. http://www.ama‐assn.org/amednews/2010/08/16/edca0816.htm. August 16, 2010. Accessed August 23, 2010.
5. Wisconsin Council on Medical Education and Workforce. Who will care for our patients? http://www.wha.org/pubArchive/special_reports/2008PhysicianReport.pdf. Accessed June 16, 2010.
6. Parchman ML and Culler SD. Preventable hospitalizations in primary care shortage areas. Arch Fam Med. 1999;8:487‐491.
7. Collins C, Kramer A, O’Day ME, Low MB. Evaluation of patient and provider satisfaction with a pharmacist‐managed lipid clinic in a Veterans Affairs medical center. Am J Health‐Syst Pharm. 2006;63:1723‐1727.
8. Garfield S, Barber N, Walley, P, Willson A, Eliasson L. Quality of medication use in primary care‐mapping the problem, working to a solution: a systematic review of the literature. BMC Med. 2009;7:50.
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ACO Pharmacist References
9. Royal S, Smeaton L, Avery AJ, Hurwitz B, Sheikh A. Interventions in primary care to reduce medication related adverse events and hospital admissions: systematic review and meta‐analysis. Qual Saf Health Care. 2006;15:23‐31.
10. Yanchick JK. Implementation of a drug therapy monitoring clinic in a primary‐care setting. Am J Health‐Syst Pharm. 2000;57(S4):S30‐S34.
11. Altavela JL, Jones MK, Ritter M. A prospective trial of a clinical pharmacy intervention in a primary care practice in a capitated payment system. J Manag Care Pharm. 2008;14(9):831‐843.
12. Smith M, Bates DW, Bodenheimer T, Cleary PD. Why pharmacists belong in the medical home. Health12. Smith M, Bates DW, Bodenheimer T, Cleary PD. Why pharmacists belong in the medical home. Health Aff (Milwood). 2010;29(5):906‐913.
13. Perez A, Doloresco F, Hoffman JM, et al. Economic evaluations of clinical pharmacy services: 2001‐2005. Pharmacotherapy. 2008:28(11):285e‐323e.
14. Vanderveen RP. How to care for 30 million more patients. Wall Street Journal. July 19, 2010.
15. Hoven AD. Doctor‐pharmacist teamwork can apply to many settings. American Medical News. http://www.ama‐assn.org/amednews/2010/08/16/edca0816.htm. August 16, 2010. Accessed August 23, 2010.
Discussion: How are Your Systems Responding to Health Care Reform?Responding to Health Care Reform?
10 minutes
Break TimeBreak Time
20 minutes
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Ambulatory Services:Success Factors and Evaluation Tools
10 minutes
What are the Real Revenue Opportunities?
• Retail Pharmacy
– Maximize on‐site Rx capture
– Maximize employee capture
• Specialty Pharmacy
• Home Infusion
• PBM
• Clinical Trialscapture
– Expand into community
• Mail Order
– Maximize patient capture
– Maximize employee capture
• Long‐term Care and Assisted Living
• Consulting Services
• Indigent Drug Program Management
Retail Pharmacy Goals
• Maximize patient care and safety
‐ Screening programs and immunizations
‐ Medication therapy management
‐ Compliance management
• Growth and revenue enhancement
• Outstanding customer service
• Branding
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Retail Pharmacy
• Model: full‐service or professional?
• Factors affecting financial performance
– Rx/patient
– Revenue per RXp
– Capture rate from system
– Staffing levels
– Labor costs
– Systems and technology (Rx software, POS, IVR, robotics, etc)
– Opportunity/capacity for community expansion
Mail Order Pharmacy
• Model: Employee‐only or open‐access?
• Factors affecting financial performance
– Rx/patient
– Revenue per RX
– Capture rate from system
– Staffing levels
– Labor costs
– Automation
Specialty Pharmacy
• Factors affecting financial performance
– Number of specialists in the system
– Payor mix
– Rx/patient
– Revenue per RX
– Capture rate from system
– Staffing levels and labor costs
– Delivery logistics
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Home Infusion
• Factors affecting financial performance
– Number of patient encounters
– Payor mix
– Revenue per patient
– Capture rate from system
– Staffing levels and labor costs
– Delivery logistics
PBM (pharmacy benefit management)
• Big Question: Is your system self‐insured?
• Second Big Question: Are you getting the best deal from your existing PBM?
F t ff ti fi i l f• Factors affecting financial performance
– Plan size
– Build or buy?
– Ability to expand into the open market
– Pass‐through versus traditional model
Clinical Trials
• Factors affecting financial performance
– Level of research being done
– System and provider interest
P ti t l (i it t l )– Patient volume (i.e., recruitment volume)
– Relationships with Pharma
– Ability to manage distribution and data
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Examples of Retail Optimization Strategies
• Employee Rx program (retail and mail order)
– Copay incentives to use a system pharmacy
– Low‐price generic program
• Centralized order processing
• Web‐based refill site– With selective product
marketing
• E‐Prescribing– OTC discounts
– Payroll deduction for convenience
– Own‐use opportunity?
• Indigent drug program (340B eligible?)
• Central fill (automation)
E Prescribing
• Enterprise‐wide software
• Marketing and capture programs in clinics
• Prior authorization coordinators focused on LCD documentation for Medicare
UW Health AmbulatoryAmbulatory
Pharmacy Reform
6 Strategies to Improve Ambulatory Pharmacy Financial Performance
1. Restructure operations and hold ourselves accountable to new operational efficiency performance parameters (15 Rx/RPh/hr) with recent technology investments
2. Reduce drug expense through better purchasing3. Improve reimbursement/collections (reduce bad
debt/charity care)• Medicare provider number issue will be resolved• Transfer charity care to a new account outside of retail pharmacies• More strict charging privilege guidelines• Accounts receivable system improvement to reduce bad debt• Daily monitoring of negative margin reports
4. Close 2 pharmacies 6/30/10 ‐ 70% retention5. Strengthen marketing efforts to increase volumes6. Evaluate performance on the “whole” to incentivize sites to
feed business to more efficient central mail/fill operations
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$3.4 million margin improvement
Initiative Impact Comment
closing 2 pharmacies $211,000 These templates will be zeroed out when opened.
Personnel savings $889,326
•Restructure operations to new performance standards
• 5.65 pharmacist FTE reduction (8 FTE off schedule to create supervisor).
• 5.7 technician FTE reduction.
Drug expense savings 1,133,000 •Dedicated ambulatory pharmacy buyer
Transfer drug inventory $280,000 One‐time savings
Charity care reduction $101,852
• Requesting an account to charge Fiscal‐approved charges at CSC (mostly discharge prescriptions to facilitate inpatient discharge).
•Pharmacy management of AR instead of hospital billing staff.
Bad debt reduction $844,436 •Medicare provider number issue since 2002.
Total financial gain 3,459,614 Did not include volume increase
Operational Efficiency Improvement Initiatives
• Central Order Processing and Load Balancing
• Central Fill
• RAMP (autofill) – Refill Assistance Monitoring ( ) gProgram
Load Balancing
• All Rx’s must be put through reception at all sites
• No prescriptions should be left on the counter at the end of each day
26
Central Fill
• Generate reports for mail out, delivery etc and will work with each site to MOVE and have medications processed out of a central location and delivered to the originating site g g
• Shift staffing accordingly to ParataMax sites/Central fill locations
RAMP
• Have patients sign up for the RAMP program
• Rx’s should be sent to the central fill location
• Will need a mechanism to call and remind patients to pick up Rx’s in will callpatients to pick up Rx’s in will call
Drug Expense Savings
• Brand to generic migrations: $813,677– Prograf to tacrolimus: $298,150– Cellcept to mycophenolate: $291,427– Neoral to cyclosporine: $224,100
• Monitor the negative margin report on a daily basisMonitor the negative margin report on a daily basis• Run the slow movers report on a monthly basis• Assure compliance with best practice purchasing at all sites
27
Financials – Strategic Marketing Initiatives
Providers and Staff:• Develop stronger relationships with clinic providers, promote the quality
difference our pharmacies offer• Cashless Convenience‐ payroll deduction for over the counter (OTCs) and
prescription co‐pays• Employee OTC discount, 20%
L i 30 d l f $9 99 d 90 d l f
70
• Low cost generic program ‐ 30 day supply for $9.99 and 90 day supply for $11.99 for identified drugs
Patients:• Low cost generic program ‐ 30 day supply for $9.99 and 90 day supply for
$11.99 for identified drugs• Interactive web response feature for online refills (future enhancement)• Pilot – Express discharge concept. Requires processing discharge Rx’s on the
nursing units, process TBD
Marketing BrochureAdmission Packets and Clinics
Marketing Brochure– Mail Order
28
Customer Satisfaction Measurement
Customer Service
Standards
Customer Service Standards
• 2 major things impacting the patient experience– People
• Get the right people on the bus
• Be quick to fire, slow to hire
– Processes• Efficient, streamlined systems
• Clear expectations (standards) you routinely measure yourself against
• Then let feedback/data drive your decisions/actions
29
Customer Service Standards
• 5 things customers (patients) want from people– Respect (do things with them, not for/to them)– Confidentiality– Listening– Kindness– Compassion
• Good things to measure– The above 5 things– Wait time– Telephone response time– Pharmacist availability– Communication
Specialty Pharmacy Clinic Pharmacist Strategy
• Improved annual revenues by $626,000 due to growth hormone prior authorization service in AFCH endocrine clinic ($82,000 margin)
• 0.2 FTE new pulmonary clinic pharmacist documents 3 avoided CF admissions per month ($320,000 savings per year to UWHC, additional business in specialty pharmacy)
• 90‐day retail contracts
Reducing Write‐offs
• Ambulatory medication cost‐avoidance and revenue optimization programs (3.6 FTE)
– Medication Assistance Program (MAP)• Started 2003• Serves underinsured and uninsured patient populations• 2 FTE pharmacy technicians
– Medication Prior Authorization Coordinators (MPAC)• Infusion Center started 3/09, 1 FTE• Oncology Clinic started 8/09, 1 FTE
– Pharmacy staffed without additional FTE
– FY10 total program cost savings/avoidance to UWHC = $4.6 million
30
Reducing Write‐offs
• MAP Program– Maximize patient participation in manufacturer‐sponsored
“take home” drug programs– Maximize hospital participation in manufacturer‐sponsored
“replacement drug” programs– Work closely with providers and clinic staff
• MPAC Program– Assure proper medical record documentation for Medicare
patients prescribed high‐cost clinic drug (with local and national coverage determination criteria) to maximize hospital reimbursement and avoid write‐offs
• Facilitate completion of Advance Beneficiary Notice (ABN) forms when therapy falls outside Medicare covered indication
– Pre‐certification of high‐cost clinic administered medications for patients with private insurance
– Enroll patients in medication co‐pay assistance programs
MAP Savings FY08 – FY10
754
585
436
400
500
600
700
800
pa
tie
nts
/mo
nth
$2.00
$2.50
$3.00
$3.50
lio
ns)
60%
28.9%
34.2%
$0.96
$1.85
$2.96
0
100
200
300
400
FY08 FY09 FY10F
Av
e #
of
MA
P
$0.00
$0.50
$1.00
$1.50
(mil
l
Total value to UWHC Ave # of MAP patients/month
92.7%
FY10 MPAC Estimated Annual Value
• Value determined based on detailed intervention documentation (8 patients per day)
• Salary plus fringe = $106,000 in FY10 • We are just at the tip of the iceberg as more private plans are
requiring prior‐authorization per guidelines similar to Medicare
FY10
Maximize hospital reimbursement and avoid write‐offs for high‐cost clinic medications for Medicare patients
$1,300,000
Pre‐certification of high‐cost clinic administered medications for private insurance patients
$230,000
Enroll patients in medication co‐pay assistance programs $133,000
Total Documented Savings in FY10 $1,663,000
31
Revenue Maximization Threats
• Revenue leakage due to missing or miscoded data in chargemaster
• Purchasing drugs that cost more than reimbursementreimbursement
• Procedural breakdowns that block reimbursement (coding, ABNs, etc)
• Keeping up with change to CMS regulations
• Labor intensive workflows
Discussion: Are Capital DollarsDiscussion: Are Capital Dollars Available in Your Systems?
10 minutes
Building the Business Case:gPro forma Models
20 minutes
32
Health‐system Ambulatory Pharmacy Business Case and ProForma Exercise
• Retail Proforma
• Specialty Proforma
• Home Infusion ProformaHome Infusion Proforma
Pro Forma: Major Sections
• Revenue: Gross and Net• Cost of Goods Sold
• Expenses– Labor
Gross Margin
– Labor– Supplies– Utilities and Infrastructure– Purchased Services and Allocations
• Interest and Taxes• Depreciations
Operating Income
Net Income
Small Group Exercise:pBuild and Present a Pro Forma
Build: 20 minutes
Present: 30 minutes
33
Case Study
• Retail Proforma
• Specialty Proforma
– Start with Prevalence model
Additional References
• Pharmacy reimbursement: A guide for the reluctant pharmacist. Jarrett A. ASHP website. http://www.ashp.org/s_ashp/docs/files/SPPM_Pharmacy_Reimbursement.pdf(access 24 Sept 2010).
• The ABCs of ACOs. Bass, Berry and Simms website: http://www.bassberry.com/files/Publication/f55dbab0‐b844‐4a1f‐bf0a‐0e34ebab8d7d/Presentation/PublicationAttachment/a98eb254‐ce4f‐48f3‐924b‐/ / /0e91896128f7/HealthReformImpact‐ABCs.pdf (accessed 29 April 2010).
• Susan Dentzer, Editor‐in‐Chief, Health Affairs. Presentation to ASHP 2010 Summer Meeting. http://www.ashp.org/DocLibrary/SM2010/SM10‐Dentzer‐Slides.aspx(accessed 24 Sept 2010).
• Zubiago S. A linchpin of health care reform: accountable health care organizations. Nixon Peobody website. http://web20.nixonpeabody.com/healthcare/sitepages/A%20linchpin%20of%20health%20care%20reform%20accountable%20health%20care%20organizations.aspx(accessed 24 Sept 2010).
The Changing Landscape of Health Care:Cultivating Leadership in Health‐System Pharmacy
The Changing Landscape of Health Care:Cultivating Leadership in Health‐System Pharmacy
Revenue Optimization and New Pharmacy Business
Models
CE Session Code for this workshop:
_________
34
Fifteenth Annual ASHP Conference for Leaders in Health-System Pharmacy
SELF-ASSESSMENT QUESTIONS 1. Which of the following, while still important, is not a key high level health-system growth
objective listed in this presentation for developing a successful ambulatory pharmacy program? a. Capture and retain revenue. b. Leverage assets. c. Reduce overtime. d. Optimize clinical performance.
2. Which of the following is not a requirement for ACOs (accountable care organizations) as
defined in the Patient Protection and Affordable Care Act (PPACA)? a. Sufficient number of primary care providers. b. Level-1 trauma center. c. Defined process to promote evidence-based care. d. Patient-centeredness criteria.
3. Capture rate from clinics and hospitals is an important factor when considering an
ambulatory pharmacy start-up? a. True. b. False.
4. Specialty pharmacy limited distribution networks are a threat to the financial performance of
the specialty pharmacy business model. a. True. b. False.
ANSWERS:
1. c 2. b 3. a 4. a
35
Fifteenth Annual ASHP Conference for Leaders in Health-System Pharmacy
REFERENCES 1. Bodenheimer T, Pham HH. Primary care: current problems and proposed solutions. Health
Aff (Milwood). 2010; 29(5):799-805.
2. Collins C, Kramer A, O’Day ME, Low MB. Evaluation of patient and provider satisfaction with a pharmacist-managed lipid clinic in a Veterans Affairs medical center. Am J Health-Syst Pharm. 2006; 63:1723-27.
3. Garfield S, Barber N, Walley et al. Quality of medication use in primary care-mapping the problem, working to a solution: a systematic review of the literature. BMC Med. 2009; 7:50.
4. Hoven AD. Doctor-pharmacist teamwork can apply to many settings. American Medical News. http://www.ama-assn.org/amednews/2010/08/16/edca0816.htm. (accessed 2010 Aug 23).
5. Office of Shortage Designation, Health Resources and Services Administration, U.S. Department of Health & Human Services. Shortage designation. http://bhpr.hrsa.gov/shortage/index.htm. (accessed 2010 Jun 7).
6. Parchman ML and Culler SD. Preventable hospitalizations in primary care shortage areas. Arch Fam Med. 1999; 8:487-91.
7. Patient Protection and Affordable Care Act. http://www.aafp.org/online/en/home/policy/ federal/hcrleg2010.html. 2010. (accessed 2010 Jun 7).
8. Wisconsin Council on Medical Education and Workforce. Who will care for our patients? http://www.wha.org/pubArchive/special_reports/2008PhysicianReport.pdf. (accessed 2010 Jun 16).
ADDITIONAL ONLINE RESOURCES 1. Pharmacy reimbursement: A guide for the reluctant pharmacist. Jarrett A. ASHP website.
http://www.ashp.org/s_ashp/docs/files/SPPM_Pharmacy_Reimbursement.pdf (accessed 2010 Sept 24).
2. The ABCs of ACOs. Bass, Berry and Simms website: http://www.bassberry.com/files/Publication/f55dbab0-b844-4a1f-bf0a-0e34ebab8d7d/Presentation/PublicationAttachment/a98eb254-ce4f-48f3-924b-0e91896128f7/HealthReformImpact-ABCs.pdf (accessed 2010 Apr 29).
3. Susan Dentzer, Editor-in-Chief, Health Affairs. Presentation to ASHP 2010 Summer Meeting. http://www.ashp.org/DocLibrary/SM2010/SM10-Dentzer-Slides.aspx (accessed 2010 Sept 24).
36
Fifteenth Annual ASHP Conference for Leaders in Health-System Pharmacy
4. Zubiago S. A linchpin of health care reform: accountable health care organizations. Nixon
Peobody website. http://web20.nixonpeabody.com/healthcare/sitepages/A%20linchpin%20of%20health%20care%20reform%20accountable%20health%20care%20organizations.aspx (accessed 2010 Sept 24).
37
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New
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Op
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Lik
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A
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nnual in
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Medic
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0
Annual In
cre
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ty P
rofo
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44
9/1
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New
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c.
New
sit
e #
50
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Op
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2Y
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d F
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#D
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Real F
TE
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$0.0
0$0.0
0$0.0
0$0.0
0
Annual In
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d F
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#D
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Real F
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$0.0
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0
Annual In
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0
Annual In
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#D
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#D
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Real F
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Annual In
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0$0.0
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0
Annual In
cre
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Manager
-$
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-$
-$
-$
Pharm
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$
-$
-$
-$
-$
Technic
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-$
-$
-$
-$
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-$
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-$
-$
-$
Call
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-$
-$
-$
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Spe
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ty P
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45
9/1
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New
co
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c.
New
sit
e #
50
Facilit
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year
260
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2Y
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$
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-$
-$
T
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$
-$
-$
-$
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-$
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-$
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% o
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00
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-$
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-$
-$
A
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cre
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-$
-$
-$
-$
-$
Tota
l R
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ase+
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-$
-$
-$
-$
-$
Utilit
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$0
$0
$0
$0
Annual In
cre
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quare
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$0.0
0$0.0
0$0.0
0$0.0
0
Annual In
cre
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Tota
l M
ain
tenance
-$
-$
-$
-$
-$
Insura
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Cost
-$
-$
-$
-$
Annual In
cre
ase
Spe
cial
ty P
rofo
rma
46
9/1
0/2
010
New
co
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arm
acy, In
c.
New
sit
e #
50
Facilit
y s
ize (
sq
ft)
2,0
00
Op
era
tin
g d
ays p
er
year
260
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1Y
ear
2Y
ear
3Y
ear
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ear
5
Bad D
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% o
f N
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evenue
Tota
l B
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-$
-$
-$
-$
-$
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Month
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# m
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#D
IV/0
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IV/0
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IV/0
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IV/0
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Com
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# m
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IV/0
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IV/0
!#D
IV/0
!#D
IV/0
!#D
IV/0
!
Auto
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s)
Month
ly D
epre
#D
IV/0
!
# m
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IV/0
!#D
IV/0
!#D
IV/0
!#D
IV/0
!#D
IV/0
!
Leasehold
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pro
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Month
ly D
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#D
IV/0
!
# m
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#D
IV/0
!#D
IV/0
!#D
IV/0
!#D
IV/0
!#D
IV/0
!
Tota
l D
epre
cia
tion
#D
IV/0
!#D
IV/0
!#D
IV/0
!#D
IV/0
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IV/0
!
Spe
cial
ty P
rofo
rma
47
New
co
Ph
arm
acy, In
c.
New
sit
e #
50
2011
Year
0Y
ear
1Y
ear
2Y
ear
3Y
ear
4Y
ear
5
Reven
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Gro
ss R
X R
evenue
-$
-$
-$
-$
-$
Dis
counts
00
00
0
MT
M R
evenue
00
00
0
To
tal N
et
Reven
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-$
-$
-$
-$
-$
RX
CO
GS
-$
-$
-$
-$
-$
G
ross M
arg
in-
$
-$
-$
-$
-$
#D
IV/0
!#D
IV/0
!#D
IV/0
!#D
IV/0
!#D
IV/0
!
Opera
ting E
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Sala
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-$
-$
-$
-$
-$
Benefits
-$
-$
-$
-$
-$
Lic
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Refe
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Offic
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upplie
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$
-$
-$
-$
-$
Medic
al S
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s-
$
-$
-$
-$
-$
Rent B
ase
-$
-$
-$
-$
-$
Rent O
pera
ting E
xp
-$
-$
-$
-$
-$
Tele
phone
-$
-$
-$
-$
-$
Security
Main
tenance
-$
-$
-$
-$
-$
Depre
cia
tion
#D
IV/0
!#D
IV/0
!#D
IV/0
!#D
IV/0
!#D
IV/0
!
Bad D
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-$
-$
-$
-$
-$
Mark
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s)
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5%
-$
-$
-$
-$
-$
Tota
l O
pera
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IV/0
!#D
IV/0
!#D
IV/0
!#D
IV/0
!#D
IV/0
!
N
et In
com
e#D
IV/0
!#D
IV/0
!#D
IV/0
!#D
IV/0
!#D
IV/0
!
%
Net R
evenue
#D
IV/0
!#D
IV/0
!#D
IV/0
!#D
IV/0
!#D
IV/0
!
Cash
Flo
w
Fix
ture
s-
$
Com
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r/P
OS
/Fax/P
hones
-$
Equip
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n-
$
Com
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r/P
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Leasehold
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pro
vem
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Work
ing C
apital (I
nv &
AR
)-
$
Goodw
ill/o
ther
assets
valu
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$
#D
IV/0
!
PV
Lease C
om
mitm
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-$
00
00
0
Net In
com
e/(
Loss)
#D
IV/0
!#D
IV/0
!#D
IV/0
!#D
IV/0
!#D
IV/0
!
Impro
vem
ent
-$
-$
-$
-$
-$
-$
Depre
cia
tion
-$
#D
IV/0
!#D
IV/0
!#D
IV/0
!#D
IV/0
!#D
IV/0
!
Net C
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low
-$
#D
IV/0
!#D
IV/0
!#D
IV/0
!#D
IV/0
!#D
IV/0
!#D
IV/0
!
Net
Pre
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t V
alu
e @
19%
#D
IV/0
!
IRR
#V
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!
To
tal B
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on
:
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5 E
BIT
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IV/0
!
P
/E M
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!
Bu
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!
Pm
t A
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-$
Goodw
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assets
#D
IV/0
!($
200/R
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Tota
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#D
IV/0
!9/1
0/2
010specia
lty
pro
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Spe
cial
ty P
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rma
48