Niloff WilloughbyReaching out to non-affiliated clinicians is becoming a business imperative for health care providers. For hospitals and retail pharmacies, there has never been a more critical time for collaboration.

The coming of value-based reimbursement is prompting hospitals and retail pharmacies to reconsider their relationship and where their respective responsibilities overlap. 

McKesson spoke with two health care business strategy experts about the benefits of partnerships between hospitals and retail pharmacies and how they can be optimized to improve patient outcomes and the respective business health of each party. The experts are Jonathan Niloff, M.D., vice president and chief medical officer at McKesson, and Tony Willoughby, vice president and chief pharmacist at Health Mart, a McKesson affiliate.

Q: How is value-based reimbursement encouraging hospitals and retail pharmacies to consider more formalized relationships?

Quote WilloughbyNiloff: Success for hospitals in value-based contacts is determined by meeting quality metrics and managing the total cost of care for their population. Meeting quality and cost thresholds may determine a hospital's eligibility for their share of cost savings. Community pharmacists, given their frequency of face-to-face encounters with patients, have the potential to impact both—quality metrics and the total cost of care.

Willoughby: Value-base reimbursement aligns incentives and penalties between different segments of the health care system. In this case it's hospitals and retail pharmacies. It's in the best interest of both if patients follow their prescriptions and medication regimens. When patients adhere to their medication regimens, they're less likely to be readmitted to the hospital and, for pharmacies, it's an opportunity to deliver more patient services and demonstrate their value to others in the delivery chain.

Q: What are the clinical and financial benefits to a hospital in partnering with a retail pharmacy?

Willoughby: The evidence tells us that there's an undeniable positive impact on patient health by being medication adherent. By that I mean taking the right medication in the right dose at the right time. If a retail pharmacy can help a hospital keep its patients adherent, it can reduce emergency room visits, admissions, readmissions and length of stay—all of which drive up the total cost of care.

Niloff: Better medication management and better adherence will result in better performance on quality and cost metrics. There will be fewer admissions and readmissions and fewer complications and exacerbations. The biggest opportunities lie with patients with chronic diseases who need medication to manage their medical conditions and who visit pharmacies most frequently.

Q: What are the clinical and financial benefits to a retail pharmacy in partnering with a hospital?

Niloff: From a pharmacy's perspective, such relationships provide an opportunity to generate new customers and return visits. Additionally, if the partnership includes the formation of a narrow or preferred provider network in which the pharmacy is included, then the pharmacy may benefit from increased revenue that results from seeing more patients and filling more prescriptions.

Quote NiloffWilloughby: It's about patient capture. The clinical benefit is improving the health of the population you're serving. The financial benefit comes from creating a funnel that brings patients into the pharmacy and keeps them there not just for filling prescriptions but for other health care services as well. They come in for their prescription but talk to their pharmacist to understand how to better manage their conditions. These conversations can include medication adherence, lifestyle changes or vaccinations. Many of these interactions can generate additional revenue, improve patients' health status and in turn, can help the health system by reducing the odds that the patients will need costly and avoidable inpatient care.

Q: What advice do you have for hospitals and retail pharmacies that want to set up such partnerships?

Willoughby: The incentives for each stakeholder must be aligned, and you need to trust that the provider you're partnering with can deliver against those incentives. Sharing data is a great way to build trust. Each side must believe in data and be committed to giving the relationship time to produce and share outcome and cost data that support the goals of the partnership. In addition to aligned incentives, trust and data, I would say coordinated workflow. Knowing the role of each partner in the relationship will reduce care fragmentation and improve the patient experience.

Niloff: The hardest part of the retail pharmacy and health system partnership is communication and coordination. How will the pharmacy know the patient's clinical information and what the patient needs in terms of medication management and other clinical interventions? How will the primary clinicians know what the pharmacy did for the patient in terms of medication management or other interventions? The enablers for optimal communication and coordination are health information technology and analytics. By using health IT, including analytics and communication tools, clinical information can be shared in a timely manner, intervention opportunities such as gaps in care, can be identified and communicated and hospitals and retail pharmacies will know who did what, all resulting in better care.

When community pharmacists work with hospitals to provide patients with medication counseling at discharge and then follow-up contact over the next few weeks, it can lead to better medication adherence and fewer hospital readmissions.

To see how one California hospital and retail pharmacy are working together to reduce readmissions for heart failure patients, read “Pharmacists Partnering with Hospitals to Improve Outcomes” or “Quality Patient Care from Hospital Bed to Home” found on

See also “E-Prescribing Enables Pharmacists to Improve Medication Adherence.”


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McKesson editorial staff is committed to offering innovative approaches and insights so that our customers can get the most out of the health care solutions they have and identify areas for operational improvement, revenue growth and improved patient satisfaction. If you have a suggestion for a blog topic you’d like to see covered, let us know in the comments.