Knowledge. Experience. Instinct. A decade ago, these three qualifications might be enough to run a successful health care business. Now, they are not nearly enough. All health care executives need data to make the optimum business decisions for their organizations.

The transition to value-based reimbursement, competition from new care-delivery models and the entry of non-traditional companies into the health care space make real-time, actionable data invaluable to all stakeholders in the $3.5 trillion U.S. health care industry.

In five former blog posts on, subject matter experts from across the industry share their thoughts on how executives can use data to make smart choices that benefit their organizations, their customers and their patients.

In “Optimizing Data Analytics for Oncology Practice Success,” McKesson’s Dan Lodder discussed the importance of data and advanced analytics to community-based oncology practices that enter into value-based reimbursement (VBR) contracts with health plans. Lodder is vice president and general manager for technology solutions at McKesson Specialty Health. VBR contracts reward or penalize oncology practices based on whether they meet clinical and financial performance criteria. Collecting and monitoring clinical and financial performance data then becomes central to the practices’ operations. In the clinical area, oncologists can use technology to convert unstructured data in physician notes and laboratory test results to actionable information they can use at the point of care, according to Lodder. He added that in the financial area, analytics can track and improve revenue cycle management, supply chain management and business processes. “Analytics provide key insights to help improve practice productivity and profitability. Incorporating information from analytics to improve practice workflow is where we see practices benefit the most,” Lodder said. “That’s the real power of analytics—having the right information at the point of care and using the information to make the best decisions possible.”

In “Connecting Pharmaceutical Distribution and Supply Chain Management,” McKesson’s Brent Wunderlich, senior director for strategic distribution operations at McKesson, spoke to hospital and health system pharmacies about the key role that pharmaceutical distribution plays in effective drug supply chain management. He said a number of factors, such as rising drug prices, lagging reimbursement rates and manufacturer consolidation, are all putting pressure on hospital and health system pharmacies to upgrade their drug inventory management processes. Those processes must be capable of minimizing the cost and maximizing the revenue of each drug in the formulary, according to Wunderlich. To help achieve those twin objectives, pharmacies should adopt a data-driven “just-in-time” inventory approach. Pharmacies should know which drugs should be available for the right patients at the right time, rather than having unused medications sitting on shelves. “Pharmacies need pharmacy management systems that can track drug use and prices, and forecast what they’ll need on a particular day and how much they’ll pay for that order,” Wunderlich said.  

In “Starting an Independent Pharmacy,” Christopher Cella, national vice president for RxOwnership at McKesson, walked through the thought process for pharmacists who want to start their own independent pharmacies. Like launching any new business, long-term success depends on preparation and making the right decisions before the doors open. As Cella noted, starting a new independent pharmacy “isn’t a ‘build it and they will come’” proposition. Objective data are at the core of three preliminary steps pharmacists should take before opening their own pharmacy: developing a business plan; researching and choosing a location; and evaluating and selecting financing options. In each of the three steps, pharmacists need data to make the right decisions, whether it’s preparing a competitive analysis, quantifying the base of prescription business or knowing upfront and working capital requirements. “Without the necessary due diligence steps and the proper preparation, reaching those final steps won’t happen,” Cella said. “But the pharmacists who make it to their grand opening will put themselves in a great position to succeed as independent pharmacy owners.”

In “How Independent Pharmacies Can Expand Diabetes Care for Patients,” McKesson’s Laurie Jamieson explained why and how independent pharmacies can expand the services they offer to diabetic patients. Jamieson is director of manufacturer marketing strategy for McKesson U.S. Pharma. Some independent pharmacies limit their diabetes services to simply filling prescriptions for diabetes medications. However, given the growth in this chronic medical condition and the related health needs of those who suffer from it, pharmacies should grow their diabetes business, according to Jamieson. They should use data to make the right decisions in six areas: clinical need, sales, patient preference, physician preference, profit margin and insurance coverage. According to Jamieson, pharmacies should know which products diabetes patients need, which products they and their doctors prefer, which products insurers will cover and how all of that will affect profitability on those products. “Those data-driven insights will help pharmacies decide the correct assortment of products to carry on their shelves and the price points that are in range for their local competitive market,” Jamieson said.

In “How Independent Pharmacies Can Manage Their DIR Fees," Valerie Fortin, senior director of pharmacy benefit manager (PBM) relations for McKesson AccessHealth, addressed the growing challenge of direct and indirect remuneration (DIR) fees. Pharmacies pay DIR fees to health plans and PBMs to compensate them for their share of discounts on prescription drugs not captured at the point of sale to pharmacy customers. As Fortin pointed out, most independent pharmacies are challenged when it comes to knowing how much they owe health plans and PBMs before they receive their notifications. A good defense is data. Fortin said pharmacies need to know the fee criteria, how much they may owe ahead of time and what they can do to minimize the fees. “Ideally, a plan is submitting its data to EQuIPP, or Electronic Quality Improvement Platform for Plans & Pharmacies. A pharmacy can access EQuIPP and see exactly where it stands,” Fortin said. “If operational criteria are used, pharmacies should try to increase their generic dispensing rates, increase their percentage of 90-day supply claims and/or maximize formulary compliance.”

As the five experts contend, replacing guesswork with objective data dramatically improves the chances that a new health care business venture or an innovation to an existing business model will succeed.

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McKesson editorial staff is committed to sharing innovative approaches and insights so our customers can get the most out of their business solutions and identify areas for operational improvement and revenue growth.

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