SCPA CONDUCTS SURVEY ON MEDICARE DRUG BENEFIT IMPACTS

Independent pharmacists greatly increase focus on costs, generics, efficiency, and growth

COLUMBUS, Ohio, July 26, 2006 – Senior Care Pharmacy Alliance (SCPA) the leading advocacy group for Independent Long Term Care pharmacists nationwide announced results from a national survey of independent long term care pharmacist regarding the impact of the implementation of the Medicare Drug Benefit as part of the Medicare Modernization Act.

This comprehensive national survey was conducted to gauge the overall impacts to independent long term care pharmacists of the implementation of the Medicare Drug benefit. This national survey of all long term care pharmacies revealed substantial impacts to long term care pharmacist and their operations. This survey was conducted by Insights Worldwide Research a leading marketing research provider based in Lake Forest, California.

The SCPA national survey of long term care pharmacies show a large increase in the independent pharmacist’s focus on several key areas (rank ordered):

• Reducing overall operating costs

• Scaling and growing their business to make them more competitive

• Working with patients, care givers and physicians to offer therapeutic and generic drug treatment options to lower patient costs and increase care efficacy.

Also, independent long term care pharmacists felt the playing field with national providers had been made more level, and expressed an interest in investing in their businesses to more effectively compete with national pharmacies. However, one area of continuing challenges for independent pharmacist was around the ease and timeliness of claims processing of payments by PDPs. However it was acknowledged that great progress had been made in this area as well over the last six months.

“We were obviously very concerned for our members as the federal government moved toward the implementation of this benefit over the last eighteen months, and had substantial dialog with CMS to insure our member’s needs were factored into their critical policy decisions,” said Ginny Roberts Director of SCPA. “Our independent pharmacists had to make substantial changes and investments in their businesses to accommodate the transition, and find entirely new ways of operating their businesses,” Ms. Roberts continued, “and this survey confirms that our independent operators have successfully made the transition, and are now aggressively investing in their businesses to take advantage of a new more competitive environment with national providers.” SCPA member Jay Meyer, CEO of Healthcare Institutional Pharmacy commented, “It is clear that CMS has listened and created a more dynamic competitive environment for us to compete with national providers, and now it is up to us to invest in our businesses and make them more competitive which will improve patient care and economics in health care, a real positive for patients, providers and payers.”

Senior Care Pharmacy Alliance (SCPA): is the leading member managed non-profit organization dedicated to representing the interests of independent long term care pharmacists nationwide. SCPA is based in Columbus, OH and is active in Federal and State government advocacy nationwide.
 

Media:  Ginny Roberts
           (614) 451-8823
           pharm4@aol.com
 

Description:

This national survey of long term care pharmacies was conducted for Senior Care Pharmacy Alliance by Insights Worldwide Research of Lake Forest, CA in July of 2006. The survey was conducted to measure impacts of the Medicare Drug Benefit on the independent long term care pharmacists. Insights Worldwide Research developed a list of in excess of fifteen hundred long term care pharmacies and conducted primary research around this topic. Outbound calling was initiated and a statistically valid sample of forty two was completed. The results below are based on that statically valid sample.

Selected Highlights :

 

ATTRIBUTE	SCORE	COMMENTARY
Impacts
Operating Costs	+1.09	Major increase in cost reduction by operators.  They understand the need lower costs to expand the business and be more competitive.
Pharmacy	+0.85	Pharmacies appear to have increased interest in growing their businesses.  They seem more certain of the reimbursements they will receive and can safely invest for growth.
Suggesting generics to patients / MDs	+0.82	Pharmacies are getting much more active in recommending to patients and MDs lower cost and more efficacious therapeutic generic drug alternative.
Ability to compete with nationals	+0.74	Pharmacies see a much enhanced ability to compete with large national providers based on a perceived leveling of the playing field. They express wiliness to invest to expand and more aggressively compete with nationals.
Impacts
Quickly collect receivables	-1.87	Pharmacies see longer time cycles in getting paid and have had to adjust cash flow to accommodate this shift.
Ease of processing of claims	-1.85	Pharmacies see a reduction in the ease of processing claims likely based on the higher number of different payers and policies.
Interest in selling pharmacy	-1.48	Pharmacies have a reduced interest in selling their pharmacies which is a positive in that they have more confidence in the opportunity to build their businesses.

Summary results:

It is clear from the survey results and the dialog with independent long term care pharmacies that the implementation of the Medicare Drug Benefits was a major event in terms of the operations of their businesses. The resulting impacts were clear: increase focus on lowering operating costs, growth of operations and generic / therapeutic substitution. Independent pharmacies also indicated an enhanced ability to compete with national providers. The pharmacies viewed this as being a significant opportunity if they could transform their operations to effectively compete. Many indicated substantial progress and investment in infrastructure around technology, training and overall business processes. Some negative impacts that were identified involved reimbursement payment cycles and the increased number of payers and payer policies. The independent pharmacies did acknowledge improvement in this area as their familiarity with payers has increased.