Pharmacy Organizational Structure

Pharmacy is moving to the top of a lot of lists as a potential resource that has typically been undervalued and underutilized.

For several years we’ve experienced an evolving healthcare landscape that is increasingly focused on value-based care. We’ve heard repeatedly about the quality of care and financial benefits that can be achieved through the development and merging of multihospital health systems.  While improved value can be achieved through such alignment, success is highly variable depending on how well systemness and integration occur. Our experience has been that high performance usually boils down to structure, accountability, resource allocation and alignment of expectations. This is true at the system level, and it’s also true within the pharmacy enterprise.

How pharmacy services are provided and how value is quantified varies widely across health systems.  Many systems have traditionally fragmented their pharmacy enterprise into varying and sometimes competing silos (ambulatory, inpatient, managed care, supply chain, etc.), that are not well positioned structurally to optimize pharmacy’s full value. Further, pharmacy executives who have successfully grown their ambulatory enterprise into billion-dollar entities increasingly experience internal “tribal warfare” from pers and executives with conflicting priorities. This situation makes the executive’s  job more politically challenging, with title and positioning becoming more important to preserving the core and successfully advancing new programs.

With the current environment being dominated by the unexpected pandemic, health systems are concentrating on strategies to improve operating efficiency, reduce expenses and grow revenue/margin. A large and growing body of evidence exists that demonstrates the many positive outcomes provided by a well-run comprehensive internal pharmacy enterprise, which leads to payers and health system executives becoming increasingly aware of this positive association. Thus, pharmacy is now moving to the top of a lot of lists as a potential resource that has typically been undervalued and underutilized.

Huge variability exists in terms of how health systems position their pharmacy enterprise for success.  We see great opportunity when pharmacy operations are all brought together under a unified enterprise structure. Health systems with a pharmacy executive reporting directly to the highest level of system organizational leadership, who is accountable for overseeing and aligning all pharmacy-related clinical, operational and business units, consistently outperform those without such a structure, both financially and clinically.

To this aim, the most successful strategic trend we see being deployed today is the repositioning of the pharmacy enterprise to enable it to be organized and managed in a manner commensurate with how a high-performing business of this magnitude would function – a “Business within a Business” (BwB) model. The BwB paradigm simply means running internal service functions in a comprehensive and entrepreneurial fashion, much as one would a stand-alone business. The BwB approach works to align the incentives of everyone in the business of pharmacy to create an ownership model that engages and empowers teamwork, innovation, efficiency, customer focus, business growth, quality and risk-taking orientation.

The role of a high-performing pharmacy enterprise is multi-faceted and increasingly complex, requiring accountability and alignment in the following areas: strategic planning, business development and oversight, acute and ambulatory care pharmacy operations and patient care service, transitions of care, retail and specialty pharmacy, supply chain and logistics, 340B, revenue cycle management, utilization management, skill mix optimization, site of care (infusion and home infusion) strategy and service management, information technology, indigent patient support program navigation, education, research, compliance and regulatory accreditation, and employee drug benefit design. In addition to all of this, new and more efficient care delivery models that leverage telehealth, as the new normal, to manage patients across the continuum will be a higher priority to help reduce readmissions and costs, especially for patients who are geographically restricted or prefer remote care.

In considering the business of pharmacy, form really does follow function. Strong results rely on aligned structure with clear oversight and accountability. The most successful organizations that we support have all recognized that a comprehensive, integrated BwB approach to pharmacy produces significantly better outcomes than the traditional fragmented/ancillary approaches. Investing in a comprehensive internal pharmacy enterprise will improve patient safety and clinical outcomes, reduce total cost of care, and generate positive financial returns for the organization.