By Peter J. Siavelis, SVP and general manager of Health System and Provider Distribution & Services at Cardinal Health
In honor of National Hospital Week (May 7-13), Siavelis celebrates the important role health systems play in delivering critical care and highlights some of the ways his team supports their work.
Throughout the COVID-19-related upheavals of the past several years, health systems and hospitals demonstrated their tremendous value to their local communities, serving their patients through pandemic surges in less-than-ideal conditions.
Today, many of the disruptions, including overcrowding in hospitals and hospital worker burnout, have slowed, according to Becker’s Healthcare. Yet even as hospitals begin to settle into a new normal, they are faced with ever-increasing financial challenges.
More than half of health systems and hospitals in the U.S. reported losing money in 2022, according to the January 2023 National Hospital Flash Report by Kaufman Hall. Losses were due to a combination of rising workforce salaries, drug prices and confusing reimbursement or payment models. Spending the time to address these financial challenges and to reexamine their current strategies can often negatively affect patient care.
Cardinal Health’s unique position in the healthcare landscape enables us to offer a holistic view of the trends impacting health systems across the country and develop new ways to address these trends. Here are just a few of the ways we’re bringing better solutions to our customers as we work to reshape the pharmaceutical supply chain.
Building a clinically integrated supply chain for pharmaceuticals
Pharmaceutical drug expenses rose 14-25% between 2019 and 2022, according to the Kaufman Hall report. This is due, in part, to more specialty and precision medications coming to market, many of which come at high costs. In fact, the median price of a new drug exceeded $200,000 in 2022 – a double-digit year-over-year price growth.
But there is more to drug expenses than simply the purchase price. Hospital pharmacies need to correctly manage their inventory of these high-expense medications, while understanding the full ramifications of the reimbursement and evolving payer formulary updates of these therapies. From purchasing and storing to prescribing, dispensing and billing to reimbursement and claims, decisions made in departments across the hospital can add significantly to the total cost of the medication.
Further complicating the issue, many health systems and hospitals have siloed departmental information, meaning that hospital leaders are only able to capture fragments of the medication journey and the related expense impact, which can ultimately affect the hospital’s bottom line.
My team saw this as an opportunity to help our customers by offering a clinically integrated supply chain solution that would mitigate the challenges created by data siloes. At the beginning of 2023, Cardinal Health announced the development of this solution for health systems that analyzes real-time clinical and purchasing data to help customers make more informed decisions during the purchasing stage.
Developed in collaboration with Palantir Technologies, a leader in the data analytics space, the solution will deploy artificial intelligence (AI) and machine learning (ML) to provide health systems and hospitals with patient-specific treatment options, reimbursement insights and predictive drug inventory needs based on integrated trend data. Already running in pilot, we’ve been able to deploy this solution to assist our customers in the pharmaceutical purchasing decision-making process, saving them millions of dollars in just the first few weeks.
A patient-first approach to reimbursement
On the opposite side of the spectrum from saving money at the purchase phase is Cardinal Health’s approach to reimbursement solutions services for health systems with a solution called Cardinal Health™ Atrix™ Elements. Developed by a nurse on my team who spent years watching hospitals and patients struggle to manage high-cost therapies, the solution is designed to minimize claim rejections and denials for hospitals, while uncovering programs for patient financial support.
Based on our years of experience working with health systems, we know that the highest risk of claims rejections and denials in health systems and outpatient clinics is in specialty therapeutic areas. Our Atrix™ Elements solution helps ensure that hospitals can be reimbursed for treating these patients, and that patients are better able to afford their medications and therefore less likely to delay treatment or default on payment. The solution identifies patient support program availability, alternate treatment rules, and requirements for specific drug or procedure coverage, as payer formularies indicate.
In the past 12 months, the patient assistance program alone has recovered more than $84 million to help patients afford their treatments, while hospitals were appropriately reimbursed for the treatments.
Supporting hospital pharmacies with clinicians and solutions
Labor expenses are rising across all industries; according to hospital industry analysts in another Kaufman Hall report, these expenses have risen 37% from pre-pandemic levels, resulting in significant strain on health systems.
One area of particular concern for the industry is the shortage of pharmacists and pharmacist technicians post-COVID. Labor shortages became commonplace post-COVID, and pharmacy technicians began leaving the field to pursue more lucrative professions, resulting in a shortage that has put additional pressure on pharmacists who reported burnout in a recent survey due to the COVID-19 pandemic.
My team includes more than 1,300 clinicians who serve hospital pharmacies in a variety of roles, including pharmacists and pharmacist technicians, and we’ve found that all of our customers are looking for different options of support to handle their unique situations. Because of this, we offer a mix of both on-site and remote workforce support services as well as technical solutions. (Though remote support gained popularity during the pandemic, Cardinal Health has offered remote pharmacy services for more than two decades to assist hospital pharmacists with remote staffing models to supplement their on-site teams.)
Across the country, health systems and hospitals are committed to providing their patients with high-quality care. We’re grateful for the work they do every day, and proud to help support them with these solutions and more as we reshape the pharmaceutical supply chain.
Peter J. Siavelis is the senior vice president and general manager of Cardinal Health’s Health System and Provider business. A veteran healthcare executive, he oversees traditional and specialty pharmaceutical distribution sales and services for health systems, hospitals, specialty physician offices, long-term and alternate care facilities and community health centers across the country.