Industry Overview

Pharmacy is one of the fastest growing sectors in healthcare, and the aging baby boomer generation will only increase this growth.

Industry Overview

There are currently more than 60,000 retail and specialty pharmacies in the United States, with nearly four billion prescriptions filled in 2010—for a retail drug spend of $259 billion. This accounts for approximately 10% of total healthcare spending in the United States. By year 2020, the retail drug spend is expected to be $450 billion.

During this period, physicians have seen a 15% decline in their personal income over the past 20 years, due to steadily declining reimbursement rates and ever increasing costs. Federally and state funded programs, such as Medicare and Medicaid, have been the worst offenders; it is estimated that in 2014, the Centers for Medicare and Medicaid Services (CMS) will recommend cuts to physician reimbursement by at least 27%. As a result, many groups are looking at bringing ancillary services back into their hospital or physician practice.

Quality-based reimbursement

As part of the Patient Protection and Affordable Care Act of 2010, the Centers for Medicare and Medicaid Services (CMS) has begun to tie quality of care metrics (such as the 5-Star Rating system and the Readmissions Reduction Program) to reimbursements. In the Readmissions Reduction Program, CMS estimates that more than 2,000 hospitals will forfeit more than $280 million in reimbursements over the next few years due to excessive readmissions.

It is estimated that 65% of hospital readmissions are medication related. Therefore, health-systems and hospitals that can institute effective programs to reduce medication interaction and increase medication therapy adherence can greatly add to their profitability, while simultaneously lowering costs in our healthcare system.