A Clearway Health Becker’s webinar Q&A recently featured a discussion on the importance of improving operating margins for the nation’s essential hospitals. This Q&A highlights the 340B Drug Pricing Program portion of the discussion with guest speakers Bruce Siegel, MD, MPH, President and CEO of America’s Essential Hospitals and Nicole Faucher, MS, president of Clearway Health.The 340B Program allows covered hospitals and health systems to stretch scarce federal resources as far as possible, so they can reach vulnerable patient populations and provide comprehensive healthcare services. Manufacturers participating in Medicaid agree to provide outpatient drugs to covered entities at significantly reduced prices.
Q: How can hospitals maintain focus to protect and defend funding sources like 340B?
Bruce Siegel: The 340B Program is very much in the crosshairs. We are facing a very well-funded coordinated campaign coming from the pharmaceutical industry and manufacturers to curtail cut back to the program. Hospital leaders need to be utterly unapologetic about this program, why it's here, and what you do with this program that was created to stretch the scarce resources of essential hospitals. Today, it allows hospitals, non-profits and public charitable organizations to do things they couldn't otherwise do.
If we don't defend the program, what we'll see is resources that can now be invested in our community taken away from our essential hospitals, and our essential communities, and go into shareholder returns for drug companies. It is literally that simple, and today, where most American hospitals are losing money because of labor costs, the pharmaceutical industry routinely generates over 20 percent operating margins. We need to defend the program aggressively and assertively.
Q: What would you tell hospital leaders about the sensationalism of the 340B Program in the news today?
Nicole Faucher: What you see in the news implies a level of risk related to the program or people participating, and it's important people recognize that is not really the case. Instead, our role is to support these organizations, and many others, but on top of that, ensure we're navigating as best as we can the various headwinds, whether it's things that are happening in the manufacturer actions, PBM actions, etc. Clearway Health grew out of Boston Medical Center Health System, and we have seen first-hand the role 340B plays in serving a community that otherwise nobody is paying attention to, and the result is immeasurable. These dollars aren't available otherwise.
This money must be available to essential hospitals, and this program doesn't cost taxpayers. It's funded in a way that's very different, and we want to ensure that we educate people to understand how to successfully participate in the program and remain compliant. My biggest hope is that people aren't deterred from the program because of things they might hear that makes it seem as if there are challenges ahead.
Bruce Siegel: The 340B Program is not going away. I don't see anything dramatic happening to the program, it's going to be here for a long time to come and people should use it to improve the health of their communities.
Q: What are the reinvestment opportunities that this type of specialty pharmacy program creates through improved operating margin that can open opportunities for healthcare systems?
Bruce Siegel: Many essential hospitals, once they have a specialty pharmacy program in place, realize the savings go beyond helping to keep the doors open. For instance, some of our hospitals invest in managing opioid use disorder across their community in an outpatient setting. Another major center opened a level one trauma center in a very needy community. This is something that was not present before. I've seen some of our essential hospitals build primary care medical homes using the benefits from specialty pharmacy in the 340B Program. Hospitals have been able to establish clinical pharmacy programs and place pharmacists as frontline primary care providers, which is a great thing, and really helps to improve access. I mentioned food pantries, there's been investments across a range of social risk factors including housing and educational opportunities. These are all things that health systems are doing today, and they're able to do it because of appropriate use of the 340B Program to stretch scarce resources as the program intended.
When people critique the 340B Program, it’s important to point out is that our hospitals have an obligation called the Emergency Medical Treatment and Active Labor Act (EMTALA), which says all hospitals must treat every patient in their emergency department. That's an obligation no other health system has, and that's just one of the reasons why essential hospitals need something like the 340B Program and specialty pharmacy programs.
Q: If you look at the compelling reasons for specialty pharmacy and 340B, why wouldn't every hospital or health system develop this program?
Nicole Faucher: Entities that find themselves eligible for the 340B Program by and large are participating. The bigger question is whether they understand the full opportunity ahead of them. Do they fully understand their community and do they understand that even a small community hospital might have upwards of 60 to 80 million dollars annually of revenue opportunity tied to a specialty pharmacy program? Are they satisfied with where they are today? Fully understanding what's possible might change their strategy.
The second consideration is whether these hospitals and health systems should have their own pharmacy. It's a rare instance where an organization would not want to have one, and as the environment has continually evolved and changed, it's changed the dynamic of relying on contract pharmacies and has allowed more hospitals to move to an ownership model. Today, about 40 percent of hospitals and health systems own a pharmacy. But still, many do not. Each organization should think about how they understand the full specialty pharmacy opportunity ahead of them and whether they are prepared and able to fully capture the annual revenue opportunity. Health systems have to start building for the future.
To watch the full webinar, go to https://bit.ly/45Tcuiu.