Innovative Ways to Improve Operating Margins for the Nation’s Essential Hospitals

Allison Arant, Senior VP, Client Development & Marketing
August 24, 2023

Part 1: A Becker’s Webinar Q&A with America’s Essential Hospitals

Clearway Health recently participated in a Becker’s Hospital Review webinar with guest speakers Bruce Siegel, MD, MPH, president and CEO of America’s Essential Hospitals and Nicole Faucher, MS, president of Clearway Health on improving operating margins for the nation’s essential hospitals.

America's Essential Hospitals is a leading association for hospitals dedicated to providing equitable and high quality care for all, including those who face social and financial barriers to care. They are partners and advocates for essential hospitals and health systems across the U.S. Clearway Health was born out of Boston Medical Center, one of the founding members of America’s Essential Hospitals. We partner with hospitals and health systems to build or strengthen their own specialty pharmacy program by eliminating barriers, improving access to care, personalizing support for vulnerable patients, families and care teams and ensuring ability to access timely medication.

Question and Answer:

Q: What are the challenges your partner hospitals and health systems face as they look to remove barriers and deliver equitable, high-quality care for all?

Bruce Siegel: In the wake of the pandemic, we are seeing huge challenges for health systems, especially our essential hospitals around issues of labor costs. Many health systems are seeing huge budgetary pressures with tens of millions of dollars per year in extra unbudgeted expenses to cover added labor costs. This realignment will be here for a while, and refilling this pipeline of health care workers, rethinking how we deliver care, is going to take a bit.

There are also new competitors in the market who want to go after a piece of your business. Usually, on the outpatient side, usually with a higher margin, such as Amazon or Optum today, also private equity. The concern there is pressure on your margin, but also a disintegration of care as different pieces of it are taken over by different new actors in this space.

Finally, if you're in the 340B program, by definition you're treating lots Medicare or Medicaid patients, especially Medicaid, with low incomes, and that means you're getting paid less to provide care. We know from data from the Kaiser Family Foundation, for instance, that on the inpatient side, commercial insurance pays twice as much as Medicare and even more so than the Medicaid, outpatient side, four times. If you're in the 340B business, if you're an essential hospital, you are facing a huge challenge.

Q: What is the response to delivering high-quality care in the face of these challenges and what is Clearway Health doing in this space?

Nicole Faucher: We are providing evidence that there are ways to solve the challenges around workforce, to look at reduced margins through the different payor mix, through more novel approaches to leveraging services that exist in the system. The most important part is how do we do more with less? I don't mean do more with less people, but rather, how do we do more with less burden? This is where elements like 340B specialty pharmacy can alleviate some of those challenges.

Bruce Siegel: How do we effectively manage the patients we have today? How do we make sure we're not spending more resources than we should on their care by keeping them as healthy as possible, and have less need for more staff and spending?

Specialty pharmacy is a big part of this. Not only do you better manage patients, you also meet them where they are. You empower pharmacists to be on the front lines, you develop relationships with patients, a very patient-centered relationship builds affinity, which is good for their care and truly delivers on the promise of population health.

Q: What are some of these opportunities to either build or strengthen service lines that already exist?

Nicole Faucher: When a patient is at a specialty provider, recently received a new diagnosis, and is now receiving a new medication or treatment plan, one of which might be scary and very complex -- where do they go from there? We know about 50 percent of patients don't fill their prescription, so hopefully they go, and continue their care with their pharmacist. Data has shown a patient will interact with their pharmacist 10 times more often than their provider practice. That's staggering.

When a patient is diagnosed and goes to a national chain or local pharmacy, immediately another relationship is intersecting their care. This is all-important related to the patient relationship to the provider, to the health system, to their outcomes.

We are passionate about closing that loop, through the intimacy of a pharmacy relationship embedded in a clinic. When you can triangulate all those relationships, the patient commitment to their care, compliance to their care is incredibly higher. A high compliance rate results in better clinical outcomes, which helps total costs of care, and the health of the community. This is why specialty pharmacy has the ability to be so important to a health system financially, operationally and clinically across the board.

Bruce Siegel: One of the benefits of bringing a specialty pharmacy program in-house is its going to save the healthcare system money. These are conditions that are very expensive, especially if they're not cared for properly or compliance isn't there.

Q: What ways are clinical programs, like hepatitis C screening and treatment, creating positive population health impact when driven through a specialty pharmacy program?

Nicole Faucher: The disease states we look at vary by state or population and require you to have the right data at your fingertips to create and execute a meaningful strategy. Hepatitis C programs, one of our larger programs, services two key areas. One relates to the total cost of care. For example, our team completed an evaluation for one of our hospitals and found the incidence of undiagnosed hepatitis C in their state was second highest in the nation, and the impact to the community was high.

 In partnership with their clinical team, we leveraged a playbook on the approach that helped facilitate how hepatitis C was screened and detected. Our approach leverages the EHR and embeds pharmacists within the clinical practice to help with screening, treatment and medication. We outlined the costs to the health system if these patients were to go undetected and undiagnosed until they required higher acuity care for a cancer diagnosis or liver transplant. The burden is quite high, and leveraging the funding through the 340B Program and the right strategies can offer health systems the opportunity to provide this type of clinical screening program, create a population health overview and improve patient access and experience.

Q: What advice would you give healthcare systems considering improving operating margins in the specialty pharmacy space?

Bruce Siegel: I would spend time looking at this and trying to figure out how I can make it work for me. Implementing a specialty pharmacy program at a hospital is one of the largest trends in our membership over the last three or four years. An advantage to partnering with Clearway Health is that they’re actually rooted in a real health system that has been active for years, and one that owns a large health plan, so they are used to accountability, including for low-income Medicaid patients across an entire state.

Nicole Faucher: Seek partnership and advice because it does become more complex. Outpatient specialty pharmacy programs are not only reserved for large institutions. It's really important to have outside eyes helping to provide insight around specialty pharmacy opportunity, what's really occurring, and how to navigate the changes that are inevitable over time.

Q: How can hospitals and health care systems determine the maximum potential for what specialty pharmacy can provide?

Nicole Faucher: When looking at a specialty pharmacy program, have an understanding of the patient population, the specialty mix, the size of the organization and types of medications being prescribed. Find out the prescribing habits and behaviors of the providers, where they're being filled, and how they're being filled. All this information is available within your EHR and or pharmacy system, and a partner can help you understand how to put it all together.

Q: Related to the population health conversation, how do you balance population health programs and the growing strain on access to care?

Bruce Siegel: Many health systems want to do the population health work, but they're having a hard time keeping the doors open. Specialty pharmacy changes the equation, it frees up resources through savings in the program to maintain the access points, and continues to make investments in the community. Therapies are miracles compared to what we had years ago and outcomes are terrible if not treated. A specialty pharmacy program identifies patients at risk, ensures they are cared for, improves health and also generates positive margin for the institutions. I don't know why you wouldn't do that, and it doesn’t require being an academic medical center. If you're a community hospital, you are facing this every day, this is part of your reality, and this can help you begin to change that picture for the people you serve.  

To watch the full webinar, go to