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How Does Physician Dispensing Help to Increase Revenue?

October 5, 2017

In-House Pharmacy Improve a Medical Practice .jpeg

Many medical offices and hospitals completely overlook the physician dispensing because of the significant up front costs. Although the investment is substantial, the upside of a properly managed in-house pharmacy can be well worth it. Here are just a few of the advantages.

Direct Revenue

Quality health care costs money. The more effective a medical office is, the more it is likely spending on care. A retail pharmacy is one way to ensure that some of the revenues come back to the source.

The retail pharmacy can be used to reduce the cost of employee drug benefits. If employees fill prescriptions through an in-house location, the business can benefit anywhere from 5 to 12%.

There are many white papers that have actually estimated the amount of money that an in-house pharmacy can drive for a hospital. For instance, the Comprehensive Pharmacy Services White Paper estimates that a 300 bed hospital with a certain number of discharges and ER visits can make around $25 million with a retail pharmacy.

A medical facility can also save a great deal of money by outsourcing a drug replacement benefits program. For instance, a hospital in Illinois saved $40,000 per month by outsourcing its patient assistance program.

Indirect Revenue

Medical facilities that improve patient outcomes can expect a better bottom line. These hospitals will retain more ongoing patient relationships and benefit from positive word-of-mouth. Medicare reimbursement is also contingent upon patient satisfaction, and hospitals can avoid penalties that they incur from readmissions as well.

If a hospital can reduce the amount of steps from prescription to pharmacy, then fewer medication errors will result. Fewer medical errors usually results in a lower number of readmissions, saving a hospital a great deal of money. It has been estimated that more than 50% of medication errors occur because of a transition from the hospital to the home. A retail pharmacy that focuses on making this transition error free as an opportunity for a great deal of savings.

Patients will also comply more readily with a regimen from a retail pharmacy. In-house pharmacists can double check a patient’s progress with easy access to electronic medical records. Having a retail pharmacy within reach also simplifies the process of consultation with primary care physicians. Confirmation is much easier, reducing distribution errors as well.

Medical facilities are also much better equipped to stock medications based on their specific needs. Specialty pharmacies that may intake a certain type of patient can stock medications that a mainstream pharmacy would have to call out for. This facility will save money and time while improving patient relations and reducing the errors that occur in transition.

Related Topic: Physician Dispensing: Revenue Booster or a Distraction?


The larger that a medical facility is, the more benefit it stands to gain from a retail pharmacy. The American Society of Health System Pharmacists surveyed hospitals of different sizes to determine the percentage that currently houses its own pharmacy. Around 70% of hospitals with over 600 beds have at least one pharmacy in-house. As the number of beds decreases, so does the percentage of hospitals that maintain this feature.

Although your medical facility needs to maintain a certain scale in order to benefit from a retail pharmacy, you should look into it no matter what size your organization may be. Even if you cannot house your own pharmacy, knowing the cost structure of in-house retail may inform your outsourcing efforts. You will be better able to negotiate drug prices for your patients if you know how much your prospective partners are making on their end. If you plan to grow your business in the future, then you may want to incorporate a retail pharmacy as part of your growth strategy.

Looking to add pharmacy in your medical practice? Contact us today at 770-666-0470 to speak with one of our experienced pharmacists. We could help you in business plan, compliance, training and sourcing the best drug prices. 


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