The Value of Insourcing Mail-Order Capabilities in Health Systems

The Value of Insourcing Mail-Order

Capabilities in Health Systems

For traditional prescription medications, a healthcare provider sends a prescription to a walk-in pharmacy for prescription pickup, the pharmacy fills the prescription, and the patient walks out with their medication. With the evolution of pharmacy practice and the increase in high-cost drugs, more pharmacies are sending prescriptions through a mail-order pharmacy (1). The mail-order pharmacy fills the prescription like a traditional pharmacy. However, instead of the patient picking up their medication, the mail-order pharmacy delivers it directly to their doorstep.

Figure 1: Sales (in Inflation-Adjusted Dollars) of Medications for Mail Order Pharmacies, 2016-2021(3)

Mail-order pharmacy is a rapidly growing industry set to challenge traditional walk-in pharmacies. Future Market Insights projects that the global prescription delivery services market is set to experience a growth of 17.8% CAGR from 2022 to 2030 (2). In 2022, the estimated market value of prescription delivery services is around $117.2 million (2). According to the ASPE Office of Science and Data Policy, medication sales for mail-order pharmacies have increased from $123 billion in 2016 to $166 billion in 2022 (see Figure 1) (3). A report published by CoverMyMeds*found that 41% of the 328 pharmacists surveyed stated their pharmacy had started a prescription home delivery service since the start of the COVID-19 pandemic (4).

Several health systems across the US are adopting mail-order pharmacy services. The challenge with offering mail-order services lies with the decision to outsource or insource these operations. Outsourcing pharmacy services has become a popular decision among many health systems to reduce overall costs. However, outsourcing leads to issues with communication, confidentiality, and inefficient delivery practices. As previously stated, outsourcing pharmacy services can lead to cost savings for the health system and improve on the issues outsourcing provides. For example, the Carolinas Health Care System, located in Charlotte, NC, saved $2.4 million in expenses over three years by insourcing a mail-order pharmacy program for their employees (5).

Current health systems outsourcing their mail-order pharmacy services face challenges in the high costs associated with outsourcing operations, consolidating prescription dispensing and delivery management systems, and inefficient route delivery processes.

1. High costs with outsourcing: Outsourcing allows large, third-party companies to handle the more tedious aspects of managing certain pharmacy services so the pharmacy can focus on providing value-based care. However, using these third-party companies can significantly increase overall costs to the health system. For instance, drug acquisition costs may be higher if using a third-party to manage the exchange versus the health system directly (6).

2. Separate prescription dispensing and delivery management systems: Mail-order pharmacies may utilize separate management systems for prescription dispensing and delivery without integration across either platform. This can lead to discrepancies in medication fulfillment and proper package requirements. For example, Concord Hospital in New Hampshire saved $150,000 in loss due to wasted medication stocks within the first year of implementing a management system with dual integration capabilities (7).

3. Inefficient delivery routes: Delivery routes are often generated by the third-party courier used to make the deliveries, which the pharmacy staff cannot access. This could lead to poor delivery route options that overestimate the number of delivery drivers necessary to complete daily deliveries and the time to complete said deliveries and raise concerns about fuel costs. For example, a UK-based pharmacy could scale its number of deliveries by 25% even with two drivers less than usual using route optimization software (8).

With each issue in mind, optimizing insourcing mail-order pharmacy services is crucial. High costs are associated with outsourcing pharmacy services, and using insourcing can essentially cut these costs. Integration of dispensing and delivery management systems can consolidate medication fulfillment and optimal delivery capabilities. With route optimization software, delivery routes can be optimized to predict the most efficient routes for drivers to save time and fuel expenses. Route optimization software allows the pharmacy and patients to see real-time delivery times, delivery notifications, and no-contact signatures when applicable.

Mail-order pharmacy is a growing field of pharmacy delivery services with its advantages and disadvantages. With issues including high outsourcing costs, separate prescription dispensing, and delivery management systems, and inefficient delivery routes, mail-order pharmacy has areas to increase patient satisfaction. Integration of dispensing and delivery management systems can help mitigate these issues. The addition of route optimization software can benefit both the mail-order pharmacy and the patients they serve.

*CoverMyMeds is a healthcare software company that automates the prior authorization process used by several health insurance companies in the US

References:

1. Skoler E, Miecznikowski K. When and why to consider mail-order prescriptions. 2022.

2. Future Market Insights. Prescription delivery services market snapshot (2022-2030). 2022.

3. ASPE Office of Science & Data Policy. Trends in prescription drug spending, 2016-2021. 2022.

4. Becker’s Hospital Review. Half of patients got prescriptions through mail order in 2020, survey says. 2021.

5. Relias Media. Health system pharmacy becomes mail-order pharmacy for employee meds. 2010.

6. Deloitte. In-sourcing retail pharmacy. 2016.

7. Tecsys. Concord Hospital see performance boost at the point of use. 2021.

8. OptimoRoute. UK-based pharmacy scales business by 25% and reduces planning from days to minutes. 2022.