The Role of Institutional Pharmacies in an Aging Society
An Industry Overview

Introduction

The nation’s senior healthcare system faces an array of clinical, financial, operational and regulatory challenges.  The combination of a growing aging population, rising healthcare costs and an increasingly complex Medicare reimbursement system requires senior healthcare facilities to implement technologies that make their operations more efficient and cost-effective, while still providing high-quality resident care.  And as pharmaceuticals are an essential component of senior healthcare, facilities need medication distribution and tracking systems to meet the rising demand for prescription drugs. 

Institutional pharmacies are in a key position to help facilities effectively manage these pressures as they relate to prescription drugs, offering services that move beyond simply filling prescriptions.  By providing consulting and technology services, institutional pharmacies guide facilities through the complex landscape of pharmaceutical services for seniors.  Today’s pharmacies work with their clients to automate paperwork, aggregate resident data, and present timely reports with actionable data for improving resident care.

The need for these services is expected to match the nation’s expanding senior population and its demand for pharmaceuticals, with the institutional pharmacy market projected to grow revenues from $13 billion in 2007 to $20 billion by 2012.   As such, pharmacies are working to solve the facilities’ most pressing issues that inhibit their ability to provide accurate, efficient and cost-effective pharmaceutical care to residents.

The Complex Landscape of Senior Healthcare

The senior population in the United States is on the edge of a massive surge in growth.  Over the next 20 years, the nation’s senior population is projected to swell to more than 71 million Americans aged 65 or older—nearly double today’s population of 40 million.  

This rapidly expanding demographic is expected to enter senior healthcare facilities at unprecedented rates, and meeting their healthcare needs already presents a complex challenge.  According to the U.S. Administration on Aging, most individuals aged 65 or older suffer from at least one chronic condition, and many have multiple conditions.  

Moreover, Medicare Part D has created broader access to prescription drug coverage among the nation’s seniors, and prescription drugs are being used to address their healthcare needs more frequently than ever before.  A 2006 report from the National Center for Health Statistics states that individuals over the age of 65 use an average of 16 medications per day.  

With more seniors taking a more complex array of prescription drugs, senior healthcare facilities need to ensure that nurses dispense medications accurately and efficiently.  However, the nationwide nursing shortage has led to a shrinking pool of qualified employees to care for more patients in less time, including dispensing drugs and completing the required administrative paperwork. 

The impact of administrative burdens on nurses’ ability to care for residents is highly documented.  A 2001 study conducted by the American Hospital Association and PriceWaterhouseCoopers, found that nurses at skilled nursing facilities spend at least 30 minutes on paperwork for each hour of care they provide.  

Keeping Patients Safe, a study published in 2004 by the Institute of Medicine, cites numerous studies showing that documentation requirements can take from 12 to 20 percent of a nurses’ work day.   In fact, documentation requirements consume enough time for most skilled nursing facilities to devote at least one full-time employee to manage the data entry process for the Minimum Data Set (MDS), a federally-required, 200-question medical assessment for nursing facility residents. 

Moreover, the introduction of Medicare Part D has significantly affected the delivery of pharmaceutical care to senior healthcare facility residents.  Under Medicare Part D, eligible individuals may choose from a multitude of prescription drug plans, each with its own list of covered drugs.  The result is a highly convoluted drug reimbursement system and increased pressure on facilities to handle complicated administrative tasks when providing pharmaceutical services. 

Managing Growth and Improving Resident Care

Prescription drug delivery in senior healthcare facilities has become more complex than ever, simultaneously requiring both personalization and scale while also increasing administrative requirements for facilities and pharmacies alike.  With facility residents receiving multiple drugs per day, precision in filling prescriptions and dispensing drugs is only the beginning of providing high-quality resident care.  In order for facilities to expand to accommodate the growing senior population, drug delivery must be accurate, scalable and increasingly cost-effective. 

Under current drug reimbursement rules, facilities are responsible for as much as 25 percent of their residents’ drug costs, making pharmaceutical care facilities’ second largest expense after labor.  Managing pharmaceutical expenses has therefore become more critical than ever to successfully care for the nation’s seniors. 

Not only must institutional pharmacies accurately fill prescriptions, they must also make drug dispensing and documentation clear and easy for nurses.  They must supply timely and actionable information to facility administrators so that appropriate pharmaceutical treatments can be made in the most cost-effective manner possible. They must help facilities meet the rising demand for prescription drugs and improved resident care, providing more detailed consultations, and exploring clinical and economic drivers of drug utilization and costs. 

Today’s best institutional pharmacies see beyond the prescription, and instead focus on the real human needs that drive the nation’s expanding senior healthcare challenges.  By proactively working with facility staffs at all levels, institutional pharmacies can link their clinical, financial, operational and regulatory knowledge, creating a shared vision of the future of quality senior healthcare.