Tuesday, January 18, 2011

Why Doctors Should Profit from Dispensing Medications

Preface: This is a previous blog of mine that Kevinmd.com reprinted on January 16, My reasoning is fairly straightforward. Doctors spend a lot of time writing prescriptions. Prescription writing requires medical knowledge. Office dispensing is legal in 35 states. Office prescribing saves patients money. Currently, patients do not fulfill 30% of prescriptions.. Office dispensing increases compliance. So why not? This Kevinmd.com blog drew 57 comments from among his 37,000 readers. , Some positive, some are negative from Kevinmd readers. You may go to hhis blog to read these comments . In 2008, Kevinmd.com was voted the number one health care blog.

Hold onto your hats. I am about to enter dangerous territory. I am about to suggest maybe doctors should profit from dispensing medications from their office to offset declining reimbursements and rising expenses by using prescriptions as a source of ancillary revenues.

Why dangerous? For a number of reasons.

One, physicians still grapple with the perception that it is improper for a physician to make money from the delivery of care from business ventures.

Two, profit-making from prescription writing might induce physicians to write unnecessary prescriptions.

Three, prescriptions for profit might lead to conflict with pharmacists.

Four, Some states prohibit physician office dispensing, and more dispensing might lead to other states prohibiting the practice.

Five, there is also a fear that such a physician business venture carry significant risk relative to government regulation.

Then, there’s the other side of the issue. Writing prescriptions and ordering their refills takes a lot of physicians’ time. It also takes knowledge. It carries some malpractice risk, should the patient suffer an adverse reaction. Dispensing from the office would be convenient for patients. Since 30% of patients never fill their prescriptions, office dispensing is more likely to assure compliance. And prescriptions dispensed at the office are generally significantly less expensive than those filled at the local pharmacy.

Besides, physician can work only a finite number of hours and see a finite number of patients. The rational way to increase revenues is to identify revenue streams that do not involve an inordinate amount of incremental time on the part of the physician. Ancillary services can assist the physician in his ultimate goal of providing quality medical care (often in his own office setting) while producing a profit for his efforts.

Add to this fact the reality that physicians across the country are already performing an increasing number of ancillary revenue-producing services – lab tests, x-rays, imaging services, osteoporosis screening, electrocardiograms, physical therapy units, alternative medicine and herbal drug sales, diabetes management programs, and weight management programs.

Are there other ways physicians can increase their compensation without sacrificing lifestyle or running afoul of government regulation?

Yes there are, and profits from prescribing is one of them. But again, consider the negative factors before setting up an office dispensing system.

• Hesitancy to change existing practice patterns

• Fear of being labeled sat “commercial”

• Lack of office space to store drug inventories

• Reluctance to buy inventories.

• Reservations about upsetting local pharmacists

Still, why shouldn’t a physician with an entrepreneurial orientation is allowed to design a plan for ancillary service delivery, execute it and make a profit?

Why not office dispensing? After all, a typical doctor sees 20 patients a day, writes one and half prescriptions and one a half refills per patient, or three for each patient. That amounts to 60 prescriptions per day. And that doesn’t count all those phone calls asking for refills. If these doctors were to have an average profit of $5 per prescription, that would be an extra $300 a day.

The linkage of e-prescribing with EHR systems, the ability of mobile iPads to send e-prescriptions, and concerns about the hazards of illegible doctor handwriting, and the push for more practice efficiencies, electronic prescribing is very much the rage these days.

So why not have the ability to e-prescribe inside the office using targeted software to write and refill prescriptions and to issue a bill?


Joey said...

Dr. Reece,

I was wondering where you found evidence that "prescriptions dispensed from the office are generally less expensive than the local pharmacy." I'm curious because as a pharmacy manager, I have to maintain an inventory of medications to fulfill the prescriptions written by the physicians, nurse practitioners, dentists, optometrists, and podiatrists that practice in the area. If a local prescriber refuses to use low cost generic medications to treat patients, the pharmacy has no choice but to order the more expensive medication. Anyway, my point is that the dispensing pharmacist in most cases is under the mercy of the prescriber when it comes to cost.

Current practice has separated prescribing and dispensing (for many of the reasons you stated but most importantly the conflict of interest). With pharmacist prescribing and prescribers dispensing in some states the lines have been blurred. I'm strongly in favor of keeping these practices separate, regardless of the setting. While I believe pharmacists are capable of prescribing per protocols and collaborative agreements, I do not support a pharmacist prescribing and dispensing under one roof (or a pharmacy employing a nurse practitioner in a "little clinic").

Many physicians are considering dispensing as an option to help their businesses. While I respect their need to make up for declining payments from 3rd parties, we should not go down this slippery slope that may do more harm than good. The team-based approach to healthcare is in the best interest of our patients and physician dispensing is just a giant step back to the days when the town physician carried a little black bag of tools and remedies when making house calls.


Joey Mattingly, PharmD/MBA

Dispensing Physician said...

Dispensing physicians have the knowledge and experience to dispense. Many times pharmacists are so busy, they don't pay enough attention to the patient. The doctor sees the patient every visit. Why not let them dispense?

Bruce Dyson said...

As long as it's the right medication, I'm not sure what the bid deal is about who is dispensing medication. It should never be about money, it should be about the well being of the patient.

Elfrieda said...

It won't work in reality, that's exactly what I consider.

Unknown said...

Thanks for the info! The question is how much are the doctors supposed to be getting or proposed to earn for dispensing medication??

Unknown said...

This is helpful information. I'm just curious as to what the differences are between Pharmacies and Doctors when it comes to dispensing medication?

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Thanks so much for posting this! I had no idea that dispensing medication could be so profitable as a doctor. Thanks!

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