Keeping neb-meds on a tether

Thursday, October 31, 2002

Building profits in nebulizer medications takes a a pharmacy. No secret there. Don't have one? Got to get one. In the meantime, strategies do exist to help you refer out the medical side of the respiratory HME equation without sticking your head in the sand and without giving away your business to others. A key to successfully referring patients to pharmaceutical operations—and to planning for your own pharmacy operation down the road—is knowing how many patients you have, said Marcus Kruk, who has been involved in the respiratory HME/pharmaceuticals business since the late 1980s..

Sounds simple, but in fact, many HMEs have no real idea how many neb-med patients they have. Typically, unless a pharmacy management agreement is in place with a pharmaceutical provider—a subject we'll get to later—the HME won't necessarily get a regular report about whether patients are refilling prescriptions or how many are still doing business with the pharmacy to which the HME referred its patients.

Knowing how many patients you really have is essential to knowing when you've reached that critical mass. Usually that means about 90 to 100 patients, according to Kruk and Jeff Baird, an attorney with healthcare law firm Brown & Fortunato in Amarillo, Texas.

Whom to turn to

Your best bet for whom to send your pharmacy referrals to is probably not your local community pharmacy, according to Mickey Letson, president of Decatur, Ala.-based Letco Medical and Mario Lacute, president of Seeley Medical in Andover, Ohio, Sure, the idea sounds good. Wouldn't anyone want to send their patients to a place nearby?

But when the pharmacy starts doing the math and realizes it's easier for them to start stocking oxygen tanks, nebulizers and compressors than it is for you to provide medications, you may find that you have fewer patients and one more HME competitor, Letson warned.

Also, some community pharmacies and many big retail pharmacies at places like variety stores and budget department stores won't take Medicare patients, said Kruk. So, you may simply cause frustration for your patients if you send them to the wrong place.

Peter Storey, the vice president and COO of Associated Healthcare Systems, Amherst, N.Y., said HMEs can best achieve recognition by building a reputation as a partner in the patient management process; as a healthcare services provider and not just an equipment provider.

"You actually want to have programs in which respiratory therapists are involved with reaching out to patients directly, following up with them regularly, monitoring those patients and reporting back changes to physician offices," Storey explained.

Going with a national mail order provider is a safer bet than a local pharmacy, maintained Lacute. "Most respiratory HME providers want to send their pharmaceutical business to a pharmacy as far away from them as humanly possible," he said.

Whether dealing with pharmacies locally or remotely, one thing is certain: You don't want to lose those patients' HME business, and you want them back if you establish your own pharmacy operation later on. To that end, Baird said, you should have giveback agreements written up. This is an agreement that lets a pharmacy keep your patients for as long as you need help filling prescriptions and lets you take them back when you're able to fill the prescriptions yourself.

In such programs, the typical arrangement is that the HME sends the pharmaceutical business to the pharmacy, which fills prescriptions by mail and keeps the HME apprised as to the number of patients who are refilling prescriptions. In a well-structured agreement, the pharmacy will let you know when you should go it alone—and give back all your respiratory patients.

That's basically what Kruk did when he owned the company Express-Med, which was recently acquired by MP Total Care.

"We would handle the HME's pharmaceutical needs and let them know how many patients they had, as well as let them know what the profit or loss would be if they were running the pharmacy themselves," Kruk explained. "When they got to the level where they had enough patients for a pharmacy business, we would help that company get its pharmacy license and help them manage that pharmacy operation for a flat fee."

What else to know

Although he agrees that HMEs should be looking to establish their own pharmacy operations, Baird is adamant that HMEs need to do their homework first. And one of the first things to do is to find out what rules your state has with regard to open-door and closed-door pharmacies.

In some states, you can operate a pharmacy that is completely closed-door or that is open only an hour or two a limited number of days per week. In such cases, you can hire a part-time pharmacist —perhaps one who works at a local pharmacy— to fill and dispense prescriptions for your patients' respiratory medications.

Other states are more restrictive about such operations, and may require pharmacies to have their doors open on a very regular basis, for a number of hours. In such states, you may have no choice but to hire at least one full-time pharmacist and perhaps even pharmacy techs, said Letson and Baird.

But even with restrictive law, there are options. One: enter into a joint venture with an established pharmacy. Another: a well-structured pharmacy management agreement that provides pharmacy staff for you at first. HME