Magazine article Drug Topics

Dispensing Cost Study Shows Need for Cognitive Services

Magazine article Drug Topics

Dispensing Cost Study Shows Need for Cognitive Services

Article excerpt

A new cost-of-dispensing study confirms what most pharmacists probably knew in their hearts: It costs a lot more to fill a third-party prescription than a private-pay script. And that means the cost-effectiveness of cognitive services must be documented to help community pharmacy avoid collapsing under the weight of escalating third-party costs, said the study's author.

Unlike previous studies, which focused on the average cost of dispensing, the survey of Rhode Island chain and independent pharmacies examines private-pay and third-party Rx costs separately. And the difference--96 cent based on 1989 data--is "more than most pharmacists realize," said Kenneth Schafermeyer, St. Louis College of Pharmacy assistant professor of pharmacy administration, who conducted the study with his colleague, Renato Cataldo Jr., assistant professor of pharmacy administration and director of microcomputer applications.

"It does cost more to dispense a prescription for a third party," said Schafermeyer. "I think we've known that for a while, but quantifying it was another matter. I don't think most pharmacists thought about this extra cost they had to absorb or shift to other payers."

The in-depth survey, completed by 45 of the 183 Rhode Island pharmacies queried, pegged the overall cost of dispensing at $5.67. The third-party cost was $6.19, compared to $5.23 for private-pay prescriptions. When researchers adjusted the 1989 data for inflation, the disparity widened; the third-party cost went to $6.87 and the private-pay rose to $5.80, for an overall dispensing cost of $5.29.

Third-party expenses were higher than private-pay Rxs in several categories (see table). (Table omitted) Based on the time employees spent in Rx department activities, store personnel cost 34 cents more; the cost of bad debts was 34 cents higher; and direct expenses, including claims processing and enrollment fees, cost 10 cents more, as did the carrying cost of accounts receivable. Central administration was 8 cents higher in chain drugstores.

The average third-party prescription in the study cost $18.31. Coupled with a $4 dispensing fee, for instance, that Rx would yield a 22% return. "That's pretty scary," Schafermeyer said. "You just can't make it on that. And the cash-paying customers are disappearing, which indicates that the crisis will get worse."

The survey results add urgency to pharmacy's need for solid research to document that cognitive services save enough money to warrant payment. "That's where a lot of effort needs to be directed right now," said Schafermeyer, who's preparing proposals for two such studies. "In the long term, that is the survival of independent pharmacy. …

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