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Navigating the Complexities of Operating a Long-Term Care Pharmacy

Choosing a career path in long-term care (LTC) pharmacy, especially as an owner-operator, is challenging yet rewarding for those who enter this specific segment of the profession. Often, an LTC pharmacist is also the owner-operator of their LTC pharmacy business. That means doing it all. Owner-operators wear many hats like CEO, COO, CFO, and HR, which builds upon the responsibilities already faced with caring for a long-term care patient population.

The Complexities of LTC Pharmacies:

Clinical Complexity

Almost three quarters of residents in LTC settings have at least two of the ten most common chronic conditions1 and on average, patients require between nine and thirteen prescriptions per month2. LTC pharmacies must comply with strict regulations put in place to protect the health and well-being of this highly specialized patient population. 

Dispensing Complexity

Typically, the estimated cost to dispense medications for LTC pharmacies is 25% more than a traditional walk-in retail pharmacy3.This is driven by complex medication regimens requiring specialized packaging, medication delivery, and medication change management, as well as working closely with caregivers and nurses to support the clinical needs of the residents within LTC facilities. During this process, pharmacists must coordinate between the ever-changing needs of the facility, physician, and payer while simultaneously remaining in compliance with federal Medicare and state Medicaid regulations. Although many LTC pharmacists find it very rewarding to play a vital role in the care team for post-acute care patients, the complexity of care is tough and time consuming with no margin for error and can be all-consuming.

Billing Complexity

However, at the end of the day, for an LTC owner-operator, there is still more work to do in managing the complexities of running the business as well. With fewer opportunities for diversified income streams through front end sales of OTC medications, gift cards, and impulse purchase items like their retail counterparts, LTC pharmacies often rely solely on the revenue from dispensing prescriptions and servicing facilities. But with the complex nature of the vast coding required on each prescription claim transaction, it makes it difficult for LTC pharmacies to ensure accurate billing. And accurate billing is critical to achieve optimal reimbursements and to avoid any preventable income leaks.

But where’s the operations team? And the finance people?

For most owner-operators, finance is often top of mind. Ensuring the dollars-in and dollars-out are optimized and accurate is key to making sure the bottom line is where it should be. For the LTC pharmacist who is ALSO owner-operator, while prioritizing the clinical well-being of their patients, we must also manage the operations of running a profitable business.

Finding opportunities to offset the higher operational costs is possible by knowing where financial leaks may be and addressing them efficiently and quickly. One common “leaky” area lies at the intersection of the practice of pharmacy and running a business. It is when prescription claims are billed to third-party payers.  In the LTC environment, there are an abundance of LTC-specific codes designed to ensure the prescription complies will all regulatory and payer requirements. These must be input correctly on every transaction for the pharmacy to receive the appropriate reimbursement for the services they provide. Additionally, correct codes help to reduce costly payer review triggers caused by contradictory data points.

These codes and their rules for use can be daunting to learn even for the most experienced staff member. And when new team members are brought on board, training can be overwhelming for both the new employees and the owner-operator. Both staff and owners need to feel confident that errors are being prevented both during the training process and during the busiest of times. Mistakes inevitably occur, and when they do, having pharmacy configured solutions in place to automatically make coding modifications within the transaction or warn billers of potential errors in real-time, allows for the opportunity to fix the mistake and learn while doing the job with reinforcing repetition. Besides automated training through real time messaging for the staff, in using these solutions, the business is more likely to collect full reimbursements without doing re-work and may reduce payer-initiated reviews and takebacks, protecting the dollars earned for the complex services provided to LTC patients

The constant balancing act of being a long-term care pharmacist and an LTC business owner is indeed challenging. Caring for the patients, while also performing the necessary operations to keep the business functioning operationally as well as financially is not an easy thing to do. Yet, there are solutions available to help relieve the most common burdens of billing and coding appropriateness through automation, real-time reviews, actionable messaging, and peace of mind knowing mistakes are being prevented. Finding that solution can help to not only maximize reimbursement dollars and cashflow, but also speed up the training process and free up time that would otherwise be spent addressing underpaid claims and payer audits. With the right solutions in place, owner-operator long-term care pharmacists can feel comfortable focusing their time and energy on doing what they do best — caring for a very special patient population, knowing the business portion of their job is being managed efficiently.

Want to see if your pharmacy has any reimbursement income leaks?  Do you know if your claims are billed to achieve maximum reimbursement? Contact us now to find out.


1CDC/NCHS, National Survey of Residential Care Facilities, 2010

2MHA Independent Long-Term Care Member Study, 2019

3 Avalere Health LLC, Long-Term Care Pharmacy: The Evolving Marketplace and Emerging Policy Issues, 2015