The Executive Suite: Dispensing medications from the office

Guest Post
By Rob Lamberts, MD

I was skeptical. A number of my direct care colleagues had touted the virtues of dispensing medications from the office, but I wasn’t sure. I built a successful practice without dispensing, relying instead on finding inexpensive drugs using services like GoodRx.com and patient assistance programs to get free medications from pharmaceutical companies. Patients were happy, and the practice was growing. It didn’t seem necessary.

But at the urging of those colleagues, I went ahead with medication dispensing about a year ago, and I must admit that I underestimated the impact it has had on my practice. It has become one of the biggest areas of patient satisfaction, as well as a very powerful marketing tool to both draw in new patients and retain my current ones.

The basics of medication dispensing

To start dispensing, there are a few things that you need to figure out early on:
What the laws are in your state regarding dispensing drugs
How to keep inventory and keep stock up
Where to buy the medications
Which medications to stock and what to charge

Each state has laws regarding dispensing*, with three of them (Texas, Minnesota, and Wyoming) not allowing physician dispensing at all. I am fortunate because Georgia has some of the most lenient dispensing laws for physicians and does not require extra licensure within the practice to dispense. The bottom line here is that your state has specific requirements, some of them significant, that you must follow if you want to legally dispense medications.

Once the legal hurdles have been crossed, the next step is to find a system that will help you print your labels, track your inventory, and log your prescriptions. There are a number of companies that take this next step out of the process by pre-packaging prescriptions and managing inventory. This does limit options for medication vendors to the one doing the packaging and also decreases flexibility of the number of pills prescribed in prescriptions. Doing a web search on “physician dispensing” will show a number of vendors who will do this for you.

Our office chose a vendor that interfaces with our EHR and our billing system. Check with your EHR vendor to see what solutions are available to you. Our solution allows us to enter prescription in the EHR, go to the dispensing software and print the label, and send it to our billing system. If the prescription brings the inventory down to a set level, it notifies us that we need to order more. It’s quite simple to use and lets us manage an inventory of over 100 drugs.

There are a number of companies that sell wholesale medications, many with free overnight shipping. In reality, it doesn’t matter where you get your medications as long as they are reputable, reliable, and reasonable in their price. We have built our list of medications up over time, based on patient demand and on the cost advantage we can give over retail pharmacies.

So, what to charge for the prescriptions? There are two philosophies in this area: the first is to make a reasonable profit on each medication and have prescriptions themselves as a revenue stream. The second philosophy (the one I follow) is to price prescriptions as low as possible (just to cover cost of prescriptions) and use these low prices as a tool for marketing and patient retention. It is hard for people to leave your practice if they are saving $50 per month on prescriptions.

The benefits of dispensing

The greatest benefit for dispensing medications in the office is to give patients something they almost never see in our healthcare system: a bargain. Patients equate inexpensive medications with us caring for their financial needs and will often brag to friends about how inexpensive our prescriptions are.

Beyond this, it is far more convenient for people to avoid going to the pharmacy, and we don’t have to worry about people not filling their prescriptions.

The downside

There is significant expense when setting up the system to order, dispense, and keep track of these prescriptions. The cost of getting a solid inventory of medications (even though most are inexpensive) is substantial. There is also significant time spent by staff managing this, filling the prescriptions, and ordering new medications.

The good news is that not only are we able to recoup our expenses in this area, we are offering a service that improves patient care, raises satisfaction, and draws new patients into the practice. So, despite my reservations, I now consider medication dispensing one of our greatest services.

* This is subject to change and I was not able to find a consistent list, so please refer to your own state’s pharmacy board for information.