Medicare Plan Comparison Strategies to Increase Patient Retention and Grow Revenue LEARN MORE

4 Key Advantages of a PSAO Pharmacy

Today’s independent pharmacists face several new challenges, from competing with large retail chains and offering enhanced clinical services to figuring out how to submit medical billing claims for reimbursement. As major retailers expand, consolidate, and take over the market, the pharmacy landscape becomes increasingly complex and convoluted—especially for smaller mom-and-pop shops just trying to help their patients and ensure their business thrives.

That’s why now more than ever, independents need a pharmacy services administrative organization (PSAO) partner to help navigate these complexities, influence the way they do business, and gain a competitive edge. Here are some of the key considerations independent pharmacies should keep in mind regarding the role of PSAOs and the benefits they provide.

1. Bringing Independent Pharmacies Together

PSAOs bring a number of independent pharmacies together to create a more influential group that can negotiate contracts with more advantageous terms. By joining forces within one PSAO network and essentially functioning as a virtual chain, independent pharmacies can gain the purchasing power and negotiation leverage that retail pharmacies already have.

There’s significant strength in numbers. Bringing independent pharmacies together also expands access to the preferred pharmacy networks of many leading healthcare plans and pharmacy benefit managers (PBMs). This ultimately means more patients and more filled prescriptions, which in turn leads to more pharmacy revenue.

2. Enhancing Pharmacy Negotiating Power

One of the biggest ways that PSAOs help independent pharmacies is by giving them negotiating power they likely wouldn’t have otherwise. A PSAO manages contracts with payers and PBMs on your behalf, ensuring they’re designed with your pharmacy’s success in mind. 

As part of a strong PSAO pharmacy network, pharmacists can negotiate reimbursement rates and payment terms—not to mention negotiating more favorable contracts with third-party payers. Independent pharmacies can also benefit from centralized administration, which empowers them to work more efficiently and spend more one-on-one time with patients.

3. Gaining a Competitive Edge in the Market

Competing with big-box retailers can be extremely difficult on top of your other responsibilities, especially without the same corporate support and footprint. However, implementing new policies and forming beneficial partnerships could be a real game-changer for community pharmacies.

Here’s how Douglas Hoey, RPh, MBA, CEO of the National Community Pharmacists Association (NCPA), described the opportunity independent pharmacies have to remain competitive: “In many ways the market remains hungry for the kind of services independent community pharmacies provide that big box stores are not equipped for. Community pharmacists don’t have to wade through corporate red tape or run things by a distant corporate office. They can make decisions that work for them and their patients.”

As community pharmacists fight to compete with large, national chains, the need for a PSAO pharmacy partner becomes even more apparent. By aggregating buying and selling powers, small, independently owned pharmacies strengthen their ability to compete. PSAOs allow independent pharmacies to become competitive in the market and negotiate more favorable prescription pricing for increased volume.

4. Expanding Reimbursement Opportunities

If you’re like most independent pharmacies, you’re probably struggling with declining reimbursements and shrinking profit margins. With the right PSAO partner, pharmacies can benefit from increased reimbursement opportunities, on top of a reduction in costly direct and indirect remuneration (DIR) fees.

According to the U.S. Centers for Medicare and Medicaid Services (CMS), DIR fees have increased by a whopping 45,000 percent in the last decade. These retroactive fees hit a record $9 billion in 2019, and despite efforts to reduce or get rid of them, it’s unlikely they’ll go away any time soon. 

This directly correlates with the vast number of pharmacies that have had to close their doors. In fact, approximately 2,000 pharmacies have closed in the past two years alone. That’s why reducing DIR fees and expanding reimbursement opportunities is a top priority for many of today’s independent pharmacists.

Protect the Health of Your Pharmacy with the Right Partner

When searching for a PSAO partner for your pharmacy, there are certain factors to consider in order to ensure you’re making the best decision for your business. Here are some important considerations when evaluating PSAOs:

  • What is included in the PSAO membership agreement?
  • Is the PSAO focused on performance improvement?
  • Does the PSAO have value-based care contract expertise?
  • Can the PSAO deliver more advantageous third-party contracts?
  • Will the PSAO step in as a strategic advisor to improve your business?
  • Does the PSAO have a large network of independent pharmacies?
  • How does the PSAO you’re considering handle claims reconciliation?
  • Will the PSAO help you identify opportunities for reimbursement?
  • Does the PSAO offer certification and credentialing services?
  • What are the PSAO’s membership requirements, if any?
  • Can the PSAO help you reduce DIR fees to improve profitability?
  • Will partnering with the PSAO in question help you provide better care?

By asking these questions when comparing PSAOs, you can move forward with the peace of mind that you’re choosing the right partner. If you’re not part of a PSAO and you’re struggling to make a profit amidst the ever-changing pharmacy landscape, it may be the right time to consider joining one. On the other hand, if you’re already part of a PSAO that isn’t necessarily meeting your needs, you might want to assess the relationship and reevaluate your options to find a better fit.

The right PSAO can help the independent pharmacist drive clinical, operational, and financial improvements to protect the health of their business. Whether you’re switching to a new PSAO or joining one for the first time, keep these considerations in mind to make sure you choose a partner that can take your pharmacy to the next level. 
FDS is not just a technology company, but a team of pharmacy experts with experience and playbooks developed from work with more than 10,000 pharmacies and partnerships with leading PSAOs. Learn more about how FDS can help your pharmacy today and leverage the relationships and partnerships you are considering. To get an inside look at FDS and learn more about the minds behind the technology, as well as the mission that continues to drive it forward, view our free, on-demand virtual event. FDS is moving pharmacies forward in 2020, and this free event featuring three in-depth sessions will show you how.

Watch the 2020 FDS Forward  Virtual Conference On-Demand »


Amplicare is now part of EnlivenHealth®


FDSRX is now part of EnlivenHealth®