Scott Taylor, Founding Principal & CEO, SRX
The changing landscape of the post-acute marketplace over the past 30 years has seen a step rise in the cost of drugs, as well as shifts in the relationships between operators, pharmacies, and regulators. The complexity of these relationships, combined with the clinical and operational environment in which drug spend is managed, creates significant challenges for even the most advanced operators and facilities.
In 2015, a group of post-acute care experts, with diverse backgrounds in the industry saw an opportunity to help operators better manage their drug spend through automation and technology. CEO Scott Taylor, a founding principal, explains, “We had enough experience in post-acute care to know full well the difficulty involved in effectively managing drug spend. This cost center is the second-highest cost area for operators, and the difficulty involved in proactively auditing, managing, and controlling drug spend represents the primary challenge we set out to solve when we built the SRX platform.”
SRX’s innovative technology integrates drug databases, facility formularies, pharmacy contracts, and regulatory and compliance considerations into its web-based application that is designed to identify areas for improving efficiencies and analysing trends, as well as help facilities receive the maximum eligible rebates. SRX experts also work with facilities in a consultative role to ensure that pharmacy contracts are optimized alongside related formulary and clinical processes. Ultimately, SRX provides a tool that gives long-term care (LTC) operators an unprecedented level of insight into their pharmacy bills and better control over their relationship with their pharmacy.
“We help skilled operators significantly bend their drug spend cost curve. In an increasingly competitive market, this provides our clients with a significant advantage over their competitors,” says Taylor. Drug spend in the LTC space represents a $6 billion industry, and costs only continue to rise. One of the key ways to reduce overall net drug costs is to maximize rebates, in combination with a carefully considered formulary. This can only be done if facilities know which line items on their bill are eligible. For larger facilities, this means manually sifting through tens of thousands of line items. Without automation, achieving lowest net cost is a near impossibility.
Pillars of Cost Optimization
SRX technology addresses three specific areas that impact the lowest net cost on pharmacy spend: formulary management, reconciliation and reporting, and rebate administration. Together, if managed and optimized properly, these areas create significant opportunities for improved savings and increased rebates.
On the formulary management side, SRX helps clients to not only choose the right mix of recommended drugs, but it also works to establish rules that hold pharmacies accountable for the drugs they are able to dispense (and thereby the associated costs). By establishing rules such as limits on dosage, defining when to use over-the-counter alternatives, or sticking to the determined formulary, SRX is able to not only improve the bottom line for clients, it also adds transparency to their pharmacy relationships.
An example of how SRX works with clients involved a nursing home operator that wanted SRX’s assistance in defining their formulary to reduce pharmacy spend. SRX integrated its platform with the operator’s existing electronic health records (EHR) system, PointClickCare, and worked with the operator’s pharmacy partners to properly adjudicate records on a daily basis. By utilizing SRX’s tools for automating and analysing data, the nursing home operator has reduced their net pharmacy costs by about 12 percent. Last year, the operator received over $950,000 in manufacturer rebates as a result of working with SRX. “In total, from all the components of our program, they are looking at an improved net effect between 15 and 20 percent,” extols Taylor.
The next key area that the technology addresses is reconciliation and reporting. The SRX platform integrates facility electronic health records with comprehensive drug databases, and combines powerful analytics to generate reports that offer insight into pharmacy bills, including identification of duplicate orders, and opportunities for split billing, returns, and credits. Automation also allows technology to sift through what are often thousands of line items to ensure that all eligible rebates are identified and submitted. This third pillar – rebates – is often the most visibly appealing for operators who can receive tens, if not hundreds of thousands of dollars in rebate checks each year. SRX also prides itself on guaranteeing quarterly rebate checks to customers. Taylor explains, “Just knowing they can count on those checks showing up each quarter means they can more accurately budget resources to other areas of operations that improve customer satisfaction and increase revenue.”
For Taylor and his fellow founders, the impact SRX has made for their clients in the market has inspired the company to look for other ways to create efficiencies and add value for operators by applying SRX’s collective experience and insight into the industry. “Few operators have access to the resources and expertise we have been able to gather and organize under the SRX umbrella. Our deep knowledge of industry best practices, challenges, and obstacles uniquely positions us to innovate improvements within the industry,” Taylor added.
When asked what opportunities stand out most, Taylor commented, “In an industry this large, there will always be areas where economies of scale can be applied to realizing additional cost efficiencies. Employee benefits and mail-order pharmacy solutions are two areas we are working on that stand to benefit our clients and the market. By leveraging the connections we have made through our technology platform, along with our expertise and network of partners in post-acute care, we are confident we will be able to continue adding to the services we offer.”
With a broad network of care providers and growing customer base at SRX’s disposal, pooling resources to offer group pricing for employee benefits or developing other operational processes seems like a logical next step. They are currently working on implementing their first employee benefits PBM to a 5,000+ life group, with launch anticipated in Q2 of 2020. The solution has effectively guaranteed a $1 million savings in connection with the health plan. Regardless of where this new venture takes them, SRX has already made great strides in improving the bottom line for industry operators. “We are committed to being the leader who asks, ‘what’s next’, and then having the resources, expertise, and will to make it happen” concludes Taylor.