||Warren Moseley is chairman and president of Physicians
Total Care, Inc. PTC is a pharmaceutical repackager and wholesale
distributor in Tulsa, Oklahoma. From 1973 to 1988, Moseley was
a lawyer in private practice specializing in taxation and business
Previously, he served as director of financial services for Medserco
Inc., a company in St. Louis that specializes in physician practice
management; and in the tax department of Arthur Andersen & CO.
A certified public accountant, Moseley earned his BS in accounting
at the University of Missouri, Columbia, and his JD from St. Louis
University Law School. Richard L. Reece, MD, editor in chief, conducted
Q: Will office dispensing become widely attractive
A:Yes, for several reasons. First, there is currently
a tremendous shortage of pharmacists, which is expected to reach
40% over the next five years. Since the existing system will be
unable to meet the market demand for prescription drugs, something
has to be done to address that problem. Second, one solution to
medication compliance issues is to force doctors to gather the data
needed to demonstrate that they are in compliance (such as data
on drug formularies and drug interactions, and for managed care
data management). Doctors in almost every practice are spending
30 minutes to an hour each day dealing with pharmacy issues. In
fact, for every three doctors, there is one full-time equivalent
person devoted totally to pharmacy issues. Doctors get no additional
revenue for the time they spend on this activity. Since the doctors
are dong the work, they might as well deliver the product and get
paid for it. Third, doctors who use our system become more knowledgeable
about the costs of medication and the therapeutic alternatives,
and as a result become more selective about the medications they
prescribe. Also, with our system, they can track the effect of various
antibiotics, for example, to make sure they are getting the results
they want to achieve.
Q: An article in "The Wall Street Journal"
noted that doctors who know the costs of medications had a dramatic
effect on lowering the costs of prescription drugs.
A: That makes sense and is our experience. Where
the prescription is filled influences the cost too. PHarmacy industry
data have indicated that per-prescription costs in 1999 were $41.04
at retail outlets and $36 through managed care. The cost was $18.97
when the prescriptions went through our system, and that cost included
an average $4 profit for the physician.
Q: The number or prescriptions being written
has skyrocketed in recent years, which is one reason pharmacists
are struggling. They simply can't meet the demand. Is that what
is driving the change to office dispensing?
A: Yes, in part. The work is being shifted to
physicians. In fact, by the time the prescription reaches the pharmacist,
physicians have cleared the prescription with the insurer--and physicians
are not being compensated for this effort. Many companies are coming
up with handheld devices that let doctors do all the checking for
information in the exam room and then transmit that information
directly to the pharmacy. It does not make economic sense for a
physician to buy a handheld device and then spend time gathering
information without being paid for this work. Gathering information
is a clerical task, and it defies logic not to pay physicians and
their staff for gathering information to verify insurance eligibility.
Q: How do office-dispensing software system work?
A: Some of the best software for office dispensing
uses the Windows environment and can be loaded onto most computers
without the need for adding incremental hardware. But let me say
that doctors who are interested in dispensing must be willing to
make a commitment. That is, before a system is installed, they must
be willing to have a software company track their prescription writing
habits for two or three weeks so that the vendor will know the kind
of inventory the office will need.
At the same time, these software vendors have to gather insurance
information about their patients. The physician must be willing
to make a non monetary investment in the background information
necessary to put the system in place. After that, the physician
will need a two week inventory of drugs. That's when the physician
start to look seriously at therapeutic alternatives in terms of
relative cost. Before this, they never looked at their prescribing
habits in this way. Using such systems, virtually all physicians
cut the total medication costs of their patients in half from what
they were before they system was installed.
Q: Lowering drug costs must also benefit the
health care system, in which the fastest growing costs are in prescription
A: Yes, but these systems have been greeted with
some external resistance. For example, many pharmacists especially
resist doctors taking over this task. Pharmacists often control
MCOs' drug policies. Although tremendous savings can be achieved
by MCOs with physician dispensing, the politics are sometimes unfavorable.
Remember that pharmacists started by compounding drugs for doctors,
not by dispensing drugs. However, with the rapid increase in new
drugs, it became impossible for physicians to maintain a complete
inventory and pharmacists started dispensing drugs. That is a relatively
recent change. Now, with the prevalence of computers, pharmacists
no longer need to be the central distribution point and that function
can be returned to the physician.
Q: Should pharmacy benefit mangers, which are
essentially an extension of insurers, continue to exist?
A: The business of insurance companies is to collect
premiums and minimize claims, which is a legitimate purpose. But
in the process of minimizing claims, the interaction between doctors
and pharmacy benefit managers and insurance companies has traditionally
been adversarial. The companies that offer software for physician
dispensing align the purposes of the insurance company and the patient
with those of the physician. In other works, doctors are encouraged
to do the maximum for minimum cost, while the insurance company
gets the maximum for minimum cost and the patient gets better, lower-cost
healthcare. It helps everybody by making prescriptions more profitable
at a lower cost.
Q: What needs to be done to set up a system for
dispensing drugs in a physicians' office?
A: The licensing fee may be $4,000 (plus sales
tax) per practice site; which can be paid at the rate of $1 per
prescription. Doctors generally make $4 to $6 per prescription,
so accounting for the licensing fee means they are making about
$1 less per script until it is fully paid. The only up front costs
are for the two week inventory, which generally runs $2,000 to $4,000
per physician; and for a printer and a barcode reader, which together
may run several hundred dollars. A few hours of training in how
to operate these systems is required as well. The best companies
in this field will provide telephone and other support during the
process, and generally it goes smoothly.
Q: Does the profit per prescription vary?
A: Yes. It is generally $4 to $6 per patient.
It will be on the low side for managed care patients and on the
high end for cash-and-carry and workers' compensation patients.
Generally, physicians need to deliver at least five prescriptions
a day per site to have enough critical mass to make a profit using
these systems and to meet the monthly support fee, which will be
Q: What do you think of point-of-care medicine,
which encompasses everything that is done during a patient visit,
from the physical exam to the coding, billing and prescribing?
A: There is no doubt about it: Point-of-care medicine
is the new model for medical excellence and lower health care costs.
For the past 12 years, we have been calling what we do point-of-care
dispensing, so we feel good that we were on the right track early.
Q: Doesn't Point-of-care medicine make sense
because the patient-physician relationship is the backbone of the
A: It always has been. But the importance of that
relationship has been obscured by the fact that doctors and the
pharmaceutical industry have become the scapegoats of the health
care system. The main reason they are the scapegoats is that many
people (including Medicare recipients) do not have pharmaceutical
coverage and the cost of their drugs comes out of their own pockets.
The payers will not pay $300 to $400 a month for drug costs, but
will gladly fork over $50,000 for a coronary bypass, which ay not
have been necessary had the patient been taking the proper drugs.
But because Medicare will not pay for the drugs, doctors and pharmaceutical
companies are berated for profiteering.
Q: Two obstacles to the dispensing of drugs by
physicians are the seven or so state laws that prohibit it and the
charge that physician dispensing "for profit" is unethical
and leads to overutiliziation. Could you comment on these obstacles?
A: The New Jersey law, for example, allows doctors
to dispense a 72-hour supply of medications and to make no more
than a 10% profit from doing so. Therefore, the issue in New Jersey
is not whether doctors can dispense with competence, but rather
where the profit from dispensing is going. In Texas, doctors cannot
dispense if there is a pharmacy within 35 miles. Again, the issue
is the allocation of profit. Allocation-of-profit laws are an illegal
restraint of trade. Those laws, if challenged, will fall, according
to the Federal trade Commission.
As to the ethics issue: The AMA and some other medical societies
have issued opinions that physician prescribing is not unethical
as long as it does not exploit the patient for the doctor's profit.
But that's also true for practically everything the physician does.
A professional license gives a person the right to do for others
something they want to have done for them for their own good and
to charge for having it done. Everything a professional does presents
ethical dilemmas; the issue is how those dilemmas are resolved.
Q: What about the turf issues concerning doctors
and pharmacists? This is, the argument that pharmacists are part
of a check-and-balance system that catches doctors' errors?
A: That is no longer an issue. First, if it's
an argument about who makes the profit, the antitrust laws take
care of that because eliminating physician dispensing is an illegal
restraint of trade. As far as the error question, the best office-dispensing
systems will check for drug interactions, allergy history, and have
extensive data on the patient. Besides, the doctor gathers information
from the patient, and that information is always in the system.
Doctors have a better database than pharmacists or insurance companies
and their PBMs. PBMs have only a record of drugs that have been
filled; they don't , for example, have records of the over-the-counter
medications a patient may be taking or the patient's allergies.
All the data that managed care, PBMs, and HIPAA (the Health Insurance
Portability and Accountability Act) folks are talking about getting
can be obtained only from doctors.
Q: Some people portray the physician-consumer
relationship as a battle for control. Does office dispensing give
doctors too much control?
A: Patients know, and usually trust, their doctor.
However, if you ask 20 patients the name of their pharmacist, 19
of them won't have a clue. And the pharmacist has no information
about them except what is in the record for the insurance company.
The control issue, as I see it, is with the payers, who often dictate
the health care decision. Patients do not complain about doctors
being in control of their destiny, but they do complain about the
payers, who want to be at the table when decisions are made.
Q: If physician dispensing cuts pharmacy costs
by 50% and if those cuts stem from the physicians' firsthand knowledge
of what drugs cost, that knowledge and that cost-cutting threaten
the HMOs' and the PBMs' reason for being, does it not?
A: The payers are brokers and the PBMs are subcontractors
to the payers. They served a useful function when the system was
out of control in the 1980s and 1990s, and they were needed to correct
a system that was in disequilibrium. But now that disequilibrium
has gone the other way, and we have more bureaucracy than physician
costs. The only place left to cut the cost of health care is in
the bureaucracy, which means we have to trim the brokers back or
they need to address operating inefficiencies that can result in
system cost savings.
One way HMOs and PBMs make money in pharmacy is to recommend drug
A over drub B and to receive a rebate for doing so. This focus on
the price of a pill, while originally lucrative for the payers,
has diminishing results for health care. Payers take a 25% commission
in the form of the premium. So the system is beginning to take payers
out of the loop because their bureaucracies are too wasteful. A
layer of management needs to be eliminated, and physician prescribing
The true savings occur at the physician-patient level, where convenience
is paramount and where patients and physicians are informed about
costs and are responsible and accountable for the true cost of the
encounter. By assisting in this process and focusing on distribution
efficiencies and total treatment cost, there will remain a very
strong market for payers and PBMs to continue accelerating the improvement
of health care delivery. These software systems are here to assist
--edited by Paula Grant, in Lincoln, Va.