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" We are very happy with PTC. "

Leandra Lynch MD


Physicians Total Care
5415 S. 125th Avenue
Suite 205
Tulsa, Oklahoma 74146


918.254.6182 fax



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 formation.
Warren Moseley

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 this interview.

Q: Will office dispensing become widely attractive to physicians?

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 drugs, correct?

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 about $175.

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 health system?

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 achieves that.

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 them.

--edited by Paula Grant, in Lincoln, Va.



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