Expert Perspectives

Accountable care strategies emerge

Executive Priorities and the Future of Pharmacy

By Becca Norris, Vice President Strategic Business Initiatives, McKesson Health Systems

The healthcare delivery market is in the midst of a metamorphosis.

The Affordable Care Act and commercial insurers’ focus on value-based payments has ushered in laser focus on quality and outcomes management as a means of managing the costs of healthcare. What got us to this point includes an aging population of baby boomers, increased chronic illness, and hospital margins threatened by lower reimbursements and rising costs. The response: Patient care is shifting to lower-cost sites of care, hospital patient days and admissions are declining, and post-discharge programs follow patients home and into the community. Recognition that keeping patients healthier and managing chronic disease correlates with lower overall healthcare costs has placed more emphasis on population health management. All of this is leading to a focus on one of the most discussed topics among health system leaders today — accountable care.

Recent industry forums and executive surveys have revealed themes about the changing shape of healthcare delivery and payment from the perspective of hospital and health system CEOs:

  • Clinical integration. Clinical integration is critical in helping to reduce the total cost of care and achieving success in the new outcomes-based environment. Many healthcare leaders are taking a fresh approach to organizing governance structures that ultimately support integration among care teams, as well as drive high-value, more affordable care.
  • The evolving reimbursement model links payments to outcomes. Though reimbursement largely remains fee-for-service based, payment methods incentivize reducing costs and achieve quality and outcome goals. For example, for FY14, Medicare reimbursement rates were cut for 1,451 hospitals as a result of their performance under the CMS’ value-based purchasing program and 2,225 hospitals were fined penalties for excessive readmission.
  • The delivery of healthcare is undergoing fundamental change. Healthcare delivery is shifting from episodic care, which is largely delivered within hospitals, to population health management, which requires coordination with payers and a host of healthcare providers to transform care delivery.

Representative comments from health system leaders reflect a common theme of change:

“Today, hospitals across the country must transform to survive.” [1]

“This is a once-in-a-lifetime thing in healthcare right now … in the way we deliver care. The system needs to change.” [2]

“The one thing health reform has done is it has changed the way we are thinking. That’s where change begins, and it has begun.” [3]

“An awful lot of reform was going on in the private sector absent the ACA. Before the ACA was passed, there was a significant amount of integration across parts of the system that was already occurring. Hospitals were already starting to take on more financial risk … and hospitals had already been seeking ways to improve quality, to improve outcomes, to improve efficiency.” — Rich Umbdenstock, President/CEO, American Hospital Association.

CEO Priorities Are Clear about Change

Hospital and health system CEOs are acutely aware of the financial challenges their organizations face. In this context, CEOs are focused on:

  • Reducing operating costs. Huron Consulting reported that even healthy hospitals will need to reduce their costs by 20–40%.[9] Hospitals are working to decrease costs through initiatives that focus on decreasing waste and improving integration.
  • Dealing with significant shifts from inpatient to outpatient/ambulatory services. Due to changes in reimbursement and care-delivery models, industry experts expect — and are already seeing — declines in inpatient volume, with significant increases in outpatient volume. Healthcare analytics firm Sg2 in its 2013 forecast predicted that inpatient volume would decline 3% per year over the next five years while outpatient volume would increase 17% per year.[10] Sg2’s inpatient/outpatient projections are consistent with the views of hospital executives surveyed by Premier.[11] This shift requires health systems to develop new capabilities at a different cost structure.
  • Preparing for the shift to population health management. Per Health Affairs, there are about 500 ACOs in the United States, representing about 20 million covered lives.[12] But this is just the beginning. Various studies estimate that between half and three quarters of U.S. hospitals will be part of an ACO by 2015.[13] ACO participants will be focused on providing more accountable, coordinated care for populations, improving the outcomes for these populations, and lowering costs by caring for populations in the most efficient, cost-effective way.
  • Embracing integrated information technology. Technology is being adopted to provide a streamlined, single source of data that can easily flow between providers as well as all departments of the organization. Integrated IT is necessary to enable health systems to coordinate care, transition to population health and provide more outpatient services.
  • Each of these focus areas is part of transforming how healthcare is delivered, and enabling health systems to survive in an era where health systems are caring for entire populations and where providers must be more accountable for the quality of care they deliver.

Pharmacy Priorities Are Aligned with CEO Priorities for Change

Health system pharmacy leaders are also acutely aware of the same changing healthcare trends as CEOs and are responding by aligning pharmacy priorities with the overall priorities of the hospital and health system.

In particular, pharmacy leaders are recognizing and actively taking a role in accountable care by engaging in population health management through medication management and adherence programs. Almost 75% of pharmacy leaders believe that within five years, at least 50% of hospitalized patients will be insured by a plan that assigns the patient to an accountable care organization. Further, 90% of pharmacy leaders believe that at least half of hospital revenue will come from payment systems that incent high-quality care and another 86% of pharmacy leaders expect bundled payment scenarios are likely.[14]

In light of these anticipated changes in the payment model and the population served, pharmacy leaders are increasingly focused on:

  • Working with other organizational leaders to develop and implement programs that improve quality and reduce costs. This includes programs to reduce unnecessary expenditures — which has been a longstanding focus of hospital pharmacy — and avoid potential penalties related to unnecessary readmissions and hospital-acquired infections.
  • In the American Society of Health-System Pharmacists’ (ASHP) Research and Education Foundation’s Center for Health-System Pharmacy Leadership Pharmacy Forecast 2014, 96% of pharmacy experts believe that in at least 75% of hospitals, pharmacy departments will be accountable for contributing measurably to improvement of institutional performance on externally reported “core” indicators of quality and safety, and more than 90% of these experts believe that in at least 50% of hospitals, a pharmacist will be on every quality improvement committee involved in improving drug-related therapy performance on externally reported “core” indicators[15].
  • Supporting success when reimbursement is linked to quality outcomes, particularly value-based quality metrics, measures related to patient satisfaction, post-discharge programs, or in ambulatory care settings.

Pharmacy Capabilities Are Helping Hospitals and Health Systems Transform

Not only do pharmacy leaders see the same changing landscape through similar lenses as CEOs; pharmacy is leveraging its capabilities to help institutions be better positioned to achieve success in this new environment. Specifically:

  • Pharmacy has capacity to aid the success of institutions’ engagements with patient-centered medical homes and ACOs.
  • Pharmacies are contributing to organizational success by:
    • Working to improve medication adherence for discharged patients. Pharmacy is involved in ensuring that medication issues are resolved prior to discharge, helping ensure smooth transitions of care, and implementing programs to follow up with high-risk patients post-discharge to help the continuity of drug therapy.
    • Focusing greater attention on ambulatory pharmacy. As population health management shifts patient care to more outpatient settings, pharmacy is aligned in developing greater ambulatory capabilities and being an active participant in caring for patients receiving outpatient services. This includes providing medication therapy management (MTM) programs and collaborating with providers to care for patients in an ambulatory setting. Almost 90% of pharmacy leaders predict that at least 25% of health systems will have pharmacists provide MTM for ambulatory patients[16].
    • Actively reforming the traditional pharmacy practice model. Pharmacy leaders see the practice of pharmacy changing, with pharmacists becoming integral parts of patient-care teams, particularly focused on patients with complex medication-use issues.

An Ally for Sustainable Change

In the midst of change, McKesson has risen to a very visible and integral role in service of the healthcare environment. Through expertise and partnership, every angle of the latest in healthcare, hospital and pharmacy operations is analyzed. Just as hospitals seek to deliver better patient health, McKesson delivers better business health to help more than 50% of American hospitals. This is done through:

  • Financial performance. Better business health begins with financial resources to help support the hospital’s bottom line. Customers have access to tools and resources such as drug spend analysis, patient assistance drug recovery programs, 340B consulting, revenue enhancement consulting, specialty clinic resources, generics program and ambulatory pharmacy consulting.
  • Operational efficiency. With solutions to generate pharmacy efficiency, pharmacies are redirecting clinical staff to support patient care and improved population health management. Customers have access to tools and resources such as online pharmacy-practice resources, unit-dose barcode packaging management, Six Sigma process consulting, supply chain management consulting and turnkey inventory management.
  • Technology integration. Integrating technology supports a positive return on investment through intelligent ordering, seamless data transfers and more. Customers are supported with tools and resources such as 340B software, automated cabinet replenishment, real-time NDC integration, outpatient software and automation, and pharmacy-management software.

Additionally, McKesson’s commitment to empowering customers to more strategically use IT solutions is reflected in the Better Health 2020™ strategy. Through a broad suite of IT capabilities, Better Health 2020 helps support organizations as they address complex challenges, including the need to reduce costs; coordinate care; measure and track clinical, financial and patient outcome metrics; assume more risk; and manage complex payment models.

Through these capabilities, McKesson is charting a course toward a stronger, more sustainable healthcare system that delivers better care and outcomes to patients in every setting — and better health for hospitals and health systems.


Becca Norris, M.S., leads strategy and program development for the health systems business group of McKesson Pharmaceutical. In this capacity she evaluates and implements critical initiatives and business opportunities that help meet customers’ challenges and needs within the changing landscape of healthcare delivery and reimbursement. Becca’s extensive healthcare career spans a broad range of leadership experience in healthcare, including hospital operations,  strategic planning,  industry analytics, program development, business intelligence, and performance measurement.


[1]Hospitals Face Whole New World Under Health Law,, October 20, 2013
[2]Healthcare in 2014: 3 CEOs Discuss Key Priorities for the Year Ahead, Becker’s Hospital Review, December 20, 2013
[3]Hospitals Face Whole New World Under Health Law,, October 20, 2013
[4]American College of Healthcare Executives Announces a Top Issues Confronting Hospitals: 2013, January 13, 2014
[5]Huron Healthcare CEO Forum Report Providing Perspectives from Hospital Executives on Industry Issues for 2014, January 28, 2014
[6]CEO Exchange: Physician Leadership Seen as Crucial, HealthLeaders Media, November 8, 2013
[7]Healthcare in 2014: 3 CEOs Discuss Key Priorities for the Year Ahead, Becker’s Hospital Review, December 20, 2013
[8]Hospital CEOs Identify Top 10 Challenges for 2013, Community Hospital 100, February 2013
[9]Huron Healthcare CEO Forum Report Providing Perspectives from Hospital Executives on Industry Issues for 2014, January 28, 2014
[10]7 Forecasts on Hospital Inpatient, Outpatient Volumes, Becker’s Hospital Review, June 14, 2013
[11]Providers Projecting Significant Inpatient to Outpatient Admission Shift in 2013, Premier Healthcare Alliance, Spring 2013 Economic Outlook, April 29, 2013
[12]Why Has ACO Growth Slowed? Health Affairs Blog, October 31, 2013
[13]More Than Half of U.S. Hospitals Aim for ACOs by 2015, Execs Say, Modern Healthcare, December 17, 2013
[14]ASHP Foundation, Pharmacy Forecast: Strategic Planning Advice for Pharmacy Departments in Hospitals and Health Systems, The New Pharmacy Forecast 2014–2018

Note: The information provided here is for reference use only and does not constitute the rendering of legal or other professional advice by McKesson. Readers should consult appropriate professionals for advice and assistance prior to making important decisions regarding their business. McKesson is not advocating any particular program or approach herein. McKesson is not responsible for, nor will it bear any liability for the content provided herein.