Compensation and Pharmacy's Mission

Abstract

To evaluate financial terms and legal wording in insurance contracts and negotiate their terms with companies to improve an independent pharmacy's financial position and to determine the time required to negotiate a contract and translate that time into a salary cost.An independent pharmacy in a small town in Alabama with a population of approximately 6,000.The prescription department accounts for two-thirds of the pharmacy's sales and dispenses approximately 70,000 prescriptions each year. Insurance companies paid for over 59% of these prescriptions in 2000. The pharmacy is open 7 days a week with one full-time pharmacist and a second pharmacist who works 2 days a month.A contract negotiation form was developed that addressed factors that might affect a pharmacy's decision to accept or reject a contract; the form included an area for recording the time involved in negotiating each contract.Insurance companies selected by the pharmacy owner were faxed copies of an Insurer Demographics Collection Form. Upon collection of all data and finalization of proposed changes, a copy of the contract with the proposed changes marked, along with a letter explaining and justifying the changes, was sent to the insurance company. If no response was received from the company, the contact person was called and negotiations proceeded over the telephone.Primary end points were the percentage of companies that would negotiate and the average increase in reimbursement achieved. Secondary end points included the time involved in negotiations and the translation of that time into a salary cost.None of the nine participating companies accepted any of the changes proposed. The time to negotiate each contract ranged from 28 minutes to 74 minutes, taking an average of 48.4 minutes. Depending on the division of work between the pharmacist and the technician, the salary cost for the negotiations ranged from $14.68 to $18.73 per contract.This study provides a realistic description of attempts at contract negotiation between one pharmacy and nine third party payers. The difficulty of achieving successful results and the necessity of carefully considering the time and cost of contract negotiations underscore how important it is for independent pharmacists to concentrate their efforts on contracts and terms they have an opportunity to change.