The Problem: Hospital Costs Are Rising, Staying High
In the post-pandemic world, healthcare leaders are rapidly reacting to a variety of challenges that place unprecedented pressure on hospitals and health systems. Driven most vigorously by price inflation and ongoing workforce issues, hospitals are facing shrinking margins that require some new ways of thinking.
Since 2019, labor costs are up by as much as 30% in some areas and new hires expect more from their employers. At the same time, many operations are looking to cut costs by anywhere from 2% to 7%. Improving revenue requires a multi-pronged approach, with leaders re-evaluating value-based care partnerships, relationships with payers, internal operations, and even slashing some service offerings that are failing to drive revenue or engagement.
In a recent interview, Penn Medicine revealed that despite revenue increasing by 6% in the last year, expenses had risen by 12%. According to the American Hospital Association, (AHA) hospital expenses have increased by 17.5% between 2022 and 2019, despite Medicare rates only increasing by 7.5% during that time.
Prioritizing anything that yields greater patient care outcomes and streamlines operations is quickly becoming top-of-mind for every executive in the health system space.
CMS updated hospital rates by 2.7% while labor rates increased by 6.5% for FY2022.
While the workforce problem remains to be solved, and inflation is still impacting supply chain costs and credit lines, health systems can capitalize on opportunities to lower costs by carefully analyzing their largest cost centers.
The Solution Hiding in Your Health System's Drug Spend
In 2022, drug costs accounted for the largest increase in hospital expenses per patient compared to labor and supply costs. With drug costs trending upward for several years, the industry has created ample ways to draw down on net costs.
For 340b entities, there are often hidden opportunities to uncover significant savings through advanced rebate management on their inpatient drug administration. Taking every opportunity to offset price increases can have a major impact on net margins, freeing up valuable capital to support vital operations and staff. So, how can hospitals and 340b entities maximize their savings through rebate administration?
Health Systems Saving on Drug Costs with Rebate Administration
Drug rebate administration, properly implemented, can quickly become an additional revenue stream for hospitals and health systems. With the right approach and the right partner, double-digit percentages can be shaved off net drug costs-often amounting to millions of dollars, depending on the size of the hospital, network, or health system.
Achieving these savings requires the right combination of data management and industry insights to ensure compliance and transparency. Doing so will support relationships with drug manufacturers offering valuable rebates.
One of the first things to look for in a drug rebate administrator is how they adjudicate claims and ensure formulary adherence. This process involves thoroughly tracking claims during their lifecycle to guarantee claims are complete and accurate upon submission to manufacturers. Claims adjudication also includes the collection of clinical data required for rebate claims and utilization management practices that drive formulary adherence.
A common issue many healthcare providers face when submitting their own rebates is a lack of technology to track and adjudicate claims. No fault of their own, duplicate claims often end up being submitted to manufacturers, delaying rebates and potentially damaging the provider's reputation with the manufacturer.
The only effective way to ensure compliance and transparency is to use a partner with the right technology, built for the task of gathering clinical data, adjudicating claims, and seamlessly ensuring each claim is properly formatted according to each manufacturer's requirements.
It takes experts in both pharmaceutical and health system operations to find every opportunity to lower drug costs, maximize rebates, and empower effective patient care. Among their duties, a good rebate administrator can create formularies that meet clinical and operational goals.
The Thirdwave Rebate Administration Solution
At Thirdwave, we help health systems, specialty providers, and other 340b entities achieve their lowest net drug costs through an unrivaled rebate administration solution. We combine our collective expertise in pharmaceuticals, health system operations, technology, and finance, to deliver an automated solution coupled with expert oversight that guarantees compliance and transparency.
The results are savings on net drug costs ranging from 5% to 10%, with additional opportunities creating incremental revenue over time.
Only Thirdwave's proprietary technology efficiently and accurately accesses, analyzes, and converts data from multiple sources to identify opportunities to lower costs for hospitals, health systems, and specialty providers.
Our capabilities deliver you predictable, sustainable rebate revenue.
Thirdwave RX is a rebate administration solution that helps healthcare providers achieve their lowest net drug cost. Our team of healthcare, pharmacy, and financial professionals solve critical challenges in the healthcare ecosystem. With a proprietary technology stack and proven automation, Thirdwave offers the most innovative rebate product and services on the market.
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