Skip to main content

Hospitals Look at Retail Pharmacies With Renewed Interest

 |  By Christopher Cheney  
   February 03, 2014


It's more than convenience: An integrated retail pharmacy provides hospitals with opportunities to boost patient satisfaction and lower readmission rates while producing modest revenue.

U.S. hospitals have offered on-campus retail pharmacies for years, but the drive to achieve improvements across the continuum of care is prompting a surge in new facilities and reinvention of existing on-site drug stores.

"A retail pharmacy based on-campus and operated by the hospital provides an integrated continuum of care for one of the most critical steps in the health care transitions process," said Christine Collins, director of pharmacy at Lifespan, which includes Rhode Island Hospital, The Miriam Hospital and Bradley Hospital in Rhode Island. "Research has shown that over half of medication errors occur during transitions in care."

Lifespan plans to have two on-campus retail pharmacies open at its Providence hospitals by the end of the year. The health system opened its first retail pharmacy at Rhode Island Hospital in May 2013 and a second site is set to open at The Miriam in the fall.

"By having our own pharmacy, we can provide integrated care," Collins said. "Our pharmacists have full electronic access to the patients' hospital record, including inpatient medications, lab and microbiology results, physician's notes and pharmacy interventions. It is also very collaborative. We can consult with the patient's physicians, nurses and other health professionals before the patient even leaves the hospital. And it's patient-centered. We can deliver the medications right to the patient's bedside before they are discharged. This is not only a convenience, but it also provides a major safety enhancement by ensuring that the patient actually fills their prescription."


She said there are several barriers that can stand between a patient and filling a prescription such as transportation and insurance denials. "We are able to work through these issues while the patient is still with us, greatly minimizing the risk of non-adherence and the subsequent health issues that go along with that such as readmissions," Collins said. "This helps us provide a continuum of care for our patients even beyond discharge."

Lower Readmissions
Douglas Scheckelhoff, VP of the office of practice management at the American Society of Health-System Pharmacists, says hospital officials are focusing on medication as one of the keys to adapting to the changing health care industry landscape. "One of their strategies to lower readmissions is medication," he said, noting hospitals are creating "discharge prescription programs" through their retail pharmacies. "It's a very practical way to make sure the transition to the home is successful."

While the percentage of hospitals that have on-campus retail pharmacies has held steady over the past decade at about 25 percent, Scheckelhoff said ASHP is now asking hospitals about how many pharmacies they have at their facilities. "I think the larger hospital systems are opening more [pharmacy] locations," he said.

When hospitals weigh the business side of opening a retail pharmacy, they should be mindful of economies of scale and the potential for a relatively low rate of prescription re-fill orders, Scheckelhoff said.


According to the ASHP hospital survey data, about 70 percent of hospitals with 600 or more beds have at least one on-campus retail pharmacy. But very few hospitals with 200 or fewer beds have retail pharmacies. "They just don't have the volume of prescriptions," Scheckelhoff said.

Convenience Cuts Two Ways
Convenience is a major factor in a patient's decision to re-fill a prescription, which poses a business challenge to some hospital retail pharmacies. "They may choose to have re-fills done closer to home," he said. "It may not be convenient for them to go back to a medical center."

St. Anthony's Medical Center in St. Louis has two retail pharmacies located in medical office buildings on the nonprofit hospital's campus. The 767-bed facility acquired one of the pharmacies in 2000 and opened a new site in 2012.

"Customer service is the Number One reason we put in the new one," said Dan Johnson, the hospital's director of pharmacy services. "These pharmacies meet the special needs of our patients."

Johnson said St. Anthony's retail pharmacies, which are staffed by the hospital, benefit patients through the teamwork between pharmacists and physicians. He cited as an example wound patients with compromised mobility, who can can have their medications delivered to their doctors' offices. Also, hospital pharmacies can stock products that are often not available at other commercial pharmacies.


Low Margins, But a Better Patient Experience
The pharmacy director said the retail sites are a modest contributor to St. Anthony's bottom line, for now. "It is not a significant revenue producer for the hospital, but it is a revenue producer," he said. "Our margin is relatively low, but we can build our margin up 10 percent over time."

Palomar Medical Center, a 288-bed nonprofit hospital in Escondido, CA, opened a retail pharmacy with attached Starbucks in the fall. The pharmacy, Sav-on, is a partnership with Albertsons, a retail company based in Spokane, WA.

"Palomar Health has had a long-standing relationship with Albertsons in the community, so it was a natural fit to bring our partners into our facility," CAO Gerald Bracht said. "Starbucks and the Sav-on by Albertsons retail store and pharmacy bring added comfort and convenience to our patients, visitors and staff. It's a win-win situation for everyone."

Bracht said Albertsons leases space for the stores in the hospital's lobby, but added "the partnership goes well beyond a tenant agreement."

"The staff of the retail stores share the same commitment to ideal patient care and strive to improve the experience of anyone who comes into the hospital doors," he said. "That could mean delivering flowers to a patient, purchasing a gift for a loved one, stirring up your favorite cup of coffee or picking up prescriptions as a patient is heading home."


Christopher Cheney is the senior clinical care​ editor at HealthLeaders.

Tagged Under:

Get the latest on healthcare leadership in your inbox.