Latest / Becker’s Healthcare Podcast / Balancing Margin, Shortages, & 340B Risks in 2026
Transcript
- 0:00Hi, everyone. This is Erica Spicer Mason with
- 0:02Becker's Healthcare. Thank you so much for tuning
- 0:04in to the Becker's Healthcare podcast series today.
- 0:08So today, we're going to talk about balancing
- 0:10margin, shortages, and three forty b risk in
- 0:122026.
- 0:14And joining me for this conversation
- 0:15is AJ Rovasecki,
- 0:17product director at BlueSite.
- 0:20AJ, it's great to have you on the
- 0:21podcast. Thank you so much for joining us.
- 0:23Oh, it's really great to be here. I
- 0:25can't say this is always everybody's favorite thing
- 0:27to talk about, but it's definitely been top
- 0:29of mind for me and everyone I talk
- 0:30to recently. So looking forward to getting to,
- 0:33share that with everyone that's listening.
- 0:35Yeah. Well, our I'm I can say safely
- 0:37that our listeners are really going to appreciate
- 0:39your insights on these topics
- 0:41even if they aren't always, the most fun
- 0:43to talk about as you said, but important
- 0:45nonetheless.
- 0:46But before we dive in, would you mind
- 0:48sharing just a little bit more about yourself,
- 0:49your background, and the work that you're doing
- 0:51in health care?
- 0:53Yeah. So I'm actually a pharmacist by training.
- 0:55I'm still a licensed pharmacist. I spent,
- 0:59the first eleven years of my career at
- 1:01a pretty large health system,
- 1:02here in the Pittsburgh area. Most recently before
- 1:05coming to BlueSight, a pharmacy operations manager, so
- 1:08I oversaw
- 1:09little bits of basically everything we'll talk about
- 1:11here today.
- 1:12I've been at BlueSite now for about five
- 1:15years where I've kind of switched over to
- 1:17the role of working on product road map
- 1:20and development,
- 1:21in and around all the areas that I
- 1:23used to worry about when I was, in
- 1:25the health care space, as a health care
- 1:28worker instead of a health care vendor. So
- 1:31I've really focused on the same thing for
- 1:33my entire career about the past fifteen years,
- 1:36now just kinda from the other side of
- 1:37the street.
- 1:39It's great to have that dual perspective. So,
- 1:41AJ, great to learn more about you and
- 1:43excited to hear your take on some of
- 1:45these questions that I have today.
- 1:47So first, I wanted to acknowledge just kind
- 1:49of the shift that we're seeing more broadly
- 1:52in our own coverage at Becker's and some
- 1:54of the conversations that we're having with leaders.
- 1:56But we're seeing that pharmacy procurement is kind
- 1:59of moving from something that's
- 2:01maybe a series of isolated
- 2:03purchasing decisions.
- 2:05And so I'd love to know what's driving
- 2:07that shift,
- 2:09towards something
- 2:10perhaps more strategic.
- 2:13We're seeing this a leading system, so I
- 2:14would just love to know your your thoughts
- 2:16on how they're rethinking procurement.
- 2:18Yeah. I think, you know, for years, there
- 2:21has kind of been these work silos,
- 2:23whether it's within kind of the the health
- 2:26system in general,
- 2:27and, I mean, from where I sit or
- 2:29have sat,
- 2:31pharmacy more in particular. But I think the
- 2:34two big shifts that I've seen are,
- 2:36one, like, how does pharmacy
- 2:38become less of
- 2:40a cost center and more of a strategic
- 2:42driver for the organization?
- 2:44So that's been something that pharmacy departments,
- 2:48in the
- 2:49health care world have been working on for
- 2:50years.
- 2:52And I think that we're kind of seeing
- 2:53this perfect storm of various
- 2:56problems coming together, which have almost forced forced
- 2:59that narrative forward, which is, okay. Now we
- 3:01must do this. So how can we
- 3:04take this
- 3:05kind of confluence of problems and look at
- 3:08them from a more holistic level where I
- 3:10think, you know, previously, we had our
- 3:13supply chain team that works purely on getting
- 3:16contracts and buying drugs.
- 3:18We had a clinical arm that focused on
- 3:20the clinical initiatives.
- 3:22We had
- 3:23a regulatory compliance team that, you know, made
- 3:26sure that we were in compliance with all
- 3:29relatively needed things between compounding USP seven ninety
- 3:32ninety seven, three forty b compliance. And what
- 3:35we're really seeing now is
- 3:37with the ever thinning margins on health care,
- 3:40the potential shift we're seeing, which was scheduled
- 3:43for this year and now is on ice
- 3:44again for a little bit of moving the
- 3:46three forty b program to a,
- 3:49rebate model
- 3:51is just a
- 3:52we can't keep living with all these things
- 3:54in silos.
- 3:56So there's the kind of organizational
- 3:58thought that
- 3:59the only way we can keep functioning strategically
- 4:02as an organization is if we quit treating
- 4:04these things like three separate problems that need
- 4:06to be solved by different teams and start
- 4:08bringing them together because
- 4:10I can't optimize
- 4:12the margin driving aspect of our organization unless
- 4:15we're procuring
- 4:16the drugs at the best cost at the
- 4:18best time. They're being done in a way
- 4:20that we know we can operationally
- 4:23access the price points we should. You know,
- 4:25we also need to be sure that we
- 4:26have confidence of the supply chain. So we
- 4:29see that kind of organizational
- 4:31change.
- 4:33And, look, this isn't a podcast about the
- 4:35the buzziness of AI, but I think the
- 4:38the concept
- 4:40that AI has brought forward to everybody
- 4:42has been that data can no longer live
- 4:44in silos. So I see I think we're
- 4:46actually seeing two things come together at the
- 4:48same time.
- 4:50The first being the operational
- 4:52nature of health care being like, we need
- 4:53to operate more strategically and less in silos.
- 4:56And at the same time,
- 4:57whether people are using AI tools or not,
- 4:59it's kind of made everybody aware that bringing
- 5:02data out of silos and using it together
- 5:04in a more consolidated manner actually allows you
- 5:06to do that first thing. You know, any
- 5:08of the AI tools that are out there
- 5:10now, that's really the big selling point, right,
- 5:12is how do I harvest new insights
- 5:14out of the data I already have by
- 5:16unsiloing it, and how can I accelerate that
- 5:19unsiloing?
- 5:20So the to me, it's the dual nature
- 5:22of
- 5:23organizations know they need to unsilo these things
- 5:26in order to keep achieving the prime directive,
- 5:29which is providing health care to patients. They
- 5:32they must get better at driving these initiatives
- 5:34forward, while at the same time, a shift
- 5:36that, hey. We don't have to live with
- 5:38our data in silos, and the only way
- 5:40we can achieve that goal is by bringing
- 5:42disparate data sources together.
- 5:44So a relatively long answer, but that's kinda
- 5:47my summary of, you know, what I'm feeling
- 5:49and seeing across the industry,
- 5:51whether it's me putting myself back in the
- 5:53seat at the hospital or looking from the
- 5:55outsider's perspective of how the vendors start to
- 5:59react to what the potential customers might need.
- 6:03Mhmm.
- 6:04Yeah. AJ, I appreciate how thorough your answer
- 6:06was because it really does underscore the complexity
- 6:08that health systems are facing when it comes
- 6:10to not just procurement, what we're talking about
- 6:13here today, but just complexity with their data
- 6:16in general and this need for it to
- 6:18be better integrated.
- 6:20So I'd love if you could also just
- 6:22share an example of changes or even outcomes,
- 6:26the organizations tend to see when they do
- 6:28take that more integrated approach.
- 6:31Yeah. One of the ways I think I
- 6:32can articulate it is essentially,
- 6:35I'll I'll answer two ways. One is what
- 6:37I'm seeing people do right now, and one
- 6:38is actually we are helping people get prepared
- 6:40for prior to this year. So right now,
- 6:43we've actually started seeing people start pull together
- 6:46data about supply chain resiliency and pulling it
- 6:49into their purchasing decisions
- 6:51from a financial perspective.
- 6:53So to expand on that a little bit,
- 6:55you know, there's the idea of we wanna
- 6:58optimize our procurement costs. Right? Just like you
- 7:01or I, if we're shopping on a
- 7:03weekend at the grocery store, you know, we're
- 7:05looking at all the different ranch dressings and
- 7:07picking the one that has the best price
- 7:09for the value that we need. We don't
- 7:11typically worry about if Hidden Valley is gonna
- 7:13be in stock or not, but in the
- 7:14drug supply chain, you're you're always worried about
- 7:17is there going to be a supply disruption,
- 7:19whether you're making that at a PNT level
- 7:21as a clinical decision. You know, the pharmacoeconomics
- 7:24of what's the cost of procurement
- 7:26often isn't looked at in terms of and
- 7:28what's the relative supply chain resiliency of of
- 7:31that item. So if I'm picking between
- 7:34various first generation cephalosporins,
- 7:37right, there's a a formulary trade off cost
- 7:40between
- 7:41how much something costs and how available it's
- 7:43going to be. We typically haven't seen that
- 7:46be part of the discussion.
- 7:48What we're starting to see people do to
- 7:50start to bring it together is
- 7:53look at the ability to harvest huge datasets
- 7:56and say, you know, within a therapeutic category,
- 7:59what's the relative risk of supply chain disruption?
- 8:02And from a therapeutic category to a drug
- 8:04class. And so start to make some of
- 8:06those decisions with
- 8:08full information. So instead of just making an
- 8:11operational decision on,
- 8:14we're gonna go with vendor x because they
- 8:16have high availability,
- 8:17or we're gonna go with vendor y because
- 8:19they have low cost,
- 8:21whether it's from the clinical decision making standpoint
- 8:24of what first generation cephalosporin do we put
- 8:27on formulary or a
- 8:29we don't care, just pick the best option
- 8:31from a procurement standpoint.
- 8:34People that are putting together those datasets to
- 8:36say, great.
- 8:38Drug x costs $1, drug y costs $2.
- 8:42I simultaneously
- 8:43can see the impact on my procurement cost
- 8:46and the relative risk of the supply chain
- 8:48of each of those things. What's the trade
- 8:50off I'm willing to make?
- 8:51And sometimes you pick the higher cost, but
- 8:54you have the defensible reason with why you
- 8:56do that. You understand the risks involved both
- 8:59from a cost and supply chain perspective.
- 9:01So it's a very kind of concrete way.
- 9:03We're watching people put together the datasets that
- 9:05we work with on a daily basis.
- 9:07In the future, and we were kind of
- 9:09getting people prepared for this prior to the
- 9:11first of the year and will continue to,
- 9:13is the notion of, you know, putting together
- 9:16datasets between the compliance and the financial aspects
- 9:19of the three forty b program.
- 9:22Look. I don't have a crystal ball. I
- 9:24don't know when it's gonna happen, but I
- 9:25know that there seems to be
- 9:28no slowdown in the push towards,
- 9:31whether you wanna call it a three forty
- 9:32b rebate pilot or a three forty b
- 9:34rebate model or just various manufacturers
- 9:36that are continuing to push for
- 9:39what some may consider
- 9:41legally ambiguous datasets to continue to access their
- 9:44prices,
- 9:45there becomes this high burden
- 9:48on marrying what you need to do to
- 9:50prove to someone like a HRSA auditor that
- 9:53your program has been compliant with everything within
- 9:56the three forty b statute
- 9:57and all of the financial and claims data
- 10:00that will need to be available for making
- 10:02sure you can access the price points that
- 10:04that that, program provides.
- 10:07And so we're seeing even future thinking,
- 10:09organizations
- 10:10start to think about how do they put
- 10:13that data together themselves or as ourselves and
- 10:16lots of other vendors were doing prior to
- 10:18the first of this year,
- 10:20ramping up efforts to pull that data together
- 10:22and make it available to,
- 10:25three forty b organizations in ways that let
- 10:27them start crossing those bridges on siloing their
- 10:30compliance teams from their financial teams.
- 10:34Great examples, AJ. I really appreciate you elaborating
- 10:37there, and you touched on two topics where
- 10:39I wanna go just a little bit deeper.
- 10:41First, I know you mentioned in your example,
- 10:43you'd you touched on supply chain resiliency,
- 10:46and we know the drug shortages have become
- 10:48really a persistent reality for most pharmacy teams.
- 10:51So I'd love to know a little bit
- 10:52more about how integrating predictive shortage data into
- 10:55those procurement workflows can actually change purchasing decisions.
- 10:59And how should leaders balance supply risk with
- 11:01cost and reimbursement as well? Yeah. I wish
- 11:04I had a magic bullet answer to the
- 11:05second question. To the to the first question,
- 11:09we're never going to stop supply chain disruptions.
- 11:11Like, as long as the economics
- 11:13and manufacturing
- 11:14and distributing drugs are what they are, it's
- 11:17it's what's going to happen. Right? And so
- 11:19it's more about how do you take those
- 11:22predictive signals, get early warnings,
- 11:25and my my goal here would be to
- 11:26start switching our thinking from warnings like everything
- 11:29is a disaster that must be responded to
- 11:31to just part of the normal workflow.
- 11:34And so what we're really thinking of is
- 11:35how do we use this kind of predictive
- 11:37nature
- 11:39not
- 11:39to say, hey. Go
- 11:41go buy up all the stock so it
- 11:43doesn't affect you or
- 11:45how to
- 11:46go time the market. We're thinking, like, this
- 11:49is a pervasive issue.
- 11:51Just like
- 11:52going back to my grocery store example, sometimes
- 11:54you can't get things. Your favorite coffee creamer
- 11:57might not be available for a long time.
- 11:59Whatever.
- 12:00It's about having the workflow so you're not
- 12:02scrambling, so you're making the right decisions, so
- 12:05you're prepared
- 12:06when ultimately
- 12:07supply chain disruptions do happen.
- 12:10So taking the financial aspect out of it
- 12:12for a second, there's a huge operational cost
- 12:15of having to be
- 12:17really reactive
- 12:18to drug supply disruptions and shortages if you
- 12:21can prepare.
- 12:23Know that, hey. In thirty, sixty, ninety days,
- 12:26there might be a disruption in the supply.
- 12:29You can start having conversations with stakeholders early.
- 12:31Where can you use a different medication
- 12:34with no impact to patient care? And and
- 12:36just kind of let it be a pharmacy
- 12:37driven thing from a swap out perspective.
- 12:40Where do you wanna engage people,
- 12:43such as, like, anesthesia providers to have a
- 12:45plan in place before things happen
- 12:48and have everyone on board. So when you
- 12:50need to make that that switch,
- 12:52it's nondisruptive.
- 12:54It's not a operational cost to people's days
- 12:56and times.
- 12:58It's not a shock to the people who
- 13:00are providing care, and you kind of are
- 13:02unifying the entire response plan across the health
- 13:05system.
- 13:06And where it ties into finances is kind
- 13:08of going back to what I was saying
- 13:09previously.
- 13:11It's just understanding the risk, right, and knowing
- 13:13what your trade offs are going to be.
- 13:15And I think that's really where we're seeing
- 13:17the push on that on that front is
- 13:21going in with eyes wide open. It doesn't
- 13:23necessarily always need to be a push to
- 13:25the bottom,
- 13:26to buy the cheapest item
- 13:28if you're willing to accept a higher price
- 13:30for better supply chain resiliency.
- 13:34And, you know, we we typically at my
- 13:36company, we don't sell to manufacturers.
- 13:39We're not technically manufacturers
- 13:41on our customers. But by being in this
- 13:44industry, I've certainly had plenty of conversations with
- 13:47drug manufacturers and pharma
- 13:49who look at one of their
- 13:52their weapons, their compelling differentiators
- 13:55as,
- 13:57one of those differentiators being like, yeah. Great.
- 13:59We know we're not the cheapest, but we
- 14:00make sure that when our customers,
- 14:02aka hospitals and health systems, need supplies available
- 14:05to them,
- 14:06they've had a problem of communicating that and
- 14:09being able to let people have visibility into
- 14:12that type of information on a real time
- 14:14basis when they're making purchasing decisions.
- 14:17We don't have any plans at the moment.
- 14:19I certainly don't. But it from a health
- 14:21system perspective is you're making those decisions.
- 14:25You're highlighting it. Right? If I'm choosing between
- 14:27manufacturer a and b and one has price
- 14:29point a and one has price point I
- 14:31guess I should do price point one and
- 14:33price point two, I have the ability to
- 14:35see, am I willing to make that trade
- 14:37off? Will I accept a little bit higher
- 14:39upfront cost because they have a more resilient
- 14:41supply chain?
- 14:42I think long term, we'll see maybe manufacturers
- 14:45start to help us mitigate the overall shortage
- 14:47problem by being willing to
- 14:50produce more
- 14:52if they can see that they can get
- 14:53those price points because people are willing to
- 14:55pay for it. Now, look, that's a very
- 14:56pie in the sky
- 14:58macroeconomic,
- 14:59supply and demand assessment of the entire situation,
- 15:02and,
- 15:03maybe I'm naive.
- 15:05But that is one of the things we
- 15:06aim to do here is by showing that
- 15:09that that balancing act, that what I'm willing
- 15:11to pay for what value I get is
- 15:13transparent to health systems, that we can start
- 15:16to mitigate the number of supply chain disruptions
- 15:18that people actually experience.
- 15:21Yeah. AJ, thank you so much. And I
- 15:24I wanna get to some closing thoughts here.
- 15:26But before we do, another piece,
- 15:29from your early examples I wanted to hit
- 15:30on to is going back to this three
- 15:33forty b,
- 15:35potentially facing
- 15:37rebate model changes.
- 15:38And
- 15:39so from your point of view, as those
- 15:42model changes, if they were to take place
- 15:44and
- 15:45if there were to be increased audit scrutiny
- 15:48here, how could this unified or integrated data
- 15:50approach help pharmacy teams stay compliant while also
- 15:53protecting their bottom line too?
- 15:56Yeah. I think it what it actually does
- 15:58is it couples
- 15:59both activities into one. So one of the
- 16:01things we've been trying to aim for, and,
- 16:04obviously, we ended up not needing to,
- 16:07pull the trigger, but we were starting to,
- 16:09pilot with some customers with how do we
- 16:12wrap all that into into all one piece
- 16:14and not make it an extra burden. So,
- 16:17if the rebate model were to go forward,
- 16:18the idea is that you take pharmacy
- 16:22medical or pharmacy claims data, and you must
- 16:24submit it back through a third party
- 16:27to prove that it was a
- 16:29approved use of the three forty b medication,
- 16:32and then you get paid back. So same
- 16:34as a mail in coupon versus an upfront
- 16:36discount. Just total shopping analogies today.
- 16:40And so
- 16:41to do that, you actually need access to
- 16:44what underlies
- 16:46a transactional audit from a compliance perspective.
- 16:49So it's really how can I couple those
- 16:51two things back together
- 16:53so that
- 16:54I can be fully audit defensible
- 16:56when I'm submitting
- 16:58that claim through a third party or through
- 17:00to a manufacturer ultimately to get my rebate
- 17:03back, which is necessary to protect the intent
- 17:05of the three forty b program, which is
- 17:07to,
- 17:08extend the reach of the health care system,
- 17:11the ability to stretch resources,
- 17:13while at the same time knowing that not
- 17:15only is that claim that I submitted
- 17:18I've been using the term bulletproof, but I
- 17:20really mean audited down to its core?
- 17:23But
- 17:24by virtue of doing that in the first
- 17:25place, if a auditor from HRSA comes back
- 17:28into our organization,
- 17:30I don't have to be worried. I don't
- 17:32have to be ready to I don't have
- 17:33to go spin up a whole another process
- 17:35to go get myself ready for an audit
- 17:37because I've been doing it all along.
- 17:39So, really, what I think is,
- 17:41in general, it's gonna push us further towards
- 17:44the perpetual audit readiness and ourselves or other
- 17:47vendors that are kind of thinking about the
- 17:49future or thinking about how can we do
- 17:51this in a way? How can we prepare
- 17:53people for this rebate pilot in a way?
- 17:55Not only that
- 17:56takes some of the operational burden off their
- 17:58plates, but also makes them more compliant ready
- 18:00at the same time while becoming more efficient
- 18:03at both.
- 18:04And that was a little bit esoteric, but
- 18:05that's just because I don't have any concrete
- 18:07examples because we haven't actually had to do
- 18:09it yet. Mhmm. But that's very much how
- 18:11we're conceptualizing
- 18:12it is how can we use
- 18:14one workflow
- 18:15to solve both problems.
- 18:18Oh, absolutely. And it it signals how your
- 18:20organization is looking ahead, AJ, and it's helpful
- 18:23for our listeners, no doubt. And by the
- 18:25way, appreciate the grocery and retail analogy
- 18:27because they they resonate with me. So, hopefully,
- 18:30our listeners too.
- 18:32But, AJ, it's been a great discussion today.
- 18:34Just one final question for you. As you're
- 18:37looking ahead, what do you think pharmacy leaders
- 18:39should prioritize right now to build a more
- 18:42resilient and financially sustainable procurement approach?
- 18:46Yeah.
- 18:48I think it's really about
- 18:49build by partner. And, like, like, it's something
- 18:51in the product world that we do all
- 18:53the time. What do we build on our
- 18:55own? What do we partner people with?
- 18:57What do we go buy? I think it's
- 18:59understanding that all three of these things are
- 19:01coming together. Tighter controls on costs. Look. I
- 19:04can sound like any big city financial consultant.
- 19:07Reduce costs, increase revenue,
- 19:10be more solvent, whatever. But think about that.
- 19:13Right? We understand that
- 19:16going forward, there's going to be increased pressure
- 19:18to decrease your cost, to increase
- 19:21margin where it is
- 19:23applicable,
- 19:24at the same time doing so with the
- 19:26variable of supply chain. So take a hard
- 19:28look at each of those three domains
- 19:30that, you know, kind of in total make
- 19:33up the procurement
- 19:34ecosystem. Like, thinking of procurement in this terms
- 19:36of, like, the actual cost of buying things,
- 19:39the supply chain of those things, and maintaining
- 19:42compliance with what you buy, that kinda makes
- 19:44up the the procurement umbrella.
- 19:46And take the next six, twelve months
- 19:49as we have kind of the stay of
- 19:51execution from the delivery of the rebate model,
- 19:53which will really throw things into,
- 19:56a bit of
- 19:57a rethinking
- 19:58and think, how are we gonna do this?
- 20:00What parts do we bring in or bring
- 20:03inside, and can we can build on our
- 20:05own? What points do we find the right
- 20:07people to partner with or buy solutions?
- 20:09And it's really using this time to make
- 20:12sure that you understand these are the challenges
- 20:14we're facing and look at the options that
- 20:16are out there and prioritize what matters most
- 20:19to your organization.
- 20:20You have
- 20:21a seven person nonstop
- 20:24data engineering team to predict your own shortages.
- 20:27You'd be in the minority, then great. Maybe
- 20:29that's not what you need to focus on.
- 20:31But it's kind of taking a look at
- 20:33your organization and figuring out which of those
- 20:35three domains makes the most sense to focus
- 20:37on first.
- 20:39Really sound advice. AJ, I I wanna thank
- 20:41you again so much for your time today
- 20:43and for sharing all of your insights with
- 20:45Becker's listeners. Thank you again.
- 20:47Thanks for having me. Look forward to being
- 20:49back at any time. No. We look forward
- 20:52to it as well, and we'd also like
- 20:53to thank the podcast sponsor for today, BlueSite.
- 20:57Listeners, be sure to tune in to more
- 20:59podcasts from Becker's Healthcare by visiting our podcast
- 21:01page at beckershospitalreview.com.