Pharmacy IT: Why Vendor Experience Matters More Than You Think

9.19.18 By Matthew Stoltz

Specialty Pharmacy IT: Experience Matters


Since the coining of the phrase “digital transformation,” you’ve likely spent countless hours trying to align IT with line of business (LOB) activities. How do I know this?


Call it a hunch.


But one 2018 survey by found that most CIO’s, after years of attempting to foster collaboration between their department and business units, are finally taking IT out of IT’s hands and sharing the productivity throughout the organization.


Digital transformation has spurred the warming relationship, but has also left one problem – resource gaps are on the rise, leading to a spike in outsourcing.


That's not the problem.


The problem is that most vendors have not caught up with LOB alignment initiatives, which slows progress.


Traditional outsourcing models – which stresses low-cost and focus on filling technology services over operational and financial outcomes - do not fit today’s healthcare environment. Many vendors employ armies of people to simply "do the work," which is often referred to as a “heads-on-sticks” approach. Pharmacy organizations struggle to find solution-ready IT resources; those with the process and operational insight to make an immediate impact.


High turnover plagues the industry as vendors are slow to catch up. 82% of healthcare IT departments have signed new outsourcing contracts in the past year or are in the process of vendor selection.


The effects have been felt throughout healthcare. 77% of CMIOs claim that they are most frustrated when having to manage a vendor with limited experience in healthcare operations.


Those who cannot collaborate on a strategic level will be replaced., in it’s State of the CIO 2018 report, says that “While some disconnect remains, IT and LOB have turned the corner and are working far more collaboratively than in the past. The 2018 State of the CIO survey found stronger cooperation and better alignment between IT and its LOB partners, especially as digital transformation initiatives heat up. During the past year, almost three-quarters of respondents (71%) said IT and LOB engage more frequently in collaborative projects where there is shared oversight.”


The vendor’s new role, as a reflection of IT progress, is driven by their ability to consult and service, as opposed to the low-cost body-shop model. Responsiveness, data management, change management, and business and operational process competence are what matters.


Pharmacy organizations are going to turn to IT for financial productivity as well as LOB enablement. Under pressure from the federal government to cap price increases, and considering rebates and discounts, spending on prescription medication is projected to hold at 2 to 5 percent through 2021. 


The mad dash for modernization has many organizations making decisions faster than their IT resources (in house, but especially outsourced) can keep up.


Which is why, especially in pharmacy practices, experience matters.



Ask These 3 Questions to Determine if a Vendor Has the Right Stuff:

1. How can you demonstrate your experience?

Talk is cheap. Anyone can throw out terms like automation, machine learning, or microservices. An experienced vendor will apply machine learning to reduce financial risk in revenue cycle management.


2. How can you contribute to our strategic goals?

A strategic partner. While it might seem early in the relationship to be thinking about the long-term, it won’t hurt to ask how your vendor can help you navigate more strategic waters. The experienced vendor will generate a digital transformation roadmap from a ten-week assessment of customer service, order processing, and fulfillment.


3. When have you said 'no' to a customer?

Everyone wins. The true litmus test of a vendor comes from their experience in helping customers avoid costly mistakes. In the case of system integrations, the experienced vendor will know when it makes sense to leverage existing system components instead of retooling an entire platform (and avoid a $4.5 million-dollar expense).



Meet 4th Source's IT Experts at the 2020 Specialty Pharmacy Summit:

Over the past fifteen years, 4th Source has worked with many of the largest pharmacy organizations in the world and has delivered tens of millions of dollars in IT cost benefits. In addition to full-stack development, QE, informatics, and QA, AN Global serves multiple areas in pharmacy and specialty pharmacy such as automation, regulatory compliance, system reliability, and manufacturing reporting.


Doug Miller_01_small

“We were automating before it was on everyone’s radar – because it made sense in many areas. Now it’s expected, but if a vendor doesn’t have system-wide experience, and operations experience, they’ll tread water. This is why we end up training other vendors with larger clients. We’d rather see a project end up as a success by teaming up with another vendor, or managing them, than cost our customers extra time and money – especially in healthcare.”

~Doug Miller

4th Source Senior Director, Client Services 



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