This month, Intermountain Healthcare announced it would close 25 of its 26 retail pharmacies and refer affected patients to CVS Health, a decision that reflects a broader industry approach toward outpatient pharmacies, Modern Healthcare reports.

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Why Intermountain shuttered its outpatient clinics

According to Modern Healthcare, Intermountain sold the inventory and prescription files of 25 of its 26 retail pharmacies to CVS Health. The health system plans to close the affected outpatient pharmacy locations and direct patients to local CVS stores by August.

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Intermountain will keep open just one retail pharmacy, Primary Children's, since many of the medications prepared there are not easily available at other retail pharmacies. The health system said it does not plan to close any of its inpatient pharmacies.

Intermountain did not release any financial details about the sale, but it cited declining business as a motivation for the decision. Brian Tanquilut, a health care services analyst at Jefferies, said of the decision, "For [Intermountain], it's probably more about eliminating losses."

The health system's retail pharmacy business—which has been in operation since the 1980s—reported a $6 million loss between January and May of this year, Modern Healthcare reports, and an $11 million loss in 2020.

More hospitals are getting out of the outpatient pharmacy business

According to Modern Healthcare, Intermountain is not alone in its decision to shed its outpatient pharmacies. In fact, as of 2019, only about one-quarter of health systems had a centralized outpatient retail or mail-order pharmacy. 

For instance, HealthPartners, an eight-hospital system based in Minnesota, closed 30 retail pharmacies last year, and Swedish Health Services, a Seattle-based system, sold five retail pharmacies to Walgreens in 2015. (Walgreens subsequently closed four of them.)

The trend seems to be financially motivated, Modern Healthcare reports, as outpatient pharmacies haven't been particularly profitable for hospitals. Randy Seifert, an associate dean at the University of Minnesota's College of Pharmacy, suggested the move may have been accelerated by the Covid-19 pandemic, as hospital and clinic traffic have slowed and the use of telehealth for medication management has increased.

Will patients be better off?

Some experts have questioned whether outsourcing retail pharmacies will disadvantage patients, Modern Healthcare reports.

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Michael Ganio, senior director of pharmacy practice and quality at the American Society of Health System Pharmacists (ASHP), noted that a health system's outpatient pharmacy has access to patients' medical records and notes from inpatient pharmacists, which can help their pharmacists make better informed care decisions.

"That's not to say some of the non-health system run programs don't have access to those, but it's a barrier in many cases to making sure that transition is not as seamless as possible," Ganio said.

Separately, the Utah Society of Health System Pharmacists pointed out that outpatient pharmacy closures could affect certain prescription delivery services for patients who have just been discharged, such as medication counseling.

On the other hand, because health system-owned retail pharmacies typically are located inside hospitals or primary care clinics, they often don't provide extended hours or drive-throughs, and they don't offer the same "one-stop shop" as Walgreens or CVS for everyday needs beyond prescription medications, such as shampoo, cosmetics, and snacks.

"They're kind of losing their niche in terms of the convenience," Seifert said.

Some health systems are bucking the trend

Not all health systems are following Intermountain's lead, however, Modern Healthcare reports.

For instance, Providence, a 52-hospital system based in Washington, has said it plans over the next few years to add up to two more retail pharmacies per year to its existing 20 retail pharmacies.

Elie Bahou, the health system's chief pharmacy officer, said that Credana Health—Providence's wholly owned subsidiary that operates its retail and specialty pharmacies—is not only profitable but good for patients.

"There are other reasons besides financial ones," Bahou said. "It's about delivering great outcomes for your patients." (Bannow, Modern Healthcare, 7/16; Gellman, Modern Healthcare, 7/12)