Pharmacy spend is the second largest cost center for skilled nursing and long term care operators, second only to overhead.

The complexity involved in calculating and reviewing monthly pharmacy bills is significant. Combined with the amount most facilities are spending on medication for Medicare Part A residents, this represents an area ripe for errors, unnecessary costs, and waste.

SRX offers a software solution that automates the review of monthly pharmacy bills, reconciles pharmacy pricing and contract discrepancies, and identifies and submits all eligible rebates. As Scott Taylor, chief executive officer explains, “Technology and automation are the only way long term care operators can fully take control of their pharmacy spend. This is a critical cost-control opportunity for any operator interested in embracing innovation and having the tools needed for competing in this industry." At SRX, this is accomplished by integrating pharmacy invoices with pricing databases (AWP/WAC), electronic health and medical records (EHRs/EMRs), pharmacy contracts, facility formularies, and more.

2019 Pharmacy Drug SpendBy using automation to manage this process, operators can realize significant cost savings, improve rebates, and save considerable time reconciling monthly bills.

On average, SRX customers are able to achieve 11 percent in cost savings.

Those savings represent valuable dollars that operators can use to improve patient care, compensate and hire staff, and upgrade facilities. In short, SRX software improves the bottom line for long term care operators.

Properly managing drug costs requires insight and management of the following areas:

Drug Utilization

Many operators are unaware of the significant cost savings that result from carefully considering their drug utilization.

Helen Halchuck, director of client services at SRX, explains, “An effective DUR begins with a thoughtfully designed formulary that outlines the drugs that best meet the financial and clinical needs of facilities and patient populations. Once this formulary is in place, you can integrate additional rules to help contain costs and build accountability into the relationship with your pharmacy."

Proper drug utilization planning plays a key role in managing costs and provides better therapeutic alternatives for patient conditions. SRX advisors work with facilities to assist in building out a formulary that achieves both these goals.


The sheer number of line items on a long term care pharmacy bill speaks to the heavy burden placed on administrators who are often charged with enforcing pharmacy contract terms and pricing. Some pharmacies can implement measures that prevent these rules from being broken in the first place. These “front-end" adjudication options employ automation software to identify off-formulary drugs or establish quantity limits, for example, and prevent pharmacies from filling orders that violate these rules. With the right technology, alerts can also be sent to facilities, notifying clinicians when prescribing outside recommended parameters.

While front-end adjudication—or preventing unnecessary line items from ever appearing on a pharmacy bill—is considered best practice, this option is not always available. In this event, having robust reporting tools that provide reports that operators can use in recouping credits and holding pharmacies to account is the next best option. SRX reports analyze all drug claims, identify price discrepancies, prevent waste related to drug utilization, and detail transactions that need to be reconciled with the pharmacy.

Identification of Credits, Errors

To put some context behind the type of savings facilities and operators can expect in switching to an automated solution, SRX recently completed a case study of a 21-facility, multiregional operator with an average of 42 facility-billed (Medicare Part A) residents.

In 2019, after switching to SRX's solution, SRX identified over 18 percent in cost-saving opportunities through drug utilization improvements (formulary), contract-rate adherence, returns and credits, duplicate orders, orders filled after discharge, over-the-counter (OTC) opportunities, and orders refilled too soon.  

Without accurate reporting, operators are left without the information needed to request credits that are rightfully theirs. The rate at which pricing fluctuates—combined with error potential on every bill—makes accountability and transparency a real challenge. Even when operators have good relationships with their pharmacy partners, there is a lot of room for error. Left unchecked, and without an automated solution to analyze every claim, those errors are likely to remain outstanding.

Drug Manufacturer Rebates

One of the easiest ways to impact the bottom line for facilities is to make sure they are correctly submitting manufacturer rebates. Due to the complexity of accurately analyzing bills and identifying rebate opportunities, many of these dollars go unrealized. SRX technology is designed to simplify this process, identify all eligible rebates, and submit them to the manufacturers so that these rebate dollars are guaranteed to be put back into facilities where they belong.

By implementing technology to manage the complexity of pharmacy spend, long term care operators have the insight required to make informed decisions and achieve greater control over this crucial aspect of operations. According to Taylor, “With all of the challenges long term care operators face, it will become increasingly critical to find the right technology partners and solutions that can add value. As one of the largest cost centers for operators, pharmacy spend represents a unique opportunity for facilities to take advantage of significant cost savings and rebates to impact their bottom line unequivocally."

SRX is a technology and advisory company that helps long term care operators realize the lowest net cost on pharmacy spend. We help our customers improve drug utilization, manage pharmacy relationships, reduce costs and waste, and maximize rebates. We are committed to transparency and accountability and guarantee our quarterly rebates are paid on time, every time. Contact us at 833-633-6833.