This is an excerpt of a 1,829-word article in the January 10, 2022 issue of THE DARK REPORT (TDR). The full article is available to members of The Dark Intelligence Group.
CEO SUMMARY: XIFIN’s acquisition of OmniSys, a pharmacy technology company, is the latest evidence that retail pharmacies are preparing to become a new front door to healthcare for consumers. The deal allows XIFIN to bring clinical lab information about patients directly to pharmacists while also helping retail pharmacies with clinical service billing and reimbursement needs as they develop primary care clinics in their stores.
ONE OF THE CLINICAL LABORATORY INDUSTRY’S BIGGEST PLAYERS in lab revenue cycle management (RCM) just made a bold move to become a valuable resource to retail pharmacies. On Dec. 14, XIFIN, Inc., of San Diego announced its acquisition of Dallas-based OmniSYS, a provider of information services to retail pharmacies.
With XIFIN’s acquisition of OmniSYS, XIFIN immediately positions itself to have access to the 30,000 retail pharmacies that use the information technology products provided by OmniSYS. To give that number perspective, in 2019, the Pharmaceutical Care Management Association published a study showing 39,084 chain pharmacies and 23,601 independent pharmacies. XIFIN thus gains access to more than 50% of the nation’s retail pharmacies.
XIFIN’s acquisition of OmniSYS may turn out to be a shrewd move, as most of the national pharmacy chains are expanding the types of diagnostic tests they offer to their customers. Additionally, most of the national pharmacy companies are well along the path of building full-service primary care clinics in their retail stores and those clinics will need the full menu of clinical laboratory testing services. (See TDR, “New Players May Alter Who Buys & Who Orders Lab Tests,” June 14, 2021.)
“Clinical labs have an opportunity to be in many of the pharmacies,” said Lâle White, founder and CEO at XIFIN, a healthcare information technology company based in San Diego. “With all the point-of-care testing being done now, we can see that there is room in retail pharmacies for laboratories to be there as an extra referral for confirmations and to provide other, more complex testing.”
Interwoven into this evolving situation are new billing and clinical data needs at retail pharmacies, which encouraged XIFIN to step into this market by acquiring OmniSYS. XIFIN’s acquisition of OmniSYS was announced on December 14, 2021, and establishes a clear data pathway between pharmacies, XIFIN, and clinical labs. Financial terms were not disclosed.
XIFIN provides cloud-based revenue cycle management, healthcare informatics, and laboratory information systems, while OmniSYS offers a software suite to support pharmacists in the administration and reimbursement of clinical services.
“Combining our capabilities will allow XIFIN to do more than simply help process the testing and clinical service claims,” White explained. “It opens the door to more extensive, patient-directed data exchange. With the appropriate authorizations, XIFIN will be able to deliver clinical lab information about patients to the pharmacists who see those people face-to-face.”
XIFIN is betting that pharmacies will need this type of behind-the-scenes help not only to stay competitive, but to also prove to private insurers and Medicare that these pharmacy-based clinical services are helping patients stay healthier more economically as the industry moves toward value-based care.
Path from Lab to Pharmacy
“If pharmacists have access to laboratory data—and they can interpret and visualize that data and the expected outcomes for those patients during the provision of care at the retail pharmacy in a precise, results-driven way—pharmacists can prove to payers that they positively contribute to improved health outcomes,” said John King, former CEO at OmniSYS and the new president of the OmniSYS division at XIFIN.
“To help pharmacies expand payer relationships and grow their clinical services business to achieve better patient outcomes would be the home run we expect from combining XIFIN and OmniSYS,” King added.
Two large shifts forced retail pharmacies to re-imagine their roles in healthcare delivery: intense competition and the SARS-CoV-2 pandemic. Pharmacies have seen their margins erode due to the growth of generic prescription drugs, mail-order prescription services, and new online competitors like Amazon. As with many other types of brick-and-mortar businesses, online prescriptions have drawn away customers from pharmacies.
Why Now for Pharmacies?
“Once pharmacies started losing their share of prescription drug orders to mail order systems and disrupters like Amazon, they didn’t just sit idly by and accept their declining business,” White observed. “They knew their marketplace and understood the consumer’s demand for convenience and rapidly pivoted into offering clinical services.”
On a different tangent, when the pandemic hit full swing in the U.S. in March 2020, it opened the door for COVID-19 testing. Pharmacies’ interest in offering more point-of-care (POC) testing and related diagnostic services got a huge boost. Pharmacy operators were quick to recognize that—just as flu shots have rapidly shifted to the retail pharmacy setting as a more convenient way for consumers to obtain their immunizations—they could provide SARS-CoV-2 vaccines and tests to consumers.
Thus, most pharmacy operators quickly offered COVID-19 vaccines and POC testing to their shoppers. This proved to be a major source of new revenue, particularly for the largest pharmacy chains, like Walgreens, CVS, and Walmart. But COVID-19 tests and other clinical services exacerbated the need for the pharmacies to be able to code, bill, and submit claims to the proper health insurer, government entity, or other organization.
That need to improve coding, billing, and collections for clinical services in a pharmacy setting plays to the strength of XIFIN and OmniSYS, which together are electronically interfaced to almost every health insurance plan in the United States. OmniSYS can help pave the way for XIFIN to bridge the business needs of labs and pharmacies because OmniSYS already manages medical claims and provides clinical systems for more than 30,000 pharmacies nationally.
Moreover, expect national pharmacy chains to build on their experience with COVID-19 vaccines and testing and apply it to other common primary care services, confident that consumers will prefer to access these services at their local pharmacy, often at cheaper prices.
“When you look at clinical lab tests for blood glucose, cholesterol, or checking for kidney and liver functions, there’s a huge opportunity for pharmacies, but only if they have access to laboratory data and the necessary partnerships to begin moving into value-based-care arrangements,” King explained.
As part of XIFIN’s acquisition of OmniSYS, the company has short-term and long-term objectives to integrate the tech offerings of both companies. “A quick win for us will be to see how our systems can integrate with each other and how we can carry data and information for lab and pharmacy to the consumer, as well as back to providers, and provide them with the insight they need,” White stated.
Through the longer-term lens, XIFIN expects to capitalize on the trend of retail pharmacies offering primary care services directly to consumers. The pharmacy industry has already laid groundwork for this, with national regulations that allow pharmacists to perform a variety of clinical services, including immunizations, diabetic counseling, and medication management. Many individual states are going even further with laws that allow pharmacists to provide services such as hormonal contraceptive prescriptions.
The list of clinical services that pharmacies are allowed to perform is rapidly growing, White noted. Combine that convenience with consumers’ growing desire to manage their own care through technology and there is an open market into which clinical laboratories can step.
However, clinical laboratory executives and pathologists have been slow to seize this opportunity. “What we haven’t seen are synergies between regional labs and pharmacies,” White said. “We’ve seen synergies at the large-lab scale, where the big public laboratory companies have done some exclusive contracts with CVS, Walgreens, and Walmart, but not necessarily at the middle and lower tier pharmacy chains.