The real ROI of immunizations

April 17, 2017

Vaccinating my patients almost killed my practice last year. I

Vaccinating my patients almost killed my practice last year. I didn’t have to read the 2012 American Academy of Pediatrics (AAP) article to know that the actual cost of providing vaccinations, including purchase and storage, is 17% to 28% more than the price we pay for the vaccine. That has been the case for most of my 20 years in independent practice.

 

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The problem is that the cost of recommended vaccines has skyrocketed while the reimbursement (based on wholesale prices that are not available to my small-volume clinic) often doesn’t even cover the vaccines’ purchase price. Vaccinations are now the second-most expensive item-after payroll-for most practices of my size, and based on data from the AAP study, reimbursement can be up to 47% less than the actual purchase cost to the practice. How did we get here?

In 2015, when we were recommended to provide the already-expensive PCV13 pneumonia vaccination to all seniors, the price my clinic paid for that vaccine suddenly increased. Now it is almost 40% more than prior to the Advisory Committee on Immunization Practices recommendation. The same thing happened in 2005 when TDaP boosters were recommended for all adults, and again in 2016 when the HPV vaccine indication was extended for all children.

 

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Independent practices like mine can’t take advantage of the volume discounts and promotions offered to larger groups. As I watched my clinic’s credit card balance rise, I asked our pharmaceutical sales representatives why vaccine prices go up rather than down with increased production. I never received a satisfactory answer-production problems, increased regulations and market forces were their most common explanations.

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On top of the increased vaccine cost and the cost to finance purchasing them, my practice has unreimbursed staff costs to enter the vaccinations into state registries and to verify coverage with insurers. We have storage costs, costs of administrative supplies and the risk of needle-stick injuries increases our workers’ comp insurance rate. All of these factors contributed to the loss I saw on my practice’s bottom line in 2016.

Despite the cost, primary care practices continue to struggle to provide vaccinations. We know that vaccination is fundamental to preventive healthcare, and my patients depend on our practice to provide their immunizations.

 

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Other than the service my clinic provides, there are few vaccination options for my patients. Retail pharmacies and employer programs help to fill the vaccination gap for those who have access and a way to pay, but most pharmacies only vaccinate people over age five, and employers focus on the most common conditions, such as influenza, that are likely to cause missed days of work. Even the county health system in our area has limited access to their vaccination programs to patients with no health insurance or those with state-sponsored medical assistance.           

 

According to Johns Hopkins Bloomberg School of Public Health in 2016, the real-world return on investment (as measured by economic and social benefits) for every dollar spent on vaccinations is between $16 to $44 (more than 1,600% the total cost of vaccination), but the same researchers caution, “The return on investment depends heavily on the ability to raise the financial investments necessary to achieve projected coverage rates, which will require continued commitment from governments and donors.” 

Attention government agencies and health insurers: Please step up!  We doctors are being crushed by the cost of keeping America vaccinated.

 

 

Melissa Lucarelli, MD, is a family physician practicing in Randolph, Wisconsin, and a member of the Medical Economics Editorial Advisory Board.

 

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