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Why You Need To Be Thinking About OTC Management at Your LTC Facilities

…And What Makes it One of the Easiest Ways to Lower Costs

For post-acute, long-term care, and skilled nursing facilities, managing over-the-counter costs can be an opportunity to build in more cost-saving processes that draw down a facility’s net pharmacy spend. By taking a little extra time, reports on over-the-counter (OTC) utilization can identify a swath of items and medications that are being overstocked, sourced at unreasonable costs, or being purchased through the wrong channel. 

This blog explains why managing your OTC spend is a tremendously effective way to reduce costs and improve efficiencies in your long-term care facilities.

What to Look For in OTC Management

Looking at your net drug costs at 30,000 feet, your facility’s OTC utilization might look relatively insignificant compared to other cost centers, but drilling into the data often shows a different picture. Identifying even a few items that are regularly used and finding affordable sourcing alternatives can quickly add up to savings in the tens of thousands of dollars. So, where should you be looking?

  1. Identify Frequently Used Items: 
    • Items and medications being used daily for the majority of residents is the first place facilities and operators should be looking to see if these high-volume items can be sourced at lower costs. With volumes in the thousands, even a few percent difference in cost can quickly add up.
  2. Similar, Duplicate Medications: 
    • When a formulary is carefully reviewed, facilities may find they are ordering multiple versions of fundamentally similar medications. Vitamins are a great example of this. One facility may have several different versions of vitamin C on their formulary, meaning a variety of quantities were being sourced from a variety of suppliers. SRX helped them source two varieties from bulk suppliers to be dispensed at their facilities that met resident care needs. Reducing this level of variation for common OTCs simplifies sourcing and reduces costs.
  3. Finding the Right Supplier: 
    • Managing your OTC utilization also includes taking a careful look at where your high-volume items are coming from. Taking the time to find a wholesale supplier with competitive pricing can make a tremendous impact on your net costs, eliminating costly pharmacy dispensing and handling fees. 
Benefits of OTC Management
  1. Optimized Periodic Automated Replenishment Levels: 
    • Thorough OTC management will highlight what is being used, how often, and where. Analyzing this data can inform the timing of orders to accommodate the use of OTC supplies, maximizing usable space inside a facility and reducing waste caused by oversupplied items sitting on shelves too long. 
  2. Delivering Faster Care: 
    • Knowing exactly what needs to be in stock inside a facility allows care for residents to be administered faster. Instead of having to wait for a pharmacy to dispense an OTC item, stock inside the facility can be made available faster for residents, improving care and comfort. 
  3. Cold, Hard Savings: 
    • Good OTC management practices will streamline processes and consolidate the number of parties involved in procuring a facility’s supplies. By finding reliable suppliers with competitive pricing—and involving fewer parties—processing fees and item costs can be reduced. These small savings, multiplied by a factor of thousands, results in significant sums of money being returned to your facilities.
Small Savings That Add Up

For one operator partnering with SRX, our OTC management specialists identified one simple product that was used with every resident in their facilities. After looking at their utilization, we found they had spent over $148,000 in one year at $9 per item. We found a supplier for them to buy this product from in bulk and saved them 50% in acquisition price, or approximately $75,000 annually.

How SRX’s OTC Management Service Helps Facilities Save

By reviewing how facilities are utilizing their OTC and where drugs are being sourced from, SRX specialists can drill down into this valuable data and highlight significant savings opportunities. During our OTC management process, we also make Periodic Automated Replenishment (PAR) level recommendations that further lower costs and improve care in facilities. It’s important for facilities to know how much they’re really using certain items and supplying them accordingly. Doing so creates an added layer of efficiency that helps a facility run smoother and overall be more cost-effective.

As part of SRX’s pharmacy management suite, this focused yet meaningful practice can have a tremendous impact on a facility or operator’s net costs. With facilities facing stretched staff, few can afford the time required to collate and analyze data around their OTC spend with this degree of acuity. Partnering with SRX opens the door to technology and experts that help operators optimize OTC management, improve care, reduce waste, and achieve lowest net cost.

Get Help with Your OTC Management

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Related Articles:

How to Simplify LTC Prescription Drug Spend with Adjudication

See How SRX is Tackling the Problem of Rising Drug Costs

3 Places Where Excess LTC Drug Costs Are Hiding in Plain Sight


SRX is a unified drug cost management solution for long-term care operators. We achieve unrivaled drug cost savings by combining our proprietary technology with expert advisors. SRX’s solutions automate drug rebates, optimize pharmacy management practices, increase managed care exclusion reimbursements, and provide cost-effective employee prescription benefits. SRX guarantees quarterly rebates are paid on time, every time, with no out-of-pocket cost.

Learn more about SRX’s cost-saving solutions


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