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Amid continued uncertainty and change across the 340B landscape, there is a lot to learn from the leaders who have experienced the program’s many ups and downs firsthand. In this article, we’re highlighting a seasoned 340B professional and the lessons they’ve learned from years of navigating the program. Our focus today is Rory Phillips, a longtime hospital pharmacy leader whose experience with 340B spans more than two decades.
Rory spent nearly four decades at Southern Ohio Medical Center (SOMC), a 250-bed nonprofit hospital in Portsmouth, Ohio, ultimately serving as its pharmacy director and helping open nine community pharmacies and a specialty pharmacy.
His introduction to 340B came in 2004, when he read about Grady Memorial Hospital’s program and traveled to Atlanta to see it firsthand. He returned convinced that SOMC should participate. In 2005, he presented 340B to SOMC’s executive team as an opportunity to both reduce drug costs and help community members access their medications. His CFO agreed to let him pursue it—but initially declined to budget any savings from the program.
The success that followed quickly changed expectations, and has grown to become an entire 340B team within SOMC.
After more than two decades working with 340B, Rory has seen the program—and what it takes to run one successfully—change dramatically. Here are five of the biggest lessons from his career.
Lesson #1: 340B cannot be a side job
One of the biggest changes Rory has seen is the sheer complexity of running a successful 340B program.
Today, organizations need people who understand pharmacy systems, wholesaler and purchasing data, payer information and an evolving regulatory environment. They also need the technical expertise to connect those systems and create a defensible record of their 340B activity.
As Rory puts it, 340B leadership “cannot be accomplished by pharmacy leaders in their spare time.” For many organizations, 340B represents a significant source of savings. Protecting that value requires corresponding investments in people, technology and expertise.
Lesson #2: Protect the program before growing it
Rory believes strongly in finding opportunities to grow a 340B program—but compliance has to come first.
Organizations should be able to reconstruct and defend a 340B transaction, connecting the patient and encounter to the prescription, payer, eligibility determination, purchase and dispense. The goal should be to operate in a continuous state of audit readiness. Growth matters, but no capture opportunity is valuable enough to justify putting the underlying program at risk.
Lesson #3: Capture may be one of the biggest overlooked growth opportunities
Late in Rory’s career at SOMC, one of the organization’s biggest opportunities wasn’t opening another pharmacy or finding another source of margin. It was getting more of its existing patients to use the pharmacies SOMC had already built.
By 2024, SOMC had five community pharmacies offering benefits such as free delivery, medication packaging and financial assistance. Yet the organization was capturing only about 23% of eligible prescriptions from prescribers at its 340B child sites, compared with a goal of approximately 70%.
That gap represented millions of dollars in potential value.
SOMC initially tried to address the problem through its clinics, developing scripts for staff and providers to educate patients about its pharmacy services. But practice leaders and providers had competing priorities, and the approach struggled to gain traction.
The experience highlighted a simple problem: a health system can build an incredible pharmacy, but its value is limited if patients don’t know why they should use it.
SOMC eventually partnered with CompassRx to use AI-enabled patient outreach and education to communicate pharmacy benefits directly to patients and help interested patients transfer their prescriptions. Within 18 months, SOMC’s capture rate increased from roughly 23% to more than 50%, generating millions in additional annual 340B savings.
For Rory, the experience reinforced how often capture is overlooked. Before adding new pharmacies, services or revenue streams, health systems should first understand how much value is being lost from prescriptions already originating within their own network.
Lesson #4: The strongest opportunities benefit both the organization and the patient
What originally attracted Rory to 340B was the opportunity to create financial value for SOMC while helping members of its community access medications.
Capture is a particularly good example. Bringing an eligible prescription into an in-house pharmacy can increase 340B savings while also connecting patients with services such as free delivery, medication packaging and financial assistance.
Financial performance and patient impact don’t have to compete. In many cases, improving the patient experience can itself become a driver of pharmacy growth.
Lesson #5: 340B strategy has to keep evolving
The 340B program looks very different today than it did when Rory entered it in 2005. Increasing operational complexity and data requirements mean organizations can’t assume the strategies that worked five or ten years ago will continue to work in the future.
For Rory, that means 340B leaders need to continually reassess their programs: Where are prescriptions leaking out of the health system? How strong is in-house pharmacy capture? Can the organization defend its transactions? And does the team have the people and technology needed to adapt?
After more than 20 years in 340B, Rory’s overarching lesson is simple: 340B needs to be treated like the strategic asset it is.
That means protecting the program through strong compliance and advocacy, investing in the expertise required to operate it, and continuing to look for opportunities to grow its impact. Increasingly, one of the biggest opportunities may be sitting right in front of health systems: better connecting the patients they already serve with the pharmacy services they’ve already built.
To learn more about strategies to improve in-house capture and mitigate contract pharmacy risk, reach out to hello@compassrx.com.
And if you’re interested in listening to a great interview with Rory and CompassRx Co-Founder and CEO Ali Farzad check out this episode of 340B Report’s 340B Leaders Upfront podcast.
Alice Cheng is chief operating officer of CompassRx. She can be reached at alice@compassrx.com.
