A nurse at a long-term care facility accesses one dose of a resident’s new medication via New Day Pharmacy’s onsite, automated dispensing technology.

When New Day Pharmacy landed TNInvestco funding in April, it was just another validation that the Nashville-based institutional pharmacy boasts a promising business model.

Founded in 2004, New Day specializes in distributing medications to nursing homes, assisted living facilities and similar long-term care operations. What differentiates New Day is its delivery of drugs in seven-day supplies rather than typical monthly supplies. Nurses also have access to an in-house mini-pharmacy set up by New Day at the facility, where initial medication doses are available while awaiting delivery of the first weekly medication pack. “We don’t oversupply them with meds,” explained Ed Mercadante, New Day chief executive officer. The result is reduced waste and a cost savings, he added.

In February 2009, New Day had filed for Chapter 11 bankruptcy protection, yet a $10.2 million financing round led by private equity firm Council Ventures in Nashville resulted in an asset acquisition. Council Ventures now has joined forces with Enhanced Capital Partners of New York to form an investment partnership called Council & Enhanced Tennessee Fund LLC, one of six venture capital firms that last year was selected to participate in TNInvestco, a program created by the Tennessee General Assembly to nurture entrepreneurship. Each firm is eligible for $20 million in gross premiums tax credits, marketed to insurance companies to create a pool of venture capital funds for investment in early- and mid-stage companies. C&E’s April decision to invest in New Day was its first as a TNInvestco participant, and the $350,000 cash infusion is further helping put New Day on solid financial ground.

While Mercadante declined for competitive reasons to reveal the number of clients New Day has now, he said, “From last year to this year, we have more than doubled our size.” The company is licensed in 12 states, where drugs are delivered from a single-source pharmacy in Nashville. New Day contracts with Federal Express for its drug deliveries to clients; and FedEx’s distribution, tracking and reporting systems interface directly with New Day’s workflow software.

New Day provides the seven days of medication in what it calls a “PouchPak,” delivered in patient-specific strips that can be either single dosed or multi-dosed. On each plastic pouch, which is simply torn open by the nurse, is printed the patient name, when the dose should be given (the med-pass time), the drug name and description, and a corresponding bar code. Mercadante said the PouchPak can cut nursing time related to medication by as much as 50 percent, and the bar code improves patient safety. Providing medications weekly rather than monthly means that not much medication is wasted if a patient finds after a few days that the drug can’t be tolerated, if the dose changes or if a drug therapy is discontinued. “We capture these changes, and thus reduce the cost systematically,” Mercadante explained.

Automated, on-site medication dispensing is billed by New Day as “Your In-House Pharmacy,” offering long-term care facilities the ability to transmit physician orders for new or emergency medicine to New Day’s central pharmacy. There, a pharmacist completes the clinical review and processes the prescription. Then, one dose of the medication is accessible by the nurse at the pharmacy station within the long-term care facility. Access is controlled by the central pharmacy until the med-pass time. A pharmacist is available around the clock.

Mercadante said New Day’s model is compatible with provisions of the federal health reform package, which requires that nursing homes eventually move toward “short cycle fill dispensing.”

Located on Linbar Drive, New Day has 34 full-time employees today, up significantly from a year ago.

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