Post on 23-Dec-2015
Outsourcing Pharmacy Services: Analysis & Recommendations
Subrata BeheraChris Beuning
Jim GrubelSteve McDonald
Medical Informatics: Health Care Operations 404August 10, 2011
County Hospital Background
Rural Midwestern town Population 50,000 Licensed for 250 beds but operations 150 Not for profit Medical staff of more than 50 active
physicians Specialties include orthopedic surgery,
gastroenterology, gynecology, urology, ophthalmology, general surgery, podiatry, nephrology, otolaryngology and general medicine
Payer Mix
30% Medicare 20% Medicaid 40% Commercial 10% Self pay (uninsured)
Financial Situation
$1.5 M deficit fiscal year 2009 Near $2.5 M deficit in year 2010 Reduction in Federal grants spending
which reduces recovered money and strains cost for facilities and administration
Uncompensated care hurts profit margin Performance Management team created
Rationale for Outsourcing Pharmacy Services
A pharmacy is an essential component in the operations of the healthcare organization. The pharmacies of today are being challenged by the changes in the structure and financing of the healthcare industry in order to reduce costs and improve performance. It is getting tougher on the part of the healthcare organization to maintain a fully fledged pharmacy and many of them are using pharmacy outsourcing in one way or the other.
Benefits of Outsourcing Pharmacy Services
It is easy to consolidate pharmacy services in large integrated health systems.
• Helps reducing the operational issues by improving the medication distribution system, designing new pharmacy workspaces, reducing medication dispensing and administration errors and improving information systems
• Enable the organization to acquire additional resources and expertise to carry out other changes
• Provide educational programs for patients and their families and for health care staff
• Help the organization to staff hard-to-fill pharmacy positions
• Allow the organization to reach optimal staffing levels for achieving productivity targets
Cost Consideration
Helps in reducing the operational cost for the organization. • Control and reduce labor rated costs by shifting the cost of
employees, benefits, and liabilities to a contractor. • Enable the healthcare organization to share the risks associated
with the operation of the pharmaceutical services. • Avoid the cost of purchasing and maintaining costly pharmacy
equipment. It will help the healthcare organization focus on activities that is more critical than operation of the pharmacy.
• Avoid the cost of physical remodeling of the office space and the cost associated.
• Increase the organization’s financial operating margin by allowing the organization to purchase drugs in bulk quantities, use group purchasing contracts, decrease lost charges, improve billing accuracy, decrease drug diversion and pilferage, improve drug formularies, and transfer drug inventory, equipment, and supply activities to a contractor.
Quality Impact
• Enable the organization to maintain or improve the quality of patient care by expanding clinical services and pharmaceutical care, establishing new services, and obtaining specialized expertise in pharmaceutical care.
• Provide support for the medical and nursing staffs and improve physician–nursing–pharmacy collaboration.
• Correct regulatory and accreditation problems relating to pharmaceutical services
• Ensure continuing compliance with accreditation and certification standards
• Allow the organization to gain an edge on competitors through improvements in service, quality, or price.
Outsourcing Options
All Pharmacy Services Pharmacy Third Shift Pharmacy Management Pharmacy Medication Procurement &
Inventory Management
Outsource All Pharmacy Operations
Current State Personnel
Outsource All Pharmacy Operations
Responsibilities Order Management Sterile Products
Outsource All Pharmacy Operations
Inventory Management Drug Locations Number of Turns
Outsource All Pharmacy Operations
N.P.M. Proposal Personnel Become N.P.M Employees Impact on Salaries
Outsource All Pharmacy Operations
N.P.M. Proposal, continued No New Equipment Needed Cost Savings Inventory Management
Outsource Night Shift Pharmacy Services
Current State Staffing Responsibilities
Outsource Night Shift Pharmacy Services
N.P.M. Proposal Shift Coverage Cost Benefits
Outsource Night Shift Pharmacy Services
N.P.M. Proposal, continued Medication Required Equipment
Outsource Pharmacy Management
Maintain current management positions
New team to fill those positions
Utilize N.P.M. personnel to fill these positions
Outsource Pharmacy Management
Cost Savings Initiatives Utilize Lean methodology Previously Identified Opportunities
Switch to generic anti-emetics Implement IV to PO conversion Implement shorter acting erythropoietic agent
Outsource Pharmacy Management
Cost Savings Initiatives – Additional Opportunities Formulary limitation by more aggressive
therapeutic interchange process Antibiotic Stewardship
Minimize adverse events Optimize antimicrobial agents De-escalate antibiotic to oral therapy when
appropriate Discontinue therapy when complete
Outsource Pharmacy Management
Cost Savings Initiatives N.P.M. Management team reporting
Community Hospital Board of Directors
N.P.M. Management and administration to track progress and offer resources and guidance
Outsource Pharmacy Medication Procurement & inventory Management
Potential areas of benefit Enrolling in 340b pricing program
Inventory management – just in time
Outsource Pharmacy Medication Procurement & inventory Management
340b Pricing Program Determine if any subset of Community
Hospital patients meet criteria for 340b pricing
Tracking required
Rigorous record keeping
Outsource Pharmacy Medication Procurement & inventory Management
Inventory Management Lower inventory levels
Increase number of inventory turns
Establishment of minimum and maximum levels
Outsource Pharmacy Medication Procurement & inventory Management
Technology options Automated system for inventory tracking (i.e.,
Talyst) Real time inventory tracking
Refill of automated dispensing cabinets (i.e., Pyxis)
Electronic purchase request submitted to vendor
Fill floor stock medication requests
Outsource Pharmacy Medication Procurement & inventory Management
Sterile compounded product outsourcing N.P.M. Compounding facility
Labor and time intensive to prepare on site N.P.M. facility meets criteria to allow longer
dating than on site Reduced wastage
Parenteral nutrition orders (TPN) Automated download from pharmacy system Remote preparation and deliver
Outsource Pharmacy Medication Procurement & inventory Management
Technology options – implications Free up technician time with automated
functions
Technicians could be deployed to some of the current, non-clinical pharmacists functions
Pharmacist time could be moved to focus on cost savings initiatives
Outsource Pharmacy Medication Procurement & inventory Management
Point of care antibiotic assembly Antibiotic vial-bag-pin assembly Lest wastage
N.P.M. Support Expert support personnel for training and
trouble shooting Established policies and procedures for
validation and adoption
Recommendation for Consideration
The Pharmacy Review Group has brought forth a recommendation for a combination of two outsourcing options as a recommendation for major cost savings initiatives. The proposal includes a combination of outsourcing pharmacy management and pharmacy medication procurement and inventory management.
Business Plan for Recommended Solution
Demand Present Economy
Business Plan for Recommended Solution
Cost Salaries
Business Plan for Recommended Solution
Human Resources Reorganization
Business Plan for Recommended Solution
Output and Productivity More Inventory Turns Staff Engagement Sterile Products
Business Plan for Recommended Solution
Quality Outcomes Clinical Initiatives Formulary Review Med Accessibility
Business Plan for Recommended Solution
Processing Quality Patient Satisfaction Physician Satisfaction
Considerations – Impact to HCO Mission
Community Hospital Mission – provide quality patient care and patient satisfaction while delivering exceptional medical care
Any solution must support this mission Each of the solutions presented will be
measured against this mission
Considerations – Community Reaction
A Health Care Organization becomes a part of the community it serves
Challenges faced by the HCO impact or reflect on the community
Community Involvement on the Board of Directors is important
Considerations – Impact to HCO Competitive Position
Financial instability can impact the organization’s competitive position
This needs to be considered with any changes implemented
Rural setting limits competition Viability still at risk