3 Steps for Reducing Costs and Improving Quality for the Hospital Inpatient Pharmacy

With reimbursements declining and regulatory and financial pressures rising, it has never been more important for hospitals to identify and implement meaningful changes that reduce costs and improve quality of care. As hospital executives work to manage through the transformation from a quantity to quality based reimbursement model, tremendous energy and effort has been put behind identifying areas for cost and quality improvement. The inpatient pharmacy, which may account for up to 15 percent of a hospital's total annual costs, is one of the few remaining functions within a health system that has significant savings opportunity.

Realizing savings and quality of care improvements from a hospital's inpatient pharmacy requires an increased level of visibility into its operations and confidence on the part of key stakeholders in the data analytical systems that provide it. There are three key steps a hospital can take to build such a capability, which will improve the bottom line and improve patient safety and quality of care.

Pain points and challenges
A 2014 report published in The American Journal of Health-System Pharmacy points to the importance of effectively managing inpatient pharmacy operations.  The report shows that prescription drug expenditures, which account for approximately 11 percent of overall U.S. healthcare expenditures, are expected to rise faster than other healthcare costs. The report predicts that total drug expenditures across all settings will increase 3 percent to 5 percent.¹

This projected spending increase is being driven by expenditures for specific medications, drug classes, therapeutic categories, anti-cancer drugs and fewer first-time generic drugs expected to reach the market in 2014.² And, while patent expirations may increase availability of generics, most are outpatient therapies that are unlikely to reduce spending in hospitals where use of brand drugs is expected to continue.³  

With costs rising, the importance of improving the financial operations of the inpatient pharmacy has never been greater. However, without data analysis platforms, defined best practices and access to broad-based unbiased data sources, it is difficult to align personnel behind a single mission of improving pharmacy costs. The absence of IT systems that support and track interventions and reporting analytics to monitor initiative results further add to the challenges care providers face.

Leveraging data to impact cost and quality: 3 steps for success

1. Capture and analyze data against best practices
The clinical analytics platform is the nerve center that analyzes important clinical and business information enabling clinical protocol optimization. It is critically important to build, maintain and utilize the platform appropriately, and to benchmark and perform a “best practices” analysis against peer facilities to provide visibility into performance gaps that may exist.

The process starts with accurately capturing data, beginning with collecting the hospitals own prescribing habits, setting up data purchasing feeds directly from drug wholesalers into the database and capturing data across the continuum of care within the hospital itself. Besides usage data, other information should be collected including: patient days or adjusted patient days, medication spend by National Drug Code or Generic Product Identifier code, number of cases, clinical protocols, etc.

A benchmarking filter is added that drives important decisions that will positively impact financial and clinical performance.  The algorithm powering the filter is built from peer reviewed clinical best practice standards and other supporting clinical documentation. It is important to make certain that benchmarking is done against similar organizations in size, scope and facility type.

The data analytics platform defines best practice models, sets drug relationship percentages, measures actual use, quality impact and incorporates cost triggers if spending hits a pre-determined limit. The database measures deviations from best practice targets, producing individual and highly specific improvement opportunities by drug type. Typically, 80 percent or more of the opportunities are sustainable. The list of opportunities is then prioritized by cost/quality opportunity and the degree of difficulty to implement. Clinical change is also factored into the prioritization. Only initiatives that improve or have no negative effect on outcomes are considered.

With an intelligent data-driven gap analysis against best practices in hand and a clear savings and quality improvement initiative identified, a hospital can then enroll key internal stakeholders into the medication management improvement plan.

2. Align key stakeholders
Aligning key stakeholders is paramount to the ultimate success of the initiative and they must be united behind the goals of changing a specific medication protocol. Cross-functional teams are then charged with building an implementation plan to ensure success.  

This alignment process should include pharmacy, clinical, operational and financial stakeholders, but remain flexible enough to include other functional stakeholders as the situation warrants.  At the top of every list will be the pharmacy and therapeutic committee, which reviews medication management issues on a regular basis.  

3. Launch and manage effective programs
Items 1 and 2 enable powerful actionable initiatives that require additional actions to be taken to keep them on track and ensure success. These include:

• Define the team and clearly define the leadership, timing and ownership of each specific program, as well as the timing for accomplishing each task. The team should include all key stakeholders who are then charged with building an implementation plan to ensure success.
  
  
• Articulate the goals for each protocol change, and make this clear right up front.
  
  
• Write the new policy, and start with what is changing and why, using evidence-based protocols. Explain the clinical and/or administrative changes and identify any acceptable instances for exceptions taking into account the type of facility (multi- or single hospital system, specialized center, skilled nursing, long-term care, etc.) and types of conditions (pain, pulmonary disease, infectious disease, asthma, diabetes, cancer; etc.).
  
  
• Link the system together through the entire system by going to various committees depending on the areas the protocol seeks to help (e.g. surgery, respiratory, etc.), then present to the P&T committee, and finally to the medical executive committee for final approval.
  
  
• Communicate and train everyone who will need to be aware of the policy change, and ensure they are trained on any new clinical and/or administrative processes. First get the word out that a change is coming, then train, communicate again when the program goes live and continuously provide updates on progress, results and changes as the program continues to evolve.
  
  
• Continuously improve and establish a comprehensive surveillance system to track progress on a regular basis to ensure goals are being met, that people and processes do not slip back to unproductive habits, reapply analytics for new opportunities to improve and feed findings back to the appropriate committees and departments.

By leveraging pharmacy analytics and using a cross functional team, a health facility can save up to 5 to 10 percent of annual drug spend and sustain that level of savings through dozens of medication protocol changes identified through a powerful database.  The key is visibility into what is happening and what could and should be happening.  

Marvin Finnefrock serves as the PharmD–divisional vice president of clinical and purchasing services for Comprehensive Pharmacy Services. Dr. Finnefrock has direct oversight over all aspects of clinical services and purchasing and the development of transitional care services, and his responsibilities include clinical consulting and assessment, medication safety and performance improvement programs, pharmacy ambulatory care, designing residency programs, clinical initiative and staff development programs and clinical data programs.
 
Len Gray, PharmD, serves as regional vice president of clinical services and data management at Comprehensive Pharmacy Services. Dr. Gray has 27 years of experience divided between pharmacy operations and clinical management in organizations that specialize in multi-hospital and health systems management

¹ American Society of Health-System Pharmacists (ASHP). "Drug costs projected to rise three to five percent in all settings in 2014." ScienceDaily. ScienceDaily, 5 March 2014. www.sciencedaily.com/releases/2014/03/140305144716.htm

²Ibid

³ G. T. Schumock, E. C. Li, K. J. Suda, L. M. Matusiak, R. J. Hunkler, L. C. Vermeulen, J. M. Hoffman. National trends in prescription drug expenditures and projections for 2014. American Journal of Health-System Pharmacy, 2014; 71 (6): 482 DOI: 10.2146/ajhp130767