Hospital performance can be a moving target for hospital administrators due to changing regulatory pressures, reimbursement challenges and the transition from inpatient to ambulatory care.
"It's always shifting. But what is not changing for hospitals is compressed margins," said Michael Brown, RPh, vice president of managed services for Dublin, Ohio-based Cardinal Health. "To succeed, you're going to have to be nimble. You're going to have to come up with new, innovative ideas of how to address these concerns for your health systems."
This article is sponsored by Cardinal Health.
Despite this need for innovation, few hospital executives have the time and resources to manage hospital performance on a frontline, operational basis. In fact, 58 percent of hospital administrators feel they don't have enough time to focus on new initiatives or ideas at their organizations, according to recent Cardinal Health research. In the pharmacy realm, leaders said 50 percent of new initiatives are driven by external market factors.
"When it comes to a department level, [hospital leaders] are usually reacting, not being proactive," Brown said. "If you really want to affect cost in your system … you need to look at it from a service line perspective."
Brown spoke with 22 health system leaders about how they are using pharmacy services and medication management to proactively overcome these industry pressures during a Nov. 13 roundtable discussion at the Becker's Hospital Review 7th Annual CEO + CFO Roundtable in Chicago.
Here are four takeaways from the discussion:
1. Pharmacy can offset drug and labor costs. Brown said leaders seeking to offset rising operational costs should turn to pharmacy, since drug inflation is increasing 5 percent annually while labor costs are rising 3 percent every year.
Pharmaceuticals touch nearly every patient, clinician and service line in a health system. Therefore, improved pharmacy practices can directly improve a hospital's staffing, care quality and medication utilization within all service lines, according to Brown. More efficient pharmacy processes not only lead to decreased drug expenses, but also give pharmacists more time to perform clinical tasks such as medication reconciliation, which leads to better patient outcomes.
As part of their strategy to boost overall hospital performance via improved pharmacy processes, many health systems are doubling down on medication utilization to achieve and sustain meaningful results.
"You need a sustained medication utilization management program if you're going to succeed in the future," said Brown. "Just think about it. If you have a patient, whether in the inpatient or outpatient setting … that individual is probably getting a drug, and they're probably interacting with a pharmacist or a technician in some way."
Health systems that treat pharmacy only as a cost center and don't prioritize medication utilization management may miss out on key cost savings and quality improvement opportunities, according to Brown.
2. Pharmacists are taking on more active roles in the hospital. Pharmacists are playing larger roles in hospitals' strategic initiatives than ever before. Many executives said that as part of their medication utilization strategy, pharmacists are placed on clinical floors to interact with patients on a daily basis.
This is precisely the approach a vice president and chief nursing officer of a large acute care hospital on the East Coast described. She said the hospital's pharmacists regularly monitor patients and their medications on designated floors.
"They talk to the patients, they talk to the nurses. They grab the doctors when they're there," she said. "[They'll notify them] if there is a bad interaction or if there's a better drug, either cost-wise or efficiency-wise."
The pharmacists also conduct discharge medication training for every patient. When patients understand what medicines they're taking and why, they are more likely to take the drugs correctly. Better medication adherence not only improves patient outcomes, but also prevents unnecessary readmissions, which saves hospitals from financial penalties.
3. Healthcare leaders must ensure they're using the right data to measure pharmacy performance. Although many healthcare leaders have a plethora of pharmacy data at their fingertips, they described the difficult nature of ensuring that data translates to accurate and relevant information.
"Just looking at the number is too easy. You're not getting the whole picture," said the president and CEO of a 200-bed general hospital in the Southwest. "Looking at data and making sure it is right and usable is important."
To monitor performance, the hospital relies on pharmacists to review a pharmaceutical expense curve. "It's a pretty cold assessment," the CEO said. "They look at what [pharmacy expenses] are going up, how they are utilized and who the supplier is."
While many hospitals analyze pharmacy costs as a percent of revenue, a true understanding of performance rests on knowing the true costs of doses dispensed, according to Brown. Pharmacists often break down larger quantities of purchased pharmacy products into individual doses, so it can be difficult to track the cost associated with these smaller units.
"Hospitals cannot know their actual pharmacy costs without this measure," Brown said.
Cardinal Health wants to break the mold with pharmacy data by allowing health systems to measure cost in a low unit of measure with the actual purchase price they pay to suppliers.
4. Telepharmacy is a lesser-used strategy for cost savings. As pharmacists take on more strategic initiatives in the hospital, their bandwidth to conduct regular order entry work becomes limited. Few hospitals can afford hiring additional pharmacists to handle traditional pharmacy tasks amid tight budgets and compressed margins. This is where remote pharmacy services come in.
Remote pharmacy services offer a convenient, cost-effective method to supplement on-site pharmacists taking on these additional responsibilities, according to Brown.
"When it comes to order entry, it doesn't really matter if the pharmacist is stationed in the hospital or 500 miles away," he said. "We're finding if you're trying to do medication reconciliation, discharge planning, etc., [remote pharmacy services] really allows pharmacists to go out and perform at the top of their license."
Remote pharmacy services can also prove beneficial for retail pharmacy clinic locations. Brown noted some states allow pharmacy technicians to dispense medications under the oversight of a telepharmacist. Health systems in these states can place pharmacy technicians at each location, who are overseen by one telepharmacist, to help scale their staff and control labor costs.
"If you have a lot of clinics, that may be something you want to consider ... just to help with productivity," he said. "If you grow pharmacy volume, there's only so much you can do before you have to add a pharmacist with a $150,000 salary. Or you could leverage a remote one, saving 30 percent or more, depending on the volume and hours of operation."
Along with cost savings, remote pharmacy services can indirectly benefit patient safety and care quality. As health systems expand and accommodate more patient visits, pharmacy order volumes increase. This creates more demand on the pharmacy team, which can increase the risk of errors. In addition, Brown said his remote pharmacists typically intervene on 5 percent of medication orders that are reviewed, and of those, half are deemed patient safety-related. Remote pharmacy services can be an economical, innovative approach to supplement this increased demand for the on-site pharmacy team while preventing errors.
Conclusion
Many healthcare administrators are rolling out strategic pharmacy initiatives to help maintain hospital performance. By doubling down on medication utilization, allowing pharmacists to practice at the top of their license and tapping innovative services like telepharmacy, hospitals can effectively improve patient outcomes and operational performance without breaking the bank.