Leveraging 340B Savings To Re-engineer Pharmacy
Publication: Pharmacy Practice News
Author: Gina Shaw
Date Published: October 25, 2011
Optimized billing software gets Virginia Hospital on road to more patient-focused care
When University of Virginia (UVA) Health System director of pharmacy Gary Johnson, PharmD, identified extra opportunities that enabled his hospital to save an additional $1 million in outpatient medication costs over the course of just six months through its participation in the federal 340B Drug Pricing Program—which limits the cost of covered outpatient drugs to certain entities, including qualified hospitals—he knew just what to do with the extra cash.
Dr. Johnson and his team plowed the savings into a comprehensive re-engineering of the hospital’s inpatient pharmacy system—prescribing, dispensing, administration and monitoring. Working with pharmacy automation provider Talyst, which facilitated UVA’s ability to maximize its 340B savings through optimized billing software, the UVA pharmacy went from an outdated, patchwork-quilt set of silos with irregular monitoring to a virtually seamless, integrated, carefully overseen system.
As a result, the hospital decreased inventory carrying costs by $500,000, reduced medication dispensing errors by 76% and administration errors by 40%, improved order turnaround time by 92%, and decreased drug costs by $6 million (in addition to the 340B savings).
How were these dramatic results achieved? Through fundamental changes to all of the core components of pharmacy operations (Table). The strategies aren’t just about switching from name brands to generics, Dr. Johnson stressed—that’s done automatically. “The real value of the pharmacist is to suggest an alternative drug, which may be less expensive but equally effective, or a drug that is more effective and gets the patient discharged and back home more quickly. A very rich environment for these sorts of interventions is found in the critical care units.”
| Table: Impact of Re-engineering on Pharmacy Operations | ||
| Before | After | |
| Prescribing | UVA had a physician order-entry system for medication prescription, but the system was dated and had limited functionality, giving prescribing physicians incomplete information. | Medications are prescribed within a new EMR that is fully integrated with patient-specific data systems, such as laboratory and radiology, as well as with ambulatory care. |
| Dispensing | Medications were dispensed through a centralized system that refilled medication carts in the pharmacy, and then exchanged those medication carts on the nursing units, every 24 hours. The process included an awkward combination of both robotic and manual systems for dispensing medications that was performed by both pharmacists and technicians. | Medication dispensing is now fully automated, driven by the bar codes found on every medication. The process begins by importing the daily delivery of medications from the distributor into perpetual inventory software—a function that decreased inventory levels from 11 to five days and generated a $500,000 inventory reduction. Medications are stored in four inventory management carousels that, in conjunction with the perpetual inventory software, ensure that each drug is scanned and then placed in a precise, software-determined storage location, as opposed to an alphabetized system. Automated dispensing devices, similar to ATM machines, now stand on each nursing unit and have replaced the old medication cart. Containing up to 250 different medications, the devices interface with the new EMR and the pharmacy’s perpetual inventory system, and allow nurses to retrieve all medications with active orders. Every 12 hours, the devices transmit replenishment data to the perpetual inventory software, which then causes the carousels to turn and dispense the required medications to replenish the devices. Bar-code functionality ensures that the correct medication is retrieved from the carousel to replenish each dispensing device—a step that’s largely responsible for the 76% decrease in dispensing errors. |
| Administration | Because patient-specific medications were only updated every 24 hours—with the exchange of the medication carts—the system was susceptible to errors, allowing discontinued medications to remain available for dispensing and newly prescribed medications to languish unavailable in the pharmacy. | Bar-code medication charting requires nurses to scan both the patient’s wristband, as the patient identifier, and the drug being given. The software then searches the EMR to ensure the patient has an active order for this medication. If not, the system will alert the nurse that an incorrect medication is about to be administered. Not only has it decreased medication administration errors by 40%, the new system also gives nurses immediate access to 90% of needed medications within five minutes of order entry—as opposed to the average processing time of 60 minutes required under the old system. |
| Monitoring | Saddled with dated information technology, UVA’s medication monitoring was rudimentary at best, with pharmacists monitoring remotely from the hospital’s basement—a location that hampered their integration into the patient care team. | Because automation has permitted so many more pharmacy tasks to be performed by technicians, a number of pharmacists have been reassigned to the nursing units. That doesn’t just make for happier pharmacists—turnover dropped from 23% to 8%—but it also leads to smarter prescribing. Pharmacists work closely with prescribing physicians, making recommendations for more effective and/or less expensive medications. |
| EMR, electronic medical record; UVA, University of Virginia | ||
Pharmacists often help physicians with appropriate prescribing of antibiotics, Dr. Johnson said. “This is a very large and very expensive drug class, which is often prescribed inappropriately. Another opportunity to better manage medications was found with the drugs used to treat hemophilia patients and/or patients who require very expensive medications for blood disorders. These drugs are genetically engineered, recombinant and can cost up to $75,000 per treatment regimen.”
Overall, this more rational medication use model has led to a $7 million decrease in drug expenditures (including the 340B savings), putting that expense at 12% below budget for the fiscal year.
The pharmacy received an Innovation Award from Virginia Gov. Bob McDonnell in August—an honor designed to recognize ideas that produce efficiencies or cost savings. “But this really goes beyond saving money,” Dr. Johnson said. “It’s about quality, reduction in errors and improvements in care.”
Praise From a Fellow Pharmacy Director
Tom Van Hassel, RPh, MPA, director of pharmacy at Yuma Regional Medical Center in Yuma, Ariz., praised Dr. Johnson for “demonstrating exactly what pharmacy technology is supposed to be used for.” Mr. Van Hassel’s own hospital has long been leading the way in pharmacy automation. “This technology is designed to allow your staff to get involved in clinical care by allowing the mundane duties of the pharmacy to be done virtually error-free, and they’re [the University of Virginia Health System] really making the most of that.”
Why aren’t more hospitals jumping on board? “Technology has a high start-up cost,” Mr. Van Hassel said. “And pharmacy directors on the whole don’t have a lot of experience in dealing for capital dollars—not like radiology and labs. We’ve really only been involved in technology for about 10 years.”
Dr. Johnson isn’t about to sit around polishing his Innovation Award. He’s got plans for the 340B savings that continue to come in. “Now, I want to go back and re-engineer the outpatient pharmacy environment,” he said. “I think we have a similar level of improvement and savings to achieve there.”
—Gina Shaw
Source: Pharmacy Practice News
