Subrata Behera Chris Beuning Jim Grubel Steve McDonald Medical Informatics: Health Care Operations 404 August 10, 2011

 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

 30% Medicare  20% Medicaid  40% Commercial  10% Self pay (uninsured)

 $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

 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.

 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

 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.

 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.

 All Pharmacy Services  Pharmacy Third Shift  Pharmacy Management  Pharmacy Medication Procurement & Inventory Management

 Current State  Personnel

 Responsibilities  Order Management  Sterile Products

 Inventory Management  Drug Locations  Number of Turns

 N.P.M. Proposal  Personnel  Become N.P.M Employees  Impact on Salaries

 N.P.M. Proposal, continued  No New Equipment Needed  Cost Savings  Inventory Management

 Current State  Staffing  Responsibilities

 N.P.M. Proposal  Shift Coverage  Cost Benefits

 N.P.M. Proposal, continued  Medication  Required Equipment

 Maintain current management positions  New team to fill those positions  Utilize N.P.M. personnel to fill these positions

 Cost Savings Initiatives  Utilize Lean methodology  Previously Identified Opportunities  Switch to generic anti-emetics  Implement IV to PO conversion  Implement shorter acting erythropoietic agent

 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

 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

 Potential areas of benefit  Enrolling in 340b pricing program  Inventory management – just in time

 340b Pricing Program  Determine if any subset of Community Hospital patients meet criteria for 340b pricing  Tracking required  Rigorous record keeping

 Inventory Management  Lower inventory levels  Increase number of inventory turns  Establishment of minimum and maximum levels

 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

 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

 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

 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

 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.

 Demand  Present Economy

 Cost  Salaries

 Human Resources  Reorganization

 Output and Productivity  More Inventory Turns  Staff Engagement  Sterile Products

 Quality Outcomes  Clinical Initiatives  Formulary Review  Med Accessibility

 Processing Quality  Patient Satisfaction  Physician Satisfaction

 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

 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

 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