1. Pharmacy Executive Forum - Benchmarking
Presenters:
Chris Little, PharmD, BCPS
Executive Director, ROi
This is the Title slide
Please do not alter the Track Name

2. Objectives
Evaluate methods of promulgating benchmarked pharmacy data throughout the health system to get people’s attention
Analyze how benchmarks help reduce the number of drugs per category to lower our drug spend
Identify key performance indicators we should be focused on that we are not today

3. Drug Pricing in the Media

4. Overall Drug expenditure trends
Why Track Drug Spend / Utilization
National Drug Spend Trends
Significant contribution to bottom line financial performance
Political pressure
New “Specialty Drugs”
Pharmacy as an Expense or Revenue cost center???

5. FINDING AND IMPLEMENTING BEST PRACTICES
What is Benchmarking?
“A continuous process of measuring products, services and practices against the toughest competitors or those renowned by industry leaders”
FINDING AND IMPLEMENTING BEST PRACTICES

6. Background Introduced to North America by Xerox in the 1980s Process:
Goal: Optimize business practices
Included end products and service offerings
Process:
Collecting, analyzing and comparing data within a defined peer group
Objective criteria chosen to derive the end result being evaluated
Once top quartile performance is identified, determine “Best Practices”

7. Why benchmark in Pharmacy?
Drive cost savings/avoidance
Many Health-System Executives feel that the ever growing pharmacy spend is a “Target rich environment”
Opportunity to integrate clinical outcomes with financial/operational drivers
Effective benchmarking provides an opportunity to improve:
Clinical outcomes
Operational efficiencies
Financial performance
Opportunity to solidify pharmacy’s value proposition

8. Pharmacy as a Cost Center
Drug spend is a high priority target for the C-Suite

9. Internal vs External Benchmarking
Internal Benchmarking
Internal performance measured over time
Individual performance within a cohort
External Benchmarking
Comparing performance versus other organizations
Must closely evaluate for built in bias

10. External Benchmarking
Vendors/consultants provide this service
Institutional data (clinical, operational, and financial) submitted to an external tool/database
Disparate systems provide data
Charge master, payroll system, financial reports, clinical systems
Certain degree of interpretation on data submitted (i.e. licensed vs occupied beds)
Benchmarking tool measures performance vs all others in the cohort
Ability to assess individual performance
Able to confirm current practices or question performance

11. External Benchmarking: Variables
Variables will normalize financial, clinical or operational components vs a predefined volume metric
Labor adjusted
Weighting based on staff/resources
Must include the type of staff (Clinical pharmacist, pharmacist, technician)
Examples include hours worked, total labor cost
Volume adjusted
Weighting based on volume to normalize data
Examples include patient day, discharge volume and encounter

12. Challenges of External Benchmarking
Definition of peer groups
Does the peer group include like health-systems?
Hospital vs Clinic
Drug revenue adjustment
Financial incentives (i.e. rebates)
Clinical activities
Labor variables are ambiguous
Pharmacist vs technician tasks

13. Facility Comparison Example
Health System A
Academic medical center in an urban setting
1000 licensed beds
42M annual drug spend
4.1M annual labor spend
Key Service Lines:
Oncology
Neurology
Transplant
Trauma/Critical Care
Health System B
Community based multi-hospital system (3 facilities)
1000 licensed beds
52M annual drug spend
5.4M annual labor spend
Key Service Lines:
Cardiology
Oncology (some physician owned infusion clinics)
Orthopedics
Can we compare?

14. External Benchmarking: Cohort Identification
Comparison to the appropriate cohort is essential to success
Acuity Adjustment
Assessment of patient severity
Varying scales in practice (i.e. CMI)
May not adequately weigh patient medication requirement
Academic vs Community vs Federal
Organizational Service Lines
DSH / 340b

15. External Benchmarking: Acute vs Infusion
Beware of combining acute and infusion
High cost drugs can quickly skew comparisons
Varying practices
Hospital based vs clinic based infusion
Are all clinic purchases reported?
Physician owned practices potentially purchasing products (high vs low margin)
Contract offerings may differ based on class of trade

16. External Benchmarking: Workload
An effective staff can tightly control pharmaceutical costs
Worked hours vs paid hours
Often times benchmarking occurs as per dose or per order
EMR limitations on the definition of “Dose”
Protocols and order sets can inflate number
Quantifying clinical pharmacy work is challenging

17. External Benchmarking: Workload
Recommendation:
Evaluate workload metrics with a parallel financial metric
Separate evaluation of operational vs clinical components is optimal
Workload/productivity measures should be adjusted for acuity
Measures include:
Orders / RPh Hours OR Interventions (Clinical Work) / RPh Hours
Doses Dispensed / Tech Hours OR Missing Med Doses / Tech Hours

18. External Benchmarking: Keys for Success
Understand your cohort and compare appropriately
Develop specific knowledge around your benchmarking partner and the limitations of their data
Recommendations for Metrics
Validate all findings with a clinical outcome if at all possible
Pharmacist hours / Order, Pharmacist hours / Doses Dispensed
All metrics adjusted to an acuity metric (CMI)
Utilize patient days rather than admission

19. Internal Benchmarking
Activity performed within a given organization
Can compare department performance within a large health-system
Can compare provider performance within a given service line
Minimizes extenuating circumstances compared with benchmarking services
Assumes a consistent approach to clinical and operational practices across the continuum of care
Common systems increase data reliability

20. Internal Challenges Less opportunities to identify best practices
Low cost = good outcomes???
Internal competition
Physician competition
Potential for supply cost shifting

21. Internal Keys to Success
Obtain buy in from key stakeholders early in the process
Systems in place must be able to accurately capture key data variables
Define exact criteria that you hope to evaluate
Connect compensation with performance whenever possible
Understand and be transparent with data limitations

22. Internal Benchmarking Example
Measurement of key data across an entire health-system

23. Internal Benchmarking Example
Supply, drug, labor and block time all accounted for
Data available by provider, case type and location

24. Internal Benchmarking Example
Provider specific data can be generated
Trending over time for key variables

25. Conclusion
Educate yourself on the benchmarking tool that you are using
Benchmarking does not always require use of an external tool or database
Identify a well matched cohort
Track progress over time

26. Q&A Slide