7 Steps to Reduce Hospital Pharmacy Costs Without Eliminating Staff

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Each year, hospital executives are faced with the same daunting task of finding ways to tighten the budget belt one more notch. It's a sign of the times against looming — and in some cases significant — reimbursement cuts from Medicare and a regulatory backdrop demanding more for less.

Historically, the pharmacy department represents one of a hospital's highest cost centers. Keeping pace with rising drug costs and staffing needs account for the majority of the pharmacy budget and are the main drivers of annual requests for increases. However, while the clinical side of the house focuses on gaining access to medical advances and newer, more effective drug treatments, the finance department is focused on, at best, maintaining the status quo in terms of pharmacy spending.

It's a double-edged sword. New regulations and quality expectations are requiring that pharmacies allocate more resources to ensure that appropriate initiatives are in place that promote the highest level of patient care and safety. At the same time, the pharmacy represents a prime area of focus for improving cost efficiencies and benchmarks for appropriate reimbursement. Going forward, hospital pharmacies will have to improve operational practices to ensure staff time is used for the most optimal tasks.

The most effective approach will combine a complementary mix of technology, automation and governance to eliminate time-consuming, paper-based processes, while increasing efficiencies and productivity. The following seven strategies enable pharmacy managers to do just that.

1. Automate scheduling. Pharmacy staff scheduling is often an inefficient process due to the complex nature of the environment — multiple shifts across various departments, varying levels of staff expertise and differing definitions of what constitutes appropriate coverage across departments. In addition, pharmacy managers do not have the luxury of waiting until workloads slow down to attend to schedule changes. Because the pharmacy is such a critical area of the hospital and directly involved in patient care, scheduling issues must be addressed immediately so as not to impact care quality.

Because of these complexities, standard hospital staffing systems are typically not appropriate for pharmacy environments. As a result, managers must often resort to manual processes that entail spreadsheets and consume the time and energy of some of the pharmacy's highest paid staff.

As departments look for ways to create more efficient operational practices, many are finding that automated tools created specifically for the hospital pharmacy are the answer to the scheduling nightmare. Managers have access to user-friendly methods of reviewing and building schedules as well as communicating with staff through an integrated platform. Employees have the ability to take ownership of the scheduling process by using the tool to submit time-off requests, view schedules and confirm shift changes. Not only do these systems provide real-time, up-to-date information for staff, but they also free up the pharmacy manager's time to allow for more high-level tasks to be completed.

2. Convert from paper to digital. Paper-based documentation and tracking processes lend to higher costs — for storage, printing and documentation management — and are prone to more errors. Thus, anywhere the pharmacy can convert paper to digital formats is a winning choice from a budget perspective.

For example, online formulary management portals streamline updates both the formulary as well as policies and procedures, and accelerate facility-wide communication of any changes. Automated reporting tools that monitor clinical interventions, medication errors and adverse drug reactions enhance quality and patient safety while freeing up staff time and providing pharmacy managers with valuable insight into how best to quantify and improve clinical programs and staff.

Consider also that many facilities accumulate and store large amounts of data over consecutive years for audit purposes. Often, this information is never used, or in the rare instance that it is needed, the process of finding a specific piece of information can be painstaking and time-consuming at best. When information is maintained in digital format, the headaches of this process are eliminated and data is retrieved via the touch of a button.

3. Real-time medication tracking to eliminate waste. Although a relative newcomer to the spectrum of healthcare automation tools, wireless medication tracking systems are turning heads across the industry for their proven ability to deliver administrative and clinical ROI — often as high as 3:1. By providing real-time tracking of patient medications from preparation in the pharmacy to final delivery in the nursing unit, these solutions dramatically impact productivity, costs and patient satisfaction.

When real-time medication tracking is available across the enterprise, pharmacy staff is no longer diverted from their core responsibilities to respond to frequent status updates. Nurses have instant access to the status of a medication, and patients receive needed pharmaceuticals in a more timely fashion.

Real-time monitoring also eliminates waste associated with duplicate orders and obsolete inventory. For example, patient specific IVs used for such procedures as chemotherapy and total parenteral nutrition are often the most expensive medications dispensed in the hospital. It is critical to hospital budgets to have clear tracking of these medications to avoid the need to reissue, especially since once dispensed, it is unlikely the original would be appropriate for another patient.

4. Standardize practices with clinical decision support technology. When pharmacy managers have time to review clinical intervention practices, improvements to drug utilization can be identified and communicated through clinical decision support technology. Through advanced technology, alerts can be built into the system that guide physicians to more appropriate prescribing based on accepted best practices in ways that promote quality and cost efficiency.

With 2 million scientific articles published annually, the sheer volume of research available supporting evidence-based practices is simply overwhelming. Hospitals place their physicians and clinicians ahead of the knowledge curve when there is immediate access to the latest guidelines, policies and best practice recommendations at the point of care.

For example, when standardized, evidence-based practices that support formulary management are in place, pharmacists can better manage such areas as antimicrobial utilization and name-brand versus generic brand drug options. The integration of automation with the oversight of competent pharmacy professionals into clinical care can have a significant impact on cost and quality.

5. Implement an antimicrobial stewardship program. Antimicrobial resistance remains a concern for healthcare providers, and the ability to effectively manage this resistance starts with the introduction of an antimicrobial stewardship program. In fact, ASPs in hospitals are a growing trend due to continued growth in resistance and the lack of new antimicrobial agents coming on the market.

Optimization of antimicrobial use is the overriding goal of any ASP. Ultimately, it's about finding the balance between effective use and overuse of antimicrobials — equating to managing proper selection, duration, dose and route of administration.

ASPs have been proven to lower antimicrobial resistance, establishing a solid ROI for healthcare organizations by reducing drug-related adverse events, improving clinical outcomes and shrinking healthcare costs. Consider the results of a 2007 study published in Clinical Infectious Diseases that included the efforts of a large academic medical center to target two antimicrobials. The end-result produced a 37 percent reduction in days of unnecessary therapy. Another initiative within the study that occurred at a medium-sized hospital realized a 22 percent decrease in use of parenteral broad-spectrum antimicrobial use.

6. Deploy rules-based surveillance monitoring to identify less costly interventions. While CDS technology is an important first step to standardizing clinical practices and maximizing drug costs, it is limited in its reach and analysis of patient data. Most CDS tools are not able to consider all the contextual data that exists — such as labs and prior history — to present the most relevant information to professionals involved in patient care.

Patient care is dynamic in nature. Often, daily reports of patient conditions become outdated quickly. Surveillance technology provides rules-based, real-time monitoring that can alert clinicians to immediate opportunities for improved care. Changes to patient care can be made quicker, improving quality and often avoiding unnecessary duplications.  

For example, pharmacist working from a report printed at 8 a.m. may go to address a patient issue only to find out a physician had already taken care of it or ordered something different. Likewise, pharmacists using manual systems would have to print out a list of patients on IV drugs to determine if there is a better intervention, such as an oral medication. With surveillance technology, the system automatically alerts pharmacists to these needs and opportunities, reducing costs and improving patient care.

7. Deploy automated systems for maintaining compliance and patient safety standards. The concept of pharmacy departments doing more with less is particularly challenging under the current regulatory environment as pharmacy managers are faced with recent changes that add costs and complications to operations. Regulations such as USP 797, along with increased expectations with Joint Commission standards, are dramatically impacting how pharmacies manage their day-to-day tasks.

Automated solutions exist that specifically address the needs of USP 797 and can ensure quality expectations are met without active involvement of pharmacy staff. Managers can also consider checklist management systems that help hospitals document and report on compliance and patient safety issues throughout the facility. Specifically, these automated systems can be used to assist pharmacies in meeting Joint Commission standards for storage of medications and to help document patient safety processes taking place before surgeries and other critical events.

Federal initiatives are upping the ante on how pharmacies operate going forward. New regulations are placing a greater burden on staff resources while the need to create cost efficiencies hospital-wide is requiring that pharmacies do more with less.

Hospital executives and pharmacy managers who take proactive steps to meet this challenge head-on through a complementary approach of advanced technology, automation and solid management oversight will be the winners going forward. While changing the way business is done is never easy, the opportunities for creating efficient practices that raise the level of patient care and quality make the effort worthwhile in the end.

Janet Blackmere, PharmD is director of clinical solutions at Pharmacy OneSource, part of Wolters Kluwer Health. She can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it. .


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