Keep your champions close, your physicians closer — drug cost savings through relationships and data

Everyone is on a budget these days, including hospitals and health systems. While operating within increasingly tighter margins, hospitals and health systems must ensure they are providing quality care.

As costs continue to rise and government reimbursements decrease, remaining profitable can seem an impossible undertaking. In a March 7 webinar sponsored by Cardinal Health and presented by Becker's Hospital Review, David Braasch, Alton (Ill.) Memorial Hospital president; Kathy Chase, PharmD, director of drug cost control at Cardinal Health; and Susan Samet, Pharm.D., director of clinical operations at Cardinal Health, provided solutions to cost and supply challenges hospitals face.

"After the Affordable Care Act was passed in 2010, we realized we needed to focus on the cost structure of our organization as reimbursements were going to decline over time," said Mr. Braasch. Hospitals like Alton Memorial turned to their leaders to identify opportunities for cost reduction.

Today, the same concerns with reimbursements and cost savings remain true. To remain sustainable, hospitals must evaluate and understand labor and supply costs, with focus on supplies and purchasing. One of the first areas within a hospital leadership can look to cut costs is its pharmacy division, Mr. Braasch notes. Traditionally, hospitals negotiate product prices or look for generic or therapeutic substitutions to lower pharmacy costs. However, this doesn't always maximize cost savings.

Mr. Braasch, Dr. Chase and Dr. Samet described two solutions to optimize cost savings in pharmacy.

1. Leveraging relationships — "Identify a champion and executive support."

"Any time you propose a utilization change with prescribers, you get met with a certain level of emotion and apprehension," said Dr. Samet. "Most physicians' personal preference drives their prescribing." To inspire physician behavior change, it's important to help them understand potential for cost savings won't come at the price of quality. The first step is to show physicians clinical evidence behind your decision to change a prescription. As Dr. Samet notes, a physician's apprehension stems from being unsure how a patient will react to a prescription.

When forming an open communication model with physicians, it can also be beneficial to bring in a champion to advocate his or her success with the new drug or regimen. Whether the champion is someone inside or outside the hospital, physicians benefit from hearing success stories from that champion and build trust in the alternative therapy. After following this model for multiple initiatives, big and small, physicians will soon become comfortable with the process and change.

2. Utilizing data — "Incorporate benchmarking data and data trends."

"Today, hospitals have access to a broad range of benchmarks," said Dr. Chase. "Several of these have strengths and weaknesses, and it is important to understand each." The best data source to use analyzing benchmarks is a hospital's own data. This allows the hospital to determine which divisions or departments need further analysis and allows for clearer comparisons with similar size hospitals. From there, hospitals need to perform cost analysis, which involves understanding their purchase data, volume adjustments and what information systems they will use as data sources. This drug cost analysis clearly outlines all drug costs for hospitals to properly determine where to cut costs.

Knowing drug costs is just one component of utilizing data. Hospitals and physicians must also understand the outcomes of the potential changes to drug purchasing and prescribing. For example, if one drug results in a shorter length of stay it might fit with the hospital's objective. However, that drug may also be more expensive. It is important to know your desired outcome in order to determine the best plan of action.

If your first drug cost initiative doesn't end with your desired results, try the process again. Costs savings do not happen overnight, and physicians don't jump on board immediately. Savings comes with time, with both physician support and an understanding of the data and benchmarks. However, with persistence, hospitals can be successful.

To view the webinar slides, click here.

To watch the webinar, click here.

To learn more about Cardinal Health services, click here.

More articles on supply chain:
Lawmakers seek to remove 'gag clauses' that keep pharmacists from revealing lower prescription drug prices
Why a better hospital supply chain starts with better relationships
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