Consultant’s Playbook A Survey of Pharmacy Consultant Experiences Among Hospitals In the University HealthSystem Consortium Dave Hicks, RPh, MBA; Br yan McCarthy, Jr., PharmD, MS, BCPS; John Fanikos, MBA, RPh; Amir Emamifar, PharmD, MBA; Andrea Nedved, PharmD, MPA, MS; Bruce Thompson, RPh, MS; Fred Bender, PharmD; and Patrick McMahon, PharmD, MBA
ABSTRACT
Purpose: Our team surveyed a group of pharmacy directors to learn about their experiences with pharmacy consultants so that the directors might be able to use their consulting resources in a more effective manner. Methods: In May 2012, the University HealthSystem Consortium (UHC) Pharmacy Council Financial Performance Committee developed an electronic survey that collectively measured the characteristics, goals, and methodology of historical pharmacy consultant engagements and level of satisfaction. After e-mailing the initial electronic survey, we conducted follow-up telephone interviews with respondents from July through November 2012. These interviews were designed to include questions about expected outcomes, recommendations for evaluation processes, timelines for implementing the recommendations, consultants’ expenses, and insights gained. Results: A total of 23 pharmacy directors responded to the initial electronic survey; their organizations had engaged at least one consultant within the previous 5 years. Data were collected for 28 consultant engagements. Subsequent telephone interviews were conducted with 20 of the 23 pharmacy directors (87%) who completed the initial electronic survey, accounting for 25 of the 28 consultant engagements (89%). Conclusion: Cost reduction along with revenue enhancement was most often the focus of these engagements. These engagements were also mainly within the scope of an organization-wide effort initiated by the executive board or executive team. Consultant experiences varied greatly in terms of (1) the degree to which assistance was provided to the organization, (2) benchmarking methodologies and resources, and (3) timelines for implementing the consultants’ recommendations. In Mr. Hicks is Vice-President of Pharmacy and Laboratory Services at The University of Chicago Medicine (formerly known as The University of Chicago Medical Center) in Chicago, Illinois. Dr. McCarthy is Clinical Coordinator of Quality, Outcomes, and Utilization at The University of Chicago Medicine. Mr. Fanikos is Director of Pharmacy Business and Financial Services at Brigham and Women’s Hospital in Boston, Massachusetts. Dr. Emamifar is Associate Administrator of Pharmaceutical Services at Emory University Hospitals and Clinics in Atlanta, Georgia. Dr. Nedved is Pharmacy Services Supervisor at Mayo Clinic in Rochester, Minnesota. Mr. Thompson is Director of Health System Pharmacy Services at Hennepin County Medical Center in Minneapolis, Minnesota. Dr. Bender is Director of Pharmacy Services at Greenville Hospital System in Greenville, South Carolina. Dr. MacMahon is Clinical Coordinator and Residency Program Director at Steward Health System in Norwood, Massachusetts.
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October 2013 • Vol. 38 No. 10
general, most respondents rated their consultant experience as positive and were able to provide “pearls of wisdom” or lessons learned.
INTRODUCTION
Many health care systems engage consultants to identify opportunities for pharmacy cost savings in areas such as the supply chain, labor productivity, and revenue enhancement. Pharmacy leaders have been encouraged to actively participate in the process by preparing data and by developing and implementing a consultant’s recommendations.1 Unfortunately, the successes or failures of pharmacy consultant engagements and the nature of recommendations made remain widely unshared. The University HealthSystem Consortium (UHC) Pharmacy Council Financial Performance Committee surveyed pharmacy leaders in an attempt to identify common consultant strategies, data sources, and methodologies.
METHODS
In May 2012, the UHC Financial Performance Committee developed and e-mailed an electronic survey to pharmacy directors of the UHC’s member hospitals. Recipients were asked to complete one survey for each instance that their respective organization had engaged a consultant or a consultant group to evaluate pharmacy services within the previous 5 years. The survey included 14 questions that collectively measured characteristics, goals, methods of historical pharmacy consultant engagements, and satisfaction level. A reminder e-mail was sent 4 weeks after the initial distribution. All respondents were contacted for a follow-up telephone interview after the initial survey responses were captured. These interviews were scripted with 17 questions designed to ask about expected outcomes, recommendations, timelines for implementing the recommendations, consultant expenses, and the insights gained. Survey respondents were contacted to schedule a telephone interview three times before they were considered lost to follow-up. We used descriptive statistics to report our findings.
RESULTS
A total of 28 pharmacy directors responded to the initial electronic survey, indicating that their organization had engaged at least one consultant within the previous 5 years. Data were Disclosure: The authors report that they have no commercial or financial relationships in regard to this article. All authors are members of the Pharmacy Council Financial Performance Committee at the University HealthSystem Consortium in Oak Brook, Illinois.
Survey of Pharmacy Consultant Experiences collected for a total of 34 consultant engagements. Of the 28 respondents, 26 were at one of the 119 UHC academic medical centers, for a 22% response rate of consultant use within the previous 5 years in this population. We subsequently conducted telephone interviews with 20 of the 28 pharmacy directors (71%) who completed the initial electronic survey, accounting for 25 of the 28 consultant engagements (89%). Four hospitals also provided itemized
lists of specific consultant recommendations and strategies (Table 1). The following analysis of our results primarily describes the 19 cost-containment and revenue-enhancement reports of the 25 total consultant engagements with respect to characteristics, scope and objectives, methodology, recommendations, and experiences.
Table 1 Consultants’ Aggregated Recommendations for Cost Reduction and Revenue Enhancement 1. 340B outpatient prescription copay less costly than mail order for employees 2. 7-day Advair 3. Steroid inhalers—Advair conversion to Symbicort 4. Albumin—guidelines for use 5. Aloxi conversion to ondansetron for outpatient use 6. Alteplase—guideline for catheter clearance 7. Ambulatory pharmacy growth hormone service 8. Anesthetic gas: drop desflurane, use isoflurane for patients with disease of long duration, reduce flow rates 9. Antifungals—pricing 10. Antifungals—utilization 11. Antimicrobial Stewardship Program 12. Antizol—eliminate as stocked nonformulary 13. Aranesp usage reduction 14. Argatroban—bag size reduction 15. Argatroban—guidelines 16. Argatroban to generic when available 17. Arixtra 7.5 and 10 mg to generic 18. Atracurium preferred over cisatracurium 19. Aztreonam restriction → cefepime 20. Carbapenems conversion 21. Cardene conversion 22. Cardiology assistant in catheter laboratory reducing Angiomax, ReoPro, and Integrilin 23. Cathflo usage reduction 24. Clindamycin premixed to self-mix 25. Clinical pharmacist for ambulatory infusion center interventions 26. Collect CAPS rebate 27. Combivent inhalers to albuterol 28. Contrast media—product change 29. CVVH distribution from supply chain to pharmacy 30. Dexmedetomidine—guidelines for use 31. Disposable pain pumps 32. Eliminate stocked nonformulary drugs 33. ESAs—guidelines for use 34. ESAs—elimination for trauma patients 35. Factor VII—guidelines for use 36. Filgrastim 300 mcg for patients weighing less than 75 kg 37. Flovent to Asmanex 38. Fosphenytoin generic 39. Fragmin to Lovenox 40. Geodon oral to generic 41. Hemostatic agents—review and use 5,000-unit size 42. Humate P to Wilate
43. Implement indigent recovery program 44. Infectious Disease Antimicrobial Stewardship Program 45. Insulin pens to insulin vials 46. Inventory—reduction of pharmacy par levels 47. Inventory—preset/reduce automated dispensing machine par levels 48. Investigational drug fee recovery 49. IV—extend NICU infusion dating 50. IV outsourcing program 51. IV push drug policy changes 52. IV to PO autoconversion for stress ulcer prophylaxis 53. IVIG—guidelines 54. IVIG purchased at 340B drug discount price 55. Lantus vials to drawn up individual doses 56. Levalbuterol to albuterol 57. Levetiracetam IV to PO 58. Lexapro to generic 59. Lexiscan 340B drug discount pricing 60. Lipitor to Crestor 61. Maximizing reimbursement of ambulatory medications 62. MDIs to generic nebulized products 63. Misoprostil from Cervidil for cervical ripening 64. Nesiritide—guidelines 65. Neuromuscular blocker use 66. Nexium restriction 67. Nicardipine IV 68. Nicardipine—bag size reduction 69. Pediatric pharmacy waste reduction 70. Pharmaceutical returns contract 71. Pharmacotherapy of heart failure 72. Pharmacotherapy of hypertension 73. Pharmacy—case management partnership 74. Procrit vs. darbepoetin savings analysis 75. Sentri7 after it is operational 76. Telecom utilization–pharmacy 77. Thrombin purchases 78. Thrombin usage decrease in the operating room 79. TPN compounding process (standard vs. custom) 80. Triostat—eliminate as stocked nonformulary 81. Vancomycin oral product 82. Venofer usage reduction 83. Wholesale distributor agreement renegotiation 84. Xalatan to generic 85. Zosyn—extended infusion/restriction 86. Zyvox—IV to PO
CAPS = Central Admixture Pharmacy Services; CVVH = continuous veno-venous hemofiltration; ESAs = erythropoeitin-stimulating agents; IV = intravenous; IVIG = intravenous immunoglobulin; MDI = metered-dose inhaler; = NICU = neonatal intensive-care unit; PO = by mouth; TPN = total parenteral nutrition.
Vol. 38 No. 10 • October 2013 • P&T 629 ®
Survey of Pharmacy Consultant Experiences Characteristics
Of 25 consultant engagements in which telephone interviews were conducted, 19 (76%) pertained to cost reduction/revenue enhancement, three (12%) were concerned with strategic development, and three (12%) were related to assessments of the Section 340B drug discount program. Organization-wide efforts initiated by the executive board or executive team were responsible for 18 of the 19 (95%) cost-reduction/revenueenhancement engagements, whereas all six of the strategic development and 340B assessment engagements were initiated by pharmacy department leadership (Figure 1). Most consultant engagements (76%) took place in 2011 and 2012. Six consultant surveys (24%) were conducted from 2008 through 2010. Fourteen different consultants or consultant groups accounted for all 25 of the surveyed engagements (Figure 2). Eight respondents who detailed cost-reduction/revenueenhancement engagements were made aware of the consultant fee structures. Six of these (75%) were based on a percentage of savings achieved, and two of these (25%) were based on a negotiated fee. All six strategic development and 340B assessment engagements were based on a negotiated fee.
Scope and Objectives
Within the 19 cost-containment/revenue-enhancement engagements, the top three areas of focus were revenue cycle (13%), formulary management (13%), and supply chain (12%) (Figure 3). Most consultants provided some form of assistance with implementation, and seven of 19 consultants (37%) provided recommendations, advice, and project-tracking support. Five consultants (28%) also provided hands-on, on-site person-
Crowe-Horvath 4%
Strategic initiatives 12% 340B assessment 12%
Cost reduction/ revenue enhancement 76%
Figure 1 Consultant engagement characteristics. nel to facilitate successful implementations. Expected outcomes for the cost-containment/revenue-enhancement engagements were defined bottom-line impacts for 14 pharmacy departments, organizations, or both (78%).
Methodology
To evaluate the area of focus or pharmacy services for costcontainment/revenue-enhancement engagements, the consultants usually used hospital performance data, as reported in 11 of 19 responses (58%). For benchmarking, the consultants used the company proprietary database or UHC/Solucient databases
CPS 4% Huron 16%
E&Y 4% American Healthcare Solutions 4% McKesson 4%
PwC 12%
Berkley 4% Lazarus 4% Cardinal 8%
Navigant 12% Visante 8%
VHA 8%
FTI 8%
Figure 2 Consultant or consultant group engagements. CPS = CPS Corporate Consultants, Inc.; E&Y = Ernst and Young, Inc.; FTI = FTI Consulting; PwC = PriceWaterhouse Coopers; VHA = Voluntary Hospital Association of America.
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Survey of Pharmacy Consultant Experiences Order entry 1% Research 1% Technology & automation 3% Revenue cycle Specialty pharmacy 5% 13% Management 5%
Patient assistance 7%
Formulary management 13%
Drug distribution 7% Supply chain 12%
Budget 8%
Productivity 8%
340B 8%
Staffing 9%
Figure 3 Pharmacy focus areas for consulting engagements. in seven engagements (37%). Of these 19 respondents, 12 (63%) either agreed or strongly agreed with the benchmarking methodology that their consultant had applied. Respondents at three sites (16%) either disagreed or strongly disagreed, and respondents at four sites (21%) had a neutral opinion.
The consultant data set request that was cited most often to ascertain cost-containment/revenue-enhancement opportunities consisted of 1-year data for operations and purchasing. From this data set, the consultant compared selected databases or best practices to identify and recommend opportunities.
Table 2 Consultant Methodologies Consultant Focus
Method
Responses
Cost Reduction
Benchmarking
• Compare data provided with proprietary benchmark data on labor and nonlabor expenses (eight engagements). • Solucient benchmarking (five engagements); UHC, VHA, or Cardinal database comparisons (one each).
Best Practices Audit
• Consultants looked at pharmacy from a best practice perspective, including automation, clinical involvement, and utilization (six engagements). • Consultants offered few new ideas (two engagements). • Consultant recommended labor productivity management system (two engagements).
Benchmarking–Audit Combination
• Re-bid/renegotiate distribution on major contracts • Consultants collected a data dump of purchases; separated expenses into labor and nonlabor savings; and further delineated operating room, diagnostics, and pharmacy supply expense. • Consultants analyzed pharmacy medication-purchasing history over a period of 1 year. From the data, they identified cost-savings initiatives, including therapeutic substitution, generic substitution, and purchasing contracts outside of a GPO.
Benchmarking and Best Practices Audit Combination
• Audit/flowchart all charge processes, review/update all charge codes, re-bill where lost charges or coding errors occurred. • Focus was on billing/revenue cycles, 340B drug discount pricing, and indigent drug programs for ambulatory infusions. • Proprietary price benchmarking (four engagements). • Focus was on specialty pharmacy and pharmacists in clinics for revenue capture.
Revenue Enhancement
GPO = group-purchasing organization; UHC = University HealthSystem Consortium; VHA = Voluntary Hospital Association of America.
Vol. 38 No. 10 • October 2013 • P&T 631 ®
Survey of Pharmacy Consultant Experiences Table 3 “Pearls of Wisdom” From Survey Respondents 1. Be sure to understand the numbers the consultants are using. 2. Do not guess or estimate your data responses. Be as accurate and specific as possible. 3. See any information before the consultants present it. 4. Make sure you fully understand the data supporting the consultant’s recommendations. Otherwise, you will find yourself agreeing to everything he or she says and you will not be able to refute erroneous statements. 5. Know the limitations of your current benchmarks. 6. Know your drug expenses and P&T committee communications approach. 7. The consultant’s viewpoints and opinions can be used to support pharmacy positions. Information can be directed toward the hospital’s key decision makers. 8. Having consultants in-house can move along projects that previously didn’t have traction. References or source documents were rarely quoted or shared. Table 2 lists the methods used.
Recommendations
Rates varied in terms of implementing consultants’ recommendations. Thirteen consultant engagements (52%) resulted in “all” or “most” recommendations being executed, and eight engagements (32%) implemented only “some” recommendations. Four respondent departments (16%) implemented no recommendations, because the pharmacy consultant validated best practices or benchmark targets that had already been achieved. Respondents reported a wide range of timelines (from 3 or 4 months to 3 years) for implementing consultants’ recommendations. Of 19 cost-containment/revenue-enhancement engagements, pharmacy consultants left progress-tracking tools or spreadsheets at five respondent departments (26%); used various established processes at five respondent departments (26%); and left no aids at the remaining nine respondent departments (47%).
Overall Experience
Most respondents (64%) rated their consultant experience as positive. Six respondents (24%) gave consultants a neu-
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9. Investigate the consultants before their arrival in order to understand the nature and scope of their processes. 10. When consultants compare your data with those of other hospitals, there are always going to be some instances where the comparison is inappropriate. It is imperative for the pharmacy leader to be able to identify those instances. 11. Ask for fundamental change. The consultants looked for quick and easy purchasing and drug-use changes; neither has a lasting effect. Programs like Antimicrobial Stewardship represent fundamental change and have a lasting impact. 12. Ensure that the scope of the work is well defined up front. 13. Administration should let the consultant know what its expectations are for the final report. 14. Staff should give consultants all information needed and should communicate all processes openly.
tral rating, and three respondents (12%) described a negative experience. Pearls of wisdom shared by respondents about their consulting experiences identified several repetitive themes that may inform future administrators about how to optimally engage pharmacy consultants (Table 3).
CONCLUSION
Our survey of 20 pharmacy directors (accounting for 25 pharmacy consultant engagements within the previous 5 years at UHC member hospitals) indicated that the focus was primarily on cost reduction and revenue enhancement. These engagements were also mainly within the scope of an organizationwide effort initiated by the executive board or executive team. Consultant experiences differed widely in terms of the degree to which assistance was provided, benchmarking methods and resources, and timelines for implementing the consultant’s recommendations. Overall, most respondents rated their experience as positive and were able to list lessons learned.
REFERENCE 1.
Sanborn M. Working effectively with consultants. Hosp Pharm 2008;43:231–232, 234–236. n
ABSTRACT
Purpose: Our team surveyed a group of pharmacy directors to learn about their experiences with pharmacy consultants so that the directors might be able to use their consulting resources in a more effective manner. Methods: In May 2012, the University HealthSystem Consortium (UHC) Pharmacy Council Financial Performance Committee developed an electronic survey that collectively measured the characteristics, goals, and methodology of historical pharmacy consultant engagements and level of satisfaction. After e-mailing the initial electronic survey, we conducted follow-up telephone interviews with respondents from July through November 2012. These interviews were designed to include questions about expected outcomes, recommendations for evaluation processes, timelines for implementing the recommendations, consultants’ expenses, and insights gained. Results: A total of 23 pharmacy directors responded to the initial electronic survey; their organizations had engaged at least one consultant within the previous 5 years. Data were collected for 28 consultant engagements. Subsequent telephone interviews were conducted with 20 of the 23 pharmacy directors (87%) who completed the initial electronic survey, accounting for 25 of the 28 consultant engagements (89%). Conclusion: Cost reduction along with revenue enhancement was most often the focus of these engagements. These engagements were also mainly within the scope of an organization-wide effort initiated by the executive board or executive team. Consultant experiences varied greatly in terms of (1) the degree to which assistance was provided to the organization, (2) benchmarking methodologies and resources, and (3) timelines for implementing the consultants’ recommendations. In Mr. Hicks is Vice-President of Pharmacy and Laboratory Services at The University of Chicago Medicine (formerly known as The University of Chicago Medical Center) in Chicago, Illinois. Dr. McCarthy is Clinical Coordinator of Quality, Outcomes, and Utilization at The University of Chicago Medicine. Mr. Fanikos is Director of Pharmacy Business and Financial Services at Brigham and Women’s Hospital in Boston, Massachusetts. Dr. Emamifar is Associate Administrator of Pharmaceutical Services at Emory University Hospitals and Clinics in Atlanta, Georgia. Dr. Nedved is Pharmacy Services Supervisor at Mayo Clinic in Rochester, Minnesota. Mr. Thompson is Director of Health System Pharmacy Services at Hennepin County Medical Center in Minneapolis, Minnesota. Dr. Bender is Director of Pharmacy Services at Greenville Hospital System in Greenville, South Carolina. Dr. MacMahon is Clinical Coordinator and Residency Program Director at Steward Health System in Norwood, Massachusetts.
628 P&T • ®
October 2013 • Vol. 38 No. 10
general, most respondents rated their consultant experience as positive and were able to provide “pearls of wisdom” or lessons learned.
INTRODUCTION
Many health care systems engage consultants to identify opportunities for pharmacy cost savings in areas such as the supply chain, labor productivity, and revenue enhancement. Pharmacy leaders have been encouraged to actively participate in the process by preparing data and by developing and implementing a consultant’s recommendations.1 Unfortunately, the successes or failures of pharmacy consultant engagements and the nature of recommendations made remain widely unshared. The University HealthSystem Consortium (UHC) Pharmacy Council Financial Performance Committee surveyed pharmacy leaders in an attempt to identify common consultant strategies, data sources, and methodologies.
METHODS
In May 2012, the UHC Financial Performance Committee developed and e-mailed an electronic survey to pharmacy directors of the UHC’s member hospitals. Recipients were asked to complete one survey for each instance that their respective organization had engaged a consultant or a consultant group to evaluate pharmacy services within the previous 5 years. The survey included 14 questions that collectively measured characteristics, goals, methods of historical pharmacy consultant engagements, and satisfaction level. A reminder e-mail was sent 4 weeks after the initial distribution. All respondents were contacted for a follow-up telephone interview after the initial survey responses were captured. These interviews were scripted with 17 questions designed to ask about expected outcomes, recommendations, timelines for implementing the recommendations, consultant expenses, and the insights gained. Survey respondents were contacted to schedule a telephone interview three times before they were considered lost to follow-up. We used descriptive statistics to report our findings.
RESULTS
A total of 28 pharmacy directors responded to the initial electronic survey, indicating that their organization had engaged at least one consultant within the previous 5 years. Data were Disclosure: The authors report that they have no commercial or financial relationships in regard to this article. All authors are members of the Pharmacy Council Financial Performance Committee at the University HealthSystem Consortium in Oak Brook, Illinois.
Survey of Pharmacy Consultant Experiences collected for a total of 34 consultant engagements. Of the 28 respondents, 26 were at one of the 119 UHC academic medical centers, for a 22% response rate of consultant use within the previous 5 years in this population. We subsequently conducted telephone interviews with 20 of the 28 pharmacy directors (71%) who completed the initial electronic survey, accounting for 25 of the 28 consultant engagements (89%). Four hospitals also provided itemized
lists of specific consultant recommendations and strategies (Table 1). The following analysis of our results primarily describes the 19 cost-containment and revenue-enhancement reports of the 25 total consultant engagements with respect to characteristics, scope and objectives, methodology, recommendations, and experiences.
Table 1 Consultants’ Aggregated Recommendations for Cost Reduction and Revenue Enhancement 1. 340B outpatient prescription copay less costly than mail order for employees 2. 7-day Advair 3. Steroid inhalers—Advair conversion to Symbicort 4. Albumin—guidelines for use 5. Aloxi conversion to ondansetron for outpatient use 6. Alteplase—guideline for catheter clearance 7. Ambulatory pharmacy growth hormone service 8. Anesthetic gas: drop desflurane, use isoflurane for patients with disease of long duration, reduce flow rates 9. Antifungals—pricing 10. Antifungals—utilization 11. Antimicrobial Stewardship Program 12. Antizol—eliminate as stocked nonformulary 13. Aranesp usage reduction 14. Argatroban—bag size reduction 15. Argatroban—guidelines 16. Argatroban to generic when available 17. Arixtra 7.5 and 10 mg to generic 18. Atracurium preferred over cisatracurium 19. Aztreonam restriction → cefepime 20. Carbapenems conversion 21. Cardene conversion 22. Cardiology assistant in catheter laboratory reducing Angiomax, ReoPro, and Integrilin 23. Cathflo usage reduction 24. Clindamycin premixed to self-mix 25. Clinical pharmacist for ambulatory infusion center interventions 26. Collect CAPS rebate 27. Combivent inhalers to albuterol 28. Contrast media—product change 29. CVVH distribution from supply chain to pharmacy 30. Dexmedetomidine—guidelines for use 31. Disposable pain pumps 32. Eliminate stocked nonformulary drugs 33. ESAs—guidelines for use 34. ESAs—elimination for trauma patients 35. Factor VII—guidelines for use 36. Filgrastim 300 mcg for patients weighing less than 75 kg 37. Flovent to Asmanex 38. Fosphenytoin generic 39. Fragmin to Lovenox 40. Geodon oral to generic 41. Hemostatic agents—review and use 5,000-unit size 42. Humate P to Wilate
43. Implement indigent recovery program 44. Infectious Disease Antimicrobial Stewardship Program 45. Insulin pens to insulin vials 46. Inventory—reduction of pharmacy par levels 47. Inventory—preset/reduce automated dispensing machine par levels 48. Investigational drug fee recovery 49. IV—extend NICU infusion dating 50. IV outsourcing program 51. IV push drug policy changes 52. IV to PO autoconversion for stress ulcer prophylaxis 53. IVIG—guidelines 54. IVIG purchased at 340B drug discount price 55. Lantus vials to drawn up individual doses 56. Levalbuterol to albuterol 57. Levetiracetam IV to PO 58. Lexapro to generic 59. Lexiscan 340B drug discount pricing 60. Lipitor to Crestor 61. Maximizing reimbursement of ambulatory medications 62. MDIs to generic nebulized products 63. Misoprostil from Cervidil for cervical ripening 64. Nesiritide—guidelines 65. Neuromuscular blocker use 66. Nexium restriction 67. Nicardipine IV 68. Nicardipine—bag size reduction 69. Pediatric pharmacy waste reduction 70. Pharmaceutical returns contract 71. Pharmacotherapy of heart failure 72. Pharmacotherapy of hypertension 73. Pharmacy—case management partnership 74. Procrit vs. darbepoetin savings analysis 75. Sentri7 after it is operational 76. Telecom utilization–pharmacy 77. Thrombin purchases 78. Thrombin usage decrease in the operating room 79. TPN compounding process (standard vs. custom) 80. Triostat—eliminate as stocked nonformulary 81. Vancomycin oral product 82. Venofer usage reduction 83. Wholesale distributor agreement renegotiation 84. Xalatan to generic 85. Zosyn—extended infusion/restriction 86. Zyvox—IV to PO
CAPS = Central Admixture Pharmacy Services; CVVH = continuous veno-venous hemofiltration; ESAs = erythropoeitin-stimulating agents; IV = intravenous; IVIG = intravenous immunoglobulin; MDI = metered-dose inhaler; = NICU = neonatal intensive-care unit; PO = by mouth; TPN = total parenteral nutrition.
Vol. 38 No. 10 • October 2013 • P&T 629 ®
Survey of Pharmacy Consultant Experiences Characteristics
Of 25 consultant engagements in which telephone interviews were conducted, 19 (76%) pertained to cost reduction/revenue enhancement, three (12%) were concerned with strategic development, and three (12%) were related to assessments of the Section 340B drug discount program. Organization-wide efforts initiated by the executive board or executive team were responsible for 18 of the 19 (95%) cost-reduction/revenueenhancement engagements, whereas all six of the strategic development and 340B assessment engagements were initiated by pharmacy department leadership (Figure 1). Most consultant engagements (76%) took place in 2011 and 2012. Six consultant surveys (24%) were conducted from 2008 through 2010. Fourteen different consultants or consultant groups accounted for all 25 of the surveyed engagements (Figure 2). Eight respondents who detailed cost-reduction/revenueenhancement engagements were made aware of the consultant fee structures. Six of these (75%) were based on a percentage of savings achieved, and two of these (25%) were based on a negotiated fee. All six strategic development and 340B assessment engagements were based on a negotiated fee.
Scope and Objectives
Within the 19 cost-containment/revenue-enhancement engagements, the top three areas of focus were revenue cycle (13%), formulary management (13%), and supply chain (12%) (Figure 3). Most consultants provided some form of assistance with implementation, and seven of 19 consultants (37%) provided recommendations, advice, and project-tracking support. Five consultants (28%) also provided hands-on, on-site person-
Crowe-Horvath 4%
Strategic initiatives 12% 340B assessment 12%
Cost reduction/ revenue enhancement 76%
Figure 1 Consultant engagement characteristics. nel to facilitate successful implementations. Expected outcomes for the cost-containment/revenue-enhancement engagements were defined bottom-line impacts for 14 pharmacy departments, organizations, or both (78%).
Methodology
To evaluate the area of focus or pharmacy services for costcontainment/revenue-enhancement engagements, the consultants usually used hospital performance data, as reported in 11 of 19 responses (58%). For benchmarking, the consultants used the company proprietary database or UHC/Solucient databases
CPS 4% Huron 16%
E&Y 4% American Healthcare Solutions 4% McKesson 4%
PwC 12%
Berkley 4% Lazarus 4% Cardinal 8%
Navigant 12% Visante 8%
VHA 8%
FTI 8%
Figure 2 Consultant or consultant group engagements. CPS = CPS Corporate Consultants, Inc.; E&Y = Ernst and Young, Inc.; FTI = FTI Consulting; PwC = PriceWaterhouse Coopers; VHA = Voluntary Hospital Association of America.
630 P&T • ®
October 2013 • Vol. 38 No. 10
Survey of Pharmacy Consultant Experiences Order entry 1% Research 1% Technology & automation 3% Revenue cycle Specialty pharmacy 5% 13% Management 5%
Patient assistance 7%
Formulary management 13%
Drug distribution 7% Supply chain 12%
Budget 8%
Productivity 8%
340B 8%
Staffing 9%
Figure 3 Pharmacy focus areas for consulting engagements. in seven engagements (37%). Of these 19 respondents, 12 (63%) either agreed or strongly agreed with the benchmarking methodology that their consultant had applied. Respondents at three sites (16%) either disagreed or strongly disagreed, and respondents at four sites (21%) had a neutral opinion.
The consultant data set request that was cited most often to ascertain cost-containment/revenue-enhancement opportunities consisted of 1-year data for operations and purchasing. From this data set, the consultant compared selected databases or best practices to identify and recommend opportunities.
Table 2 Consultant Methodologies Consultant Focus
Method
Responses
Cost Reduction
Benchmarking
• Compare data provided with proprietary benchmark data on labor and nonlabor expenses (eight engagements). • Solucient benchmarking (five engagements); UHC, VHA, or Cardinal database comparisons (one each).
Best Practices Audit
• Consultants looked at pharmacy from a best practice perspective, including automation, clinical involvement, and utilization (six engagements). • Consultants offered few new ideas (two engagements). • Consultant recommended labor productivity management system (two engagements).
Benchmarking–Audit Combination
• Re-bid/renegotiate distribution on major contracts • Consultants collected a data dump of purchases; separated expenses into labor and nonlabor savings; and further delineated operating room, diagnostics, and pharmacy supply expense. • Consultants analyzed pharmacy medication-purchasing history over a period of 1 year. From the data, they identified cost-savings initiatives, including therapeutic substitution, generic substitution, and purchasing contracts outside of a GPO.
Benchmarking and Best Practices Audit Combination
• Audit/flowchart all charge processes, review/update all charge codes, re-bill where lost charges or coding errors occurred. • Focus was on billing/revenue cycles, 340B drug discount pricing, and indigent drug programs for ambulatory infusions. • Proprietary price benchmarking (four engagements). • Focus was on specialty pharmacy and pharmacists in clinics for revenue capture.
Revenue Enhancement
GPO = group-purchasing organization; UHC = University HealthSystem Consortium; VHA = Voluntary Hospital Association of America.
Vol. 38 No. 10 • October 2013 • P&T 631 ®
Survey of Pharmacy Consultant Experiences Table 3 “Pearls of Wisdom” From Survey Respondents 1. Be sure to understand the numbers the consultants are using. 2. Do not guess or estimate your data responses. Be as accurate and specific as possible. 3. See any information before the consultants present it. 4. Make sure you fully understand the data supporting the consultant’s recommendations. Otherwise, you will find yourself agreeing to everything he or she says and you will not be able to refute erroneous statements. 5. Know the limitations of your current benchmarks. 6. Know your drug expenses and P&T committee communications approach. 7. The consultant’s viewpoints and opinions can be used to support pharmacy positions. Information can be directed toward the hospital’s key decision makers. 8. Having consultants in-house can move along projects that previously didn’t have traction. References or source documents were rarely quoted or shared. Table 2 lists the methods used.
Recommendations
Rates varied in terms of implementing consultants’ recommendations. Thirteen consultant engagements (52%) resulted in “all” or “most” recommendations being executed, and eight engagements (32%) implemented only “some” recommendations. Four respondent departments (16%) implemented no recommendations, because the pharmacy consultant validated best practices or benchmark targets that had already been achieved. Respondents reported a wide range of timelines (from 3 or 4 months to 3 years) for implementing consultants’ recommendations. Of 19 cost-containment/revenue-enhancement engagements, pharmacy consultants left progress-tracking tools or spreadsheets at five respondent departments (26%); used various established processes at five respondent departments (26%); and left no aids at the remaining nine respondent departments (47%).
Overall Experience
Most respondents (64%) rated their consultant experience as positive. Six respondents (24%) gave consultants a neu-
632 P&T • ®
October 2013 • Vol. 38 No. 10
9. Investigate the consultants before their arrival in order to understand the nature and scope of their processes. 10. When consultants compare your data with those of other hospitals, there are always going to be some instances where the comparison is inappropriate. It is imperative for the pharmacy leader to be able to identify those instances. 11. Ask for fundamental change. The consultants looked for quick and easy purchasing and drug-use changes; neither has a lasting effect. Programs like Antimicrobial Stewardship represent fundamental change and have a lasting impact. 12. Ensure that the scope of the work is well defined up front. 13. Administration should let the consultant know what its expectations are for the final report. 14. Staff should give consultants all information needed and should communicate all processes openly.
tral rating, and three respondents (12%) described a negative experience. Pearls of wisdom shared by respondents about their consulting experiences identified several repetitive themes that may inform future administrators about how to optimally engage pharmacy consultants (Table 3).
CONCLUSION
Our survey of 20 pharmacy directors (accounting for 25 pharmacy consultant engagements within the previous 5 years at UHC member hospitals) indicated that the focus was primarily on cost reduction and revenue enhancement. These engagements were also mainly within the scope of an organizationwide effort initiated by the executive board or executive team. Consultant experiences differed widely in terms of the degree to which assistance was provided, benchmarking methods and resources, and timelines for implementing the consultant’s recommendations. Overall, most respondents rated their experience as positive and were able to list lessons learned.
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