Transforming the Pharmacy Supply Chain March 1, 2016...Supply Chain Center •Opened September 2012...

Transforming the Pharmacy Supply Chain

March 1, 2016 DeVere Day, PharmD

Pharmacy Automation and Technology Manager, Intermountain Healthcare

Conflict of Interest

DeVere Day, PharmD

Has no real or apparent conflicts of interest to report.

Agenda •Discuss the background of a centralized supply

chain model

•Describe financial challenges in the changing

pharmacy market

•Outline pharmacy distribution opportunities

utilizing a pharmacy supply chain

•Explain the role of the pharmacy supply chain in

decreasing pharmaceutical expenses

Learning Objectives 1. Assess the industry’s current challenges to

effectively manage medication inventory across

the healthcare enterprise

2. Discuss how Intermountain Healthcare took

advantage of opportunities for greater efficiency

3. Recognize the return on investment that

Intermountain Healthcare achieved by managing

mediation inventory across their enterprise

4. Identify prerequisites and core competencies for

successful implementation

http://www.himss.org/ValueSuite

Satisfaction

Patient

Engagement &

Population Mgt

Savings

Benefits of a Pharmacy Supply Chain

Treatment

Clinical

Supply Chain Center

• Opened September 2012

• 327,000 total square feet

• Acute Care Pharmacy 16,000 square feet

• Ships to each hospital at least twice per day

> 12,000 courier miles per day

• Gartner rank as the #3 Health Care Supply Chain

http://www.gartner.com/newsroom/id/3170117

Supply Chain Service Area

• 22 Hospitals

• 185 Medical clinics

• 25 community pharmacies

• 35,000 employees

39,406

110,134

487,645 506,454

0

100,000

200,000

300,000

400,000

500,000

600,000

InpatientSurgeries

AmbulatorySurgeris

ER Visits Acute PatientDays

Hospital Statistics 2014

Challenge of Managing Medications

• Pharmaceuticals expense

• Compliance to law & regulations

• Automation

• Sterile compounding

• Medication shortages

Mayo Clinic—average annual cost for

cancer drug therapy

• Before 2000 $5,000 to $10,000

• 2012 >$100,000

Analysis by Wall Street Journal

• 30 top drugs

• 5 years

• 76% increase

http://www.mayoclinicproceedings.org/article/S0025-6196(15)00101-9/pdf

http://www.wsj.com/articles/for-prescription-drug-makers-price-increases-drive-revenue-1444096750

Challenge of Managing Medications

NDC Medication Item

Description

Older Price

(Pkg)

Recent

Price

$ Change

Alert

$73.23 $2,039.56 2,785%

$2,077.70 $13,247.80 638%

Challenge of Managing Medications

Pharmacy % of Insurance Plan

24.3%

18.7% 32.5%

11.5%

13%

24.%

21.3% 28.5%

9.2%

17%

Inpatient

Outpatient

Professional

Other

Pharmacy

2010 2015

Zero Harm

Perpetual compliance

Adherence and extraordinary care

Costs (purchasing and utilization)

Goals of Pharmacy

https://m.intermountain.net/newsroom/

Pre-Packaging Savings • 6 large hospitals use a robot for cart fill

• Concerns about safety and liability

• Decision to internalize packaging at the supply chain center

• Average cost savings per dose = 9 cents

• 900 different medications packaged

• Software automatically generates order based on max and par levels

171,684

246,778

254,216

304,223

306,564

313,785

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

Unit Dose Packages

0

$23,894 $24,399

$27,918

$25,015 $24,263

$23,805

$23,195 $26,733

$27,909

$25,861

$26,422

$26,082

$305,496

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

$500,000

$305,496

Pre-Packing Savings for Hospitals

2015

Opportunity Buys

• System level discount

• Bulk purchases

• Short dating

Opportunity Buys—Short Dating

$3.25

$5.54 $7.62

$15.25

$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

$14.00

$16.00

$18.00

Dose 1 Dose 2

Short Date Cost Regular Cost

$74,429 10,700

Doses

Population

Management

Treatment

Clinical

$1,187,792

$839,853 $520,096

$31,218

$200,000 $600,000 $1,000,000 $1,400,000 $1,800,000

2015

2014

Opportunity Buys—Bulk Purchase

2015

$1,219,010

Sterile & Non Sterile Compounding

•Sterile compounds made at the SCC = 9

•Non-sterile compounds = 80

•Focus on

–Medications used by multiple facilities

–Medications with high $$ savings

$35,990

$34,637

$40,273

$36,312

$45,081

$49,858

$43,616

$40,349

$40,653

$44,797

$44,968

$47,942 $504,474

$0

$100,000

$200,000

$300,000

$400,000

$500,000

Sterile Compounding Savings

2015

$504,474

Total Doses Dispensed from SCC

345,216

353,198

391,617

362,659

348,938

362,596

369,169 391,307

409,038

389,190

393,662 351,949

4,468,539

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

5,000,000

4,468,539

Doses Shipped

from SCC

Inventory Visibility

•40% of pharmacy inventory in automation

•Goal of putting a perpetual medication inventory in every hospital pharmacy

• Inventory system tested in a few hospitals

• Installed inventory software during 2015

Inventory Visibility

Challenges

•Pharmacy set-up needed improvement

•Hoarding/backroom storage

•Getting all NDCs into the software

•Change in distribution workflow

•Staff commitment to scanning in and out

Inventory Visibility

46% 45%

58% 62% 57% 59%

63% 66%

89%

102% 92% 91%

0%

20%

40%

60%

80%

100%

120%

Low Unit of Measure

$384,125

$628,325

$1,012,450

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

Jan-June July-Dec Total Savings

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000Expired Medication – Small Size Hospital

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000Expired Medication – Medium Size Hospital

Decrease Expired Medications

Decrease Expired Medications

Medical Group—Clinics

• Multiple avenues of purchasing medications

• Not maximizing supply chain contracts

• Not tracking 3 T’s for DSCA

• Ordering more than they needed

• Concern about controlled substances

Medical Group—Clinics

3,379

13,947

26,180

33,605

42,052

51,728 53,314

0

10,000

20,000

30,000

40,000

50,000

60,000

Ma

y-1

4

Ju

n-1

4

Ju

l-1

4

Au

g-1

4

Sep

-14

Oc

t-1

4

No

v-1

4

De

c-1

4

Ja

n-1

5

Feb

-15

Ma

r-1

5

Ap

r-1

5

Ma

y-1

5

Ju

n-1

5

Ju

l-1

5

Au

g-1

5

Sep

-15

Oc

t-1

5

No

v-1

5

De

c-1

5

Doses Filled per Month

http://www.himss.org/ValueSuite

Satisfaction

Savings

Central Fill Pharmacy

Treatment

Clinical

Patient

Engagement &

Population Mgt

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000Number of Prescriptions per Month

Home Delivery Community Refills

Central Fill Pharmacy

Central Fill Pharmacy Call Center

22,386

19,241

21,603

20,438

29,046 31,098

19 2 2,225

4,506 5,204 5,403

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

January 2015 February 2015 March 2015 April 2015 May 2015 June 2015

Total Inbound Calls Community Support Protocol

Patient

Engagement Adherence

http://www.himss.org/ValueSuite

2015 Savings

$1.4 Million

25 Community Pharmacies

• Many are affiliated with a hospital

• Multiple wholesalers

• Savings from volume wholesaler purchase

Central Fill Pharmacy

http://www.himss.org/ValueSuite

Satisfaction

Patient

Engagement &

Population Mgt

Supply Chain Prescription Verification

•35% of all new prescriptions are verified at the Supply Chain Center

•Community pharmacists spend more time with patient

Specialty Pharmacy

• Cystic fibrosis

• Growth deficiency

• Hepatitis C

• Hereditary angioedema

• HIV/AIDS

• Metabolic disorders

• Multiple sclerosis

• Oncology

• Osteoarthritis

• Osteoporosis

• Pulmonary HTN

• Transplant

http://www.himss.org/ValueSuite

Specialty Pharmacy

728

1,086

1,591

1,948 1,807 1,952

2,298

0

500

1,000

1,500

2,000

2,500

Ju

n-1

4

Ju

l-14

Au

g-1

4

Sep

-14

Oc

t-14

No

v-1

4

De

c-1

4

Jan

-15

Fe

b-1

5

Ma

r-15

Ap

r-15

May

-15

Ju

n-1

5

Ju

l-15

Au

g-1

5

Sep

-15

Oc

t-15

No

v-1

5

De

c-1

5

# of Prescriptions

http://www.himss.org/ValueSuite

Specialty Pharmacy

$73.93

$38.30

$31.84

$41.85

$36.81 $22.09

$18.15

$19.72

$16.46

$17.31

$9.27

$9.55

$-

$10

$20

$30

$40

$50

$60

$70

$80

Patient Copay

Avg Cost per Prescription $4,000

Patient

Satisfaction Population

Management

Clinical

care

http://www.himss.org/ValueSuite

Specialty Pharmacy

2,119

2,725

4,003

4,021

4,185

4,339

6,133 6,969

8,152

8,506

8,737

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

Outbound Calls

Patient

Engagement &

Population Mgt

Prerequisites and Core Competencies

• Leadership

• Strategy

• Data analysts

• Shipping plan

• IS/IT support

• Software

• Automation

• Communication

• Adaptability

Future Endeavors •Automated dispensing machine restocking

•High risk or chemotherapy compounding

•Sterility testing

•Antidote distribution

•High cost medication distribution

•Medication kit filling

•Expand customers: operating rooms, surgical centers, hospital clinics

•Mandatory 90 day prescription refills

http://www.himss.org/ValueSuite

Shortages

Top of License

Inventory Mgt

Budgets

Call Center

Better Care

Compounding

Volume discount

Opportunity buys

Pre-packaging

Expirations

LUM

Pharmacy Supply Chain STEPS Benefits

Shortages

Adherence

Questions

• DeVere Day

• devere.day@imail.org