Engaging the C-suite to Advance Pharmacy PracticeProviding quality patient care throughprogressive pharmacy practice

Investing in pharmacy residency programs - What’s the value for Institution A?

Institution A Pharmacy Residency Program

• 290 residents since 1963• Recipient of ASHP Foundation Pharmacy

Residency Program Excellence Award for producing leaders in the pharmacy profession

16 Current Institution A Residents

• M.S./Residency in health-system pharmacy administration – 8 administrative residents (4 junior, 4 senior)

• Pharmacy practice residency (PGY1)– 4 hospital residents– 1 community resident

• Medication systems and operations residency– 1 MSO resident (2 year program)

• Specialty residencies (PGY2)– 1 critical care resident– 1 transplant resident

External Funding

Cost Reduction & Avoidance

Provider Satisfaction

Quality, Compliance &

Service

New Business & Service Growth

Pharmacist Recruitment, Development, & Satisfaction

Education & Scholarship

Benefits of Pharmacy Residency

Programs for Institution A Health

External Funding

Federal Government

Other

• Graduate medical education: “Medicare pass-through funds” (PTF) available for accredited PGY1 pharmacy residency programs

• State and national pharmacy associations – professional project (research) grants

• Pharmaceutical industry grants

Ex: Medicare Pass Through Funds*

Cost Item Calculation ($) Cost ($)

Direct Costs Resident Salary + benefits Travel Residency accreditation fee Tuition & related expenses Teaching time Program director Director – administrative time Preceptor – teaching time Preceptor – administrative time Preceptor travelTotal direct costs

(38,300 + 20% benefits) x10

4 programs9,000 x 4 admin residents

(20% of salary + benefits)(5% of salary + benefits)

(25% of salary + benefits) x10(5% of salary + benefits) x10

459,6008,6054,725

36,000

41,30010,325

312,00062,400

2,125937,080

Indirect costs (30% of total direct costs) 281,124

Total educational costs 1,218,204

Anticipated Medicare reimbursement Medicare pt load (35.6%) x total educational costs $433,681

NET COST (1,218,789-433,889) $784,523

*Assumes 10 PGY1 pharmacy residents with a 35.6% Institution A Medicare patient load

Cost Reduction

• All residents are responsible for completing one or more drug cost reduction projects each year*– On average, each project reduces drug

costs by $40,000– Total annual cost reduction = $1,280,000

*Administrative residents complete three cost reduction projects per year, all others complete one per year

Cost Avoidance

• Online staffing as clinical pharmacist– 12 hours/week avoids 0.3 pharmacist FTE– 0.3 RPh FTE (salary + fringe) = $41,184– 1 resident FTE (salary + fringe) = $46,800

88% of the cost of a resident is covered by their staffing component alone

Avoids $650,000 in pharmacist FTE per year

Cost Avoidance

• School of Pharmacy (SOP) lectures• SOP lab teaching assistants• Monograph preparation• Medication use guideline revisions• PSN follow-up• Site visit coordination• Health Link go-live and upgrade assistance• Audits• Drug contract analyses• Advertising, training, and relocation fees*

*Average of 2 to 4 Institution A -trained residents are hired onto staff each year!!

Improved Provider Satisfaction

• Nurse satisfaction– Resource for questions: drug interactions, compatibilities,

administration rates, ect.– Aid in communication with MD/PA/NP– Assist in assuring patient doses are available to the nurses at

the appropriate time– Assist in changing the dispensing location of medications for

more timely administration of first doses– Change dosing times to standardized times to reduce time

demands on nurses– Continuing education seminars

Improved Provider Satisfaction

• Physician satisfaction– Dose medications to avoid complications– Contact prescriber regarding abnormal lab values

and cultures found while monitoring patients– Knowledgeable about Institution A’s drug formulary

and therapeutic alternatives– Drug expert for clinical rounds– Modification of inappropriate drug orders– Increase through-put and efficiency– Continuing education seminars

Improved Quality and Service• Patient care

– Enhance pharmacists’ capacity and effectiveness with patient care rounding, clinical monitoring, medication reconciliation and patient teaching

– Resource to research best way to manage very complex patient cases

• Compliance (audits, projects)– CMS– TJC– Third party billing audits– Detailed follow up on ALL PSN reports

Improved Quality and Service

• Enhanced achievement of external pay for performance quality indicators– Improved reimbursement for pay-for-performance and future

accountable care organization measures• Increased reimbursement for medication therapy

management (MTM) services in Institution A ambulatory pharmacies– Leads to direct revenue from payers (Navitus, Unity, Group

Health, etc…) via patient teaching and care management

Improved Quality and Service

• Recruitment of future (well-trained) pharmacists

• Community service and professional activities

• Enhance capacity of staff• Formulary review • Drug policy development• Opportunity for externally funded projects

Expanded Pharmacy Services

• Every major new Institution A pharmacy initiative is powered by a pharmacy resident project

• Second year administrative residents complete a rotation with the VP of Professional Services to help advance goals of senior leadership.

Expanded Pharmacy Services

1960s –1970s

Innovation in core pharmacy services

1970s – 1980s

Advancements in patient care services

1980s – 2000s

New pharmacy business development

Expansion of clinical services into ambulatory and alternate sites

1990s – 2000s

Drug policy and managed care pharmacy program development

Implementation of fully automated medication use process

2000s – 2010s

Electronic medical record

Innovative pharmacist roles

New business ventures

Resident Projects• 1960s – 1970s

– 100% unit dose dispensing– Complete IV admixture system– Fully computerized pharmacy order entry/ distribution system– Pharmacist-managed drug information center– Pharmacist-managed medication administration record for inpatients

• 1970s – 1980s – Med histories, reconciliation, discharge counseling for all patients– Pharmacist participation on patient care rounds– Pharmacokinetic dosing services– Decentral pharmacy service in all areas from 0700 to 2300 and

around the clock services for critical care areas

Resident Projects• 1980s, 90s, 2000s

– Pharmacists participate in >20 ambulatory clinics– Integrated ambulatory pharmacy network throughout Dane County

• 13 pharmacies• Inpatient and in-home hospice services• Pharmacy management consultative services for hospitals in rural communities

• 1990s – 2000s– Developing, implementing, maintaining, and monitoring policies related to the

use of pharmaceuticals with in Institution A – Initiation of several external pharmacy contract services– Manage pharmacy benefit for Unity– Coordination of technology assessment programs– Centralized robot– Automated dispensing cabinets– Barcode medication administration software at point of care– “Smart” IV infusion pump– Medication carousel

Resident Projects• 2010s (What will we do next?)

– Practice model and professional staff advancement through development and implementation of the pharmacist career ladder

– Decision support expansion to maximize evidence-based care

– Operational efficiency improvement– New technologies (IV Robot, etc)– Integration of pharmacists on primary care teams

Recruitment

Development

Satisfaction

• Feeder-system for new and vacant positions

• More costly to recruit, orient, and train outside candidates

• Attract highly skilled candidates – best RPh’s want to precept residents

• Training of new hires – technicians, interns, and pharmacists

• Promotes workplace energy, practice reflection, innovation, and company dedication to quality improvement

• Resident projects enhance workplace experience

Pharmacist Recruitment, Development, & Satisfaction

Education and Scholarship

• Residents are required to provide education to doctors, nurses, and pharmacists

• Precept pharmacy students• Faculty-resident collaboration on

scholarly efforts

Show me the Money…Pharmacy Residency Program Return on Investment

(ROI) Analysis

Expense for Current 16 Residents

Expense Item CostSalary and Benefits $734,400Travel 24,585Tuition 72,000Accreditation fee 5,175Recruitment 2,185

Total Expense $838,345

External Funding for Current 16 Residents

Funding Source Funds ($)Commercial Supporter grant 40,000Medicare PTF 442,604

Total Direct Income $482,604

Cost Reduction for Current 16 Residents

Drug Cost Reduction Project*:Resident Type Calculation Total Cost

Reduction ($)Administrative 3 projects/yr x $40,000/project x 8 res 960,000

PGY1 1 projects/yr x $40,000/projects x 5 res 200,000

MSO 1 project/yr x $40,000/project x 1 res 40,000

PGY2 1 project/yr x $40,000/project x 2 res 80,000

Total $1,280,000

Cost Avoidance for Current 16 residents cont…

Cost Item Calculation Cost ($)

HL go-live assistance 50 shifts/yr x 4 hr/shift x $66/hr 13,200

Medication audits 8 audits/yr x 15hr/audit x $66/hr 7,920

Med rec assessment 10/res/yr x 0.3 hr/asmt x $66/hr x 16 res 3,168

Drug contract analysis 5 analyses/yr x 15hr/analysis x $66/hr 4,950

Position advertisement* 2 ads/position x 2 positions/yr x $5000/ad 20,000

New RPh training* 2 RPh FTE/yr x 40hr/wk x 8wks x $66/hr 42,240

New RPh relocation fee* 2 RPh FTE/yr x $4,000/relocation fee 8,000

Staffing ~12hr/wk x 52wk/yr x $66/hr x 16 res 646,272

Subtotal $745,750

*********continued on next slide**********

Cost Avoidance for 16 residents

Cost Item Calculation Cost ($)Institution A SOP lectures $300/lecture x 5 lectures 1,500

Institution A SOP lab TAs 40hr x $66/hr x 5 res 13,200

CE lectures $30/CE credit x 25 RPh/tech attendees x 11 res 8,250

Monograph preparation 10hr/monograph x $66/hr x 10 res 6,600

Med use guideline revision 2hr/revision x $66/hr x 10 res 1,320

PSN follow-up 1500 PSN/yr x 0.5hr/PSN x $66/hr 49,500

Site visit coordination 12 visits/yr x 10hr/visit x $66/hr 7,920

Subtotal $88,290

Subtotal (previous slide) 745,750

Total Cost Avoidance $834,040

financial gain – annual expenseannual expense

ROI

= ( )x 100$

Return on Investment for Current 16 Residents

Item Cost Benefit

Total Cost $838,345

External Funding $482,604

Cost Reduction $1,280,000

Cost Avoidance $834,040

Total ROI $1,758,299

($482,604 + $1,280,000 + $834,040) – $838,345 $838,345ROI = = 210%

ROI Breakdown per Resident Type

Resident Type* Cost per Resident ($)

Financial Value per Resident ($) Margin ($) ROI

Admin (n=8) 54,937 195,761 140,824 256%

PGY1 (n=5) 49,237 137,998 88,761 180%

MSO (n=1) 48,637 110,964 62,327 128%

PGY2 (n=2) 48,937 80,382 31,445 64%

* n= # of residents in current FY11 budget

PROPOSAL

Residency Program Expansion

• Add a permanent PGY2 oncology resident position

• Add a permanent PGY2 nutrition resident position

• Add an fifth administrative resident position for FY12 + FY13

Benefits of Oncology Resident• Oncology is core Institution A service line• Area of growth and expansion – key pharmacy

specialty area• 25% of Institution A ’s $109 million drug budget is

oncology drugs • At forefront of what we can do at ambulatory clinics• Hard to find and hire pharmacists with oncology

specialty• MD demand• Services can be expanded while at the same time

lowering total costs

Benefits of Nutrition Resident• Program was initiated 5 years ago, but has alternated

between critical care and nutrition• Extremely successful program• High priority of Department of Surgery for both

research and practice – funds 50% of nutrition pharmacist’s FTE

• Shortage of nutrition pharmacists throughout the country

• Services can be expanded while at the same time lowering total costs

• Have seen 25% growth in consistent level of nutrition service to all patients

Benefits of Nutrition Resident

2007 2008 2009 20103000

3500

4000

4500

5000

5500

6000

6500

7000

7500# TNA Doses Administered at Institution A

Adult DosesLinear (Adult Doses)Total DosesLinear (Total Doses)#

of D

oses

Benefits of Administrative Resident

• Largest ROI (256%)• Record number of exceptional applicants in

2010• Shortage of pharmacy administrators

– Huge leadership crisis in pharmacy profession– A 2005 survey of pharmacy directors and middle

managers found that 80% anticipate leaving their jobs in the next decade

• Services can be expanded while at the same time lowering total costs

FINANCIAL IMPLICATIONS

Total Cost to Institution A

• Cost of 3 new resident positions– Salary + Benefits + Travel = $152,810

• In exchange, 0.7* clinical pharmacist FTE will be removed– Salary + Benefits = $96,096

• Total Investment = $56,714

*0.3 FTE for admin resident (FY12 + FY13 only) and 0.2 FTE for each PGY2 resident (permanent)

Can we afford more residents?

Current

Additional Onc

Additional Onc &

Nutrition

Additional Onc, N

utrition, &

Admin$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

CostBenefitMargin

Let’s Compare Total ROI

Cost ($) Benefit ($) Margin ($) ROI

Current 838,345 2,596,644 1,758,299 210%

Additional Onc, Nutrition, & Admin 991,155 2,925,448 1,934,293 195%

Difference $152,810 $328,804 $175,994

Financial return is greater with the addition of oncology, nutrition, and administrative residents

Expanding both the number of residency positions and roles of pharmacy residents will benefit the pharmacy department, the

hospital and most importantly, our patients!

Questions????

Additional References

• Smith KM, Sorensen T, Connor KA, et al. ACCP White Paper: Value of conducting pharmacy residency training – the organizational perspective. Pharmacotherapy. 2010;30(2):490e-510e.

• Pasek PA, Stephens C. Return on investment of pharmacy residency training program. Am J Health-Syst Pharm. 2010; 67: 1952-1957

• White S. Will there be a pharmacy leadership crisis