Nothing has shed more light on the challenges of balancing hospital spending than the COVID-19 pandemic, which has driven up hospital costs while dramatically reducing the revenue they typically generate through outpatient visits and elective procedures.1 With so many changing factors hospitals cannot control, organizations need to focus on managing what they can, especially as some only have 12 to 45 days of cash on hand.2 This challenge is further exacerbated by the fact that 60% of hospital pharmacists have received a cost reduction target due to the fiscal tightening resulting from COVID-19. And for 39% of these pharmacists, their savings goal is $ 300,000.3 Hospital pharmacy must play its role by leveraging technology to control business costs and support the business in addition to focusing on patient care.
Streamline budget management with technology
Manual budget management is extremely time-consuming for hospital pharmacy staff, who often lack the means to compare prices and ensure that the contracts negotiated and the rates made available to them are optimized. Additionally, staff are more likely to make mistakes if they use manual processes, which can lead to sub-optimal cost management. This is why technological solutions can be so useful for hospital pharmacies. In addition to streamlining the task and reducing the amount of work required for staff, the real-time data they provide allows hospitals and healthcare systems to see exactly when prices and inventory change so they can adjust and rotate as needed. This is crucial because of the fluctuation in costs. For example, GoodRx data from January 2021 showed that a total of 832 drugs increased by 4.5% on average.4
Hospitals can also experience significant changes in the types and amounts of drugs they need. When the COVID-19 pandemic struck, demand for drugs needed for sedation and intubation skyrocketed, and hospitals treating influxes of critically ill patients needed more of these drugs than ever before. This major change had an impact on hospitals across the board as they had to more carefully monitor their spending on drugs that they keep in stock all the time as well as things like personal protective equipment. Not to mention that it all adds up to the increase in overall costs. According to the most recent report from the American Society of Health-Systems Pharmacists (ASHP) Research and Education Foundation,1 the average total expenditure on drugs per hospital admission increased by 18.5% in 2017 compared to 2015. As a result, 1 in 4 hospitals had to reduce their staff and more than 90% had to identify alternative therapies for cope with drug shortages or sharp price increases. Once again, price monitoring technology is ready to help. By tracking purchasing options from different wholesalers and monitoring an organization’s historical spend, these solutions can make suggestions as to the most cost-effective options that will always deliver the best patient outcomes, the top priority for each hospital. .
Looking forward to
Budget management is more important than ever, and with the evolution of drug pricing legislation,2 costs are likely to continue to fluctuate. Now is the time for organizations to consider implementing tools that can help them stay organized and on track, as the healthcare system must remain prepared to respond to unpredictable events like the COVID crisis. 19. Access to real-time data and cost information can aid preparedness by improving price transparency, providing hospital pharmacists with updates on price movements, and more. This can lead to better evidence-based purchases and, potentially, significant savings for hospitals.
About AJ Rivosecchi
AJ Rivosecchi is Product Manager at Kit Check. He completed his undergraduate and pharmacy school at the University of Pittsburgh, graduating Summa Cum Laude with a Doctor of Pharmacy (PharmD) degree. He has over 10 years of hospital pharmacy experience, most recently as Director of Pharmacy Operations for UPMC St. Margaret’s Hospital in Pittsburgh, where he championed numerous process improvement projects including the implementation of a program to monitor the diversion of controlled substances in collaboration with the nursing directorate. AJ has been active in the planning and initiatives of health system pharmacy operations, including review and policy development, chairing the UPMC Pharmacy Operations Finance Committee and serving on construction committees and diversion of pharmacy operations from the health system. AJ has extensive experience in all aspects of healthcare system pharmacy operations, management of controlled substances, coordination of diversion investigations, perioperative pharmacy services and pharmacy automation.
1. John Commins. The pandemic continues to weigh on hospital volumes, margins and revenues in 2021. Health leaders.Updated February 22, 2021. Accessed June 14, 2021. https://www.healthleadersmedia.com/finance/pandemic-continues-strain-hospital-volumes-margins-revenues-2021
2. Summary of Findings: North Carolina Rural Health Research Program. Cegil G. Sheps Center for Health Services Research, University of North Carolina at Chapel Hill. May 2020. Accessed June 14, 2021. https://www.shepscenter.unc.edu/wp-content/uploads/dlm_uploads/2020/05/Most-Rural-Hospitals-Have-Little-Cash-Going-into-COVID .pdf
3. 2020 Operational report of hospital pharmacies. Checking the kits. 2021. Accessed June 14, 2021. https://kitcheck.com/wp-content/uploads/2021/03/2020-HPOR-final.pdf.
4. Marsh T. Live Updates: Drug price increases January 2021. Good Rx. Updated January 19, 2021. Accessed June 14, 2021. https://www.goodrx.com/blog/january-drug-price-hikes-2021/
5. Vermeulen LC, Eddington ND, Gourdine MA, Jorgenson J, et al. ASHP Foundation Pharmacy Forecast 2019: Strategic Planning Advice for Pharmacy Services in Hospitals and Healthcare Systems. American Journal of Health-System Pharmacy. 2019. https://doi.org/10.2146/sp180010
6. Van Antwerp G, Naaz B, Korba C. State drug pricing policies: Pharmaceutical companies and PBMs need to be prepared to continue operating. Deloitte Perspectives. Updated July 16, 2020. Accessed June 14, 2021. https://www2.deloitte.com/us/en/insights/industry/life-sciences/state-drug-pricing-legislation.html