Impact of Trained vs. Non-Trained Pharmacy Purchasing Professionals on Pharmacy Finances

Impact of Trained vs. Non-Trained Pharmacy Purchasing Professionals on Pharmacy Finances

Impact of Trained vs. Non-Trained Pharmacy Purchasing Professionals on Pharmacy Finances

Richard Ponder, MBA, CPhT, CPP, CEPP, CMRPPharmacy Supply Chain SupervisorEast Jefferson General Hospital, Metairie, LA

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1Introduction

Current Survey

Training

Resources

AgendaAgenda

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Current EnvironmentCurrent Environment

• Pharmacy cost continue to exceed inflation and continue to exceed the rate of increase for total healthcare expenditures.

• Healthcare reform will drive more supply chain cost cutting. Labor vs. Supplies

• Pharmaceutical supply chain executives are looking to maximize their operations in the face of changing legislation, expanding scope and mounting pressure on cost control.

• Most hospitals emphasize education for their clinicians; however, many Pharmacy Purchasing Professional do not receive any formal training.

• Materials Management/Supply Chain Management Department and Pharmacy address increasing pharmaceutical cost.

• GS1 and GLN

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Healthcare Supply ChainHealthcare Supply Chain

“Despite well-documented evidence of significant competitive advantage and cost reduction resulting from supply chain management practices, the healthcare industry has been extremely slow to embrace these practices. Barriers include… and limited education on supply chain.”

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Source: Journal of Supply Chain Management, February 2005

Purchasing Impact to the Bottom LinePurchasing Impact to the Bottom Line

• Example: Average, private sector, not-for-profit hospital with margins <1%

• Objective: Improve bottom line by $500K

• Options:– Reduce supply chain expense by $500K– Increase revenue by $50 million

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Source: HFM Magazine, 2008

SurveySurvey

• Overview– Participants and Methodology

• Who is the Pharmacy Purchasing Professional?– Demographics

• Training• Supply Chain Management• Operations• Finances

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Demographics - AgeDemographics - Age

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Demographics - GenderDemographics - Gender

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Demographics - EducationDemographics - Education

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Demographics - LicensedDemographics - Licensed

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*Consultants, Non-Licensed Technician, Non-Pharmacy Staff

Training - CertificationTraining - Certification

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*Master in Pharmacy Administration

Training - FormalTraining - Formal

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Experience – Position Held Immediately Before Becoming A Pharmacy Purchasing ProfessionalExperience – Position Held Immediately Before Becoming A Pharmacy Purchasing Professional

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Experience – Years Before Becoming A Pharmacy Purchasing ProfessionalExperience – Years Before Becoming A Pharmacy Purchasing Professional

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Experience – Years As A Pharmacy Purchasing ProfessionalExperience – Years As A Pharmacy Purchasing Professional

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Facility - SizeFacility - Size

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Facility - TypeFacility - Type

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Supply Chain Management - WholesalerSupply Chain Management - Wholesaler

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Supply Chain Management - GPOSupply Chain Management - GPO

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Supply Chain Management – Inventory ReplenishmentSupply Chain Management – Inventory Replenishment

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Supply Chain Management – Inventory Buffer/Safety StockSupply Chain Management – Inventory Buffer/Safety Stock

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Supply Chain Management – Inventory Reorder Points and QuantitiesSupply Chain Management – Inventory Reorder Points and Quantities

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Supply Chain Management – Inventory ConsignmentSupply Chain Management – Inventory Consignment

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Supply Chain Management – Technology Automated Low United of MeasureSupply Chain Management – Technology Automated Low United of Measure

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Supply Chain Management – Technology CarouselSupply Chain Management – Technology Carousel

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Operations - Routinely Meeting with the Pharmacy Director to Review Purchasing Operations - Routinely Meeting with the Pharmacy Director to Review Purchasing

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Operations – Routinely Attend and Participate in Manager MeetingsOperations – Routinely Attend and Participate in Manager Meetings

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Operations – Routinely Report-Out at Department MeetingsOperations – Routinely Report-Out at Department Meetings

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Operations – Attend Management Operational Review or Similar MeetingsOperations – Attend Management Operational Review or Similar Meetings

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Operations – Dual ReportOperations – Dual Report

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*Pharmacy Manager - Operational and Clinical, System Coordinator, Business Operations Manager, Sr. Accountant, COO, SCM

Supply Chain Management OrganizationSupply Chain Management Organization

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Contract Management

Pharmacy Supply Chain Management Model 1 – Traditional ReportPharmacy Supply Chain Management Model 1 – Traditional Report

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Pharmacy Supply Chain Management Model 2 – Direct ReportPharmacy Supply Chain Management Model 2 – Direct Report

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Pharmacy Supply Chain Management Model 3 – Dual ReportPharmacy Supply Chain Management Model 3 – Dual Report

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Director of Supply Chain

Supply Chain Management – Reports TypeSupply Chain Management – Reports Type

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Sample Pharmacy Purchasing ReportSample Pharmacy Purchasing Report

• Dashboard– Compliance, Penetration, Coverage

• Contracts– $ Increased or decreased – XX contracts changed in XX period with XX change

in XX period

• Spend Analysis– Top Therapeutic Categories– Unbudgeted Drug Expense

• Factor

• Expense – Reduction Efforts– IV to Po: xx savings– Projects

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Supply Chain Management – Report BenchmarkingSupply Chain Management – Report Benchmarking

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Finance - FTEsFinance - FTEs

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Finances – Contract Compliance RateFinances – Contract Compliance Rate

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Finances – Variance in Inventory Value from Previous Year Finances – Variance in Inventory Value from Previous Year

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Finances – Factors Considered When Calculating The Switch Between Two Equal Products Finances – Factors Considered When Calculating The Switch Between Two Equal Products

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Finances – Inventory is PerformedFinances – Inventory is Performed

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Finances – Inventory Turn RateFinances – Inventory Turn Rate

• Mean – 12.426• Median – 12• Mode – 11• Standard Deviation – 4.165• Minimum – 5• Maximum – 21

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From Non-Trained to TrainedFrom Non-Trained to Trained

• Find a Mentor

• Network

• Educate Yourself

• Make an Impact and Promote the Results

• Know Your Skill Set

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Source: Materials Management in Health Care, 2009

Training – Purchasing Assessment of Skills for Success (PASS)Training – Purchasing Assessment of Skills for Success (PASS)

• The PASS program measures purchasing professional’s proficiency in seven key skill dimensions:– Purchasing Fundamentals– Analysis & Spreadsheets– Contract Law– Project Management– Purchasing Best Practices– Sourcing– Negotiation*Next Level Purchasing Benchmarking Program; 475 purchasing

professionals from 46 companies

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Training – Skills and KnowledgeTraining – Skills and Knowledge

The Center for Advance Procurement and Supply (CAPS) Research of Arizona State University summarized the top skills and knowledge area required for tomorrow.– Skills

• Ethics, interpersonal communication, negotiation skills, project and team orientations, and strategic thinking.

– Knowledge• Supplier relationship management, total cost

analysis, purchasing strategies and plans, and supplier analysis.

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Source: 92nd Annual ISM Conference, May 2007

Training – APICS – The Association for Operation Management: Supply Chain Competency ModelTraining – APICS – The Association for Operation Management: Supply Chain Competency Model

• Foundational – Personal Effectiveness– Academic – Workplace and Leadership

• Profession-Related– Operations Management Technical – Supply Chain Manager Knowledge Areas– Supply Chain Manager Technical

• Occupation-Related– Supply Chain Manager Specific Requirments

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Source: APICS Future Leaders, 2009

Training – Pharmacy “Black Hole”Training – Pharmacy “Black Hole”

• Failure to Supply• Expired Products• Recalls• Borrowing and Loans• Shortages – Secondary Market• Freight• X%net15 – Payment Terms• Waste• Reimbursement• Shrinkage

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Resources – Industry ToolsResources – Industry Tools

• GPO– Broadlane

• Broadlane University• Medication Use Management

– Premier• 2010 Breakthroughs Conference & Exhibitions

• Manufacture– Baxter

• Pharmacy Advisor– Cubist

• Economics in Infection Management/LOS• Access Manager

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Resources – Industry ToolsResources – Industry Tools

• Wholesaler– Cardinal

• Inventory Management Best Practices Reference Guide, Version 1, 2008

• Case Studies– McKesson

• Healthcare Supply Chain Management And The Internet

• Operationalizing The Event-Driven Supply Chain• Supply Management Online• Pharmacy Optimization Consulting

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Resources – Suggested ReadingsResources – Suggested Readings

• ASHP Guidelines on Medication Cost Management Strategies for Hospitals and Health Systems. Am J Health-Syst Pharm. 2008; 65:1368-84.

• ASHP Current Status of Medicines Procurement. Am J Health-Syst Pharm. 2009; 66: 5: Supplement 3 s20-s28.

• Brown, Thomas.(2010, August). Introduction to Health-System and Hospital Pharmacy Practice

• Dominick, Charles.(2010, January). Certification Update: The Cost and Benefits of Getting Certified

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Resources – Suggested ReadingsResources – Suggested Readings

• Goos, Kevin. (2008, March). Identifying Cost Savings Opportunities

• McKone-Sweet, Kathleen. (2005, February). The Ailing Healthcare Supply Chain: A Prescription for Change

• Merrifield, Ric. (2009). Rethink

• Middleton, Diana. (2010, April). Exam Time: More Firms Are Requiring Test-Taking

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Resources – Suggested ReadingsResources – Suggested Readings

• Nutescu, Edith. Basic Terminology in Obtaining Reimbursement for Pharmacists’ Cognitive Services. Am J Health-Syst Pharm. 2007; 64:186-92

• Puckett, William. (2008, November). Recruiting a Manager for Financial Activities in Pharmacy

• Wilson, Andrew. (2009). Financial Management for Health-System Pharmacist

• World Health Organization. (1999). Operational Principles for Good Pharmaceutical Procurement

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Resources - PublicationsResources - Publications

• American Journal of Health-System Pharmacy

• Healthcare Financial Management

• Inside Supply Management

• Journal of Supply Chain Management

• Materials Management in Health Care

• Pharmaceutical Executive

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Resources - PublicationsResources - Publications

• Pharmacy Purchasing & Products

• Pharmacy Purchasing Outlook

• PM Network

• Supply Chain

• Supply & Demand Chain Executive

• The Journal of Healthcare Contracting

• The Journal of Pharmacy Technology

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Resources - WebsitesResources - Websites

• www.ahrmm.org• www.apics.org• www.ashp.org• www.asq.org• www.capsresearch.org• www.gs1us.org• www.ism.ws• www.ncmahq.org• www.pharmacyadvisor.com• www.pharmacypurchasing.com• www.pmi.org• www.theiiba.org

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SummarySummary

• Patient Safety > Cost Savings

• Facilities should have a trained purchasing professional dedicated to the pharmacy purchasing process.

• Continuous Education, Training, and Certification

• Additional Pharmacy Purchasing Professional Specific Research to Follow

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Do You Have Any Questions?

Email: Rponder@ejgh.org