Developing a Business Case for Advancing Pharmacy Practice

Developing a Business Case for Advancing Pharmacy Services

Developing a Business Case

for Advancing Pharmacy Services

Presented by:

Steve Rough, RPh, M.S. Scott Knoer, M.S., Pharm.D. Director of Pharmacy Director of Pharmacy University of Wisconsin Hospital and Clinics University of Minnesota Medical Center

11About Our SpeakersSteve Rough, M.S., R.Ph, is Director of Pharmacy, University of Wisconsin Hospital and Clinics, Madison, WIHe is a Clinical Assistant Professor at the UW-Madison School of Pharmacy

Scott J. Knoer, MS, Pharm.D. is the Director of Pharmacy at the University of Minnesota Medical Center (UMMC) He is a Clinical Assistant Professor at the University of Minnesota College of Pharmacy and the Graduate Program in Social and Administrative Pharmacy

22ObjectivesDevelop a successful business proposal to justify a new clinical program, service or personnelDescribe the key elements of a good executive summary Discuss strategies for securing resources from senior administrationProduce a good return on investment (ROI) analysis that sells33Developing a business case for new programs, services and personnel4Project/Business Plan Document outlining the external services you are trying to provide for a potential business partner (stakeholder)Provides vision, lists objectives and provides task lists aimed at the completion of the projectShould be written to the level of the audience (administration vs. clinical)Includes appendices of the work that has been completed (ROI, charts, etc.)Remember this can be thought of as a marketing guide or your sales pitch (stress the positive aspects of plan, minimize negativity)

55Clearly states the benefits

Not pharmacy-centric

Project/Business Plan Executive summaryTable of contentsBackgroundProposal of services to be providedBenefits of the proposal Resource requirements and financial implicationsMilestones, schedule and action plansSummarySupporting documentation/appendicesKey Components of a Project/Business Plan66Executive Summary 1 page!!!! =Likely all that will be read.

Proposal (1-2 sentences)Background (Project Concept)Briefly describe current situation making case for change Financial analysisBenefits safety, accuracy, service, compliance, etcConclusion

Executive summary6. Resource requirements/financial implicationsTable of contents7. Milestones, schedule and action plansBackground8. SummaryProposal of services to be provided 9. Supporting documentation/appendicesBenefits of the proposal Executive SummaryHigh level overview, maximum of 1 page, lots of bullet pointsProposal (1-2 sentences about your program)Background (succinctly make case for change)Benefits to the organization (link to organizational goals)Financial analysisConclusionsDont include anything not in the rest of the materialThink of this as your abstractMay be all that is read by people at higher pay grades than you

77Executive summary6. Resource requirements/financial implicationsTable of contents7. Milestones, schedule and action plansBackground8. SummaryProposal of services to be provided 9. Supporting documentation/appendicesBenefits of the proposal BackgroundKey literature reviewBest practices Gap analysis versus desired stateCurrent situation in the organizationRegulatoryQuality/safetyFinancesWhy is this important anyway?Any data supporting the need for the project

88Executive summary6. Resource requirements/financial implicationsTable of contents7. Milestones, schedule and action plansBackground8. SummaryProposal of services to be provided 9. Supporting documentation/appendicesBenefits of the proposal Proposal of Service to be ProviedSuccinct statement of what you want to do and whyStrive to be very clear, succinct, believableTarget patient population of unitProposed activities, hours of serviceInteraction with other departmentsCommitment of resourceMay highlight alternative routes

99Executive summary6. Resource requirements/financial implicationsTable of contents7. Milestones, schedule and action plansBackground8. SummaryProposal of services to be provided 9. Supporting documentation/appendicesBenefits of the proposal Example Proposal StatementWhat are you proposing (text)?To increase patient safety, meet Joint Commission requirements and decrease costs associated with adverse events, the Pharmacy and Therapeutics Committee proposes implementing a pharmacist-based anticoagulation monitoring program

1010Executive summary6. Resource requirements/financial implicationsTable of contents7. Milestones, schedule and action plansBackground8. SummaryProposal of services to be provided 9. Supporting documentation/appendicesBenefits of the proposal Benefits of the ProposalSell based on organizational goals, look for win-winsPatient safety (reduced error)Patient satisfactionProvider satisfactionOperational efficiencyCost savings/avoidanceContinuity of careReduced readmission ratesRevenue growth/captureReimbursementPatient outcomesRegulatory complianceQuality indicatorsEducation/researchImproved throughput/MD efficiency1111Warfarin Monitoring ServiceSafety decreased ADEsCost decreased ADEsRegulatoryJoint CommissionEfficiency / ServiceSaves Physician timeExecutive summary 6. Resource requirements/financial implicationsTable of contents 7. Milestones, schedule and action plansBackground 8. SummaryProposal of services to be provided 9. Supporting documentation/appendicesBenefits of the proposal Resource Requirements/Financial ImplicationsLabor expense (salary plus fringe)PharmacistsTechniciansOthersSuppliesTravelComputerOfficeReturn on Investment (ROI) analysis

1212Executive summary6. Resource requirements/financial implicationsTable of contents7. Milestones, schedule and action plansBackground8. SummaryProposal of services to be provided 9. Supporting documentation/appendicesBenefits of the proposal Milestones/Action PlansBe specificUse Gantt charts and tables to show organizational sequenceHave clear actions and timeline (proposed schedule)Measures of success to build credibilityWhat indicators will be used (process, outcomes)?Who is responsible for auditing, measuring and reporting?How often will it be collected and reported?How will the report be shared?

1313Executive summary6. Resource requirements/financial implicationsTable of contents7. Milestones, schedule and action plansBackground8. SummaryProposal of services to be provided 9. Supporting documentation/appendicesBenefits of the proposal SummaryConclusionSuccinctly tell em what you told emProposalBenefitsKnow the organizations strategic plan and link to it1414Executive summary6. Resource requirements/financial implicationsTable of contents7. Milestones, schedule and action plansBackground8. SummaryProposal of services to be provided 9. Supporting documentation/appendicesBenefits of the proposal Example Summary StatementUniversity of XXX Medical Center should implement a pharmacist-managed warfarin dosing service which will reduce costs by $$$$ / year, reduce adverse drug events, improve physician efficiency and satisfaction and meet Joint Commission requirements1515Executive summary6. Resource requirements/financial implicationsTable of contents7. Milestones, schedule and action plansBackground8. SummaryProposal of services to be provided 9. Supporting documentation/appendicesBenefits of the proposal Supporting Documentation/AppendicesROI analysisOrganizational fit and linkages (Practice, IT, Quality)Literature review (detailed) and/or detailed gap analysisFlow chartsPilot data detailsDetailed project plan with specific deliverables and accountabilityLetter of support from key stakeholder; especially physiciansReferenceAcknowledgements1616Where to Start? Start with an example business case that was approved in your organizationAsk colleague elsewhere for a templateDiscuss with your boss BEFORE you share it with themMost bosses hate surprisesHow many pages is it expected to be?

1717Scott 17 44

Clearly states the benefits


Helpful Hints Get a first draft ready in plenty of time to run it by 3-5 people for feedbackDevelop FAQs/talking points for your bossBuild in assumptions for growthAfter the anticoagulation clinic enrollment is >300 patients, will add 0.5 FTE of technical supportKnow your organizational strategic planKnow who has your backGet decision support involved earlyGive the credit away



Always Think About Who are your key stakeholders?Whats their WIIFM?What barriers might you face?How will you obtain buy-in?What are the one or two keys to your success?What will you measure to demonstrate value?1919Clearly states the benefits


Keys to a Winning Proposal Know your numbersPublished literature and your ownMake it personal with examples from your institutionHighlight benefits to others in the systemUse lots of figures, graphs, tables, large fontHelp your boss advocate for you Practice your elevator speech2020Clearly states the benefits


Elevator Speech Quick 30-60 second overview of a service, project or proposalPerfect for communicating new initiatives to others outside of pharmacyFocuses on:What the project/service isWhy it is importantWhat the results will look like (WIIFM)What is needed from the receiver2121Clearly states the benefits


Elevator Speech What the project/service isI want to let you know about a new pharmacy service starting next Monday. Pharmacists will automatically assess your patients meds and adjust doses daily for their renal function.

Why it is importantThe Medical Executive Committee approved this project because many patients have rapidly changing renal function and it is often difficult for pharmacists to reach physicians to request dose changes when they are busy in the clinic or OR.



Elevator Speech What results will look likeThis service should optimize drug therapy and result in fewer phone call interruptions for you.

What is needed from the receiverOne thing we need from you is to let us know if you have intentionally dosed more or less aggressively than recommended so we do not modify those doses.



Return on Investment (ROI) Analysis24ROIYear 1-?VolumeCosts (capital and operating)Assumptions (time per encounter, error avoided, etc)Payer sources and reimbursementHard and soft dollar savingsTime savings for staffDo NOT rely solely on number from the literature

Executive summary 6. Resource requirements/financial implicationsTable of contents 7. Milestones, schedule and action plansBackground 8. SummaryProposal of services to be provided 9. Supporting documentation/appendicesBenefits of the proposal 2525ROIFinancial tool that measures the economic return of a project or investmentROI = Net benefits / costs X 1001

http://www.bnet.com/2410-13240_23-66470.html?tag=content;col12626IRR

IRR = Internal Rate of Return2The discount rate often used in capital budgeting that makes the net present value of all cash flows from a particular project equal to zero. The higher a projects IRR, the more desirable it is to undertake the project.Allows comparison vs. other capital projects

http://www.investopedia.com/terms/i/irr.asp2727ROIAdhere to financial standards and partner with financeEnhances credibilityCosts incurred or reduced/avoidedCapitalLaborMaintenanceOperatingRisk

2828ROI Case Rx AutomationCurrent automation contract is expiringReview medication distribution systemSafety and efficiency potential improvementsOrganizational imperative to minimize labor costs2929Cost Elements to Consider in ROIEquipmentInstallationLabor for implementationRenovations

3030Savings Potential for ROILaborReduction vs. redeployment vs. avoidanceInventoryOne time reduction, wastage reductionCurrent costs of automationWhat you were spending alreadySafety/quality improvement savingsMedication incident cost3131Model ROI Format

32ExampleAUTOMATED DISPENSINGYEAR 0YEAR 1YEAR 2YEAR 3YEAR 4YEAR 5TOTALCapital Equipment /Interface (1) $ (317,577) $ (317,577)Additional Interfaces (2) $ (30,000)Remodel Cost (3) $ (50,000) $ (50,000)Support Fees(31,128)(31,128) (31,128) (31,128) (31,128) $ (155,640) $ - Inventory Reduction (4) $ 284,078 $ 284,078 Released FTE Savings (5) $ 93,600 $ 96,408 $ 99,300 $ 102,279 $ 105,348 $ 496,935 Carrying Cost (6)$17,045 $ 18,493 $ 20,065 $ 21,771 $ 77,375 Product Shrinkage (7) $ - $ - $ - $ - $ - $ - Outdate Reduction (8)$15,000 $15,750 $16,537.50 $17,364.38 $18,232.59 $ 82,884 TOTAL INVESTMENT (with Inventory Reduction) $ (397,577) $ 361,550 $ 98,075 $ 103,203 $ 108,581 $ 114,223 $ 418,055 IRR 40%Payback (years)2.0 Model ROI - Carousels33Example33Financial AnalysisHard costsYou can track these to the General LedgerFTEs (under Salaries and Benefits on GL)Must extend FTEs for Salary and Benefits (approx 15%)One shift 7 days a week is 1.4 FTEsSalary x FTEs x S&B multiplier $100,000 x 1.4 x 1.15 = $161,0003434Financial AnalysisOther hard costsPhysical spaceRemodel workroom = $20,000 dollarsWork with facilities hereRentSpace has a cost. We rent space from the U for $18 / ft2 1000 square foot room1000 ft2 x $18 / ft2 / yr 12 months$1,500 / monthComputers, refrigerators, supplies, etc3535Hard and Soft DollarsHard savingsRevenueReal dollars that you can bill insuranceIncreased script volume by doing discharge medication reconciliationDecreased costsIncreased inventory turns, decreased inventory volumeDecreased waste in the IV room (real quantifiable waste)3636Soft DollarsYou cant track these to the GLADE avoidanceLiterature says $2,000 / ADE avoidance3Calculate ADEs avoided (soft)Use the literatureAre you willing to take $ out of your drug budget based upon this proposal?If not, they are soft dollars

Arch Intern Med. 2005;165(4):424-4293737Nursing Time Hard or Soft Savings?Potentially hardIf you get rid of nursingPharmacy generated MARDecreases transcription time for nursingAre they actually going to get rid of nurses? If so, hard savingsIf not, soft savingsDont have to hire nurses to get other things done3838Presentation Pearls39Presentation PearlsEvery business case should be accompanied by a PowerPoint presentationGreat student or resident project!Present facts and data uniquelyA pictures worth a thousand wordsExamples:Big bag full of wasted medsDigital pictures of reality4040

4141Presentation PearlsPick 3-5 key points and emphasizeExplain how they support organizational goals and initiatives

OR Rx exampleIncrease charge capture and waste reduction offset labor costsCurrent situation is not safeWe can do it in

Documents

Developing a Business Case for Advancing Pharmacy Practice