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

214th Annual NPPA Conference

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


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.”


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


Source: HFM Magazine, 2008

SurveySurvey

• Overview– Participants and Methodology

• Who is the Pharmacy Purchasing Professional?– Demographics

• Training• Supply Chain Management• Operations• Finances


Demographics - AgeDemographics - Age


Demographics - GenderDemographics - Gender


Demographics - EducationDemographics - Education


Demographics - LicensedDemographics - Licensed


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

Training - CertificationTraining - Certification


*Master in Pharmacy Administration

Training - FormalTraining - Formal


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


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


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


Facility - SizeFacility - Size


Facility - TypeFacility - Type


Supply Chain Management - WholesalerSupply Chain Management - Wholesaler


Supply Chain Management - GPOSupply Chain Management - GPO


Supply Chain Management – Inventory ReplenishmentSupply Chain Management – Inventory Replenishment


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


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


Supply Chain Management – Inventory ConsignmentSupply Chain Management – Inventory Consignment


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


Supply Chain Management – Technology CarouselSupply Chain Management – Technology Carousel


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


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


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


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


Operations – Dual ReportOperations – Dual Report


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

Supply Chain Management OrganizationSupply Chain Management Organization


Contract Management

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


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


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


Director of Supply Chain

Supply Chain Management – Reports TypeSupply Chain Management – Reports Type


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


Supply Chain Management – Report BenchmarkingSupply Chain Management – Report Benchmarking


Finance - FTEsFinance - FTEs


Finances – Contract Compliance RateFinances – Contract Compliance Rate


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


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


Finances – Inventory is PerformedFinances – Inventory is Performed


Finances – Inventory Turn RateFinances – Inventory Turn Rate

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


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


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


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.


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


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


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


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


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



• 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



• 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


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


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


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


http://www.ashp.org/



http://www.asq.org/

http://www.capsresearch.org/

http://www.gs1us.org/

http://www.ism.ws/

http://www.ncmahq.org/

http://www.pharmacyadvisor.com/

http://www.pmi.org/

http://www.pmi.org/

http://www.theiiba.org/

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



Do You Have Any Questions?

Email: [email protected]

Documents

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