The Challenge of Managing Hospital Pharmacy Financials
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The Challenge of Managing Hospital Pharmacy Financials

By Joel Weber, Director, Finance 340B & Pharmacy, Corporate Finance, Community Medical Centers

Joel Weber, Director, Finance 340B & Pharmacy, Corporate Finance, Community Medical Centers

There are many challenges facing hospitals and health system pharmacies which include drug shortages, escalating drug costs, expansion of specialty pharmaceuticals, the opioid crisis, regulatory changes and requirements including 340b for eligible sites, and most importantly providing the most appropriate care for their patients. With many of the challenges affecting the financial bottom line related to drug costs it is imperative that hospitals and health systems are focusing on what drives these costs and how to manage to keep the potential increase costs at a minimum.

One of the difficulties in trying to understand what is driving the pharmaceutical costs is hospitals many time have multiple IT systems that do not effective communicate with each other. These systems include the Electronic Medical Record (EMR), the drug wholesaler ordering and reporting system, hospital financial system, pharmacy computer system, stand along retail pharmacy system, and for those sites that are 340B eligible their split billing software program.

In assuring that contacts are in place and loaded correctly, that 340B purchasing is being maximized, drug shortage alternatives being identified, that the drug formulary is being managed appropriately, and retail system proving discharge and emergency room prescriptions being charged and billed correctly can take time and special skill sets. Being able to develop appropriate benchmarks and dashboards to monitor drug costs changes, understand why and how costs are trending, and forecasting is imperative to manage the overall drug cost increases appropriately.

To meet these needs many hospitals and health systems are expanding the role for pharmacist, pharmacy technicians, analysts, and individuals with a financial background to help monitor and track what is causing increased pharmaceutical costs. New roles and job descriptions have been developed including pharmacy supply chain manager, corporate 340B compliance manager, IT pharmacy specialist, and even director of finance overlooking pharmacy drug costs for the system. Many hospitals and health systems now have people in each of these roles working together to minimize the potential for increased pharmaceutical costs.

"With the development and implementation of dashboards related to medication costs, purchasing, and utilization it makes it easier to identify where there may be issues that need to be addressed and action plans put to minimize costs."

These new roles have the ability to oversee and monitor drug contracts making sure the most appropriate ones are being utilized (GPO, personal, 340B other) and making sure the drug wholesaler has the correct contracts loaded. With the expansion of specialty medications which usually focus on only a few disease states these can easily costs in the thousand to tens of thousands for a treatment for course of therapy. Making sure that these are being used appropriately and that product is available to assure a complete course of treatment is achieved.

Drug shortages are continuing and there are no indications that we will see improvements soon. The effect of drug shortages is significant and not only affects patient care but also increases the drug expense and time commitments to identify alternatives as well as provide communication to prescribers and users. Having someone who can predict future shortages as well as managed when they do occur is needed to minimize increased costs using other products.

With the development and implementation of dashboards related to medication costs, purchasing, and utilization it makes it easier to identify where there may be issues that need to be addressed and action plans put to minimize costs. Having dashboards in place and staff to monitor the ability to identify and forecast future drug expenditures will minimize overall increases.

Weekly Brief

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