Justifying a Residency Program
and Showing a Return on
Investment
Janet Teeters, M.S.
Director of Accreditation Services
Objectives:
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Why ↑ demand for residency positions
Why you might want to start or expand a program
Financial and non-financial elements to consider
when justifying a program
Pharmacists in 2020
Pharmacogenetics
Gene Therapy
Nano Therapy
Molecular Target Therapy
To support the position that by the year 2020, the
completion of an ASHP-accredited postgraduateyear-one residency should be a requirement for all
new college of pharmacy graduates who will be
providing direct patient care.
ASHP Position Statement approved June 2007
Residencies are the bridge
between Education and Practice
Helping to develop clinical & professional maturity
What’s Happening with Residencies?
Although we are growing more programs, the demand by
new graduates is higher than the supply. Market conditions
are changing and employers are seeking ASHP accredited
residency trained pharmacists.
Pharmacy Organization Support for Residency
All of these organizations are partners with ASHP at the ASHP Commission on Credentialing table .
Demand from new graduates
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Pharm. D. entry level degree –everyone has the same
degree and individuals need to find a way to differentiate
themselves. Additionally colleges are graduating an
increased number of students.
“Ideal job” requires residency training
Many jobs, not just ideal jobs, now require residencies
(e.g. Health systems)
~19% of new graduates complete a residency, but even
higher numbers seek them
Current Economy has tightened up the number of jobs,
while the number of graduates increases,
managers can be more selective in
requiring residency trained individuals
PGY2
Administration
Ambulatory
Cardiology
Critical Care
Drug Information
Emergency Medicine
Geriatrics
Infectious Diseases
Informatics
Internal Medicine
Medication Use Safety
Nuclear
Nutrition
Oncology
Pain/Palliative Care
Pediatrics
Pharmacotherapy
Psychiatry
Solid Organ Transplant
Opportunities to meet the demand
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Increase # Residency Programs
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Increase # Residency Positions
Why start a residency?
There must be perceived value…
Human Resources side
Recruitment
Retention
Residents cover some staff shifts
If hire your resident
 No recruitment fees
No interview fees
Advertisement
No outside recruiters
 Reduced Training costs
 No relocation expenses
 You know the person
Perceived value… Service
Residents expand your normal scope of service
Improve patient care
Keep services and staff progressive
Residencies tend to drive innovation
Projects
CQI
Perceived value…Cost Avoidance
Improved Financials
P&T (therapeutic substitution)
DUE
↓ Medication Errors/ ADR
↑ Interventions
Special Projects focusing on cost reduction
Perceived value… Education
Precept Students
Education for Techs, R.Ph., RN, MD
Interdisciplinary focus
Improved credibility
If perceived value: How to begin?
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Initial assessment
Costs of the program
Support for program
Core Elements
Program Design
Individuals Role
Part I
Part II
Initial assessment
 Organization
– Mission/Philosophy – does it include education?
– Patient types & Volume – do you have enough variety and
volume to support a program?
 Department
– Staff (experience, interest, commitment, presence)
– Services (wide scope & depth)
– Complete ASHP Pharmacy Practice Model Initiative (PPMI)
Hospital self assessment (if a hospital)
http://www.ashpmedia.org/ppmi/
 Complete “RU Ready”
http://www.ashp.org/menu/Accreditation/ResidencyAccreditation/RUReadyT
ool.aspx
Costs of a residency program
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Preceptor and program directors time
Space and equipment
Stipends & benefits of residents
Travel
Recruitment expenses
Training of Preceptors
Accreditation Fees
You will need detail to receive CMS funding
Gathering support
 Pharmacy
 Physicians
 Nursing
 Administration
Business Plan
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Description
Market analysis
Costs
Value to offset costs (intangibles and financials)
 CMS Inpatient Reimbursement Pass through funding for hospital
run pharmacy residencies, if you meet their criteria, and are ASHP
accredited
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Executive Summary
Refer to your hospital for their format
Costs – 2 residents
Residents stipend & benefits
$87,500
(2 residents @ $35,000 +25% benefits)
Travel
$ 4,000
(2 residents MCM, Regional Residency Conf)
Accreditation Fees
$ 3,655
(2010: $780 application fee 1X & $2,875 annual assessment -1 program)
Residency Program Director
$ 8,600
(4hr/week X $43/hr x 50 wks)
Preceptors
$21,500
(10hr/week X $43 x 50 wks)
MISC – copying costs, etc.
$ 1,000
Residency Showcase
$ 555
TOTAL
$126,810
Offset Costs (2 residents)
CMS Funding (PGY1 only) – direct costs
$63,405
(Est same % as Medicare Pts $126,810X 50%)
CMS Funding indirect costs
$ 25, 362
(see your finance dept 20% of directs?)
Staffing commitment (not paying RPH)
$ 34,944
(Every other Weekend 16hr/wk x 52 weeks x $42/hr RPH Shift diff)
Sub total $123,711
Once established:
Projects that reduce costs (therapeutic substitutions, DUE)
????
Hire 1 resident (soft costs)
↓ recruitment $ est $15,000,
↓ training time 3 months 480 hr X $40/hr est $19,200
$34,200
SUBTOTAL
$157,911
Versus costs
This does not address intangible benefits
$126,810
Include intangible benefits
Innovation
Progressive staff
Recruitment & Retention
……
Where’s the $ coming from?
One-time start up costs
Grants (Foundation, state, college, industry)
Vacant FTE
1RPH ~ 2 Residents
RN, MD vacancies
Partners
shared cost
Justification may be enough 
How will you justify or show a return
on investment of your residency?