Transforming the
Pharmacy Supply Chain
March 1, 2016
DeVere Day, PharmD
Pharmacy Automation and Technology Manager,
Intermountain Healthcare
Conflict of Interest
DeVere Day, PharmD
Has no real or apparent conflicts of
interest to report.
Agenda
• Discuss the background of a centralized supply
chain model
• Describe financial challenges in the changing
pharmacy market
• Outline pharmacy distribution opportunities
utilizing a pharmacy supply chain
• Explain the role of the pharmacy supply chain in
decreasing pharmaceutical expenses
Learning Objectives
1. Assess the industry’s current challenges to
effectively manage medication inventory across
the healthcare enterprise
2. Discuss how Intermountain Healthcare took
advantage of opportunities for greater efficiency
3. Recognize the return on investment that
Intermountain Healthcare achieved by managing
mediation inventory across their enterprise
4. Identify prerequisites and core competencies for
successful implementation
Benefits of a Pharmacy Supply Chain
Satisfaction
Treatment
Clinical
Patient
Engagement &
Population Mgt
Savings
http://www.himss.org/ValueSuite
Supply Chain Center
• Opened September 2012
• 327,000 total square feet
• Acute Care Pharmacy 16,000 square feet
• Ships to each hospital at least twice per day
> 12,000 courier miles per day
• Gartner rank as the #3 Health Care Supply Chain
http://www.gartner.com/newsroom/id/3170117
Supply Chain Service Area
• 22 Hospitals
• 185 Medical clinics
• 25 community pharmacies
• 35,000 employees
Hospital Statistics 2014
600,000
500,000
487,645
506,454
ER Visits
Acute Patient
Days
400,000
300,000
200,000
110,134
100,000
39,406
0
Inpatient
Surgeries
Ambulatory
Surgeris
Challenge of Managing Medications
• Pharmaceuticals expense
• Compliance to law & regulations
• Automation
• Sterile compounding
• Medication shortages
Challenge of Managing Medications
Mayo Clinic—average annual cost for
cancer drug therapy
• Before 2000  $5,000 to $10,000
• 2012 >$100,000
Analysis by Wall Street Journal
• 30 top drugs
• 5 years
• 76% increase
http://www.mayoclinicproceedings.org/article/S0025-6196(15)00101-9/pdf
http://www.wsj.com/articles/for-prescription-drug-makers-price-increases-drive-revenue-1444096750
Challenge of Managing Medications
NDC Medication
Item
Older Price
Description
(Pkg)
$73.23
Recent
Price
$ Change
Alert
$2,039.56
2,785%
$2,077.70 $13,247.80
638%
Pharmacy % of Insurance Plan
17%
13%
24.%
24.3%
9.2%
11.5%
Inpatient
Outpatient
32.5%
18.7%
28.5%
21.3%
Professional
Other
Pharmacy
2010
2015
Goals of Pharmacy
Zero Harm
Perpetual compliance
Adherence and extraordinary care
Costs (purchasing and utilization)
https://m.intermountain.net/newsroom/
Pre-Packaging Savings
• 6 large hospitals use a robot for cart fill
• Concerns about safety and liability
• Decision to internalize packaging at the
supply chain center
• Average cost savings per dose = 9 cents
• 900 different medications packaged
• Software automatically generates order
based on max and par levels
Unit Dose Packages
350,000
300,000
304,223
246,778
250,000
150,000
100,000
50,000
0
306,564
254,216
200,000
171,684
313,785
Pre-Packing Savings for Hospitals
$500,000
$450,000
$400,000
$350,000
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
$0
0
2015
$305,496
$26,082
$26,422
$25,861
$27,909
$26,733
$23,195
$23,805
$24,263
$25,015
$305,496
$27,918
$24,399
$23,894
Opportunity Buys
• System level discount
• Bulk purchases
• Short dating
Opportunity Buys—Short Dating
Short Date Cost
$18.00
$16.00
$14.00
$12.00
$10.00
$8.00
$6.00
$4.00
$2.00
$0.00
Regular Cost
$15.25
$7.62
$5.54
$3.25
Dose 1
10,700
Doses
Dose 2
Treatment
Clinical
Population
Management
$74,429
Opportunity Buys—Bulk Purchase
2014
$839,853
$520,096
2015
$1,219,010
2015
$200,000
$1,187,792
$600,000
$31,218
$1,000,000
$1,400,000
$1,800,000
Sterile & Non Sterile Compounding
• Sterile compounds made at the SCC = 9
• Non-sterile compounds = 80
• Focus on
– Medications used by multiple facilities
– Medications with high $$ savings
Sterile Compounding Savings
$504,474
$47,942
$44,968
2015
$500,000
$44,797
$40,653
$400,000
$40,349
$43,616
$49,858
$300,000
$45,081
$36,312
$40,273
$200,000
$100,000
$34,637
$35,990
$0
$504,474
Total Doses Dispensed from SCC
4,468,539
5,000,000
351,949
393,662
4,500,000
4,000,000
389,190
409,038
391,307
3,500,000
369,169
3,000,000
362,596
2,500,000
348,938
2,000,000
362,659
1,500,000
1,000,000
500,000
0
391,617
353,198
345,216
4,468,539
Doses Shipped
from SCC
Inventory Visibility
•40% of pharmacy inventory in automation
•Goal of putting a perpetual medication
inventory in every hospital pharmacy
•Inventory system tested in a few hospitals
•Installed inventory software during 2015
Inventory Visibility
Challenges
•Pharmacy set-up needed improvement
•Hoarding/backroom storage
•Getting all NDCs into the software
•Change in distribution workflow
•Staff commitment to scanning in and out
Inventory Visibility
120%
102%
100%
89%
80%
60%
40%
20%
0%
66%
63%
62%
58%
57% 59%
46% 45%
92% 91%
Low Unit of Measure
$1,200,000
$1,012,450
$1,000,000
$800,000
$628,325
$600,000
$400,000
$384,125
$200,000
$0
Jan-June
July-Dec
Total Savings
Decrease Expired Medications
$90,000
$35,000
$80,000
$30,000
$70,000
$25,000
$60,000
$50,000
$20,000
$40,000
$15,000
$30,000
$10,000
$20,000
$5,000
$10,000
$0
$0
Expired Medication – Medium Size Hospital
Expired Medication – Small Size Hospital
Decrease Expired Medications
Medical Group—Clinics
• Multiple avenues of purchasing medications
• Not maximizing supply chain contracts
• Not tracking 3 T’s for DSCA
• Ordering more than they needed
• Concern about controlled substances
Medical Group—Clinics
60,000
51,728 53,314
Doses Filled per Month
50,000
42,052
40,000
33,605
26,180
30,000
20,000
10,000
13,947
3,379
Dec-15
Nov-15
Oct-15
Sep-15
Aug-15
Jul-15
Jun-15
May-15
Apr-15
Mar-15
Feb-15
Jan-15
Dec-14
Nov-14
Oct-14
Sep-14
Aug-14
Jul-14
Jun-14
May-14
0
Central Fill Pharmacy
Satisfaction
Treatment
Clinical
Patient
Engagement &
Population Mgt
Savings
http://www.himss.org/ValueSuite
Central Fill Pharmacy
14,000
Number of Prescriptions per Month
12,000
10,000
8,000
6,000
4,000
2,000
0
Home Delivery
Community Refills
Central Fill Pharmacy Call Center
35,000
29,046
30,000
25,000
22,386
21,603
20,000
20,438
19,241
15,000
Adherence
10,000
5,000
19
31,098
2
2,225
4,506
5,204
Patient
Engagement
5,403
0
January 2015 February 2015
March 2015
Total Inbound Calls
April 2015
May 2015
June 2015
Community Support Protocol
Central Fill Pharmacy
25 Community Pharmacies
• Many are affiliated with a hospital
• Multiple wholesalers
• Savings from volume
wholesaler purchase
2015 Savings
$1.4 Million
http://www.himss.org/ValueSuite
Supply Chain Prescription Verification
•35% of all new prescriptions are verified
at the Supply Chain Center
•Community pharmacists spend more
time with patient
Satisfaction
Patient
Engagement &
Population Mgt
http://www.himss.org/ValueSuite
Specialty Pharmacy
•
•
•
•
•
•
Cystic fibrosis
Growth deficiency
Hepatitis C
Hereditary angioedema
HIV/AIDS
Metabolic disorders
•
•
•
•
•
•
Multiple sclerosis
Oncology
Osteoarthritis
Osteoporosis
Pulmonary HTN
Transplant
Specialty Pharmacy
# of Prescriptions
2,298
2,500
1,948
2,000
1,807
1,952
1,591
1,500
1,086
1,000
500
728
http://www.himss.org/ValueSuite
Dec-15
Nov-15
Oct-15
Sep-15
Aug-15
Jul-15
Jun-15
May-15
Apr-15
Mar-15
Feb-15
Jan-15
Dec-14
Nov-14
Oct-14
Sep-14
Aug-14
Jul-14
Jun-14
0
Specialty Pharmacy
Patient Copay
$80
$70
$73.93
$60
$50
$40
$30
$20
$10
$-
Clinical
care
Patient
Satisfaction
$38.30
$31.84
Population
Management
$41.85
$36.81 $22.09
$19.72
$18.15
$17.31
$16.46
$9.55
$9.27
Avg Cost per Prescription  $4,000
http://www.himss.org/ValueSuite
Specialty Pharmacy
Outbound Calls
10,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
8,737
8,152
6,133
4,185
4,003
2,119
4,021
4,339
8,506
6,969
Patient
Engagement &
Population Mgt
2,725
http://www.himss.org/ValueSuite
Prerequisites and Core Competencies
• Leadership
• Strategy
• Data analysts
• Shipping plan
• IS/IT support
• Software
• Automation
• Communication
• Adaptability
Future Endeavors
• Automated dispensing machine restocking
• High risk or chemotherapy compounding
• Sterility testing
• Antidote distribution
• High cost medication distribution
• Medication kit filling
• Expand customers: operating rooms,
surgical centers, hospital clinics
• Mandatory 90 day prescription refills
Pharmacy Supply Chain
STEPS Benefits
Shortages
Top of License
Inventory Mgt
Budgets
Call Center
Better Care
Shortages
Adherence
Compounding
Volume discount
Opportunity buys
Pre-packaging
Expirations
LUM
http://www.himss.org/ValueSuite
Questions
• DeVere Day
• devere.day@imail.org