For the past three years, C-suite executives have consistently rated margin management as their top strategic priority. In the wake of Humana’s recent study revealing $1 in every $4 is wasted annually in U.S. Healthcare, hospital executives continue to elevate sustainable cost control as a top priority in 2020. With Pharmacy playing a major role in most hospital’s budgets, executive teams should work closely with Pharmacy leadership to better understand their pharmacy’s performance and what defenses they should deploy to keep pharmacy costs under control. Here are three tips executives can follow to help ensure your pharmacy is working towards sustainable cost control.
- Know the industry benchmarks
Is your hospital running efficiently? As it relates to Pharmacy, many executives struggle to answer this question with actual data and benchmarks. “It’s important for executives to know industry standards at the department level to identify outliers and strategic priorities,” said Mark Brown, VP of Sales for CompleteRx. Brown suggests not just looking at the hospitals around you, but to instead research facilities comparable to your organization in size, services, etc.
- Know your own organization’s metrics
Much like a car, in order to truly understand if your organization’s pharmacy is running efficiently, you have to look under the hood. “We recommend pharmacy leadership sit down with the executive team on a monthly basis to review quality indicators and overall pharmacy performance,” said Rick Burnett, Chief Operating Officer for CompleteRx. In this monthly meeting you should discuss drug spend analytics, , drug shortages, labor costs, clinical outcomes, readmission rates, performance improvement goals, and more. This will give you a chance to flush out areas where pharmacy can maximize its impact on quality and cost control.
- Optimize Operations
Once you have a better understanding of your pharmacy’s performance, , you can work with your pharmacy team to develop a strategic and tactical pharmacy operations plan. Whether it is simply through basic operational activities like making smarter purchasing decisions, reducing waste, optimizing staffing levels, or through a more innovative approach like the ones listed in this earlier CompleteRx blog post, cost control should always remain top of mind.
By taking these steps, hospital executives can make greater strides towards the larger goal of sustainable cost control. Removing waste and cutting costs in the pharmacy improves overall hospital profitability. If you are more profitable and efficient, then your hospital will have more resources to explore new revenue growth opportunities and/or expansion of existing service lines.