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

1
Impact of Trained vs. Non-Trained Pharmacy
Purchasing Professionals on Pharmacy Finances

• Richard Ponder, MBA, CPhT, CPP, CEPP, CMRP
• Pharmacy Supply Chain Supervisor
• East Jefferson General Hospital, Metairie, LA

2
Agenda
Current Survey
Training
Resources
3
Current 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

4
Healthcare 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
5
Purchasing Impact to the Bottom Line

• Example Average, private sector, not-for-profit
  hospital with margins lt1
• Objective Improve bottom line by 500K
• Options
• Reduce supply chain expense by 500K
• Increase revenue by 50 million

Source HFM Magazine, 2008
6
Survey

• Overview
• Participants and Methodology
• Who is the Pharmacy Purchasing Professional?
• Demographics
• Training
• Supply Chain Management
• Operations
• Finances

7
Demographics - Age
8
Demographics - Gender
9
Demographics - Education
10
Demographics - Licensed
Consultants, Non-Licensed Technician,
Non-Pharmacy Staff
11
Training - Certification
Master in Pharmacy Administration
12
Training - Formal
13
Experience Position Held Immediately Before
Becoming A Pharmacy Purchasing Professional
14
Experience Years Before Becoming A Pharmacy
Purchasing Professional
15
Experience Years As A Pharmacy Purchasing
Professional
16
Facility - Size
17
Facility - Type
18
Supply Chain Management - Wholesaler
19
Supply Chain Management - GPO
20
Supply Chain Management Inventory Replenishment
21
Supply Chain Management Inventory Buffer/Safety
Stock
22
Supply Chain Management Inventory Reorder
Points and Quantities
23
Supply Chain Management Inventory Consignment
24
Supply Chain Management Technology Automated
Low United of Measure
25
Supply Chain Management Technology Carousel
26
Operations - Routinely Meeting with the Pharmacy
Director to Review Purchasing
27
Operations Routinely Attend and Participate in
Manager Meetings
28
Operations Routinely Report-Out at Department
Meetings
29
Operations Attend Management Operational Review
or Similar Meetings
30
Operations Dual Report
Pharmacy Manager - Operational and Clinical,
System Coordinator, Business Operations Manager,
Sr. Accountant, COO, SCM
31
Supply Chain Management Organization
Contract Management
32
Pharmacy Supply Chain Management Model 1
Traditional Report
33
Pharmacy Supply Chain Management Model 2 Direct
Report
34
Pharmacy Supply Chain Management Model 3 Dual
Report
Director of Supply Chain
35
Supply Chain Management Reports Type
36
Sample 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

37
Supply Chain Management Report Benchmarking
38
Finance - FTEs
39
Finances Contract Compliance Rate
40
Finances Variance in Inventory Value from
Previous Year
41
Finances Factors Considered When Calculating
The Switch Between Two Equal Products
42
Finances Inventory is Performed
43
Finances Inventory Turn Rate

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

44
From 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
45
Training Purchasing Assessment of Skills for
Success (PASS)

• The PASS program measures purchasing
  professionals 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

46
Training 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
47
Training 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
48
Training Pharmacy Black Hole

• Failure to Supply
• Expired Products
• Recalls
• Borrowing and Loans
• Shortages Secondary Market
• Freight
• Xnet15 Payment Terms
• Waste
• Reimbursement
• Shrinkage

49
Resources 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

50
Resources 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

51
Resources Suggested Readings

• ASHP Guidelines on Medication Cost Management
  Strategies for Hospitals and Health Systems. Am J
  Health-Syst Pharm. 2008 651368-84.
• 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

52
Resources Suggested Readings

• 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

53
Resources Suggested Readings

• Nutescu, Edith. Basic Terminology in Obtaining
  Reimbursement for Pharmacists Cognitive
  Services. Am J Health-Syst Pharm. 2007 64186-92
• 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

54
Resources - 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

55
Resources - 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

56
Resources - 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

57
Summary

• Patient Safety gt 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

58
?
Do You Have Any Questions?
?
?
Email Rponder_at_ejgh.org
59
Thank You!