Hospital budget cuts can result in changes
Hospital budget cuts can result in changes
IT efficiencies can help
Not every hospital pharmacy has experienced budget cuts this year, but with the prolonged economic downturn this is a possibility for everyone.
The pharmacy at Oregon Health & Sciences University Hospital and Clinics in Portland, OR, took a 3.5-4% across-the-board budget cut — all in labor costs, says Gae M. Ryan, PharmD, director of pharmacy services.
"The reason OHSU needed to lay off staff is because the hospital and clinics are part of a larger campus, and its educational mission partly relies heavily on investment income," Ryan says. "And as you might expect, that didn't do too well this year."
So last fall there was an immediate deficit, and the hospital system's budgetary pressures also emerged, Ryan adds.
"Volume is down everywhere, and there are so many things impacting people's reactions to things now," she says.
The High Desert Health System, which is funded through the Los Angeles County Department of Health Services, has dealt with major budget cuts, says Nadrine Balady-Bouziane, PharmD, director of pharmacy services.
"We will expect a $4.5-$5 million budget, and they want to cut $500,000 to $1 million," she says. "And we have an increase in patients."
The hospital has had to change its formulary to accept generic drugs for just about every treatment, and the pharmacy has cut outpatient pharmacy hours from seven days a week to being closed on Sundays and holidays, Balady-Bouziane says.
"The outpatient pharmacy was open to 9 p.m., and now it's closed at 7 p.m.," she adds. "And we try not to use any new drugs unless we can't do without them."
For hospital pharmacies that have not taken the time to fully examine their budgets to look for cost-cutting measures, now would be a good time to do so.
However, for OHSU's hospital, the work to create a more efficient process had already taken place, Ryan says.
The hospital has been finding cost savings through technology for the past 5-10 years, she says.
"We've had ongoing projects in drug utilization for years, looking at automatic substitutions of intravenous (IV) to oral (PO) medication conversions, consolidating our utilization in therapeutic class so we can take advantage of market share savings," she explains. "So we didn't get significant pressure to cut drugs."
The pharmacy used the annual projected drugs expenditures report and its supplier's forecast to project a 1% inflation rate on drug costs, Ryan adds.
Fortunately, the pharmacy department was able to reduce its labor costs without laying off staff.
"In the past six months the institution has implemented computer physician order (CPOE) entry, and that's dramatically impacted workflow," Ryan says. "What it boils down to is we didn't need to cut any pharmacists, but we've decreased technician hours."
Before the new CPOE, technicians would enter data, and now the same information is entered by physicians, she adds.
"So we took cuts in those kinds of positions, and it was a stroke of luck, serendipitus timing," Ryan says.
Another way the pharmacy department will respond to the current economic downturn is through expanding business lines on the outpatient side where there are more patients, she says.
"We offer specialty pharmacy services which we didn't do before, and it will bring in more revenue," Ryan explains. "Instead of cutting costs, we'll bring in more revenue."
One new business line will focus on the hospital's transplant business, she adds.
"We'll bring in more than enough revenue for it to pay for itself," Ryan says.
Sometimes there is little a hospital pharmacy can do to improve its budget without impacting patient care.
For example, the High Desert Health System pharmacy purchased generic digoxin as part of cost-savings measures, Balady-Bouziane says.
Then the pharmaceutical company making the product issued a recall because the pills were delivering different drug dosages, she explains.
"This is a critical issue with drugs that have a narrow therapeutic index," she says. "We had to call 40 patients or so and had them come back to check their drug levels."
Then the hospital switched to giving patients a brand name version of the drug.
It ended up costing more than it would have if the hospital had used the brand name drug in the first place, Balady-Bouziane says.
Not every hospital pharmacy has experienced budget cuts this year, but with the prolonged economic downturn this is a possibility for everyone.Subscribe Now for Access
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