Data-driven change management: Controlling hospital drug costs through data analysis

Data by itself may simply be a tool, yet when applied in the right way, it can be a powerful ally.

A large health system in the Northeast recently used the power of data analysis and an ability to work synergistically with other hospital departments to drive impressive results.  It reduced drug costs by more than $2.8 million over two years across two of its member hospitals. Care quality measures improved, too, as the hospital pharmacy effectively shared its pharmaceutical and clinical knowledge with doctors and nurses in ways that shaped treatment decisions.

To enable real change, data analysis must be a continual process, not a one-time event.  For utilization improvements to succeed, the results of the pharmacy’s data analysis and actions must be disseminated widely into the diverse hospital culture. Physicians believe data. Concrete evidence helps secure their engagement in making changes to improve patient care.

Three steps to speed up your savings results

So what lessons learned can be shared?  Consider these three steps to leverage the power of data to drive change in your organization:

  1. Focus on utilization.  Because purchasing agents already continually monitor contract compliance and purchase lowest-cost products, evidenced-based utilization is the only way to affect substantial change. Pharmacy costs typically make up 10 percent to 20 percent of a hospital’s operating budget, according to Hospitals & Health Networks magazine. This means improvement in drug utilization – impacting drug use patterns – can significantly impact a hospital’s bottom line.
  2. Measure all healthcare costs, not just drug costs. Overall cost of care is what matters. Rather than looking just at drug cost per patient, by focusing on drug cost per DRG (diagnosis-related group), you will be able to align expense analysis by reimbursement groups. Also, consider length of stay, adverse events, 30-day readmission rates and other measures that reflect the overall cost of care, not just drug costs.  Published literature and data analytics have shown proper medication utilization contributes to improvements in all of these metrics – and improves overall outcomes. Likewise, inappropriate medication utilization may have negative impact on all of these areas.  This health system also deployed a dashboard of both quality and financial initiatives in order to monitor results on an ongoing basis.
  3. Use pharmacy data in new, creative ways.  Data is simply a tool and its value is in how you use it. Combining data with clinical knowledge and strategies is what drives practice change.  Use skill and imagination in the questions you ask to get the most from the data.

A culture open to change can turbo-charge results

Culture can be the engine that drives change. The health system highlighted here has an integrated physician practice with a comprehensive practice model that supports a culture open to change. In their model, pharmacy input in clinical decision-making isn’t a surprise. Indeed, pharmacists are expected to proactively collaborate with physicians, nurses, and other healthcare providers to monitor medication selection and drug use patterns. It is a healthy way for a hospital culture to work.

In this collaborative environment, presenting data to all levels within the system, from bedside to hospital leadership, is the fuel that turbo-charges results.  The pharmacy clinicians continually drive cutting-edge, cost-effective medication utilization by preparing recommendations that combine clinical data, system and national benchmark comparisons, and data analytics.  This data-driven approach highlights pharmacy as a strategic asset in the ever-changing healthcare environment.

Example: Antimicrobial Stewardship Program

Antimicrobial Stewardship continues to be a focus for hospitals. This focus is likely to continue, given the addition of Centers for Medicare & Medicaid Services’ (CMS) core measures for Conditions of Participation, proposed elements added to The Joint Commission survey, and the President’s declaration of war against antimicrobial resistance, stated within the National Action Plan to Combat Antibiotic-Resistant Bacteria. Furthermore, antimicrobial utilization has other factors that are unique to the healthcare facilities that call for monitoring of different metrics.  The addition of antimicrobial-use metrics, such as Days of Therapy, Defined Daily Dose, and Costs per Acute Patient Day, as well as resistance patterns within the hospital, further strengthened the health system’s antimicrobial stewardship program.

Example: Intravenous Acetaminophen

At one point, it was estimated that Intravenous Acetaminophen alone would become a $1.8 million line item on the system drug budget.  This spike in cost was due to a large increase in acquisition cost, and increasing utilization compared to baseline and national benchmark data. Utilization data was analyzed at the DRG level for patients receiving IV acetaminophen compared to those who did not, and included length of stay, use of other pain medications, and total medication cost per DRG. This analysis was combined with published clinical data and presented to the Pharmacy and Therapeutics Committee along with results-based recommendations for proper utilization of IV acetaminophen. Upon implementation of these recommendations, the health system avoided $850,000 in spend in just one year.

Pharmacy data analysis is a powerful medical and business tool that’s still largely untapped in our industry. Many hospitals don’t fully realize the size and scope of savings that can be achieved via a well-executed pharmacy data analysis and well-designed dashboard. To hospital pharmacists, we say: Give your clinical colleagues data—data that is easy to review and meaningful to make change happen. This particular health system’s experience shows that data analysis—proactive, predictive, actionable—can make the pharmacy (and its leadership) a strategic asset in a hospital system.