The first step in Cardinal Health's four-part approach to transforming the hospital pharmacy into a strategic asset is often the most discussed -- yet seldom truly optimized: Finding Meaningful Growth. "Revenue solves all known problems" is one of Google's Executive Chairman Eric Schmidt's favorite business sayings. For a hospital, what would it mean to generate an extra $500,000 in annual profitability and another $500,000 in cost savings? Perhaps it wouldn't solve "all known problems," as Schmidt might say, yet it could certainly help fund other, critical initiatives.
Growth opportunities can be a powerful lever to lift profitability and turn a hospital pharmacy into a strategic asset, rather than a necessary cost center that manages expenses. Finding growth is a classic win-win business strategy. Customers (patients) reward a hospital when it delivers new and valued services. And hospitals benefit financially, and strategically, by unlocking hidden value from an undervalued asset -- the hospital pharmacy.
Cardinal Health's 4 F Framework for optimizing hospital pharmacies has four parts: "Find growth," "Fix inefficiencies," "Fulfill the quality care mission" and "Follow the patient." This article focuses on the first step: achieving meaningful growth through expanded services, better reimbursement capture and smart expense management. Two real-life success stories will help illustrate the impact a hospital pharmacy can have: Riverside Health System, a non-profit system based in Newport News, Va., and IASIS Healthcare, a for-profit health system headquartered in Franklin, Tenn.
Ideas from proven winners:
- Establish or expand an outpatient pharmacy.Thirty-eight percent of prescriptions are not filled post-discharge. And medication non-adherence is a leading cause of readmission. With new penalties for hospital readmissions, it's more important than ever that hospitals leverage outpatient pharmacies to help increase the likelihood that patients understand and adhere to their medications. An outpatient pharmacy can provide discharge medications to patients, provide an added convenience that drives patient satisfaction, help answer patient questions and monitor compliance post-discharge.
Outpatient pharmacies can also offer customized service to employees - including desk-side delivery of medications - as well as significant cost savings to the hospitals' prescription drug benefits.
"Having the pharmacy in-house means we can reliably direct people to generic drugs and other lower-cost alternatives, saving money in our health plan outlays," says Michael Doucette, vice president of operations for the Riverside Health System.
- Capture all available reimbursement. The federal government, especially under the Affordable Care Act, increasingly provides financial incentives for improving efficiency and care quality. Don't let reimbursement revenue slip away because the opportunity is hidden. A hospital can capture extra reimbursement dollars by helping its hospital improve patient care.