Last month, Pharmacy Angle published a great article on four cost containment strategies your pharmacy can implement. Excellent strategies that can be achieved with clinical programming and committee approval. These initiatives are key to every successful pharmacy, although can take a long time to implement and even longer to yield results. So, what can you do in tandem to get as fiscally lean as possible in the meantime while you await approval?

While you are looking for change in the sofa cushions, start by examining all the ways you’re currently spending, perhaps and most likely on non-reimbursable money, so explore where you can make redundant change. It’s possible you are leaving money on the table by not leaning into your contracting with revenue streams/drains with your GPO, distributor, direct ships, technology, and consignment for example as fully as possible.

If you haven’t seen them already, ask for a copy of your supplier/partner contracts and take note of key milestones in the terms. You can take some simple steps to mix and match results that can make all the difference in truly maximizing your unrealized opportunities, or simply to point out areas where the contracts could be better suited to your practice.

Look at the cost minus structure of your distribution contract. Observe the milestones you need to reach to realize the maximum savings, and where you can bundle to take advantage of direct shipments or alternative delivery options such as consignment cabinetry that does not interfere with the purchase requirements of your primary distribution contract. There is always a little wiggle room in the contract. Use it to your advantage. You know how we Starbucks fans chase after those coveted stars for buying stuff? Sometime it’s best to forego the stars by not spending the money at all.

That said, use one primary distributor and stay loyal to the contract. Distribution partners will pay for that loyalty and contract compliance, and that brings more money back to your hospital in the long run.

Reduce delivery fees by voluntarily reducing your delivery days. Use a daily budget to give your purchaser guidelines to meet, and base that on the days that you get free delivery, eliminating weekends if there is an extra charge for example. You will reduce fees which can really add up, and the budget will give your pharmacy a way to anticipate costs while spreading out necessary purchases if you plan it well.

Make full use of the failure to supply clauses. It can be a pain to keep up with it, but it is lucrative and often an untapped portion of the overall agreement. Make it part of your daily activities, and you will secure contract pricing when you can’t get a contracted product.

Be as close to contract compliant as you can get. You will most likely reach milestones by simply making sure you are buying on contract, and this in turn brings more money back to your hospital. The distributor makes money when they move contracted items first, and they will share that wealth if you ask nicely.

Lean into any technology that your distributor offers. Let them help you make the most of your inventory turns, automatic conversions from non-contract to contract items, and have a plan in place for any overrides that may need to occur. Have them reviewed before the daily order is approved.

Analyze your spend and avail yourself of quarterly reviews. Your account manager can help you identify where you are not maximizing opportunities, which opportunities have changed with contract rolls for example, and what changes need to happen. Look towards this as it can be very helpful. This spend will also help you understand which clinical programming is working, what needs to be revisited and what is driving your budget. This gives you a good place to further analyze spend to pinpoint problem areas.

Just a few ideas on distribution. Next time we meet let’s talk GPO and technology. Applying some of the same principles to other contracting helps to create the full picture of how to make the most of the agreements you have in place, and where you can make changes that will be specific to your strengths. 

Before Western Carolina University students Madeline Tyson and Lisbet Alvarez had even thought about applying to college, they knew they wanted to be pharmacists.

“I knew I wanted to go to an in-state institution, not only because of scholarship requirements, but I wanted somewhere near the mountains and a small community to be part of,” Tyson said. “Western has been the perfect fit for me, especially with the Early Assurance Program that has allowed me to apply and be accepted into pharmacy school.”

The Early Assurance Program is a partnership between WCU and UNC – Chapel Hill that will run through 2027, with an option to renew. The program is not only a means for WCU to increase its undergraduate enrollment, but it will also allow UNC’s Eshelman School of Pharmacy to attract students from Western North Carolina.

WCU is the fourth UNC System school to partner with the Eshelman School of Pharmacy, joining Appalachian State University, University of North Carolina at Wilmington and UNC Pembroke. 

Tyson, a junior majoring in biology from Pinehurst, grew up around health care with her mother being a nurse.

“I knew I wanted to go into the medical field very early on,” Tyson said. “But the event that made me decide for sure I wanted to be a pharmacist was almost losing my grandmother.”

Tyson’s grandmother had gone to the emergency room for stomach pain and was admitted to the hospital and prescribed a medication that dialysis patients like her could not take because of life-threatening complications it could cause.

“When she got home, the complications began and she went into a coma,” Tyson said. “After she went back to the hospital, we found out about the medication error. When the medicine is prescribed, it goes to the hospital’s pharmacy and they are supposed to check the safety of medicines and any interferences that may happen when combined with other medications or treatments. My grandmother survived, but never fully recovered.”

At that moment Tyson knew she wanted to be a pharmacist and ensure patients and their families did not experience what her family had been through. 

Already knowing what career field she wanted to pursue, Tyson’s college decision was almost as easy, because the mountains of Western North Carolina were calling and Tyson answered with her decision to come to Cullowhee.

After Tyson graduates from WCU, she will begin her classes at the Eshelman School of Pharmacy in the fall of 2025.

Tyson credits Darby Harris, adviser and associate instructor for molecular physiology and genetics, for helping her on her journey to becoming a pharmacist.

“Darby Harris has been so supportive and has really helped guide me through my educational journey at WCU and the application process of pharmacy school,” Tyson said. “I am very appreciative of his support as well as the rest of the WCU faculty.”

For Alvarez, it was not a medical emergency, but a passion for advocacy against health disparities in the Hispanic community that led her, a senior from Hendersonville majoring in integrated health sciences, to purse pharmacy school.

Alvarez and her family are of Mexican American descent and she wanted to be an advocate for her family and community and address the healthcare issues they face. 

Alvarez was introduced to the pharmacy field during a high school internship at a local compounding pharmacy.

“The internship was an amazing opportunity to dive into the field,” Alvarez said. “I did not expect to like it as much as I did, but I loved it. I went to Henderson County Early College and realized during my internship that I wanted to pursue a degree in the health care field, specifically pharmaceuticals. I also love chemistry and to combine those two interests was great for me.”

Alvarez earned her high school diploma and associate’s degree by graduating from the early college and came to WCU in the fall of 2022.

“I have been involved in the Latinx Appreciation Student Organization during my short time at WCU and I've met a lot of people in my community,” Alvarez said. “It's pretty cool to see how people from different backgrounds have so much in common.”  

As for her plans after graduation, Alvarez, a first-generation college student, wants to make a difference through the opportunities her education has given her.

“I just want to be part of the solution and bring change,” Alvarez said. “My advisors and professors in the integrated health sciences program were very encouraging of me pursing this path.”

As for imparting words of wisdom to her fellow Catamounts and incoming students, Alvarez had a few thoughts to share.

“Being the first one in my family to go to college, I would say to these students and future students to not let the fear of failure keep them from pursuing something great,” she said. “I want to pave the way for my nieces and nephews to do something great also.”

Jamie Wallen, associate professor and chemistry and physics department head is leading the project.

“The new agreement between WCU and the UNC Eshelman School of Pharmacy provides an amazing opportunity for our students to pursue a career in pharmacy,” said Wallen. “We are very excited that both Lisbet and Madeline were accepted as our first cohort and we look forward to more WCU students entering into this program. I encourage any student that might be interested in pharmacy to reach out to learn more about this outstanding opportunity.”  

This story was originally published by Western Carolina University.

With the changing times, and pharmacy gaining more exposure and traction as a revenue generating department, rather than a cost center, it is important we, as pharmacy leaders, continue to evolve and evaluate new opportunities to continue to be business savvy. This may mean we will be pushed beyond our comfort zones, but we should find comfort that we have a network of pharmacy executives and leaders who will work collaboratively together. We are in a unique position, as we must always balance cost savings, revenue opportunities with clinical and professional judgement, which includes limiting risk and predicting the downstream impact of certain decisions. 

As we get out of Covid-19, with a whirlwind of new expectations, including rising costs and shrinking margins have put us in a unique position to be innovative and think differently. One opportunity that may not be novel, in nature, but gaining more attention in the inpatient space is inpatient rebates. When I first heard of the concept years ago, I shut it down immediately; however, with the growing need to find every penny, this has moved from a hard pass and gone beyond exploratory to being a real option. 

As you consider the concept of inpatient rebates, including the vendor you decide to partner with, there are several things you should consider before making a decision to 1) even entertain this concept, and 2) selecting a vendor.

Understand that the business model has been around for a while, particularly in long term care facilities and the retail pharmacy space (particularly between manufacturers and PBMs). As you begin your journey and perform your due diligence, ensure you speak with your colleagues across your network to see if they’re comfortable and how they got comfortable. Equally as important, ensure you work internally with your counsel and other stakeholders, so you do not accidentally cause a negative impact at your organization.

Evaluate the data requirements: Get into the details about what the third party wants vs. what they need to process the rebate, and if that is acceptable for your organization. In a world where data and data sharing is a hot topic, it’s best to know the position of your organization when it comes to data. 

Eligibility: Ask about which medications are eligible and compare that to your inpatient operations. Pay attention to payor mix and 340B eligibility and how that may complicate and impact the potential pro forma. 

Legal: Although your legal counsel will play a significant role in going through the contract and protecting the organization with certain boiler plates and mitigate liability whenever possible, you should take care to understand the process between all parties and see where you and your organization may be vulnerable or at risk. 

Timeline: Be sure to understand the timeline on how and when the data is to be transferred and when to expect the rebate back to the organization. It’s important to set clear expectations for all parties. 

As we embark in new territory and asked to evaluate new ideas, be sure to take a step back and take a 360-lens approach when performing your due diligence.

Those of us who have been in healthcare for a long time have seen changes come and go at a breakneck pace. Regulations, practice, lean into clinical, defer to the physician, multidisciplinary practice, silo mentality, more tech, less tech…yada yada yada. With so much energy spent attending to putting out fires every day, I have found it is easy to lose sight of the person behind the profession.

School taught us the Krebs cycle and anatomy. We learned the “lock and key” theory as drugs do their thing. We spent hours memorizing every written word and nugget of wisdom from our professors. As I now have a lifetime of experience in this chosen profession of ours, I find that the most valuable lessons are the ones life has taught me and unlike the tenets of practice back and forth, these lessons hold true throughout. Secret weapon: the intangibles. Here I share a few thoughts on pharmacy leadership that I have gathered over years of being in the trenches at every level.

Find your value and lean into it. You know how to do the job, but do you know how to lean into your strengths? The things that make you a good leader also make you a good follower. Managing goes both up and down. Learn from everyone around you, and then take that and create your strongest path. Tell a joke in a tense situation. Offer a creative idea from the cheap seats. This will be hit and miss, but you don’t know if you don’t try. Find your best voice and sing from the rooftops.

Learn your surroundings and adapt to how the organization works. No matter how good you are, how smart you are, how high your GPA was, none of that matters if you can’t operationalize your big brain so be sure to read the room. This includes the people you are working with which can be hit and miss. I offer this: taking a swing and missing at times, and knowing when to make a change, is as important as sticking with it at all costs. You may lose a little of yourself if you don’t take time to identify the moment. Learn the “politics” of your organization and work within that framework to show the immense power of what you bring, and how pharmacy can be transformative to an organization.

Think of things you can do to make strides. Real strides, things that propel you and your practice forward in a different way. Ruth Bader Ginsburg said, “Fight for the things that you care about, but do it in a way that will lead others to join you”. This will get you noticed for all the right reasons.

You can’t do it alone. None of us does it alone. We may think we do, but if you dig a little deeper you will realize that whatever success you have or wish to have does not happen in a vacuum. Think about key turning points in your professional life and there will always be someone or something that helped you get there. Never forget that and remember to pay it forward. Maybe take that call you would normally screen. Set that meeting that you think you don’t need. I have always said that you never know whose hand you will eventually shake, be open to it.

Of course, we should be talking about Specialty, 340B, staffing, budgets, etc., but we should also talk about and share how we take our profession to new heights outside of the daily grind and look a little deeper at our success as highly trained professionals in a rapidly changing world.

It is said that with challenges come opportunity. Well, as most every hospital CEO and CFO knows, hospital finances certainly are laden with challenges. Some economists described 2022 as the worst financial year for U.S. hospitals in decades, as expense increases continued to exceed revenue growth. According to data from healthcare data and consulting firm Syntellis Performance Solutions, cumulative hospital expense growth from 2019 to 2022 was 17.5%, while reimbursement by the Medicare Inpatient Prospective Payment System (IPPS) grew only 7.5%. 

Labor shortages fueled explosive growth in contract labor expenses, which contributed to overall hospital labor expense growth of 20.8% over the same period. Even after accounting for increased patient acuity, labor expenses per patient jumped 24.7%. 

Not surprisingly, over half of U.S. hospitals ended 2022 operating at a financial loss. Also not surprisingly, in December 2022 credit rating firm Moody’s concluded that more healthcare organizations were at risk of credit downgrades or default—which turned out to be prophetic, as the first quarter of 2023 saw eight hospitals default, according to research firm Municipal Market Analytics. That figure represented the most hospital bond defaults since 2011, and only one hospital defaulted in the first quarter of 2022. Perhaps most concerning, some of the defaults came from large, highly rated systems. 

Moreover, Kaufman Hall predicts expense pressures will continue through the remainder of this year. The firm’s May 2023 National Hospital Flash Report concluded that: 1) the median operating margin for U.S. hospitals was 0%--meaning just breakeven--in April, leaving most hospitals with little or no financial wiggle room; 2) inpatient volumes declined while lengths of stay rose, and outpatient volumes also dropped; 3) the effects of Medicaid disenrollment could be materializing, as reflected in increases in bad debt and charity care in April, and this trend could continue as substantial disenrollment from Medicaid is projected as a result of the end of the COVID-19 public health emergency on May 11; and 4) inflation continued to impair hospital finances, as labor costs jumped in April and the costs of goods and services continued to be significantly above pre-pandemic levels.

With no quick fix to the labor shortages, hospitals and health systems are scrambling to find other areas to reduce costs and/or increase revenue profitably. Therein lie opportunities for pharmacy leaders to help bolster hospital finances. 

Since prescription drugs are the fourth-largest category of non-capital expenses for hospitals, pharmacy departments can support cost reduction through the deployment of automation to generate labor savings and by leveraging insights gleaned from medication use evaluation, preferably in an automated manner, given the continued widespread shortage of pharmacy technicians, which has required many pharmacists to perform pharmacy technician tasks. 

Furthermore, financial information and analytics firm S&P Global has advised hospitals to diversify beyond acute care and generate new, often more profitable, revenue streams, and the list of promising areas includes an outpatient pharmacy and other pharmacy services. Similarly, McKinsey & Company has identified specialty pharmacy and home infusion as attractive areas for growth and profitability during the next two years.

Those of us who have been in healthcare for a long time have seen changes come and go at a breakneck pace. Regulations, practice, lean into clinical, defer to the physician, multidisciplinary practice, silo mentality, more tech, less tech…yada yada yada. With so much energy spent attending to putting out fires every day, I have found it is easy to lose sight of the person behind the profession.

School taught us the Krebs cycle and anatomy. We learned the “lock and key” theory as drugs do their thing. We spent hours memorizing every written word and nugget of wisdom from our professors. As I now have a lifetime of experience in this chosen profession of ours, I find that the most valuable lessons are the ones life has taught me and unlike the tenets of practice back and forth, these lessons hold true throughout. Secret weapon: the intangibles. Here I share a few thoughts on pharmacy leadership that I have gathered over years of being in the trenches at every level.

Find your value and lean into it. You know how to do the job, but do you know how to lean into your strengths? The things that make you a good leader also make you a good follower. Managing goes both up and down. learn from everyone around you, and then take that and create your strongest path. Tell a joke in a tense situation. Offer a creative idea from the cheap seats. This will be hit and miss, but you don’t know if you don’t try. Find your best voice and sing from the rooftops. 

No matter how good you are, how smart you are, how high your GPA was, none of that matters if you can’t operationalize your big brain so be sure to read the room. Learn your surroundings and adapt to how the organization works. This includes the people you are working with. This will also be hit and miss, but taking a swing and missing at times, and knowing when to make a change, is as important as sticking with it at all costs. You may lose a little of yourself if you don’t take time to identify the moment. Learn the “politics” of your organization and work within that framework to show the immense power of what you bring, and how pharmacy can be transformative to an organization.

Think of things you can do to make strides. Real strides, things that propel you and your practice forward in a different way. Ruth Bader Ginsburg said, “Fight for the things that you care about, but do it in a way that will lead others to join you”. This will get you noticed for all the right reasons.

You can’t do it alone. None of us does it alone. We may think we do, but if you dig a little deeper you will realize that whatever success you have or wish to have does not happen in a vacuum. Think about key turning points in your professional life and there will always be someone or something that helped you get there. Never forget that and remember to pay it forward. Maybe take that call you would normally screen. Set that meeting that you think you don’t need. I have always said that you never know whose hand you will eventually shake, be open to it. 

Of course, we should be talking about Specialty, 340B, staffing, budgets, etc., but we should also talk about and share how we take our profession to new heights outside of the daily grind and look a little deeper at our success as highly trained professionals in a rapidly changing world.