Cover Story - Health-system pharmacists forecast upbeat 2003


Hospital business outlook for 2003.



Health-system pharmacists forecast upbeat 2003

It's safe to say that 2002 has been a checkered year for health-system pharmacists. On the one hand, health-system pharmacies faced the potential of a Medicare drug benefit, a nagging pharmacist shortage, increasing drug expenditures, tremendous public and internal pressure to reduce drug errors, and arduous compliance requirements from the Health Insurance Portability & Accountability Act. Yet, from a financial perspective, 2002 is turning out to be a pretty good year. And it looks as if 2003 is shaping up to be even more fruitful financially.

Based on the results of an exclusive survey conducted by Drug Topics, more than half of health-system pharmacists claimed that 2002 will be a lucrative business year in terms of reaching their financial goals and contributing to their net revenue. Survey respondents were pretty optimistic about 2002, with 37% reporting that it is turning out to be a good year, 17% describing it as very good, and 6% said that they expect it to be excellent. Bringing up the rear, 32% said 2002 will be only a fair year, and 8% anticipate a poor year in terms of reaching their financial goals.

What is the business forecast for 2003? Forty-four percent anticipate a good year financially, 16% expect a very good year, and 2% believe that 2003 will be an excellent year in terms of reaching their financial goals and contributing to their hospital's net revenue. One respondent who said that he expects 2003 to be an excellent year financially based his claim on an anticipated rise in patient volume.

But before you light up that cigar, you may want to consider the fact that not everyone is forecasting an upbeat 2003. Thirty-three percent of the respondents expect next year to be fair in financial terms, while 5% envision business to be poor. Bleak budget projections for 2003 prompted one respondent to predict a poor year financially for his institution.

Budget control an issue

Health-system pharmacists reported having $8 million, on average, in their 2002 departmental budget for drugs, personnel, and miscellaneous expenses. Do health-system pharmacies expect to stay within their budget for 2002? Among the respondents, 14% said that they "definitely" would stick to their budget while 51% reported they "probably" would stick to their budget.

On the flip side, 24% said that they probably would not stick to their 2002 departmental budget and 10% claimed they would definitely not stick to this year's budget. Only 1% reported that they didn't know whether they'd stay within their budget.

Regarding departmental versus personnel budgets, 17% of the respondents said that they were asked to cut their 2002 departmental drug budget and 14% were asked to trim their personnel budget. On average, drug budgets were cut by 6% and personnel budgets were cut by 11%. Smaller hospitals tended to have their personnel budgets cut more.

With the nationwide slowdown of mergers and acquisitions among hospitals, only 4% of the respondents reported that their hospital merged with another facility in 2002. Of the 11 respondents who said their hospital had merged, one noted that the merger had a major effect on his 2002 departmental budget.

It came as no big surprise that the majority (93%) of respondents said there is a shortage of pharmacists in their region of the country. Of those who reported a shortage, 19% said that the shortage is extremely severe, 75% reported that it is somewhat severe. Only 6% claimed that the shortage is not at all severe in their neck of the woods.

Looking ahead

From a budget standpoint, 75% of respondents expect their 2003 departmental drug budget to increase, 21% expect it to stay the same, and 4% anticipate a decrease. On average, the 11 respondents who expect a decrease foresee a 10% change, while those looking forward to an increase are expecting a 9% rise. In last year's survey, 75% of the respondents said that they expected their 2002 departmental budget to increase, 23% believed that the budget would remain the same, and 2% anticipated a drug budget decrease.

In the personnel budget category for 2003, seven out of 10 respondents expect pharmacist salaries to increase, 28% anticipate they will remain the same, and 2% foresee a decrease. Of those respondents looking ahead to higher salaries, the average increase expected is 6%. Only four respondents are expecting a decrease in pharmacists' salaries, and they are predicting an average decrease of 10%. When asked in last year's survey to comment on 2002 personnel budgets, 80% of the respondents expected pharmacists' salaries to increase, while 19% believed that they would remain the same. One percent anticipated a decrease in salaries.

Workload, techs, employment

More than two-thirds (68%) of respondents said they expect an increase in technician and other nonpharmacist salaries in 2003, while 31% anticipate salaries to stay the same, and only 1% envision a decrease. Of those respondents expecting higher salaries, the average estimated increase is 5%.

Moving on to staffing hours, 67% of respondents believe their pharmacy's total number of nonpharmacist personnel hours will remain the same in 2003. About one-quarter (24%) expect the number of hours to increase, while 9% think they will decrease.

The status of technicians will likely remain the same, according to survey results, with 74% of responding pharmacists expecting the number of techs in their department will not change. Twenty-two percent expect an increase, and just 4% foresee the number of technicians decreasing in 2003. On average, respondents who expect to add technicians said that they anticipate an increase of two technicians in their department next year.

Health-system pharmacists will work at least as hard in 2003 as they did in 2002. Survey data revealed that 65% of respondents believe their pharmacy's total number of pharmacist personnel hours will remain the same. Three out of 10 respondents expect the number of hours to increase, while 4% think they will decrease. Seventy-two percent of respondents expect the number of pharmacists in their department to remain the same, while one-quarter anticipate an increase, and only 3% envision the number of pharmacists to decrease in 2003. On average, of the respondents who expect an increase, two more pharmacists are to be added to their department next year.

Recruitment of new pharmacists in 2003 doesn't look that promising. More than three-quarters (79%) of respondents reported that they anticipate difficulty in finding pharmacists for employment in their region of the country in 2003.

Cutbacks in Medicaid reimbursement, compliance with HIPAA rules, and the Leapfrog Group's recommendation calling for hospitals to install computerized physician order entry (CPOE) are among the key issues respondents said will have a negative financial impact on their pharmacies.

Pharmaceutical care is a top priority for health-system R.Ph.s, with more than half (51%) of the respondents reporting that their facility is somewhat involved in providing pharmaceutical care and 47% claiming their hospital in very involved. Only 2% reported that their facility is not involved in such care. Yet seven out of 10 (71%) respondents said that their pharmacy plans to increase its involvement in providing pharmaceutical care in 2003, while 13% said they do not plan to increase their involvement, and 16% said they just don't know yet what's going to happen.

Based on survey data, it is apparent that pharmacy involvement in disease state management is becoming increasingly more important. More than one-third (38%) of the respondents reported that their pharmacy specializes in particular disease states.

When queried as to what will be the biggest business challenge their hospital pharmacy will face in 2003, 27% of pharmacists cited their budget/financial management, followed by 21% who foresee staffing issues as their biggest problem. Eighteen percent foresee rising drug costs, 11% predict cutbacks in insurance/third-party reimbursements, and 15% expect some other type of challenge.


While Web sites aren't yet ubiquitous in hospitals, the trend seems to be moving in that direction, with nearly nine out of 10 (89%) respondents reporting that their hospital currently has a Web site. Disturbingly, of those reporting that they have a Web site, only 27% said that their pharmacy is featured on the site.

Moving on to other technology areas, 66% of the respondents said dispensing is automated at their facility. Of those hospitals that do have automated dispensing, 65% said that they plan to expand this technology in their hospital. Of those that do not currently have automated dispensing, 22% plan to adopt automation technology in 2003.

The pressure to reduce the incidence of medication errors and adverse drug events is forcing hospitals to embrace technology such as CPOE. Yet 86% of respondents still do not have CPOE systems in their facility. Of the 14% that have such technology, CPRS (VA) and Eclipsys were listed most often as the type of system used. Meanwhile, according to survey results, 23% of respondents without CPOE reported that they plan to install a system in 2003.

The problem of antibiotic resistance looms large on the health-system pharmacy radarscope. One-third of respondents reported that their facility has had a problem with antibiotic resistance in the past year.

Hot industry news

When asked to indicate what they thought were the top three pieces of pharmacy news in 2002, drug shortages topped the list, followed by drug errors and the pharmacist shortage.

Finally, when asked which new drug in 2002 had the greatest impact on their budget, the No. 1 answer given by hospital pharmacists was Xigris (drotrecogin alfa, activated, Lilly). Which drug class had the greatest impact on their budgets in 2002? One-quarter listed antibiotics, 16% pointed the finger at oncology/chemotherapy drugs, and 12% reported antipsychotics.

Anthony Vecchione



Tony Vecchione. Cover Story - Health-system pharmacists forecast upbeat 2003.

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