Hospital pharmacy networks save millions on drug costs

August 21, 2015

By joining together with other hospitals on medication purchasing and other efforts, Kalispell Regional Medical Center in Kalispell, Mt., has saved millions of dollars annually.

By joining together with other hospitals on medication purchasing and other efforts, Kalispell Regional Medical Center in Kalispell, Mt., has saved millions of dollars annually, said Mark Donaldson, PharmD, director of pharmacy performance services at VHA Inc., the national healthcare network of not-for-profit hospitals.

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VHA recently combined with UHC, the alliance of the nation's leading not-for-profit academic medical centers to form the largest member-owned healthcare company in the country.

Donaldson was one of the speakers during VHA’s  webinar: “Are you Cultivating Your Pharmacy Multipliers?”

Kalispell Regional is part of the VHA Pharmacy Network, Mountain States (VHAMS), which was formed in 2008. The network has grown to 35 member hospitals and 45 affiliate members in several states, representing approximately $285 million in total annual drug spend.

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Mark Donaldson, PharmD

 “Rather than [all the healthcare systems’] directors of pharmacy going out and getting savings on their own, we combined so there is the power of one,” said Donaldson, who was the director of pharmacy at Kalispell Regional for 15 years before joining VHA in early 2015. Forming a network goes along with the concept of “pharmacy multipliers,” he said. “We realized that one plus one could in fact be greater than the sum of its parts. We can multiply our successes.”

For example, shortly after Kalispell Regional joined the VHAMS, its’ pharmacy directors agreed to change medication purchasing to a single distributor. “It is common now, but in 2002, it was novel to get so many different philosophies to change medications to a single distributor,” Donaldson said.

That one move saved VHAMS members $5.6 million in the first year. “We were able to cut costs, improve contract compliance, and improve quality of care,” Donaldson said.

As a result of single-source purchasing and several other measures, the VHAMS has saved its members $68 million from 2008 through 2014.

 

The VHAMS currently has 203 different projects, which include cost-savings measures and advocacy initiatives. “Now, we are getting more involved in the clinical realm. We are focused not just on drug spend but also drug savings and improving quality of care,” Donaldson said.

VHA has created 11 total pharmacy networks across the U.S. Other “pharmacy multiplier” initiatives that Kalispell Regional implemented include operating an in-hospital retail pharmacy and adding clinical pharmacy services to outpatient clinics.

By operating its own retail pharmacy, the hospital has reduced its costs and added to its revenue stream, according to Hugh Easley, director of pharmacy for Kalispell Regional. “We offer a bedside medication delivery service, which assists with reducing re-admission rates and improves patient compliance,” Easley said.