April 07, 2011 12:30 ET

Nine Hospitals in Indiana, Michigan and Ohio Save Nearly $6.2 Million in 2010 Through VHA's Clinical Pharmacy Assessment Program

IRVING, TX--(Marketwire - April 7, 2011) - Hospitals across the nation continue to struggle with rising economic stress, driven by falling reimbursements and expanding labor and technology costs. These pressures have led hospitals to attack supply costs with a vengeance.

One area of emphasis is the pharmacy department. Approximately 75%-85% of a hospital pharmacy department's expenses are drug costs, so striving to reduce drug expenditures and inappropriate or overutilization is a worthy, but complex goal. Working with VHA Inc., the national health care network, nine hospitals in Indiana, Michigan and Ohio identified nearly $6.2 million in savings opportunities, without compromising patient care during a year-long project. In 2010, by focusing on the top drugs and drug classes that collectively represent a majority of their annual $85 million-in drug expenditures, the hospitals implemented numerous strategies to generate changes in pharmacy spending. The following hospitals have completed the VHA pharmacy savings project:

  • Columbus Regional Hospital, Columbus, Ind.
  • Good Samaritan Hospital, Vincennes, Ind. 
  • Kings Daughters Hospital, Madison, Ind.
  • Licking Memorial Health, Newark, Ohio
  • Memorial Healthcare, Owosso, Mich.
  • Oakwood Hospital, Dearborn, Mich.
  • Reid Hospital, Richmond, Ind.
  • Schneck Medical Center, Seymour, Ind.
  • Union Hospital, Terre Haute, Ind.

VHA helped the hospitals focus on reducing expenses by evaluating drug utilization and drug classes and identifying opportunities that exist to reduce costs related to their use of such high-cost medications as antibiotics and anticoagulants, as well as looking at medication administration processes, such as their use of respiratory inhalers. The average recognized savings per member was around 7.8% of total annual spend on medications, according to Bruce Weiner, vice president of VHA's pharmacy Performance Services consulting team.

"The expert analysis of the VHA pharmacy consultants provided us with a clear roadmap to achieve $400,000 in savings on drug expenditures," said Kevin Davis, director of Ancillary Services, including pharmacy, at Memorial Healthcare in Owosso, Mich.

"Many of the hospitals participating in the VHA Central Pharmacy Initiative have pharmacists and management staff who carry multiple responsibilities, making it difficult for these organizations to consistently focus on improving medication management and utilizing medications more cost-effectively," said James Bana, PharmD, with VHA's Performance Services team. "My role is to provide the extra eyes, energy, and experiences in order to ensure safe, appropriate, and cost-effective medication utilization within health care organizations, enabling hospital staff to maintain their focus on patient care and day-to-day responsibilities."

"The collaboration between VHA's Performance Consulting Services team and the VHA Central regional office has manifested its success in providing ongoing value to our members," said Steve Rudner, MS, PharmD, director of performance improvement for VHA Central. "The strength of VHA lies in its networking capabilities, and we continue to support the project by ensuring that leading practices are consistently applied to pharmacy practice management in an ongoing basis through our regional networking."

Key success factors for the program were:

  • Partnering closely with directors of pharmacy, hospital administration, and key physician leaders
  • Using clinical decision support tools and evidence-based medicine to reach clinical consensus
  • Leveraging analytics, and tracking, reporting and monitoring performance
  • Prioritizing around high-cost and high-volume items
  • Maximizing Novation contracts and developing regional contract enhancements
  • Maintaining close collaboration and communication between VHA Central's pharmacy staff and VHA Performance Services pharmacy team.

About VHA
VHA Inc., based in Irving, Texas, is a national network of not-for-profit health care organizations that work together to drive maximum savings in the supply chain arena, set new levels of clinical performance and identify and implement best practices to improve operational efficiency and clinical outcomes. In 2009, VHA delivered record savings and value of $1.47 billion to members. Formed in 1977, VHA serves 1,350 hospitals and more than 30,000 non-acute care providers nationwide, coordinating delivery of its programs and services through its 16 regional offices. VHA has been listed as one of the best places to work in health care by Modern Healthcare since 2008 and one of the best places to work in IT by Computer World since 2007.

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