© 2011 Parallon Business Solutions, LLC.

HCAPharmacyCentralizedDistribution

JanetZarndt,Pharm.D.DivisionDirectorofPharmacy

HCAMountainDivision

PharmacyDistribution

2

Optimizing the Present Preparing for

the Future

3

Pressures Mandates

•PayForPerformanceImperative

•PopulationHealthManagement

•LaborCosts↑

•PharmacyCosts↑

•Reimbursements↓

•ControlExpenseGrowth

•IntegrateNewPayment&CareDeliveryModels

•ImproveOutcomes

•AccelerateValueAcrossCareContinuum

•TransformPharmacytoStrategicAsset

ImplementingSolutionsthataddressalldimensionsof

pharmaceuticalandoperatingexpensewhilepreservingtheclinicalfoundationandenhancingoutcomes

HighPerformingPharmacy

HealthcareReform….AChallengingEnvironment

IncreasedOperatingMarginPressure

InnovatetobeLow-CostProvider

HealthcareChallenges

4

PharmacyIndustryChallenges

CostIncreasesDrugShortages

• Over260criticalshortages

• Non-contractpurchasesorhighercostentities>$10M

• Notlikelytoresolveinnearterm

• Brandeditems/contractincreasesresultedinover$70Mimpactin2014,$80Min2015

• Solegenerics,companymergers

• Unapproveddruglegislation

• Exparel-Surgery

• IVTylenol-Surgery

• OutPtInfusion

• ExpansionofInfusion Services,Transplant,Stroke,CV-high costdrugtherapies

HighCostDrugs

• Newcompoundingregulationsfederally

• StateregulationsonIVAdmixtureServices

• FDARegulationswilldetermineoutsourcedvendors

Compounding

5

OptimizationofPharmacyResourcestoDriveaHighPerformancePharmacy

HighQuality,Cost

EffectiveCare

LeadershipDevelopment

ClinicalPharmacyandFormulary

OperationsandAutomation

Standardization

TechnologyCPOE/EHRVigilanz

CentralizedOrderEntry

CentralizedDistribution

6 6

ProjectScope

• The scope of implementing a company wide pharmacy distribution program starts with purchasing of drugs to delivering of drugs to the facility. The process includes:

• Centralized drug purchasing and distribution• Centralized drug packaging and barcoding if required• Reduce number of drug SKUs through a centralized formulary

management• Implement a facility pharmacy inventory management system• Standardization of pharmacy operations across the enterprise• Implement a SMART/WMS interface with the automated dispensing

cabinets• Enhanced reporting capabilities

• The following are out of scope for this project:• Controlled substances• Centralized medication cart fill• IV compounded medications• Patient specific filling

7

DistributionTimeline2011• Nashville2014• North Texas • Jacksonville 2015• Richmond • Denver • Kansas City • Houston • Tampa 2016• Salt Lake City• San Antonio• Atlanta• Miami• Austin

8

MajorBenefitsofConsolidatedPharmacy

Effectiveness Efficiency

Expe

nseRe

duction

• Reduce PharmacyExpense/APD

• ReduceSKUs

• ReduceOn-HandInventory

• ImproveInventoryTurns

• ReduceDrugStockOuts

• ReduceExpiredDrugs

• ReduceFacilityTimeonSupplyChainFunctions oldertext

• InventoryManagement

• Automation ofDrug

Replenishment

• CentralizedDrugPurchasing

• CentralizeCriticalDrugStockpiles

• DrugFormularyManagement

• PharmacyTechnology

Stan

dard

Ope

ratin

gMod

el

9

PharmacySupplyChainFunctions

AccountPayables

Procurement Standardization

• Requisitioning• ContractCompliance• Monitoring

• Direct• Non-Stock Items

• Optimizingdiscountsandrebates

• Analyzepurchasinganddistribution

• Ensureappropriatepricing

• Receiving• Picking• Optimizing

distribution• Efficientuseof

space

Logistics

• Inventorymanagement

• Wastereduction

• Formularystandardization

• Utilizationmanagement

10

DistributionTimelineforMountainCSC

ProjectKickoffwithO’s

CustomizeProjectPlans

ImplementFormularyandSKU

ImplementOptiFlexinFacility

PharmacyWorkflow Design

OpenCSCPharmacy

BeginDistribution to1st site

ImplementRemainderofSites

MayJuneJulyAugSeptOctNovDecJan.Feb. Mar

11

MetricstoDetermineFacilityDeployment

CartlessDistribution

Model

CSCFormularyImplemented/

SKUReduction

PyxisOptimizationComplete

PharmacyWorkflowOptimized

12

HowDoWeDetermineSuccess?

• ReductionofPharmacydrugexpense/APD

• Reductionindrugproductsstockedateachfacility

• Standardizationofinventorymanagement

• Pharmacistandpharmacytechniciansperformingotherclinicalfunctions

Metrics Outcome

PharmacyExpense/APD

MeetestablishedPharmacyExpense/APDtarget

FacilityDrugInventory Turns

12inventoryturns/year

ContractLostOpportunity

Reductionin lostopportunityspendoverprioryear

Drug Waste Reduce amountofexpireddrugs

SKU Reduction ReducenumberofuniqueNDCscarriedineachfacility

13

LessonsLearned• People

o RedeploymentofPharmacistsfromtaskorientedprocessestopatientcareo RedefinedroleofPharmacyTechniciantofreeuptimeforPharmacisto Defined resourcesnecessarytosustaininventoryoptimizationatthefacilityo Divisionandfacilityleadershipsupport forformularyworkandoperational

changes• Process

o Optimizedformularystandardizationexecutionthrough visibilityatservicecentero RealizedSKUreductionfrom6800lineitemspurchased to1400itemso Standardized facilitypharmacyoperationsprocesseso Heightenedawarenessofinventorymanagementopportunitieso Standardized pharmacydistributionmodel

• Technologyo Difficulty tofindenterprisetechnology tosupport afullyconsolidatedmodelo Reducedautomationandautomationlaborexpensethrough eliminationof

contracts

1414

CurrentStateMountain– PharmacyInventory

• $ 5 million in drug inventory in MTN

• $4.5 million @ facilities

• $ 430,337 in expired meds last 12 months

1515

~ $ 3.5 million stored in Pyxis cabinetsRepresenting approx 19% of inventory

1616

Inventory Turns for Mountain FacilitiesFacility InventoryTurns

Alaska 7.84BrighamCity 4.72CacheValley 4EIRMC 12.12Lakeview 7.15LonePeak 3.94MountainView 8.97Ogden 6.56St.Mark’s 10.82Timpanogos 6.84WestValley 7.52

1717

57

28

33

17

25 26

47

15

0

5

10

15

20

25

30

35

40

45

50

CVH BCCH EIRMC LVH LPH MVH ORMC SMH TRH

PyxisMedStations

PyxisNursingLocationsforMountainFacilities

203 cabinet locations

1818

Facility ADUs are polled by Center to generate replenishment order

• Hospital Automated Dispensing Cabinet (ADU)• Hospital Pharmacy Department scans product

•Receives requisition•Product picked in low units of measure•Product placed in tote

Truck/courier deliverstotes to hospital

Pharmacy receives product and inventory is replenished

Mountain Division Supply Chain

PharmacyReplenishmentProcess

19

OverarchingGoal- ImprovementinPatientCare

ReduceNon-ClinicalActivities

FocusonClinicalActivities

20

21

© 2011 Parallon Business Solutions, LLC.

Questions

PharmacyDistribution