Ef­fi­cient pur­chas­ing habits linked to higher per­for­mance

Lower spend­ing on sup­plies, drugs tied to higher scores on key qual­ity met­rics

Modern Healthcare - - A SUPPLEMENT TO MODERN HEALTHCARE - By Adam Ruben­fire

Strong clin­i­cal and op­er­a­tional per­for­mance at the na­tion’s high-per­form­ing hos­pi­tals is as­so­ci­ated with their more ef­fi­cient use of drugs and sup­plies, ac­cord­ing to a new study. Lower-than-ex­pected use of med­i­cal sup­plies and phar­ma­ceu­ti­cals is linked to lower rates of mor­tal­ity, lower 30-day read­mis­sion rates and higher pa­tient-sat­is­fac­tion scores at hos­pi­tals that score well in Tru­ven Health An­a­lyt­ics’ 100 Top Hos­pi­tals study, ac­cord­ing to an ex­clu­sive study con­ducted for Mod­ern Health­care by the Ann Arbor, Mich.-based data and re­search firm.

Tru­ven found that hos­pi­tals with less waste—and there­fore lower-than-ex­pected sup­ply and phar­macy costs per dis­charge— out­per­formed oth­ers on mul­ti­ple qual­ity mea­sures used by Medi­care.

The study in­cluded 2,560 hos­pi­tals from Tru­ven’s flag­ship 100 Top Hos­pi­tals study for which phar­macy and sup­ply data were

avail­able from Medi­care. To­gether, the hos­pi­tals re­ported nearly 5.3 mil­lion dis­charges.

Among all the hos­pi­tals stud­ied, most spent slightly less than what they ex­pected to spend on phar­ma­ceu­ti­cals and sup­plies in the 2013 fed­eral fis­cal year, with an av­er­age ob­served/ex­pected ra­tio of 0.998 for phar­ma­ceu­ti­cal prod­ucts and 0.992 for sup­plies (a hos­pi­tal with a ra­tio of 1 would have spent ex­actly what it pro­jected). How­ever, some hos­pi­tals in the study spent as much as 6.9 times more than ex­pected on drugs and 9.5 more than pro­jected on sup­plies.

The hos­pi­tals’ av­er­age phar­macy cost per dis­charge was $1,062, while the av­er­age sup­ply cost per dis­charge among hos­pi­tals was $2,440. While hos­pi­tals were spend­ing only a frac­tion less per case com­pared with what they ex­pected to spend, the cu­mu­la­tive sav­ings and pos­i­tive out­comes were sig­nif­i­cant, ac­cord­ing to Tru­ven.

Tru­ven found that at hos­pi­tals in the study that spent less than ex­pected on phar­ma­ceu­ti­cal prod­ucts, pa­tients ex­pe­ri­enced fewer read­mis­sions due to acute my­ocar­dial in­farc­tion, heart fail­ure and pneu­mo­nia, and lower over­all av­er­age rates of 30-day read­mis­sions. Pa­tients at hos­pi­tals that spent less than ex­pected on drugs also re­ported higher sat­is­fac­tion on Medi­care’s Hos­pi­tal Con­sumer As­sess­ment of Health­care Providers and Sys­tems, while the fa­cil­i­ties re­ported higher op­er­at­ing mar­gins and lower Medi­care spend­ing.

“Th­ese find­ings are very im­por­tant be­cause we are see­ing a higher rate of do­ing the right thing at the right time to achieve the right re­sult, and that means bet­ter di­ag­nos­tics and more ef­fec­tive use of phar­ma­ceu­ti­cals,” said Jean Chenoweth, Tru­ven’s se­nior vice pres­i­dent of per­for­mance im­prove­ment and the 100 Top Hos­pi­tals pro­grams.

Sim­i­lar but less pro­nounced re­sults were re­ported for sup­ply ef­fi­ciency. David Foster, lead sci­en­tist at Tru­ven’s Cen­ter for Health­care An­a­lyt­ics, said phar­ma­ceu­ti­cal use can be more closely tied to health out­comes than can sup­ply ef­fi­ciency. For each unit in­crease in the ob­served/ex­pected ra­tio for phar­macy uti­liza­tion (mean­ing more waste), there was a roughly 14 per­centile deficit in 30-day mor­tal­ity per­for­mance, while the same in­crease in sup­ply uti­liza­tion was as­so­ci­ated with only a 3.5 per­centile deficit, for ex­am­ple.

Nonethe­less, more ef­fi­cient use of

sup­plies led to bet­ter per­for­mance on pa­tient-safety in­di­ca­tor scores and 30-day mor­tal­ity rates for heart at­tacks and pneu­mo­nia, ac­cord­ing to the Tru­ven find­ings.

Even small changes in sup­ply ef­fi­ciency can make a dif­fer­ence for hos­pi­tals and health sys­tems, since sup­ply­chain spend­ing typ­i­cally ac­counts for hos­pi­tals’ big­gest ex­pense af­ter la­bor costs. Sup­ply-chain and other non­la­bor costs at hos­pi­tals to­taled about $74 bil­lion in 2012, ac­cord­ing to the Health­care Sup­ply Chain As­so­ci­a­tion.

An ef­fi­cient sup­ply chain is a sim­ple sup­ply chain, Foster said. Stock­ing too many kinds of sup­plies or phar­ma­ceu­ti­cals to sat­isfy physi­cian pref­er­ence leads to un­nec­es­sary ex­penses and waste, and could even lead to wide vari­a­tions in pa­tient out­comes.

“Be­ing able to do vol­ume pur­chas­ing sim­pli­fies things,” Foster said, not­ing that hos­pi­tals can save money and re­duce waste if they stan­dard­ize treat­ments and prop­erly com­mu­ni­cate order­ing pol­icy.

For Evanston, Ill.-based NorthShore Uni­ver­sity Health­Sys­tem, that means bring­ing phar­ma­cists and physi­cians to­gether to dis­cuss what drugs the hos­pi­tal should buy, and stick­ing to those de­ci­sions. Ev­ery two years, a phar­ma­cist works with physi­cians from var­i­ous de­part­ments to re­view the hos­pi­tal’s choices in var­i­ous drug classes, some­times meet­ing sooner if a new med­i­ca­tion or new re­search arises in be­tween re­views, said Lynn Boe­cler, se­nior direc­tor of phar­macy ser­vices at NorthShore. Her sys­tem has ap­peared on the 100 Top Hos­pi­tals list a record 16 times and twice on Tru­ven’s 50 Top Car­dio­vas­cu­lar Hos­pi­tals list.

Be­cause a small num­ber of high­value drugs ac­count for a large por­tion of sup­ply-chain costs, drug in­ven­tory man­age­ment tends to fo­cus on care­fully order­ing high-priced items. Lynn Boe­cler North Shore Uni­ver­sity Health Sys­tem

Physi­cians work with the hos­pi­tal’s phar­macy to de­velop or­der sets for spe­cific con­di­tions, which speeds up the pre­scrib­ing process, lim­its the va­ri­ety of drugs the hos­pi­tal pur­chases and leads to more pre­dictable pa­tient out­comes. “Since we have had th­ese or­der sets and guide­lines in place, we re­ally don’t en­counter over-order­ing,” Boe­cler said. “We are in a place where we’re proac­tive.”

North Shore’s process still al­lows for flex­i­bil­ity in choos­ing a treat­ment for con­di­tions that may be more de­pen­dent on the pa­tient’s or physi­cian’s pref­er­ence, such as for post-op­er­a­tive pain, Boe­cler said. Be­cause a small num­ber of high-value drugs ac­count for a large por­tion of sup­ply-chain costs, the sys­tem’s drug in­ven­tory man­age­ment tends to fo­cus on care­fully order­ing high-priced items, she said. There’s less worry about over-order­ing run-of-the-mill painkillers or other com­mon prod­ucts.

In­ter­moun­tain Health­care, a large in­te­grated sys­tem based in Salt Lake City—which ap­peared in the top quin­tile of Tru­ven’s 15 Top Health Sys­tems this year and in 2009—has con­trolled phar­ma­ceu­ti­cal costs by ed­u­cat­ing physi­cians and pa­tients on lim­it­ing the use of an­tibi­otics, which can be­come in­ef­fec­tive when over­pre­scribed.

Lead­ers at Og­den, Utah-based McKay-Dee Hos­pi­tal, one of In­ter­moun­tain’s fa­cil­i­ties that made Tru­ven’s most re­cent 100 Top Hos­pi­tals ros­ter, have saved about $55,700 so far this year by re­duc­ing an­tibi­otic-re­lated costs, with cu­mu­la­tive sav­ings of nearly $1 mil­lion since the ef­fort be­gan four to five years ago at the hos­pi­tal, said Scott Sax­ton, direc­tor of con­tin­u­ous im­prove­ment for In­ter­moun­tain’s North Re­gion. CMS of­fi­cials have said the agency plans to re­quire an­tibi­otic stew­ard­ship pro­grams at hos­pi­tals that par­tic­i­pate in Medi­care, with an im­ple­men­ta­tion win­dow in 2017.

Some of McKay-Dee’s sup­ply ef­fi­ciency ef­forts are sim­ple and low-tech, such as a sys­tem con­sist­ing of col­or­coded alerts and clear la­bel­ing of where prod­ucts can be found. Physi­cians or nurses flip a two-sided, two­col­ored card from green to red when a

“When we pro­vide trans­parency to our physi­cians, they’re look­ing for the best-qual­ity out­come for the low­est-cost so­lu­tion.”

Scott Sax­ton In­ter­moun­tain Health­care

prod­uct needs re­plen­ish­ing, and in­ter­nal run­ners reg­u­larly mon­i­tor the rooms to see what needs re­stock­ing. “We’re try­ing to put sup­ply rooms in or­der with good iden­ti­fi­ca­tion and good visibility,” Sax­ton said.

To help stream­line its sup­ply-chain man­age­ment, In­ter­moun­tain op­er­ates a 306,000-square-foot cen­tral sup­ply ware­house in Mid­vale, Utah, that opened in 2012. From the mas­sive ware­house, the sys­tem dis­trib­utes sup­plies di­rectly to the point-of-use within its 22 hos­pi­tals on a regular ba­sis, which re­duces the ten­dency of hos­pi­tals to hoard larger quan­ti­ties that can ex­pire and aren’t as eas­ily shared among fa­cil­i­ties. This process lim­its ship­ping time, re­duces waste by al­low­ing the sys­tem to share prod­ucts across its hos­pi­tals, and elim­i­nates the need for hos­pi­tal-based ware­hous­ing, Sax­ton said.

Lim­it­ing provider pref­er­ence is im­por­tant with sup­plies and equip­ment, for which there can be a wide va­ri­ety of ven­dors and dif­fer­ent pref­er­ences among clin­i­cians, es­pe­cially around high-value in­stru­ments. To curb waste in this area, In­ter­moun­tain will soon roll out doc­tor pref­er­ence cards—notes reg­u­larly dis­trib­uted to physi­cians that no­tify them of what sup­plies and equip­ment are be­ing or­dered on their be­half. The sys­tem hopes it will give doc­tors a chance to in­form sup­ply-chain man­agers if they’re no longer us­ing a prod­uct, or it might give the sys­tem a chance to find a less-ex­pen­sive al­ter­na­tive.

“When we pro­vide trans­parency to our physi­cians, they’re look­ing for the best-qual­ity out­come for the low­est­cost so­lu­tion,” Sax­ton said. The doc­tor pref­er­ence cards will also give the hos­pi­tal a chance to dis­cuss stan­dard­iza­tion of sup­ply brands.

At NorthShore, re­mov­ing nurses from the in­ven­tory-order­ing process has given care­givers more time to spend with pa­tients and en­sured that the sys­tem is order­ing the right amount of sup­plies from the right ven­dors, said Brian Washa, se­nior vice pres­i­dent of busi­ness ser­vices. Washa said sur­gi­cal packs and other pre-determined kits have helped im­prove the ef­fi­ciency of sup­ply pur­chases that can be stan­dard­ized across the sys­tem.

“We’re very care­ful with new items that are added” to the mas­ter list, Washa said. By hav­ing a sin­gle pro­cure­ment of­fice, “we have con­trol so that we don’t have 100 dif­fer­ent kinds of gloves.”

Among ef­forts to im­prove sup­ply­chain ef­fi­ciency, lead­ers at McKayDee Hos­pi­tal in Utah have saved about $55,700 so far this year by re­duc­ing an­tibi­otic-re­lated costs. The cu­mu­la­tive sav­ings have reached nearly $1 mil­lion since the ef­fort be­gan four to five years ago at the In­ter­moun­tain Health­care hos­pi­tal, which made this year’s 100 Top Hos­pi­tals ros­ter.

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