Healthcare News & Insights

7 ways hospitals can cut drug costs

Prescription drug costs are one of hospitals’ biggest expenses, and it doesn’t look like the trend’s going away anytime soon. As pharmaceutical companies continue to raise their prices, hospitals bear the brunt of the increases. 

Although the current presidential administration has promised to take a hard stand against rising drug costs, no final decisions about healthcare reform have been made just yet. That means it’s up to hospitals to manage expenses wherever they can.

Keys to reduce spending

An article from Hospitals & Health Networks offers facilities seven helpful strategies they can use to lessen the impact of rising medication prices on their budgets and bottom lines:

  1. Explore alternative drugs. Whenever an expensive drug is clinically necessary for a patient’s condition, it’s important for doctors to check for any less costly alternatives that would still be just as efficient and safe for treating the patient. Pricey medications should only be ordered if the alternatives aren’t as effective.
  2. Identify medications that have gotten more expensive. Ask your electronic health records (EHR) vendor or your IT department about the possibility of creating a data analytics tool to highlight medications that have recently increased in price. Pharmacy staff can use this tool to work with clinicians and see if a more cost-effective drug is available.
  3. Negotiate discounts via volume purchasing. Hospitals can often get better deals on prescription medications if they purchase them in bulk through a group purchasing organization made up of several different facilities and providers. The organization works directly with drug manufacturers to obtain various drugs at lower costs.
  4. Manage medication inventories. Take a closer look at the drugs kept in supply cabinets. Make sure drugs are being used, and double-check to make sure extra orders aren’t being made for medications in high supply. If any drugs aren’t being prescribed often, stop keeping them on hand.
  5. Consider extended dating. Many drugs are simply thrown out once their expiration date passes, but some may still be safe for patients. Instead of immediately tossing expired drugs, it might be a good idea to partner with an analytical laboratory and test the drugs to see if they’re still stable and usable for treatment. (And if you’re throwing out large amounts of expired drugs that can’t be used, it’s wise to adjust your ordering process to reduce waste.)
  6. Use pharmaceutical consignment services. Your hospital may occasionally need certain high-cost drugs that aren’t prescribed enough to keep them on hand regularly. In this situation, take advantage of consignment services that’ll allow you to have these medications delivered as needed. That way, you won’t have to store them in-house and run the risk of them going unused.
  7. Update your practice’s EHR to help with smart prescribing. Many EHRs can be customized to give clinicians a “suggested drug list” with cheaper, generic alternatives to costly brand-name medications. Some even rank drugs by price to help physicians make the most cost-effective choices. If this isn’t already a feature in your EHR, ask your vendor if it can be included.

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