Healthcare News & Insights

5 steps hospitals can take to reduce costs for prescription drugs

Saving costs at your hospital could be as simple as creating benchmarks for common expenses, including prescription drugs.

178416625Prescription drugs are one of the highest expenditures at most hospitals. So making drug purchases as cost-effective as possible can have a major positive impact on the budget.

Drug-cost control expert Kathy Chase of Cardinal Health, an organization promoting quality patient care at reduced cost, spoke at a recent healthcare conference about what hospitals can do to save money through prescription drug benchmarking.

Strategy to save

Benchmarking is crucial because it gives your hospital clear data to work with when coming up with policies to maximize efficiency without compromising patient care.

Chase presented five steps hospital execs can follow to create a more cost-effective prescription drug system, in a Cardinal Health blog post:

  1. Benchmark against multiple measures. When evaluating prescription drug cost, it’s just as important to measure your performance against other competing hospitals as it is to evaluating your hospital’s performance on its own. Compare what your hospital spent on drugs last year to this year, and get data from similar hospitals in your healthcare system or geographic area.
  2. Adjust data to make it meaningful. Looking at just the cost of drugs without the appropriate context won’t be useful to your hospital. Consider factors like acute patient days and pharmacy adjusted patient days in your calculations. And when looking at numbers from other hospitals, be sure to compare apples to apples. Don’t worry about finding exact matches, but focus on hospitals of roughly the same size that provide similar services to yours.
  3. Measure cost, not charges. To get the most accurate measurements when benchmarking, it’s important to focus on the total charges your hospital incurs for prescription drugs, not patient charges.
  4. Expand benchmarking beyond cost. Taking quality indicators into account when evaluating the cost of prescriptions will only give your hospital more accurate numbers to work with. High quality shouldn’t be compromised to save money. Rather, prescription drug benchmarking should help your hospital maintain or improve its quality of care. It’ll help you target areas where money is being wasted and reallocate those resources to improve patient care.
  5. Apply pharmacy benchmarking to your hospital’s clinical decision support program. Once you’ve crunched the numbers and gotten applicable benchmarking data, it’s time to take those results to your clinical staff and come up with policies to enforce what your hospital’s doing right, and reduce its weaknesses and wasted costs. Put a program into place that adequately tracks the results of any changes you’ve implemented, and periodically evaluate them for success.

By taking these proactive steps, hospitals can get more bang for their buck when acquiring prescription drugs and can make informed, cost-effective decisions that still support high-quality patient care.

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