Multimodal Approach Saves MedStar Health $13M in 8 Years

Physicians vet cost-saving strategies across the organization.

Containing pharmacy costs requires a sustainable, multimodal approach, and one health system that puts that philosophy into practice is MedStar Health, a 10-hospital system based in Columbia, Maryland. There, pharmacy leaders use a variety of strategies to help manage the health system’s drug spend.

Eight years ago, MedStar Health had just acquired three hospitals, and leaders were searching for an overarching strategy to manage the health system’s pharmacy costs. “At that time, we realized we needed a systemwide and uniform culture to facilitate the acquisitions and assimilate these new member hospitals,” says Raymond Lake, RPh, corporate director of pharmacy operations.

By engaging physicians and employing a range of strategies, pharmacy leaders have achieved significant cost savings and avoidance in eight years. They also have developed a firm foundation to successfully integrate future acquired facilities.

Implementing Clinical Initiatives

Without an enterprisewide strategy, clinical initiatives often vary by site, leading to variable outcomes across a health system. To address this issue, MedStar Health has coordinated its clinical initiatives through a systemwide pharmacy and therapeutics (P&T) committee that makes decisions implemented by individual hospital P&T committees.

They also have created 32 systemwide clinical practice councils covering areas like anesthesiology, oncology, and other specialties to drive clinical improvements and share best practices. Each virtual council includes specialists from MedStar Health’s hospital and ambulatory sites who help pharmacists vet different strategies.

In one initiative, leaders in the pediatrics and primary care councils helped the pharmacy team standardize its annual flu vaccine so they could negotiate pricing. The health system reduced spend 17 percent by centralizing the purchase and distribution of the vaccine. Leaders also expect to save 7 percent by working with the councils to standardize surgical sealants.

“To get to any kind of standardization, you need to have collaboration among your clinicians and care providers, but to do that you need to have trust,” says Bonnie Levin, PharmD, assistant vice president, pharmacy services. “We work really hard with our team members to get cooperation.”

Partnering on Continuous Improvement

Pharmacy leaders at MedStar Health once managed their drug inventory without the discipline of data analysis and Lean operating procedures, Lake says. But during the past eight years, they have unlocked savings by employing these techniques to reduce on-hand inventory. Specifically, they have used data to establish periodic automatic replenishment (PAR) levels and used dispensing cabinets to help automate processes.

Pharmacy leaders also have been collaborating with the health system’s performance improvement and organizational effectiveness departments on a number of initiatives. “You can’t do this in a vacuum,” Levin says. “It requires a lot of skills that pharmacy leaders typically don’t have or haven’t learned yet.”

MedStar Health’s pharmacy department also has added a data analyst with experience outside the healthcare industry to develop reports on cost savings opportunities and successes. The finance and internal audit teams validate these savings.

Overseeing 340B Processes

In recent years, leaders at MedStar Health also have been working to standardize their 340B drug pricing program processes across eight participating hospitals. “We spent a lot of time thinking about how we could leverage 340B, be completely compliant, and do it efficiently,” Levin says. One of the first steps was migrating each site to a standardized 340B software platform to make sure all facilities were managing their auditing processes correctly.

To help oversee the software migration, MedStar Health established an interdisciplinary steering committee composed of COOs, CFOs, pharmacy directors, and 340B subject matter experts as well as leaders from legal, compliance, and internal auditing. Today, that committee still provides critical oversight of the program. “We work very closely with all of the stakeholders to make sure that we are maximizing the program and following the regulations as closely as possible,” Levin says.

The health system also hired a 340B manager who reviews program data across MedStar Health and communicates any regulatory changes to participating sites.

Heeding Lessons Learned

Levin and Lake offer the following advice for leaders on using continuous improvement strategies to contain pharmacy costs.

Don’t focus solely on purchase price negotiations with drug manufacturers. Although contracting strategies can help, they cannot be used alone to sustain cost savings. A multimodal approach should include a variety of approaches, including clinical initiatives and inventory management.

Standardize early. MedStar Health is standardizing its formulary. Pharmacists work with the anesthesia clinical practice council to standardize concentrations of commonly used medications. “If we can aggregate our contracts and commit to using one product, we often can get significant savings from the manufacturer,” Levin says.

Work with your wholesaler. MedStar Health contracted with its wholesaler to provide medication management solutions. The health system received assistance with inventory turns and carrying costs, GPO portfolio management, drug cost tracking and trending, and other initiatives.

Incorporate data analysis into every pharmacy meeting. Leaders review a monthly analysis of proposed versus actual savings. They also review a variety of performance metrics at every system P&T committee meeting.

Create pharmacy communities. MedStar Health has created virtual networks of pharmacy directors, informatics specialists, and other pharmacy professionals aligned by area or job function across the health system. These communities meet frequently (some weekly and monthly), either virtually or onsite. Not only do they help foster cultural change, but they also help MedStar Health onboard the pharmacy teams at newly acquired hospitals. “It’s a support group and a network for process change,” Levin says.

Leverage technology. In addition to its automated medication dispensing cabinets, MedStar Health will soon implement anesthesia dispensing cabinets. “These help control inventory and increase compliance,” Levin says.

They also rely on the electronic health record (EHR) to track medication use. “You can’t improve what you can’t measure,” she says. The health system is currently migrating all of its hospitals to one EHR, a process that should be completed by 2020.

Centralize when appropriate. MedStar Health has a centralized facility where they restock their automated dispensing cabinets and produce IV admixtures and total parenteral nutrition (TPN).

Focus on stewardship of antibiotics and other medications. To ensure appropriate use of antibiotics, opioids, and other medications, MedStar Health has implemented a number of evidence-based practices across the health system. For example, the emergency department reduced opioid prescriptions by 21 percent in one year by implementing guidelines for prescribing.

Share performance and best practices across the health system. “If there is a lot of variation, it is almost impossible to have good processes,” Levin says. Today, MedStar Health has built a culture of interdependence in which pharmacy leaders use dashboards to share performance data across hospitals.

Develop a roadmap for strategic growth. Previously, pharmacies at MedStar Health were reactive to events such as drug shortages. Now, leaders are taking a more proactive approach by developing emergency preparedness plans and organizing daily buying huddles to address drug shortages. They also are more focused on strategic opportunities, including growing their ambulatory care presence.

Championing the Cause

Pharmacy leaders at MedStar Health say support from senior leaders, including those in finance, is critical to reducing costs. “We had a lot of senior leaders attend our pharmacy meetings and support our endeavors,” Lake says. Levin agrees. “Senior leadership support is the most critical reason for our success,” she says.

This article is based in part on a presentation at the 2018 ACHE Congress.

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Laura Ramos Hegwer is a freelance writer and editor based in Lake Bluff, Ill., and a member of HFMA’s First Illinois Chapter.

Interviewed for this article:

Bonnie Levin, PharmD, MBA, FASHP, is assistant vice president, pharmacy services, MedStar Health, Columbia, Md.

Raymond Lake, RPh, MS, is corporate director of pharmacy operations.