The problem of medical errors was brought to public attention in a 1999 Institute of Medicine Report citing medical errors as the eighth leading cause of death in the United States. Medication errors represent the largest single cause of death in a medical setting. This has caused a strong response from purchasers, regulators and the state and federal government. SB1875 now requires every general acute care hospital to adopt a formal plan for minimizing medication related errors as a condition of licensure. In the June of 2001 JCAHO Survey, the Medical Center received a Type One deficiency in Medication Use with five areas of non-compliance. The recent CMS Validation Survey showed the Medical Center out of compliance for “Condition of Participation” in the Medicare Program for medication use. At the same time activity and drug costs escalate in double digit increases. Prescription drug prices are expected to rise 19% in 2003.
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Continued public and regulatory scrutiny requires the Medical Center, in collaboration with the Medical Staff through the Pharmacy and Therapeutics Committee, to develop and implement a pharmaceutical management plan. The three aspects of the plan include; Quality Management – effective and safe prescription drug therapy to improve patient outcomes; Utilization Management – Optimizing the quantities and patterns of prescription drug use and Cost management – decreasing the cost of drug therapy.
To assist in this effort, the Controller’s Internal Audit Division has been performing an operational audit to review operations and possible revenue/savings options.
1. Formulary Management
There is significant opportunity for savings through better formulary management, e.g. more Generic purchasing vs. Brand name, elimination of redundant but higher priced drugs, etc. The Medical Staff has agreed to reinvigorate and authorize the Pharmacy and Therapeutics Committee to review 20 high-cost drugs and evaluate options, revamp the drug approval process, expand membership to include Finance and Quality leaders and give quarterly reports to Medical Center leadership. We are recommending the addition of a pharmacist for continuous monitoring of the formulary for best pricing, adherence to generics, evaluating scientific evidence behind requests for new drug additions and educating and reaching out to physicians regarding available drug options. Preliminary audit findings demonstrated expenditures could have been reduced $117,000 in 2002 with the addition of this position.
2. Patient Assistance Programs
Most drug manufacturers have indigent charity care programs called Patient Assistance Programs. The purpose and intent is to ensure no patient is denied access to needed medications. Patients qualify based on income and patients must apply every time a prescription is filled. This requires working with patients one on one to process the application and working with Drug Representatives to apply for different programs. Although the process is labor intensive, other Counties and our Mental Health Department have realized large savings from implementing. We are recommending the hiring of one Administrative Assistant and one Patient Services Assistant to begin taking advantage of Patient Assistance Programs at the 39th Ave Clinics. Preliminary audit results estimated an average first year return of $394,000.
3. Drug Purchasing/Inventory Control
Weak controls over the inventory process results in a loss of assets without notice. Without par levels there is a potential for ordering drugs in excess. Currently the Pharmacy Manager does 90% of the ordering in addition to her other duties. Many times the lowest generic is not always ordered. We are recommending the hiring of a Pharmacy Technician to be solely responsible for the establishment of formal procedures for the inventorying, receiving and stocking of drugs. Preliminary audit findings estimate approximately $80,000 could be saved based on past purchases.
4. Quality Management/Error Reduction
SB1875 requires the Medical Center to prevent and/or significantly reduce medication errors by January 1, 2005. We are recommending the hiring of one clinical pharmacist to work with the medical staff to insure completeness and accuracy in prescribing medication according to established guidelines, insure the efficiency and accuracy of pharmacy dispensing systems and improve efficiency, timeliness and accuracy of medications administration. This rounding pharmacist will be assigned to one or two units to evaluate the effectiveness and cost savings of such positions.
The Medical Center’s Board of Directors has reviewed and approved these initial positions.
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Total cost of these positions for this fiscal year is $80,317. Savings from the Patient Assistance Programs, formulary management and purchasing/inventory controls offset the costs of these new positions and result in a savings of $6,765.
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