Press releases

Average Drug Spend Among Hospital Pharmacies Managed by Cardinal Health: 4.3 Percent Lower Than National Average 

DUBLIN, Ohio, September 8, 2010 — Hospital pharmacies managed by Cardinal Health reduced their overall drug spend by 1.3 percent in 2009¹, while average pharmaceutical costs in non-federal acute care hospitals increased by 3 percent in that same period².

Through its Pharmacy Solutions business, Cardinal Health’s team of more than 1,000 licensed hospital pharmacists manage nearly two hundred hospital pharmacies across the United States and Puerto Rico. Knowing that pharmaceutical costs are usually one of a hospital’s top three supply expenses, Cardinal Health pharmacists use best-practice processes and proprietary analytics systems to gather drug purchasing, utilization and cost trend data to help monitor drug costs and analyze how drugs are utilized and dispensed within the hospital. As a result, Cardinal Health pharmacists are able to leverage benchmarking and best practice data to improve inventory management and drug utilization, optimize formularies and drive down drug costs.

“Our processes and proprietary analytics systems are a key reason why the hospital pharmacies we manage have lower overall drug spends than the national average,” said Michael D. Brown, R.Ph., vice president of Cardinal Health’s Pharmacy Solutions business.  “We look forward to sharing our expertise, data and analytics with more hospitals, nationwide, to provide them with the valuable information they need to dramatically drive down drug costs while maintaining or improving patient safety.”

Brown said that while each hospital needs a customized plan for keeping drug costs in check – based on its size, service lines and patient acuity – the following general tips can help hospitals reduce overall drug spend:

• Analyze drug dispensing and utilization data across the entire delivery system—from bulk purchasing through the cost of dispensing unit doses.  This will help ensure that the broadest possible savings opportunities can be identified.
   
• Look beyond the purchase cost of drugs, as the purchase cost alone tells an incomplete story. Hospitals need utilization-level data to identify their true drug costs. Utilization-level data provides insight into which drugs are dispensed to which patients, for what purpose and at what cost per dose. This type of information can help pharmacists recommend less costly, but equally safe, medication alternatives.
   
• Implement effective buying strategies to maximize drug purchasing contracts and to ensure optimal inventory management.
   
• Place particular emphasis on applying drug utilization initiatives to specific diagnosis-related groups (DRGs) – which can provide the most significant opportunity for cost savings. Hospitals can benefit by targeting drug utilization within DRGs because lowering these costs can increase a hospital’s reimbursement profitability.
   
• Engage the pharmacy’s purchasing staff and physician teams in cost reduction effort, too. Collaboration with these groups is critical to a hospital’s ability to consistently use lower-cost, equally effective alternatives to high-cost medications whenever possible.
   
• When putting cost-reduction initiatives in place, establish clear goals, set targets, and then track performance to drive operational and clinical change. Key measures can include: drug costs per pharmacy-adjusted day, total expense per discharge, and cost per diagnosis-related group.
   
• Lastly, know your data and how you compare to peers. Truly cost-conscious hospitals should consider using automated systems to provide purchasing and utilization dashboards, cost trend and benchmarking information, which can help rapidly identify the most significant cost-reduction opportunities.

According to Brown, hospitals and pharmacy directors seeking to reduce their overall drug spend can engage Cardinal Health’s pharmacy experts on a consulting or project basis to develop and help implement a drug cost containment program. Cardinal Health also offers proprietary analytics systems to help hospitals trend and benchmark their purchasing and utilization data.

Cardinal Health’s Pharmacy Solutions team now provides software solutions, consulting and management services to help hospitals and health systems enhance safety and improve workflow while controlling costs. New services help hospitals:

• Control costs and accurately forecast expenses;
• Ensure continuous compliance with accreditation and regulatory standards;
• Optimize the use of technology and automation;
• Achieve 24x7 pharmacy coverage;
• Decrease medication order turnaround times; and
• Provide pharmacy leadership through ongoing training and education.

“With the launch of our expanded services last year, we can help any hospital pharmacy – not just those we manage – dramatically improve their drug spend by implementing proven best practices,” said Brown. “Our new, customized approach to service delivery is part of Cardinal Health’s overall commitment to helping pharmacy directors quickly identify and qualify savings opportunities and ensure their pharmacies are running at optimal levels.”

Pharmacy directors can customize the specific consultation, project management, data analytics, benchmarking, or support services they need based on their organizations’ unique goals. To learn more, call 877.300.9180 or visit www.cardinalhealth.com.

About Cardinal Health
Headquartered in Dublin, Ohio, Cardinal Health, Inc. (NYSE: CAH) is a $96 billion health care services company that improves the cost-effectiveness of health care. As the business behind health care, Cardinal Health helps pharmacies, hospitals, ambulatory surgery centers and physician offices focus on patient care while reducing costs, improving efficiency and quality, and increasing profitability. Cardinal Health is an essential link in the health care supply chain, providing pharmaceuticals and medical products to more than 60,000 locations each day. The company is also a leading manufacturer of medical and surgical products, including gloves, surgical apparel and fluid management products. In addition, the company supports the growing diagnostic industry by supplying medical products to clinical laboratories and operating the nation's largest network of radiopharmacies that dispense products to aid in the early diagnosis and treatment of disease. Ranked #17 on the Fortune 500, Cardinal Health employs more than 30,000 people worldwide. More information about the company may be found at cardinalhealth.com.

¹ Cardinal Health source data
² American Journal of Health System Pharmacy, Volume 67, 2010