the business case for bar-code readiness

8/6/2019 The Business Case for Bar-Code Readiness

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The Business Case for Bar-Code Readiness

Aligning Acute Care Hospital Goals

with Pharmacy Objectives to Ensure Patient Safety,

Operational Efficiency and Cost Containment

By Janet Silvester, R.Ph, MBA, FASHP and Chris Jones, R.Ph



About the Authors

Janet A. Silvester, R.Ph, MBA, FASHP

Director of Pharmacy and Emergency Services

Martha Jefferson Hospital

Charlottesville, VA

A past president of both the American Society of Health-System Pharmacists (ASHP) and the Virginia

Society of Health-System Pharmacists (VSHP), Janet A. Silvester has more than 30 years experience

advancing pharmacy practice in a hospital setting. She currently serves as Chair of the ASHP

Executive Vice President Search Committee and Chair of the Virginia Pharmacy Congress. She has

received numerous honors, including VSHP’s Pharmacist of the Year award. Janet is a participant in the

ASHP Pharmacy Practice Model Initiative.

Chris Jones, R.Ph

Senior Executive Pharmacist Consultant

Six Sigma Advanced Green Belt

McKesson Automation Inc.

An Executive Pharmacist Consultant with McKesson for the past 10 years, Chris Jones has worked

with hundreds of hospital pharmacies across the country to improve medication safety andoperational efficiency. Chris has over 22 years of hospital pharmacy experience, including

leadership roles as a former Director of Pharmacy and former Clinical Coordinator. He is actively

involved at the local, state, and national level of various pharmacy organizations, including past service

on the Board of Directors for the North Carolina Association of Pharmacists and as an ASHP delegate.

Chris is a two-time winner of the North Carolina Innovative Pharmacy Practice award and a recipient of

the McKesson Automation President’s Award of Excellence.

2



Table of Contents

Executive Summary ....................................................... 4

Drivers for Change ......................................................... 6

The Evolving Pharmacist Practice Model .......................... 9

Building Your Business Case ......................................... 15

Conclusions ................................................................ 17

Appendices ................................................................ 17

Appendix A: Advantages of Patient-Focused Dispensing

Appendix B: Examples of the Impact of Bar-Code-Based Automation

Appendix C: Business Realization Measurements

Appendix D: Things to Keep in Mind

3



Executive Summary

While electronic health records (EHR) have garnered a significant amount of attention from U.S. hospital

administrators, bar-code-based medication systems have quietly gone about doing their job of protecting

patients, improving efficiency, and containing costs.

The implementation of bar-code-based systems in the hospital is both good medical practice and good

business. Several studies have shown that bar-code technology can reduce errors in medication

dispensing, and this message has obviously hit home with hospital administrators and Directors of

Pharmacy. In one survey, a significant 41% of hospitals responding were using bar-code medication

administration in 2010.1

Bar-code readiness is defined as having implemented the systems that serve as the foundation leading

to full, enterprise-wide bar-code medication administration (BCMA) and bar-code, electronic medication

administration record (MAR) systems. By this definition, hospitals vary widely in terms of their bar-code

readiness. We believe this will change, as more hospitals implement the appropriate systems. This will

be largely driven by three important developments:

1) Requirements of the Patient Protection and Affordable Care Act (H.R. 3590). Beginning

in 2013, this legislation will begin to penalize hospitals that do not meet performance measures

established by the Centers for Medicare and Medicaid Services (CMS). Sixty-five percent of those

measures are related to medication use and safety; further implementation of bar-code-basedtechnology will make it easier for hospitals to maintain full reimbursement.

2) Greater clinical involvement by hospital pharmacists. Pharmacist involvement in patient care

has been widely accepted as a way to improve patient outcomes. In fact, 97.3% of hospitals responding

to the 2009 American Society of Health-System Pharmacists (ASHP) national survey of hospital

pharmacy practice have pharmacists regularly monitoring medication therapy in some capacity.2

According to an analysis of 298 studies published in the October 2010 issue of the journal Medical

Care,3 pharmacist participation in patient care was associated with a nearly 50% decrease in adverse

drug reactions, along with fewer medication errors, improved patient compliance with drug regimens,

higher overall quality of life scores, and improved outcomes, including better diabetes control, lowerblood pressure, and lower cholesterol. Bar-code-based pharmacy automation is largely responsible for

freeing pharmacist time and allowing them to assume expanding clinical responsibilities. This continuing

trend points to further adoption of bar-code systems moving forward.

1 State of Pharmacy Automation. (2010, April). Pharmacy Purchasing & Products. 8(4).

2 Pedersen CA, Schneider PJ, Scheckelhoff DJ. ASHP national survey of pharmacy practice in hospital settings: Monitoring and patienteducation—2009. Am J Health-Syst Pharm. 2010; 67:542-58.

3 Chisholm-Burns MA, Kim Lee J, Spivey CA, Slack M, Herrier RN, Hall-Lipsy E, Graff Zivin J, Abraham I, Palmer J, Martin JR, Kramer SS, WunzT. US pharmacists’ effect as team members on patient care: systematic review and meta-analyses. Medical Care. 2010; 48(10):923-33. 4



3) The effect on the bottom line. Bar-code-driven

automation helps reduce the incidence of adverse drug

events (ADEs) and avoid their associated costs; can

increase revenue through better medication charge

capture; and also can result in reduced medication

inventory, labor efficiency, and other savings. Few

hospitals are in a position to ignore this collective

positive impact on their balance sheet,4 making it

highly probable that bar-code readiness will gain

increasing attention in hospital board rooms and

executive offices.

Economics and patient centricity, then, make a strong case for bar-code readiness as the essentialrequisite step toward bar-code-driven dispensing technology and BCMA. Given the length of time

needed for planning and implementing bar-code-enabled systems, there is some urgency to doing so in

advance of H.R. 3590 taking effect. It is also worth noting that bar-code readiness meets the definition

of “meaningful use” described in H.R. 1, the American Recovery and Reinvestment Act of 2009,

making some or all of a bar-code readiness initiative eligible for federal funding. Hospitals should

understand, however, that the stimulus package does not fund the introduction of new systems, only

systems already under consideration. For this reason, now is the time for Directors of Pharmacy to

engage with C-level administrators to formally acknowledge bar-code readiness and BCMA projects and

initiate project planning stages.

Achieving bar-code readiness with bar-code-assisted distribution systems in the pharmacy frees

pharmacists from other tasks and can significantly increase the time they have available for clinical

duties that improve patient care. At the same time, these technologies also increase patient safety

through greater accuracy in the medication distribution process within the hospital.

In this white paper, you will learn:

• how to overcome common cost and

technology obstacles to achieving

bar-code readiness;

• how to align bar-code processes with

administration’s outcomes-based goals; and

• quantifiable benefits of bar-code readiness at

hospitals that have successfully established

the essential bar-code medication

foundation.

According to an analysis of

298 studies...pharmacist

participation in patient care

was associated with a nearly

50% decrease in adverse

drug reactions.

4 Kiselev M. Hospitals in Distress: How the Economy has Affected Financing of Health Care. Illinois Business Law Journal. March 16 2010, 15:34.


Percentage of Hospitals Using BCMA, 2002-20095

2003 20042002 2005 2006 2007 2008 2009

1.5%

25.1%

4.4%

3.2%

9.4%

13.2%

19.6%

27.9%30%

20%

10%

0%

5



Drivers for Change

The Patient Protection and Affordable Care Act (H.R. 3590) is a significant driver for change faced by

hospitals, and should serve as a major impetus for technology investments related to bar-code readiness.

The bill establishes value-based purchasing of hospital services, emphasizing quality of care over quantity

of care. This will have financial repercussions for hospitals. Beginning in 2013, for example, Medicare

and Medicaid reimbursements will begin to be awarded – or withheld – based on a hospital’s score

according to performance measures determined by the government. Fully 70% of the measures involved

are Centers for Medicare and Medicaid Services (CMS) Performance Measures; the remaining 30% will

be based on the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey

of patient priorities. The percentage of reimbursement at risk begins at 1% in FY13, rising to 1.25% in

FY14, 1.50% in FY15, and so on. In a mid-sized hospital, 1% of reimbursement can total millions of

dollars in a single year, so meeting or exceeding performance standards will be critical.

This aspect of the bill is, in itself, a convincing case

for investment in pharmacy automation and bar-code

readiness. Analysis of the CMS measures shows that

two-thirds of care indicators (27 of 40) are related to

medication use. This comprises more than half of the

total performance score on which reimbursement will be

based. In addition, 15 of 26 indicators of the Joint

Commission Center for Transforming Healthcare’squality measures are also medication-related.

Centers for Medicare and MedicaidServices (CMS) Performance Measures

OTHER

CARE INDICATORSRELATED TOMEDICATION USE

27

13

6

Pneumonia

Heart Failure

Acute MI

Surgical Care Improvement Project

Hospital Outpatient Measures

Children’s Asthma Care

Pregnancy and Related Conditions

Process of Care Measures

Hospital Consumer Assessment of Healthcare Providers andSystems (HCAHPS)

5 of 7

2 of 4

6 of 9

6 of 10

5 of 7

2 of 3

0 of 3

27 of 40

1 of 10

Medication-Related Indicators

Centers for Medicare and Medicaid Services (CMS) Performance Measures: Medication-Related Indicators



H.R. 3590 and the CMS measures align the interests of hospital administrators with those of the pharmacy.

Medications are used in nearly every area in the hospital, all of which would benefit from safe systems

that employ bar-code technology. Bar-coded medication administration, partially enabled and stronglysupported by pharmacy automation, addresses enterprise-wide medication issues that can dramatically

affect performance scores – more so, for example, than computerized physician order entry (CPOE).

The drug administration step is the last in the medication-use system where a medication error can be

detected and a potential adverse drug event (ADE) prevented. Indeed, a 2005 study showed that the

use of bar-code technology reduced the rate of potential ADEs due to dispensing errors by 63%.6 BCMA

thereby provides a wider-ranging safety net in the medication-use process and greater potential safety

gains, with a greater potential positive impact on performance scores.

The decrease in ADEs has a significant financial

aspect, as well. Each ADE equals $2,2007 in

additional hospital costs; each preventable ADE,

$8,750.8 At a hospital dispensing millions of

medication doses every year, bar-code technology

can prevent thousands of ADEs. The savings can

run into millions of dollars annually.9

At a hospital dispensing

millions of medication doses

every year, bar-code

technology can prevent

thousands of ADEs. The

savings can run into millions

of dollars annually.

6 Poon E, Cina J, Churchill W, Mitton P, et al. Effect of Bar-code Technology on the Incidence of Medication Dispensing Errors and Potential

Adverse Drug Events in a Hospital Pharmacy. AMIA Annual Symposium Proceedings. 2005.

7 Classen DC, Pestotnik SL, Evans RS, Lloyd JF, Burke JP. Adverse drug events in hospitalized patients: excess length of stay, extra costs, andattributable mortality. JAMA. 1997; 277:301-306.

8 Aspden P, Wolcott J, Palugod R, Bastien T. Preventing Medication Errors. Institute Of Medicine. 2006; 115-117.

9 Poon E, Cina J, Churchill W, Mitton P, et al. Cost-Benefit Analysis of a Hospital Pharmacy Bar Code Solution. Archives of Internal Medicine.

April 23 2007. 7

Perinatal Care (PC)

Hospital Based Inpatient Psychiatric Services (HBIPS)

Stroke National Hospital Inpatient Quality Measures (STK)

Venous Thromboembolism Measures (VTE)

Process of Care Measures

1 of 5

2 of 7

7 of 8

5 of 6

15 of 26

Medication-Related Indicators

Joint Commission Center for Transforming Healthcare: Medication-Related Indicators



In addition to the potential for safety gains realized by bar-code-driven pharmacy automation equipment,

pharmacy automation and bar-code readiness are also critical to achieving meaningful use under the

American Recovery and Reinvestment Act of 2009 (H.R. 1). Meeting the meaningful use requirement is

necessary to receiving government funding for hospital technology projects. Bar-code infrastructure and

effective closed-loop medication management solutions are considered “meaningful” since they

are necessary for successful deployment of clinical systems that directly relate to the Federal

government’s overall healthcare goals.

The significant importance of medication issues to the enterprise also argues for pharmacy involvement

in technology decisions currently made at the executive level, even when those decisions reach beyond

the pharmacy. Certainly, for any technology that may in any way touch the administration of medication,

it is only logical. Additionally, in most hospitals, the pharmacy has consistently been an early adopter in

the implementation of technological advances, often developing a project management skill set that cancontribute to the overall planning of the system and is useful as additional technologies are implemented.

The value of the pharmacy in examining these solutions should not be undervalued.

Also driving change is ASHP, an early and consistent leader in recognizing the game-changing aspects of

a bar-code-based medication system. ASHP’s official position on bar-code readiness and BCMA states,

“The American Society of Health-System Pharmacists encourages hospital and health-system pharmacies to incorporate bar-code scanning into inventory management, dose preparation and

packaging, and dispensing of medications. The purpose of such scanning is to ensure that drug products distributed, deployed to intermediate storage areas, or used in the preparation of patient doses are the correct products, are in-date, and have not been

recalled.” 10

10 ASHP Statement on Bar-code Verification During Inventory, Preparation, and Dispensing of Medications. June 2010. 8



The Evolving Pharmacist Practice Model

As the use of bar-code-based pharmacy automation systems has spread, the role of the hospital

pharmacist has been changing. The hospital pharmacist’s role is becoming more an integrated position

with increased clinical responsibilities,11 as automation allows the delegation of many tasks that do not

require clinical judgment to well-trained technicians, freeing pharmacist time. Indeed, the ASHP’s

Pharmacy Practice Model Initiative sees pharmacists providing ever higher levels of patient care –

including medication prescribing as part of a collaborative team – as certified pharmacy technicians

assume virtually every distributive function that does not require clinical judgment.

— Inpatient Pharmacists Routinely Monitor Medication Levels

— Pharmacists Have Authority to Order Initial Serum Medication Level

— Pharmacists Have Authority to Adjust Dosage for Routinely Monitored Medication

— Pharmacists Are Notified When Medication Levels Fall Outside of Therapeutic Range

Pharmacist Involvement in Therapeutic Drug Monitoring for Inpatients11

2003 20062000 2009

75.6 80.1

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

75.5

87.8 92.3

79.2

37.9

69.1

73.2

47.3

63.3

64.6

35.5

58.6

63.1

36.5

11 Pedersen CA, Schneider PJ, Scheckelhoff DJ. ASHP national survey of pharmacy practice in hospital settings: Monitoring and patienteducation—2009. Am J Health-Syst Pharm. 2010; 67:542-58. 9



Studies involving care programs with expanded clinical involvement by pharmacists, such as The

Asheville Project,12-15 are showing significant improvement in clinical outcomes and may be encouraging

hospitals to accelerate the trend. In the Asheville study involving hypertension and dyslipidemia, for

example, the period of pharmacist clinical involvement showed a 53% decrease in risk of a cardiovascular

event (CV) and greater than 50% decrease in risk of a CV-related emergency department or other

hospital visit.12

In the 2009 ASHP survey, the trend toward pharmacist clinical involvement is clear:

• 64.7% of hospitals used clinical generalists in an integrated pharmacy practice model.

• 97.3% used pharmacists to regularly monitor medication therapy, with nearly 50% of those

pharmacists monitoring 75% or more of patients.

• In more than 92% of those surveyed, pharmacists monitor serum medication concentrations or

surrogate markers; in 80.1%, pharmacists can order initial serum concentrations, and in 79.2%, adjustserum dosages.

• In 27.9% of hospitals, pharmacists provided medication education to patients.16

Activities Implemented to Improve Patient Outcomes

As the value of the pharmacist’s clinical involvement has become clearer, hospitals have turned to various

methods to stimulate pharmacist clinical practices. For instance, during the past several years, common

methods included promoting the value of clinical pharmacy services, increasing access to patient-specific

data, and expanding pharmacy technician responsibilities. Not surprisingly, considering the role of automated

systems in freeing pharmacists to assume more clinical duties, 29.9% of hospitals have implementedautomated dispensing systems. In addition, 35.4% expanded pharmacy technician responsibilities, and

23.5% redeployed pharmacists to patient care units. This latter number is especially significant since,

according to an analysis of 298 studies published in the October 2010 issue of the journal Medical Care,17

pharmacist participation in patient care was associated with a nearly 50% decrease in adverse drug

reactions, along with fewer medication errors, improved patient compliance with drug regimens, higher

overall quality of life scores, and improved outcomes including better diabetes control, lower blood pressure,

and lower cholesterol.

10

12 The Asheville Project: Clinical and Economic Outcomes of a Community-Based Long-Term Medication Therapy Management Program for

Hypertension and Dyslipidemia. Journal of the American Pharmacists Association. January/February 2008.

13 The Asheville Project: Long-Term Clinical, Humanistic, and Economic Outcomes of a Community-Based Medication Therapy ManagementProgram for Asthma. Journal of the American Pharmacists Association. March/April 2006.

14 The Asheville Project: Long-Term Clinical and Economic Outcomes of Community Pharmacy Diabetes Care Program. Journal of the

American Pharmacists Association. March/April 2003.

15 The Asheville Project: Participants’ Perceptions of Factors Contributing to the Success of a Patient Self-Management Diabetes Program. Journal of the American Pharmacists Association. March/April 2003.


17 Chisholm-Burns MA, Kim Lee J, Spivey CA, Slack M, Herrier RN, Hall-Lipsy E, Graff Zivin J, Abraham I, Palmer J, Martin JR, Kramer SS, WunzT. US pharmacists’ effect as team members on patient care: systematic review and meta-analyses. Medical Care. 2010; 48(10):923-33.



The argument can be made for a correlation between the use of automated dispensing technology and the

ever-greater share of dispensing responsibilities assumed by technicians over the past several years.

Bar-code-based automation greatly reduces the chances of error and requires significantly less expert

human supervision. This would allow moving the dispensing process into the purview of non-pharmacist

personnel and enabling pharmacists to evolve into more integrated roles. The cumulative growth of both

dispensing automation and technician responsibilities since 1997 may well have laid the groundwork for the

accelerated expansion in the number of hospitals employing an integrated pharmacy practice model – and the

broadening of pharmacist practice area involvement and influence – seen in the most recent ASHP studies.

Freeing Pharmacists to Be Pharmacists

Technology is increasingly available to support the safe use of medication. Its use continues to improve

the medication-use system and is at the heart of a classic “virtuous circle”: as the pharmacy automates,

pharmacists are freed for clinical work, improving patient care, thereby helping to support further

automation, and so on.

The use of automated dispensing cabinets has become widespread, and while BCMA and CPOE

technologies are being utilized in less than half of U.S hospitals, their use is decidedly growing, with

BCMA adoption outpacing CPOE in 2009. CPOE systems with clinical decision support systems were in

place in 15.4% of hospitals in the 2010 ASHP survey, BCMA systems in 27.9%, smart infusion pumps in

56.2%, and complete EMR systems in 8.8%.18

— Percentage of hospitals using BCMA

— Mean number of integrated pharmacist positions per 100 occupied beds

Comparative Growth of BCMA and Integrated Pharmacist Practice Model18

5.1

2006 20072005 2008 2009

7.94

5.51

6.71

9.87

9.4 13.2

19.6

25.1 27.9

11




Bar-code readiness and BCMA initiatives add an additional safety check to the final step in the

medication-use system, and this no doubt explains to a large degree the speed with which they have

been and are being adopted:

• 27.9% of U.S. hospitals live on BMCA systems in 2009, compared to just 1.5% in 2002*

• 233% growth in central pharmacy automation systems, 1999-200620

• 500% growth in “machine-readable coding”* used to verify doses before dispensing, 2002-200821

• 61% growth in hospitals outsourcing unit-dose bar-code packaging, 2002-200821

• 86% of the 500 most frequently prescribed oral solid medications are available in manufacturer

unit-dose, bar-coded packaging22

* Robots, carousel systems, and sometimes manual unit dose pick stations use machine-readable coding for safety and

inventory verification purposes.

ROBOTICS

CAROUSEL

AUTOMATEDDISPENSING CABINETS

BAR-CODE PACKAGING

42%

77%

n/a

66%

47%

72%

n/a

64%

54%

69%

90%

71%

2009 20102008

Technology Use, Inpatient Dispensing19



21 Pedersen CA, Schneider PJ, Scheckelhoff DJ. ASHP national survey of pharmacy practice in hospital settings: Dispensing and administration—2008. Am J Health-Syst Pharm. 2009; 66:926-46.

22 McKesson Health Systems data report 2010. Oral solids sales data.

23 State of Pharmacy Automation. (2010, April). Pharmacy Purchasing & Products. 8(4). 12

BAR-CODE DRUGADMINISTRATION

CPOE

29%

28%

33%

31%

41%

35%

2009 20102008

Technology Use, Prescribing and Drug Administration23



Pressure for 24/7 Pharmacy Service Coverage

Another argument for bar-code readiness can be inferred from the rise in 24/7 pharmacy service

coverage. According to the 2010 ASHP survey, 41.2% of hospitals provided 24-hour inpatient pharmacyservices, up dramatically from 30.2% in 2005. The average number of hours per week pharmacy

departments were open and available to provide services has also increased, from 101 hours in 2005,

to 103.8 hours in 2007, to 106.2 hours in 2008, to 112 hours in 2009.24-28

From strictly a patient care point of view, around-the-clock on-site pharmacy services are preferable to

more limited hours of operation, even with the inevitable drop off of demand during nighttime hours.

The primary barrier to extended or 24/7 coverage has traditionally been financial, since more hours

significantly increase pharmacy labor costs without necessarily generating commensurate medication

services income. Over the past five years, perhaps the largest single change in many hospitals is the

increased use of pharmacy automation. That increase and the growth in 24-hour inpatient pharmacy

services have been simultaneous, suggesting that the efficiency, staffing, and cost-reduction benefits ofautomation have been notable enablers of longer pharmacy hours.

This seems more than plausible when comparing the variation in extended hours growth among

hospitals of different sizes. As might be expected, large hospitals with 600 or more staffed beds had

the highest incidence of 24-hour pharmacy services, at 98.4%, while only 8.8% of the smallest hospitals

(fewer than 50 staffed beds) operated around-the-clock pharmacies. Certainly, need plays a significant

part in such a wide discrepancy, but it must also be noted that larger hospitals are far more likely to

employ pharmacy automation than the smallest institutions.

Supporting the Drivers for Change

In terms of pharmacist duties, bar-code automation technology is enabling change that is being driven

by the need for increased patient safety (H.R. 3590) and also for process efficiency as a response to

cost constraints.

The effects of central pharmacy automation solutions are allowing patient monitoring to increasingly be

performed by integrated pharmacists performing both distributive and clinical roles. The use of

distributive pharmacists to monitor medication therapy has declined and the use of other pharmacists to

monitor medication therapy has steadily increased over the past nine years. In 2000, 49.2% of hospitals

had distributive pharmacists monitor medication therapy, 40.6% used clinical pharmacists, 51.3% used

integrated pharmacists, 9.4% used pharmacy residents, and 24.5% used student pharmacists.28

24 Pedersen CA, Schneider PJ, Scheckelhoff DJ. ASHP national survey of pharmacy practice in hospital settings: Dispensing andadministration—2008. Am J Health-Syst Pharm. 2009; 66:926-46.

25 Pedersen CA, Schneider PJ, Scheckelhoff DJ. ASHP national survey of pharmacy practice in hospital settings: Prescribing andtranscribing—2007. Am J Health-Syst Pharm. 2008; 65:827-43.


27 Pedersen CA, Schneider PJ, Scheckelhoff DJ. ASHP national survey of pharmacy practice in hospital settings: Dispensing andadministration—2005. Am J Health-Syst Pharm. 2006; 63:327-45.

28 Pedersen CA, Schneider PJ, Scheckelhoff DJ. ASHP national survey of pharmacy practice in hospital settings: Monitoring and patienteducation—2009. Am J Health-Syst Pharm. 2010; 67:542-58. 13



In 2009, of the 97.3% of facilities where pharmacists regularly monitored medication therapy for patients,

44.6% had distributive pharmacists regularly perform this function, 44.6% used clinical pharmacists, 65.2%

used integrated clinical–distributive pharmacists, 13.5% used pharmacy residents, and 38.3% used student

pharmacists.29

Pharmacist involvement in medication safety initiatives, including technology adoption, continues to be

strong, interconnected to others and focused on the medication-use system. Interdisciplinary committees

reviewed ADEs in 89.3% of hospitals. Prospective analysis such as failure modes and effects analysis was

conducted in 66.2% of hospitals and retrospective analysis such as root cause analysis was conducted in

73.6%. Safety culture had been assessed by 62.9% of hospitals. ADEs were reported to external groups by

60.7% of hospitals.29

Looking Ahead

The 2010 ASHP National Survey reveals pharmacy directors’ future plans for the pharmacy practice model

in their hospitals. Directors from all sizes of hospitals expected a transition toward a more patient-centered,

integrated model and away from a centralized drug distribution-centered model. Some pharmacy directors

at smaller hospitals envisioned moderate growth in the use of a clinical specialist-centered model, while

some pharmacy directors at larger hospitals envisioned a moderate decline in the use of a clinical

specialist-centered model.

To keep pace with the needs of patients, the desires of personnel, and technological changes, 46.7% of

hospital pharmacy departments were working to change their practice models or had already done so in

the past three years. The most common barriers were a lack of pharmacist staff resources, a lack ofpharmacy staff with needed training, and resistance to change from current staff. Other barriers included a

lack of automation to support change, a lack of hospital leadership support, and a lack of qualified

technician staff. Only 9.7% of hospitals had not experienced barriers to their practice model changes. Staff

issues represented significant challenges to envisioned practice models of hospital pharmacy directors. 29

14

DRUG DISTRIBUTION-CENTERED

PATIENT-CENTERED,INTEGRATED

CLINICAL SPECIALIST-CENTERED

64.7

10.9

83.6

12.3

Future2009

Current and Expected Future Structure of Pharmacy Practice29

24.4 4.1




Building Your Business Case

The ASHP organizes the medication-use process into six areas: prescribing, transcribing, dispensing,administration, monitoring, and patient education. Examining the dispensing function in detail illustrates

how bar-coding across these multiple steps and hand-offs can ensure accuracy, resulting in

improvements in safety, operational efficiency, and inventory management. This makes bar-code

readiness and bar-code-based systems vital to any patient-focused dispensing initiative or patient-centric

business model.

Bar-code scanning has been shown to increase safety and reduce errors at all of these dispensing points:

• Receipt from the distribution center

• Stocking into automation systems or manual pick stations

• Dispensing in pharmacy for patient-specific purposes• Dispensing in pharmacy for cabinet restocking purposes

• Quality assurance checking by pharmacists or technicians (tech-check-tech)

• Restocking at automated medication cabinet

• Dispensing at automated medication cabinet

• Delivery to nurse server, inpatient medication cabinet, or workstation on wheels near patient room

The Correlation Between Safety and Savings

While it’s widely accepted that pharmacy bar-code

systems reduce the incidence of dispensing errors,there are some who question the financial

implications of this increased safety. In 2006, a five-

year study was completed at a “large, academic,

nonprofit tertiary care hospital pharmacy”30 in order

to assess the actual costs and benefits of a pharmacy

bar-code system implementation.

The results were impressive. Over the five years of the study, costs for implementing and maintaining

the pharmacy bar-code system totaled $2.24 million. The dispensing error rate after system

implementation was reduced by 31%. Even more striking, the potential ADE rate dropped by 63%. 30 Asnoted earlier in this paper, additional hospital costs per ADE are $2,200 and $8,750 per preventable ADE.

In terms of avoided ADEs alone, the hospital realized annual savings of $2.20 million over the course

of the study. The net benefit after five years was $3.49 million. Break-even was reached within one

year of the system becoming fully operational.30

Over the five years of the study, bar-code system

costs totaled $2.24 million.The net benefit after five years was $3.49 million. Break-even was reached within one year.

30 Poon E, Cina J, Churchill W, Mitton P, et al. Cost-Benefit Analysis of a Hospital Pharmacy Bar Code Solution. Archives of Internal

Medicine. April 23 2007. 15



Granted, the hospital in question is a large facility, dispensing more than six million medication doses

annually. However, the research found that implementation of a similar bar-code system at a smaller

hospital would show a significant return on investment (ROI), as well. Even with changes in details of

system implementation and use, such as leasing, purchasing, or repackaging costs, any hospital with

a minimum of 1.75 million annual doses could expect to realize a positive ROI within a five-to-ten-year

period.31

16

— Benefits — Recurring costs — 1-time costs

Cost and Benefits of Pharmacy Bar Coding31

2 31 4 5

$600,000

$400,000

$200,000

$0

-$200,000

-$400,000

C o s t / B e n e fi t

Years

31 Poon E, Cina J, Churchill W, Mitton P, et al. Cost-Benefit Analysis of a Hospital Pharmacy Bar Code Solution. Archives of Internal

Medicine. April 23 2007.



Conclusions

The question no longer is if hospitals will become bar-code ready but, simply, when. The economic

and professional drivers, along with real-world bar-code readiness and BCMA results, are making it

an inevitability. The performance demands of H.R. 3590 and the demonstrated patient care benefits

of increased clinical involvement by pharmacists are creating a perfect storm that aligns the goals of

administrators and the pharmacy. Increased pharmacy automation and increased pharmacy

involvement in enterprise technology decisions are the logical outgrowth.

Pharmacy automation and bar-code readiness are also critical drivers in achieving meaningful use

under H.R. 1. However, hospitals should bear in mind that the stimulus package does not fund the

introduction of new systems, but rather is meant to accelerate the adoption and implementation of

systems already under consideration. For this reason, now is the time for Directors of Pharmacy to

engage with C-level administrators to formally acknowledge bar-code readiness and BCMA projects

and initiate project planning stages, if they have not done so already.

We are in the midst of an important and exhilarating period for health-system pharmacists and the

institutions and patients they serve. Bar-code readiness is central to the trends already in progress, and

will become only more important to the entire enterprise in the years directly ahead.

AppendicesAppendix A: Advantages of Patient-Focused Dispensing

Automated patient-centric dispensing:• Assures proper patient-centered pharmacotherapy• Establishes effective drug use and control• Establishes bar-code foundation necessary for BCMA• Improves safety by scanning every medication before leaving pharmacy• Reduces pharmacist dispensing labor, freeing pharmacists for patient-specific roles• Reduces nursing labor by reducing med-prep time and multiple trips to patient rooms• Brings meds closest to patient (WOWs, nurse servers, etc.)• Significantly reduces cabinet overrides (including overrides of medications that cannot be scanned

which reach patient bedside without pharmacist oversight)• Reduces nursing complexity, interruptions, and workarounds (associated with cabinets)• Positions hospitals for “just in time” delivery to coincide with medication administration• Introduces standardization and scalability (census increases, fill for multiple sites, etc.)• Increases pharmacy technician labor efficiency• Minimizes duplicative medication inventory on nursing units and waste associated with expired

medications• Provides capital cost certainty (no cabinet scope creep)• Eliminates variability in medication processes• Delivers fast time to value and strong ROI

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Appendix B: Examples of the Impact of Bar-Code-Based Automation

Evergreen Hospital Medical Center

Kirkland, Washington250-bed community-based facility

• Improved medication dispensing accuracy to 99.9%• Conducted nearly 24,000 clinical interventions annually, saving approximately $1.9 million• Cut first dose fill labor by 78%• Reduced cart fill labor by 72%• Decreased crediting labor by 50%• Strengthened narcotics management

Shore Memorial Hospital

Somers Point, New Jersey

300-plus bed, not-for-profit acute care facility

• Established bar-code foundation to support patient safety, productivity, and inventorymanagement initiatives

• Projected 28% ROI in less than five years, and a project net present value of more than $700,000• Projected 3% annual revenue increase over ten years (totaling $220,000) as a result of accurate

charge capture of floor stock and controlled substance medications• 220% increase in documented clinical interventions by pharmacists, resulting in additional yearly

savings of $416,000 through reduced ADEs• 90% reduction in pharmacist checking labor• 42% increase in medication inventory turns, effectively cutting inventory costs by 30%, and saving

$166,000

• 80% reduction in the number of medication stockouts on nursing units• 93% reduction in time required for narcotics reconciliation

Comanche County Memorial Hospital

Lawton, Oklahoma283-bed community hospital

• Established bar-code foundation to support patient safety, productivity, and inventory managementinitiatives

• Projected 42% ROI in less than eight years, with 7% cost of capital and project net present valueof more than $17 million

• Projected eight-fold increase in time spent by pharmacists on clinical intervention activities,

resulting in annual 10% reduction in ADEs and related costs• 90% reduction in pharmacist checking labor• 33% improvement in technician picking labor and 33% decrease in technician training time• 92% decrease in missing doses and 75% decrease in medication cabinet stockouts• $26,000 savings per year through bulk medication purchasing• $80,000 gain in additional annual revenue through automated medication charge capture during

administration• 54% reduction in annual cost of medication write-offs due to expired medications

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St. Dominic-Jackson Memorial Hospital

Jackson, Mississippi535-bed, not-for-profit, acute care hospital

• Established closed-loop, bar-code-based system throughout medication-use process• Immediate BPOC 99.9% scan rate enabled by bar-code automation foundation• 801% increase in the number of pharmacist-patient interventions over five years• Improvement from 0% to 78% of pharmacist time spend on clinical activities• $1.8 million in annual cost avoidance through pharmacist-patient interventions• $204,000 reduction in cost of medication inventory over five years

Hybrid Distribution Case Study

(Multiple-hospital analysis of pharmacy-to-bedside hybrid medication distribution system by Shack &Tulloch, Inc.)730-bed Spartanburg Regional Medical Center, Spartanburg, South Carolina

649-bed Mississippi Baptist Medical Center, Jackson, Mississippi512-bed The Medical Center, Bowling Green, Kentucky (contains three hospitals)

• 99% robot dispensing accuracy• 96% reduction in picking errors with automated carousel• 50% reduction in missing medications• 75% reduction in expedited medications• 10% reduction in ADEs• 60% increase in technician productivity• 39% increase in pharmacist time for clinical activities• 8% increase in nursing time with patients• 75% reduction in expired medication costs

• 30% reduction in medication purchase costs• 15% improvement in medication inventory costs• 40% reduction in cabinet assets• 58% composite ROI (6-year project life, no terminal value)

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Appendix C: Business Realization Measurements

An oft-repeated management mantra says, “You can’t manage what you don’t measure.” Here are

some common metrics pharmacies use for process improvement and for reporting to hospitaladministration. Tracking these and other relevant metrics can help reassure administrators thatpharmacy automation and bar-code readiness have been worthwhile investments.

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Length of Patient Stay

Pharmacist Labor

Tech Labor

Nurse Labor (Vending, Travel, Patient Care Time, Reduced Steps/

Improved Workflow, Time, and Motion)

Medication Inventory (Turns, Stockouts, etc.)

Medication Turnaround Time

Medication Availability for Administration

Technology ROI/TCO

Technology Integration with Existing Systems

Unit-Dose Readiness of Meds (Scan Readability)

Employee Satisfaction (Nurse, Pharmacy, Physicians)

Patient Satisfaction

Employee Turnover/Employment Stabilization

Days

$/hr.

$/hr.

$/hr.

$

% or #/hr.

% or #/hr.

$/5 years

$/interfaces

%

%

%

%

Unit of MeasureMedication Dispensing Stage



Appendix D: Things to Keep in Mind

Pharmacy automation supports Bar-Code Medication Administration

• Positive bar-code identification of drug and patient at point of care• Supports IT strategic plan and provides safety net for nursing• Helps ensure the “five rights” – right medication, patient, time, dose, and route

Positive BCMA results are only possible if the right infrastructure is in place• Bar-coded medications• Bar-coded patient ID bracelets• Bar-coded employee badges• Wireless network• Point-of-care hardware

Some common challenges/ barriers

• Competing priorities between clinical/quality measure work and order entry requirements forpharmacists

• Bar-code packaging burden• Changing NDC codes requiring database changes• Space – balance needs for technology, medication storage, and workflow• Hard to keep the vision over many years

Operational tips for bar code use• Scan entire order prior to bringing in pharmacy

• Identifies NDC changes to correct in database for scanning• Identifies product changes due to drug shortages that must be added to database

• Scan test all drugs after packaging – assures “scanability ” at bedside

• Continually optimize robotics and ADC inventory, check SA/LA drugs in matrix drawers• Make one technician responsible for packaging to create equipment “expert”

Lessons from the real world• Engage with the C-Suite early, educating them on the benefits and challenges of automation and

bar-code readiness• Talk about the changes often – staff need time to get used to process change• Communicate the benefits – people buy in easier if it helps patients and supports a better

practice model• Automation doesn’t equal faster, just safer• Go back to C-Suite and show them the positive outcomes – remind them they made a good

decision

• Share with the media

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McKesson Corporation — Automation500 Cranberry Woods DriveCranberry Twp., PA 16066

1.800.594.9145

www.mckesson.com

© 2011 McKesson Corp.

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