IRVING, TX – Working with VHA Inc., the national health care network, 34 hospitals in Colorado, Idaho, Montana, Nebraska, New Mexico, Washington and Wyoming combined resources to hire a consultant to coordinate their efforts to help them identify savings opportunities to cut pharmacy costs that won’t compromise patient care.

By focusing on the top drugs and drug classes that drive a majority of their annual drug expenditures, which exceed $400 million collectively, the hospitals were able to identify more than $18.7 million in savings opportunities from April 2008 through the end of September 2009.

In the spring of 2008, the VHA members in the Mountain States region launched a focused effort to drive savings and quality by using an evidence-based approach to establish clinical equivalency and gain commitment from members to standardize drug formularies.

“Initially we looked at reducing cost by ensuring the appropriate utilization of specific high-cost drugs,” said Ed Kent, a registered pharmacist and the implementation manager for the VHA program. “Now we not only look at how these drugs are best utilized, but work to identify supply partners that are willing to provide extra discounts in exchange for additional purchase volumes or market-share commitments. This innovative initiative is driven by our members and their decision to share ideas through the VHA network. Each member has something they do best that others can learn from.”

Thus far, Kent said each focused drug class initiative has yielded a 10% to 50% savings per member, but each member is working at its own pace to realize the savings that have been identified, targeting the opportunities that match their clinical priorities.

Kalispell Regional Medical Center, Kalispell, Mont., has identified nearly $327,000 in savings opportunities so far through this VHA initiative, and expects to save another $275,000 in year two of the regional pharmacy program. “Saving money is an obvious benefit, but another benefit for us is that it leads to better care coordination, since we share patients across the region. I know more now about the pharmacy protocols that other hospitals in the region follow, and I trust that we’re better aligned thanks to our participation in the VHA program,” said Mark Donaldson, R.Ph., Pharm.D., FASHP, director of pharmacy services at Kalispell Regional.

Another very tangible benefit for the small rural hospitals participating in this program is that they can easily duplicate the tools the group creates to more efficiently drive the adoption of best practices resulting in safe, quality care within their own organizations. Oftentimes, it’s a challenge for small hospitals to develop these protocols and tools on their own.

BACKGROUND
Six years ago, VHA member hospitals in the VHA Mountain States region standardized to the same pharmacy distributor, and this created a platform for them to begin discussions about broader levels of collaboration. The members recognized they could leverage their collective purchasing volume and thereby obtain additional wholesaler discounts off the cost of their medications. Their efforts to do this proceeded somewhat slowly for several years until the group decided to form the VHA Mountain States Formulary Standardization and Clinical Process Improvement Committee. This led to the subsequent 2008 hiring of Ed Kent by VHA as a member shared resource. The VHA members in the region share the cost associated with bringing Kent on board. He is a former director of pharmacy at one of the VHA member hospitals in the region, and now, as a seasoned member of the VHA pharmacy consulting team, serves as the catalyst in helping his former hospital colleagues direct the formulary standardization program.

About VHA
VHA Inc., based in Irving, Texas, is a national network of not-for-profit health care organizations that work together to drive maximum savings in the supply chain arena, set new levels of clinical performance, and identify and implement best practices to improve operational efficiency and clinical outcomes. Formed in 1977, through its 17 regional offices, VHA serves more than 1,400 hospitals and more than 24,000 non-acute care providers nationwide.