IRVING, TX – Hospitals across the nation continue to struggle with rising economic stress, driven by falling reimbursements and expanding labor and technology costs. These pressures have led hospitals to attack supply costs with a vengeance.

One area of emphasis is the pharmacy arena. Approximately 75%-85% of a hospital pharmacy department's expenses are drug costs, so striving to reduce drug expenditures is a worthy, but complex goal. Working with VHA Inc., the national health care network, and its regional office near Boston, 11 hospitals in Connecticut and Massachusetts hired a consultant to coordinate their efforts to cut pharmacy costs, without compromising patient care. By focusing on the top drugs and drug classes that drive a majority of their annual drug expenditures, the hospitals were able to implement more than $1 million in savings opportunities from November 2008 through the end of October 2009. They anticipate saving even more in 2010. The hospitals purchase more than $50 million in pharmaceuticals annually.

The following hospitals participate in the VHA pharmacy cost reduction initiative:

• Cape Cod Hospital (Hyannis Port Mass.)
• Falmouth Hospital (Falmouth Mass.)
• Greater Waterbury Health Network (Waterbury Conn.)
• Heywood Hospital (Gardner Mass.)
• Lawrence Memorial Hospital (Medford Mass.)
• Lowell General ( Lowell Mass.)
• Manchester Memorial Hospital (Manchester Conn.)
• Melrose-Wakefield Hospital (Melrose Mass.)
• Middlesex Hospital (Middletown Conn.)
• Rockville General Hospital (Vernon Conn.)
• The Charlotte Hungerford Hospital (Torrington Conn.)

"This was an opportunity for hospitals that had not previously worked together to leverage each other's knowledge and experience, and they all took full advantage of it to achieve significant savings," said Allison Tauman, PharmD, MPH, the manager of the project for VHA. "The pharmacy directors and their staff, typically the clinical coordinators, worked with the medical staff at each hospital, their pharmacy and therapeutics committees and VHA to change physician prescribing preferences for the benefit of the patients and the institutions."

MEMBER RESULTS
Cape Cod Healthcare, which includes Cape Cod and Falmouth Hospitals, identified an opportunity where the hospitals could switch from leuprolide depot, a drug for treating advanced prostate cancer, to less expensive drugs, save money and enjoy a greater margin on reimbursements. This saved the hospitals more than $120,000 annually.

"The hospitals in our group selected initiatives that had a cost-savings impact for each institution. However, because the initiatives were quite complex, we wanted to make sure they were implemented in a safe fashion. VHA helped because it benchmarked our practices against others in the region and provided tested protocols and the clinical documentation and studies we needed to support the transition to different drugs. Would we have done this without the help of VHA? Maybe, but VHA certainly provided both a safer and faster mechanism towards implementation," said Peter Scarafile, director of pharmacy services at Cape Cod Hospital.

Greater Waterbury Hospital was in the process of switching low molecular weight heparin products when it joined the VHA pharmacy cost reduction program. The organization made the decision to completely remove enoxaparin from its formulary and switch all patients to dalteparin, a blood thinner used to prevent or treat dangerous blood clots. This resulted in an additional 21% savings or nearly $100,000 annually.

Heywood Hospital also saw a huge benefit from its collaboration with VHA. "We could customize the policies that other hospitals had developed to suit our needs without reinventing the wheel. In fact, we were successful in implementing nearly our entire savings and improvement goal within 12 months because we were able to accelerate our improvement process thanks to the VHA connection. When it comes to changing physician attitudes, that's a formidable task," said Kathie MacKenzie, director of pharmacy services at Heywood Hospital. "Being able to achieve success so quickly was a key to maintaining momentum."

Key success factors for the program were:

• Developing new, evidence-based utilization and dosing standards and formulary changes for high impact drug categories, such as:
• IVIG, an immune globulin used to treat a host of immunodeficiencies and other disorders
• low molecular weight heparins, a class of medication that helps prevent or treat blood clots
• erythropoietin stimulating agents, a drug class used in cancer and kidney disease patients to treat anemia
• inhaled anesthetics, a gas used in the operating room for general anesthesia
• Creating a Web-site for clinical decision support tools and educational resources
• Leveraging analytics, tracking, reporting and monitoring performance
• Negotiating with suppliers as a single entity for thrombin, IVIG, inhaled anesthetics and low molecular weight heparins
• Maximizing Novation contracts

Tauman noted that future projects include standardizing the hospitals in the regional collaborative to one injectable contrast media agent and implementing a benchmarking system to analyze antibiotic use.

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 16 regional offices, VHA serves more than 1,400 hospitals and more than 25,500 non-acute care providers nationwide.