(Management Case Study) When Your Boss Says “Show Me the Money”… Again!

Purpose: Health systems are being pressured into finding new ways of increasing revenue or reducing expenses after experiencing declines in patient volume and increases in staffing expenses after the Covid-19 pandemic. Our health system executive leadership team set a pharmacy goal in early 2023 to reduce drug costs by $1,000,000 in calendar year 2023, after overall pharmacy cost savings goals were previously established for the pharmacy fiscal year July 2022 to June 2023. This case describes how the system pharmacy management team developed a plan to meet this challenging goal, which additionally, had a deadline of one week.

Methods: The system pharmacy management team quickly met to develop a plan. The team decided to use the prior pharmacy fiscal year as the baseline for drug cost savings (July 2021 to June 2022), since several new system drug cost savings initiatives were put into place in the July to September 2022 time period. This would also align this goal with System Pharmacy and Therapeutics Committee initiatives and other system initiatives. We reviewed the results of currently established system initiatives to determine which were most successful and would likely continue throughout calendar year 2023. It was also decided that cost avoidance methodology could be used for high-cost medications in which an alternative had been selected. Pharmacy typically has little impact to affect prescribing of these agents.

Results: Nine initiatives were identified to reach the $1,000,000 goal: Intravenous (IV) to oral conversion of corticosteroids, inpatient IV immune globulin dosing using ideal body weight, inpatient IV iron agent selection, inpatient biosimilar agent selection (cost avoidance), tenecteplase for acute ischemic stroke (cost avoidance), dexmedetomidine IV room preparation, neuromuscular blocking agent use in critical care, echinocandin antifungal agent selection, and other antibiotic stewardship initiatives. The plan was approved by the system chief medical officer. The system clinical director met with each of the nine hospital pharmacy leaders monthly to assure follow-through on the initiatives. The system lead clinical manager developed a cost savings tracking spreadsheet and the system director of pharmacy provided monthly updates to the system chief medical officer. For January through April 2023, the cost savings were $549,652 (54% of goal), exceeding the savings goal forecast for the first four months by $207,984 (21%).

Conclusion: A plan was developed to meet a health system goal to reduce drug costs by $1,000,000 in calendar year 2023, even though overall pharmacy cost savings goals were previously established for the pharmacy fiscal year July 2022 to June 2023. Using the same baseline period as previously established goals and cost avoidance methodology for high-cost drugs, along with effective project management, helped drive success.