Hospitals save $3.5M by attacking drug shortage problems
The Premier healthcare alliance reports that its new failure-to-supply program has helped more than 1,400 members save more than $3.5 million in the past year.
Drug shortages are becoming common, with conditions in the past year rising to the worst ever, according to Premier experts.
According to Premier, many pharmaceutical contracts include FTS clauses to help hospitals capture compensation when drug shortages occur and the provider has to purchase an alternate drug at a higher cost. But the process is complicated, and many providers don't have the resources to find those areas where they are owed compensation.
Last December, Premier established PharmacyConnect, an automated way to help alliance hospital members optimize recovery for drug shortage costs.
According to officials, the program began with a pilot of six integrated delivery networks representing 100 alliance members and has grown to 89 IDNs representing more than 1,400 members.
"We're seeing more credits from FTS in one quarter than ever before in a year, plus our hospitals aren't spending any time on it now," said Ray Moore, system contract manager at PeaceHealth in Bellevue, Wash. "It's a tremendous return on investment – all handled by Premier. It could not be any easier."
Premier captures sales data from its PharmacySpend database and assesses whether an item has been shipped. If an item has not been shipped because it's back-ordered or out of stock, Premier submits an FTS claim on behalf of the provider for those manufacturers who have the FTS term in their contract.
Premier submits claims on a monthly basis and credits are issued quarterly through the pharmacy distributor.
"Before the program, we didn't have sufficient staff resources to pursue this kind of work and thus missed these opportunities," said Steven Hamm, director of pharmacy at Catawba Valley Medical Center of Hickory, N.C.
"Premier works behind the scenes to collect on our behalf. We didn't fill out any claims or paperwork; we simply joined the program," he said. "Between May and this year's end, we will have collected over $9,000 – money that protects our bottom line so that we can focus on providing the best care to our patients."
Premier said it has negotiated terms and conditions detailing the FTS remedy for more than 120 Premier pharmacy contracts.
"For our 17 owned hospitals and 46 affiliates, this was money left on the table," said Tom Jacobsen, corporate pharmacy director at Adventist Health in Roseville, Calif. "It was owed to us, but we didn't have an effective way to collect it. Premier has done excellent work here. Individual facilities can't do this alone, but this concerted effort on behalf of the membership is showing great results."
Bryant Mangum, Premier's vice president of pharmacy services, said the network is working with professional pharmacy associations and the FDA to address high incidences of drug shortages.
"The tide of shortages we've seen in recent months is a critical concern for the Premier alliance that has serious implications for patient care," he said. "Unavailability of the prescribed drugs could lead to medication errors and poor patient outcomes, which is Premier's primary concern."
