Reducing Waste in Pharmacy Services

The operation of a healthcare provider organization differs from that of most other businesses in three important ways:

1. The most important outcomes are not measured in dollars, but in terms of patient survival and quality of life.
2. They cannot fully control their revenues—rates are often subject to influence by HMOs, insurance companies, and Medicare/Medicaid.
3. They cannot control major components of their costs. For example, the number of staff, such as nurses, is often dictated by state or national regulations.

These factors make it imperative that healthcare providers use the best methods available that will let them improve patient outcomes while controlling the parts of the cost equation that they can control.

This article is one in a series from Strong America Now that illustrate how forward-thinking healthcare providers are using quality improvement methods to meet the dual goals of improving patient outcomes and controlling the costs.

Overview
Use of waste reduction methods focused on process improvements helped the University of California–San Francisco (UCSF) Medical Center improve performance in pharmacy services. On-time delivery of medications to nursing units improved by 40% and medication cabinet stock outs (lack of appropriate medications) dropped by 36%. Total savings is estimated at more than $446,000 per year.

Problems
The pharmacy department at any hospital has to be concerned about maintaining extremely high levels of quality control in order to assure patient safety, be in compliance with healthcare regulations, and contribute to overall cost savings. At the UCSF Medical Center, a process review showed that potential areas of concern included stock outs (not having medications in the dispensing cabinets available immediately when prescribed), the high cost of replacing expired medications, and the time it took to deliver medications to the nursing units. Approach A cross-functional team examined the pharmacy processes from the moment a prescription request is made to when the patient receives it. The team also looked at the behind-the-scenes work involved in stocking medications. They discovered that the medications were being delivered in large batches infrequently throughout the day. The large batch approach cased delays in filling the medication cabinets. At the time the cabinets were being filled the medications needed no longer matched the medications being delivered. Overall, many of their processes were too complex, with unnecessary steps that slowed down the work and/or increased the likelihood of errors. There were steps that just didn't work right, such as timeline transmission of a medication request to the pharmacy unit. The team identified a number of basic improvements to make based on Lean principles for process efficiency.

Results
Many pharmacy processes were streamlined, cutting both time and costs from the processes while also improving compliance and patient safety. Specific improvements include: On-time delivery of medications to nursing units improved by 40% Stock outs dropped by 36% The time needed to refill controlled medications (narcotics) dropped from 6 – 9 hours on average to 1.5 to 2.5 hours. Inventory levels were cut because the processes of ordering and delivery were so much more efficient (= less costs tied up in unused supplies that do not need to be inventoried and could become outdated, unusable medications) Outdated orders were cleared from the system Patient billing accuracy improved

The combined effect of these improvements was that less staff was needed to perform the work, which was done with a higher level of accuracy and speed. In all, the project generated savings that will lead to annual cost savings of more than $446,000.

Lessons Learned

The multidisciplinary team brought all views of the work process to the table to be examined Lean process improvement eliminated wasted steps improving efficiencies that lead to the right medication being available at the right time. Any core business process can present significant benefits when Lean methods are properly applied.

Credits Thanks to Karen Rago, Executive Director and Alfio Levy, Project Manager Operations Improvement Department, for their assistance in completing this case study.