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Consultant’s Playbook

A Survey of Pharmacy Consultant Experiences Among Hospitals In the University HealthSystem Consortium
Dave Hicks RPh, MBA
Bryan McCarthy PharmD, MS, BCPS
John Fanikos MBA, RPh
Amir Emamifar PharmD, MBA
Andrea Nedved PharmD, MPA, MS
Bruce Thompson RPh, MS
Fred Bender PharmD
Patrick McMahon PharmD, MBA

Purpose:

Our team surveyed a group of pharmacy directors to learn about their experiences with pharmacy consultants so that the directors might be able to use their consulting resources in a more effective manner.

Methods:

In May 2012, the University HealthSystem Consortium (UHC) Pharmacy Council Financial Performance Committee developed an electronic survey that collectively measured the characteristics, goals, and methodology of historical pharmacy consultant engagements and level of satisfaction. After e-mailing the initial electronic survey, we conducted follow-up telephone interviews with respondents from July through November 2012. These interviews were designed to include questions about expected outcomes, recommendations for evaluation processes, timelines for implementing the recommendations, consultants’ expenses, and insights gained.

Results:

A total of 23 pharmacy directors responded to the initial electronic survey; their organizations had engaged at least one consultant within the previous 5 years. Data were collected for 28 consultant engagements. Subsequent telephone interviews were conducted with 20 of the 23 pharmacy directors (87%) who completed the initial electronic survey, accounting for 25 of the 28 consultant engagements (89%).

Conclusion:

Cost reduction along with revenue enhancement was most often the focus of these engagements. These engagements were also mainly within the scope of an organization-wide effort initiated by the executive board or executive team. Consultant experiences varied greatly in terms of (1) the degree to which assistance was provided to the organization, (2) benchmarking methodologies and resources, and (3) timelines for implementing the consultants’ recommendations. In general, most respondents rated their consultant experience as positive and were able to provide “pearls of wisdom” or lessons learned.

INTRODUCTION

Many health care systems engage consultants to identify opportunities for pharmacy cost savings in areas such as the supply chain, labor productivity, and revenue enhancement. Pharmacy leaders have been encouraged to actively participate in the process by preparing data and by developing and implementing a consultant’s recommendations.1 Unfortunately, the successes or failures of pharmacy consultant engagements and the nature of recommendations made remain widely unshared. The University HealthSystem Consortium (UHC) Pharmacy Council Financial Performance Committee surveyed pharmacy leaders in an attempt to identify common consultant strategies, data sources, and methodologies.

METHODS

In May 2012, the UHC Financial Performance Committee developed and e-mailed an electronic survey to pharmacy directors of the UHC’s member hospitals. Recipients were asked to complete one survey for each instance that their respective organization had engaged a consultant or a consultant group to evaluate pharmacy services within the previous 5 years.

The survey included 14 questions that collectively measured characteristics, goals, methods of historical pharmacy consultant engagements, and satisfaction level. A reminder e-mail was sent 4 weeks after the initial distribution.

All respondents were contacted for a follow-up telephone interview after the initial survey responses were captured. These interviews were scripted with 17 questions designed to ask about expected outcomes, recommendations, timelines for implementing the recommendations, consultant expenses, and the insights gained. Survey respondents were contacted to schedule a telephone interview three times before they were considered lost to follow-up. We used descriptive statistics to report our findings.

RESULTS

A total of 28 pharmacy directors responded to the initial electronic survey, indicating that their organization had engaged at least one consultant within the previous 5 years. Data were collected for a total of 34 consultant engagements. Of the 28 respondents, 26 were at one of the 119 UHC academic medical centers, for a 22% response rate of consultant use within the previous 5 years in this population.

We subsequently conducted telephone interviews with 20 of the 28 pharmacy directors (71%) who completed the initial electronic survey, accounting for 25 of the 28 consultant engagements (89%). Four hospitals also provided itemized lists of specific consultant recommendations and strategies (Table 1).

The following analysis of our results primarily describes the 19 cost-containment and revenue-enhancement reports of the 25 total consultant engagements with respect to characteristics, scope and objectives, methodology, recommendations, and experiences.

Characteristics

Of 25 consultant engagements in which telephone interviews were conducted, 19 (76%) pertained to cost reduction/revenue enhancement, three (12%) were concerned with strategic development, and three (12%) were related to assessments of the Section 340B drug discount program. Organization-wide efforts initiated by the executive board or executive team were responsible for 18 of the 19 (95%) cost-reduction/revenue-enhancement engagements, whereas all six of the strategic development and 340B assessment engagements were initiated by pharmacy department leadership (Figure 1). Most consultant engagements (76%) took place in 2011 and 2012. Six consultant surveys (24%) were conducted from 2008 through 2010.

Fourteen different consultants or consultant groups accounted for all 25 of the surveyed engagements (Figure 2). Eight respondents who detailed cost-reduction/revenue-enhancement engagements were made aware of the consultant fee structures. Six of these (75%) were based on a percentage of savings achieved, and two of these (25%) were based on a negotiated fee. All six strategic development and 340B assessment engagements were based on a negotiated fee.

Scope and Objectives

Within the 19 cost-containment/revenue-enhancement engagements, the top three areas of focus were revenue cycle (13%), formulary management (13%), and supply chain (12%) (Figure 3). Most consultants provided some form of assistance with implementation, and seven of 19 consultants (37%) provided recommendations, advice, and project-tracking support. Five consultants (28%) also provided hands-on, on-site personnel to facilitate successful implementations. Expected outcomes for the cost-containment/revenue-enhancement engagements were defined bottom-line impacts for 14 pharmacy departments, organizations, or both (78%).

Methodology

To evaluate the area of focus or pharmacy services for cost-containment/revenue-enhancement engagements, the consultants usually used hospital performance data, as reported in 11 of 19 responses (58%). For benchmarking, the consultants used the company proprietary database or UHC/Solucient databases in seven engagements (37%). Of these 19 respondents, 12 (63%) either agreed or strongly agreed with the benchmarking methodology that their consultant had applied. Respondents at three sites (16%) either disagreed or strongly disagreed, and respondents at four sites (21%) had a neutral opinion.

The consultant data set request that was cited most often to ascertain cost-containment/revenue-enhancement opportunities consisted of 1-year data for operations and purchasing. From this data set, the consultant compared selected databases or best practices to identify and recommend opportunities. References or source documents were rarely quoted or shared. Table 2 lists the methods used.

Recommendations

Rates varied in terms of implementing consultants’ recommendations. Thirteen consultant engagements (52%) resulted in “all” or “most” recommendations being executed, and eight engagements (32%) implemented only “some” recommendations. Four respondent departments (16%) implemented no recommendations, because the pharmacy consultant validated best practices or benchmark targets that had already been achieved.

Respondents reported a wide range of timelines (from 3 or 4 months to 3 years) for implementing consultants’ recommendations. Of 19 cost-containment/revenue-enhancement engagements, pharmacy consultants left progress-tracking tools or spreadsheets at five respondent departments (26%); used various established processes at five respondent departments (26%); and left no aids at the remaining nine respondent departments (47%).

Overall Experience

Most respondents (64%) rated their consultant experience as positive. Six respondents (24%) gave consultants a neutral rating, and three respondents (12%) described a negative experience. Pearls of wisdom shared by respondents about their consulting experiences identified several repetitive themes that may inform future administrators about how to optimally engage pharmacy consultants (Table 3).

CONCLUSION

Our survey of 20 pharmacy directors (accounting for 25 pharmacy consultant engagements within the previous 5 years at UHC member hospitals) indicated that the focus was primarily on cost reduction and revenue enhancement. These engagements were also mainly within the scope of an organization-wide effort initiated by the executive board or executive team. Consultant experiences differed widely in terms of the degree to which assistance was provided, benchmarking methods and resources, and timelines for implementing the consultant’s recommendations. Overall, most respondents rated their experience as positive and were able to list lessons learned.

Figures and Tables

Consultant engagement characteristics.

Consultant or consultant group engagements. CPS = CPS Corporate Consultants, Inc.; E&Y = Ernst and Young, Inc.; FTI = FTI Consulting; PwC = PriceWaterhouse Coopers; VHA = Voluntary Hospital Association of America.

Pharmacy focus areas for consulting engagements.

Consultants’ Aggregated Recommendations for Cost Reduction and Revenue Enhancement

  • 340B outpatient prescription copay less costly than mail order for employees
  • 7-day Advair
  • Steroid inhalers—Advair conversion to Symbicort
  • Albumin—guidelines for use
  • Aloxi conversion to ondansetron for outpatient use
  • Alteplase—guideline for catheter clearance
  • Ambulatory pharmacy growth hormone service
  • Anesthetic gas: drop desflurane, use isoflurane for patients with disease of long duration, reduce flow rates
  • Antifungals—pricing
  • Antifungals—utilization
  • Antimicrobial Stewardship Program
  • Antizol—eliminate as stocked nonformulary
  • Aranesp usage reduction
  • Argatroban—bag size reduction
  • Argatroban—guidelines
  • Argatroban to generic when available
  • Arixtra 7.5 and 10 mg to generic
  • Atracurium preferred over cisatracurium
  • Aztreonam restriction → cefepime
  • Carbapenems conversion
  • Cardene conversion
  • Cardiology assistant in catheter laboratory reducing Angiomax, ReoPro, and Integrilin
  • Cathflo usage reduction
  • Clindamycin premixed to self-mix
  • Clinical pharmacist for ambulatory infusion center interventions
  • Collect CAPS rebate
  • Combivent inhalers to albuterol
  • Contrast media—product change
  • CVVH distribution from supply chain to pharmacy
  • Dexmedetomidine—guidelines for use
  • Disposable pain pumps
  • Eliminate stocked nonformulary drugs
  • ESAs—guidelines for use
  • ESAs—elimination for trauma patients
  • Factor VII—guidelines for use
  • Filgrastim 300 mcg for patients weighing less than 75 kg
  • Flovent to Asmanex
  • Fosphenytoin generic
  • Fragmin to Lovenox
  • Geodon oral to generic
  • Hemostatic agents—review and use 5,000-unit size
  • Humate P to Wilate
  • Implement indigent recovery program
  • Infectious Disease Antimicrobial Stewardship Program
  • Insulin pens to insulin vials
  • Inventory—reduction of pharmacy par levels
  • Inventory—preset/reduce automated dispensing machine par levels
  • Investigational drug fee recovery
  • IV—extend NICU infusion dating
  • IV outsourcing program
  • IV push drug policy changes
  • IV to PO autoconversion for stress ulcer prophylaxis
  • IVIG—guidelines
  • IVIG purchased at 340B drug discount price
  • Lantus vials to drawn up individual doses
  • Levalbuterol to albuterol
  • Levetiracetam IV to PO
  • Lexapro to generic
  • Lexiscan 340B drug discount pricing
  • Lipitor to Crestor
  • Maximizing reimbursement of ambulatory medications
  • MDIs to generic nebulized products
  • Misoprostil from Cervidil for cervical ripening
  • Nesiritide—guidelines
  • Neuromuscular blocker use
  • Nexium restriction
  • Nicardipine IV
  • Nicardipine—bag size reduction
  • Pediatric pharmacy waste reduction
  • Pharmaceutical returns contract
  • Pharmacotherapy of heart failure
  • Pharmacotherapy of hypertension
  • Pharmacy—case management partnership
  • Procrit vs. darbepoetin savings analysis
  • Sentri7 after it is operational
  • Telecom utilization–pharmacy
  • Thrombin purchases
  • Thrombin usage decrease in the operating room
  • TPN compounding process (standard vs. custom)
  • Triostat—eliminate as stocked nonformulary
  • Vancomycin oral product
  • Venofer usage reduction
  • Wholesale distributor agreement renegotiation
  • Xalatan to generic
  • Zosyn—extended infusion/restriction
  • Zyvox—IV to PO
  • CAPS = Central Admixture Pharmacy Services; CVVH = continuous veno-venous hemofiltration; ESAs = erythropoeitin-stimulating agents; IV = intravenous; IVIG = intravenous immunoglobulin; MDI = metered-dose inhaler; = NICU = neonatal intensive-care unit; PO = by mouth; TPN = total parenteral nutrition.

    Consultant Methodologies

    Consultant Focus Method Responses
    Cost Reduction Benchmarking
    • Compare data provided with proprietary benchmark data on labor and nonlabor expenses (eight engagements).
    • Solucient benchmarking (five engagements); UHC, VHA, or Cardinal database comparisons (one each).
    Best Practices Audit
    • Consultants looked at pharmacy from a best practice perspective, including automation, clinical involvement, and utilization (six engagements).
    • Consultants offered few new ideas (two engagements).
    • Consultant recommended labor productivity management system (two engagements).
    Benchmarking–Audit Combination
    • Re-bid/renegotiate distribution on major contracts
    • Consultants collected a data dump of purchases; separated expenses into labor and nonlabor savings; and further delineated operating room, diagnostics, and pharmacy supply expense.
    • Consultants analyzed pharmacy medication-purchasing history over a period of 1 year. From the data, they identified cost-savings initiatives, including therapeutic substitution, generic substitution, and purchasing contracts outside of a GPO.
    Revenue Enhancement Benchmarking and Best Practices Audit Combination
    • Audit/flowchart all charge processes, review/update all charge codes, re-bill where lost charges or coding errors occurred.
    • Focus was on billing/revenue cycles, 340B drug discount pricing, and indigent drug programs for ambulatory infusions.
    • Proprietary price benchmarking (four engagements).
    • Focus was on specialty pharmacy and pharmacists in clinics for revenue capture.

    GPO = group-purchasing organization; UHC = University HealthSystem Consortium; VHA = Voluntary Hospital Association of America.

    “Pearls of Wisdom” From Survey Respondents

    • Be sure to understand the numbers the consultants are using.
    • Do not guess or estimate your data responses. Be as accurate and specific as possible.
    • See any information before the consultants present it.
    • Make sure you fully understand the data supporting the consultant’s recommendations. Otherwise, you will find yourself agreeing to everything he or she says and you will not be able to refute erroneous statements.
    • Know the limitations of your current benchmarks.
    • Know your drug expenses and P&T committee communications approach.
    • The consultant’s viewpoints and opinions can be used to support pharmacy positions. Information can be directed toward the hospital’s key decision makers.
    • Having consultants in-house can move along projects that previously didn’t have traction.
    • Investigate the consultants before their arrival in order to understand the nature and scope of their processes.
    • When consultants compare your data with those of other hospitals, there are always going to be some instances where the comparison is inappropriate. It is imperative for the pharmacy leader to be able to identify those instances.
    • Ask for fundamental change. The consultants looked for quick and easy purchasing and drug-use changes; neither has a lasting effect. Programs like Antimicrobial Stewardship represent fundamental change and have a lasting impact.
    • Ensure that the scope of the work is well defined up front.
    • Administration should let the consultant know what its expectations are for the final report.
    • Staff should give consultants all information needed and should communicate all processes openly.
    Author bio: 
    Mr. Hicks is Vice-President of Pharmacy and Laboratory Services at The University of Chicago Medicine (formerly known as The University of Chicago Medical Center) in Chicago, Illinois. Dr. McCarthy is Clinical Coordinator of Quality, Outcomes, and Utilization at The University of Chicago Medicine. Mr. Fanikos is Director of Pharmacy Business and Financial Services at Brigham and Women’s Hospital in Boston, Massachusetts. Dr. Emamifar is Associate Administrator of Pharmaceutical Services at Emory University Hospitals and Clinics in Atlanta, Georgia. Dr. Nedved is Pharmacy Services Supervisor at Mayo Clinic in Rochester, Minnesota. Mr. Thompson is Director of Health System Pharmacy Services at Hennepin County Medical Center in Minneapolis, Minnesota. Dr. Bender is Director of Pharmacy Services at Greenville Hospital System in Greenville, South Carolina. Dr. MacMahon is Clinical Coordinator and Residency Program Director at Steward Health System in Norwood, Massachusetts.
    Reference
  • Sanborn M. Working effectively with consultants. Hosp Pharm 2008;43:231–232.234–236.