Impact of Trained vs. Non-Trained Pharmacy Purchasing Professionals on Pharmacy Finances

1. Impact of Trained vs. Non-Trained Pharmacy Purchasing Professionals on Pharmacy Finances Richard Ponder, MBA, CPhT, CPP, CEPP, CMRP Pharmacy Supply Chain Supervisor East Jefferson General Hospital, Metairie, LA

2. 1 Introduction 2 3 4 Agenda Current Survey Training Resources 14th Annual NPPA Conference

3. Current Environment • Pharmacy cost continue to exceed inflation and continue to exceed the rate of increase for total healthcare expenditures. • Healthcare reform will drive more supply chain cost cutting. Labor vs. Supplies • Pharmaceutical supply chain executives are looking to maximize their operations in the face of changing legislation, expanding scope and mounting pressure on cost control. • Most hospitals emphasize education for their clinicians; however, many Pharmacy Purchasing Professional do not receive any formal training. • Materials Management/Supply Chain Management Department and Pharmacy address increasing pharmaceutical cost. • GS1 and GLN 14th Annual NPPA Conference

4. Healthcare Supply Chain “Despite well-documented evidence of significant competitive advantage and cost reduction resulting from supply chain management practices, the healthcare industry has been extremely slow to embrace these practices. Barriers include… and limited education on supply chain.” Source: Journal of Supply Chain Management, February 2005 14th Annual NPPA Conference

5. Purchasing Impact to the Bottom Line • Example: Average, private sector, not-for-profit hospital with margins <1% • Objective: Improve bottom line by $500K • Options: • Reduce supply chain expense by $500K • Increase revenue by $50 million Source: HFM Magazine, 2008 14th Annual NPPA Conference

6. Survey • Overview • Participants and Methodology • Who is the Pharmacy Purchasing Professional? • Demographics • Training • Supply Chain Management • Operations • Finances 14th Annual NPPA Conference

7. Demographics - Age 14th Annual NPPA Conference

8. Demographics - Gender 14th Annual NPPA Conference

9. Demographics - Education 14th Annual NPPA Conference

10. Demographics - Licensed *Consultants, Non-Licensed Technician, Non-Pharmacy Staff 14th Annual NPPA Conference

11. Training - Certification *Master in Pharmacy Administration 14th Annual NPPA Conference

12. Training - Formal 14th Annual NPPA Conference

13. Experience – Position Held Immediately Before Becoming A Pharmacy Purchasing Professional 14th Annual NPPA Conference

14. Experience – Years Before Becoming A Pharmacy Purchasing Professional 14th Annual NPPA Conference

15. Experience – Years As A Pharmacy Purchasing Professional 14th Annual NPPA Conference

16. Facility - Size 14th Annual NPPA Conference

17. Facility - Type 14th Annual NPPA Conference

18. Supply Chain Management - Wholesaler 14th Annual NPPA Conference

19. Supply Chain Management - GPO 14th Annual NPPA Conference

20. Supply Chain Management – Inventory Replenishment 14th Annual NPPA Conference

21. Supply Chain Management – Inventory Buffer/Safety Stock 14th Annual NPPA Conference

22. Supply Chain Management – Inventory Reorder Points and Quantities 14th Annual NPPA Conference

23. Supply Chain Management – Inventory Consignment 14th Annual NPPA Conference

24. Supply Chain Management – Technology Automated Low United of Measure 14th Annual NPPA Conference

25. Supply Chain Management – Technology Carousel 14th Annual NPPA Conference

26. Operations - Routinely Meeting with the Pharmacy Director to Review Purchasing 14th Annual NPPA Conference

27. Operations – Routinely Attend and Participate in Manager Meetings 14th Annual NPPA Conference

28. Operations – Routinely Report-Out at Department Meetings 14th Annual NPPA Conference

29. Operations – Attend Management Operational Review or Similar Meetings 14th Annual NPPA Conference

30. Operations – Dual Report *Pharmacy Manager - Operational and Clinical, System Coordinator, Business Operations Manager, Sr. Accountant, COO, SCM 14th Annual NPPA Conference

31. Supply Chain Management Organization Contract Management 14th Annual NPPA Conference

32. Pharmacy Supply Chain Management Model 1 – Traditional Report 14th Annual NPPA Conference

33. Pharmacy Supply Chain Management Model 2 – Direct Report 14th Annual NPPA Conference

34. Pharmacy Supply Chain Management Model 3 – Dual Report Director of Supply Chain 14th Annual NPPA Conference

35. Supply Chain Management – Reports Type 14th Annual NPPA Conference

36. Sample Pharmacy Purchasing Report • Dashboard • Compliance, Penetration, Coverage • Contracts • $ Increased or decreased • XX contracts changed in XX period with XX change in XX period • Spend Analysis • Top Therapeutic Categories • Unbudgeted Drug Expense • Factor • Expense – Reduction Efforts • IV to Po: xx savings • Projects 14th Annual NPPA Conference

37. Supply Chain Management – Report Benchmarking 14th Annual NPPA Conference

38. Finance - FTEs 14th Annual NPPA Conference

39. Finances – Contract Compliance Rate 14th Annual NPPA Conference

40. Finances – Variance in Inventory Value from Previous Year 14th Annual NPPA Conference

41. Finances – Factors Considered When Calculating The Switch Between Two Equal Products 14th Annual NPPA Conference

42. Finances – Inventory is Performed 14th Annual NPPA Conference

43. Finances – Inventory Turn Rate • Mean – 12.426 • Median – 12 • Mode – 11 • Standard Deviation – 4.165 • Minimum – 5 • Maximum – 21 14th Annual NPPA Conference

44. From Non-Trained to Trained • Find a Mentor • Network • Educate Yourself • Make an Impact and Promote the Results • Know Your Skill Set Source: Materials Management in Health Care, 2009 14th Annual NPPA Conference

45. Training – Purchasing Assessment of Skills for Success (PASS) • The PASS program measures purchasing professional’s proficiency in seven key skill dimensions: • Purchasing Fundamentals • Analysis & Spreadsheets • Contract Law • Project Management • Purchasing Best Practices • Sourcing • Negotiation *Next Level Purchasing Benchmarking Program; 475 purchasing professionals from 46 companies 14th Annual NPPA Conference

46. Training – Skills and Knowledge The Center for Advance Procurement and Supply (CAPS) Research of Arizona State University summarized the top skills and knowledge area required for tomorrow. • Skills • Ethics, interpersonal communication, negotiation skills, project and team orientations, and strategic thinking. • Knowledge • Supplier relationship management, total cost analysis, purchasing strategies and plans, and supplier analysis. Source: 92nd Annual ISM Conference, May 2007 14th Annual NPPA Conference

47. Training – APICS – The Association for Operation Management: Supply Chain Competency Model • Foundational • Personal Effectiveness • Academic • Workplace and Leadership • Profession-Related • Operations Management Technical • Supply Chain Manager Knowledge Areas • Supply Chain Manager Technical • Occupation-Related • Supply Chain Manager Specific Requirments Source: APICS Future Leaders, 2009 14th Annual NPPA Conference

48. Training – Pharmacy “Black Hole” • Failure to Supply • Expired Products • Recalls • Borrowing and Loans • Shortages – Secondary Market • Freight • X%net15 – Payment Terms • Waste • Reimbursement • Shrinkage 14th Annual NPPA Conference

49. Resources – Industry Tools • GPO • Broadlane • Broadlane University • Medication Use Management • Premier • 2010 Breakthroughs Conference & Exhibitions • Manufacture • Baxter • Pharmacy Advisor • Cubist • Economics in Infection Management/LOS • Access Manager 14th Annual NPPA Conference

50. Resources – Industry Tools • Wholesaler • Cardinal • Inventory Management Best Practices Reference Guide, Version 1, 2008 • Case Studies • McKesson • Healthcare Supply Chain Management And The Internet • Operationalizing The Event-Driven Supply Chain • Supply Management Online • Pharmacy Optimization Consulting 14th Annual NPPA Conference