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HEALTHCARE YANAOEYENT FORUM OESTION DES SOINS DE SANTC - In Pursuit of More Effective Pharmacies Dear Editor: The article by Z. Uddin and R.A. Bear, entitled “Public- Private Partnerships in the Canadian Environment: Options for Hospital Pharmacies” (Winter 1997, Vol. 10, No. 4), presents an interesting analysis of possible opportunities for public-private partnerships in hospital pharmacies. As institutions struggle to maintain and improve the quality of patient care in the face of significant funding cutbacks, health care leaders must examine all options to improve processes and reduce costs. However, many of the approaches outlined in this article require additional study to confirm that the theoretical advantages are achievable. Like many other institutions, the Queen Elizabeth I1 Health Sciences Centre has embarked on redesign projects in several areas, including supply chain management. The pharmacy com- ponent of the supply chain initiative was conducted in coopera- tion with the Nova Scotia Provincial Drug Purchasing and Distribution Program, a provincially funded operation that man- ages purchasing, warehousing and distribution of pharmaceuti- cals for all hospitals in the province of Nova Scotia. Following a detailed review of the proposals received in response to our call for expressions of interest, we concluded that the greatest saving would be achieved by improving processes and upgrading tech- nology in the existing operations. Our analysis indicated that outsourcing of the supply chain component of pharmacy services would actually have resulted in increased costs, largely due to vendor upcharges based on percentage of drug sales. Hospitals attempting to improve the quality and efficiency of pharmacy services should first ensure that they have fully inves- tigated well-established systems that have had proven successes in the Canadian environment. For example, unit dose and intra- venous admixture programs have been clearly demonstrated to enhance patient safety, reduce drug costs, improve inventory management and reduce the percentage of time that nurses spend in medication-related activities. However, data from the 1996-97 Annual Report Hospital Pharmacy in Canada’ suggest that many hospitals have not yet realized the potential benefits of these sys- tems, since the percentage of survey respondents reporting pro- vision of unit dose services and intravenous admixture services was 45 percent and 71 percent respectively. The report data on inventory management illustrate another potential area of opportunity. The average reported drug inventory turnover rate (calculated by dividing total drug expenditures for the year by the total inventory maintained on hand) was 8.1, with a range from three to 21.8. Hospitals on the low end of the scale for inventory turnover rate have an opportunity to reduce costs by reducing inventory. For example, if a hospital with annual drug costs of $3 million could increase the inventory turnover rate from six to 20, a reduction of inventory on hand from $500,000 to $150,000 could be achieved. This would provide a one-time cash flow improvement of $350,000, and would also reduce inventory carrying costs by over $20,000 annually (based on a six percent interest rate). Our analysis at the QEII HSC suggests that it is possible to achieve such improvements in inventory management by initiating improvements in existing operations. This should be considered before moving to the more controversial approach of outsourcing. Some additional improvements that have been successful at the Queen Elizabeth II Health Sciences Centre and in other insti- tutions include centralization of oral and parented packaging and compounding functions, automation of the total parented nutrition compounding process, enhancement of the role of the pharmacy technician, expansion of clinical pharmacy programs and implementation of drug utilization programs. Although there are many theoretical advantages to public pri- vate partnerships in hospital pharmacy, additional experience in the Canadian environment is required. These partnerships are worthy of further investigation, but hospitals would be well advised to weigh risks versus benefits carefully before embark- ing on such ventures, and to evaluate all new programs thor- oughly to determine their effectiveness. Bonnie scrlsnran, Director of Pharmacy Queen Elizabeth I1 Health Sciences Centre and Chairperson, Government and Health Policy Planning Committee Canadian Society of Hospital Pharmacists Reference 1. Eli Lily Canada Inc. Hospital Pharmacy in Canada. Annual Report. 1996-97. SUYYER 1888, VOL. 11, NO. 2 LTC 1888, VOL. 11, NO. 2
