New Data Shows Many Health System Pharmacies Considering Consolidated Distribution Models to Address Medication Management Challenges

Forty-eight percent of health system pharmacies are considering centralized distribution at a consolidated service center.

13. November 2018

Hospital pharmacies face substantial pressure to shoulder cost-reduction measures while maintaining exceptional service levels. This pressure is compounded by a variety of operational issues, including rising drug costs, increased regulatory oversight and drug shortage management.

To address these challenges, leadership at progressive health systems recognize a need to create “systemness” by streamlining processes, driving standardization and enhancing visibility across sites. One viable solution gaining momentum is the centralization of pharmacy operations within a consolidated service center (CSC).

A market leader in medication supply chain management, Swisslog Healthcare embarked on a mission to better understand the adoption of consolidated distribution strategies for pharmacy operations. Working with Visante, Inc. in July of this year, Swisslog Healthcare surveyed pharmacy leaders from across the United States, receiving market feedback from 31 distinct health systems.

The survey revealed 13 percent of respondents currently operate a CSC and 48 percent are actively considering developing a CSC to improve inventory management and streamline procurement.

“At the heart of a consolidated service center is a commitment to minimizing unsubstantiated variation and leveraging economies of scale,” explains Beth Riggio, Director of Solutions Management, Pharmacy Automation, at Swisslog Healthcare. “The continued growth of integrated delivery networks is creating a greater need for control and coordination that can be achieved through centralizing supply chain and shared services.”

One of the primary questions surrounding the decision to implement a CSC is determining what operations to centralize. The research revealed that centrally replenishing Automated Dispensing Cabinets (ADCs) on patient floors and sterile compounding are the operations most commonly implemented by pharmacy at existing Consolidated Service Centers.

To support these activities, IDNs have invested in pharmacy automation, including high adoption of carousel or robotic storage, pharmacy analytics and inventory management software. However, to fully answer the question of what to centralize at a CSC, a thorough business case is required.

“Although the business case for building a CSC contains multiple variables, aggregating purchasing volumes and reducing inventory overhead are shown to be the largest contributors to cost savings,” reveals Riggio. “On average, pharmacies utilizing a CSC model saw a 23 percent inventory reduction as well as a 15 percent reduction in expired medications.”

In addition to medication supply chain efficiency, a consolidated service center enables health systems to better serve their internal and external customers through consistent drug availability and reallocation of resources to patient-facing activities.

Pharmacy professionals interested in learning more about consolidated pharmacy distribution are encouraged to meet with a member of the Swisslog Healthcare team at the ASHP Midyear Clinical Meeting & Exposition December 3-6 in Anaheim, CA.

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