Wednesday, April 9, 2014

9:22 AM

Simon professors examine pharmacy processes and discover a solution to reducing waste.

Photo: University of Rochester
A Simon Business School case study of production practices at Strong Memorial Hospital reveals the potential to save millions in production costs at hospital pharmacies across the nation.

Two years ago, professor Vera Tilson advised a team of Simon graduate students, including Strong pharmacist Andrew Smith, who were helping pharmacy managers figure out how to reduce waste in medication processing. With Curtis Haas, director of the pharmacy at the University of Rochester Medical Center (URMC), Tilson and professors David Tilson and Gregory Dobson used math modeling to examine the pharmacy’s operation.

Their paper, “Quantitative Case Study: Use of Pharmacy Patient Information Systems to Improve Operational Efficiency,” details the results.

“They were able to take our existing process and analyze it from the perspective of the percent of orders canceled, and how much waste is generated currently,” Haas says. “Using some rather simple math modeling, they showed us different scenarios to follow to revise the process, and what anticipated benefits and detriments of various scenarios might be.”

Preparing and dispensing compounded sterile products, or CSPs, one at a time would be inefficient, so they are typically produced in batches. But batch production brings potential waste; an order can be canceled after the dose already has been prepared. Dispensed doses that haven’t been administered in most cases cannot be recycled. The logistics of collecting unneeded doses is complex, and many of the CSPs have short expiration dates. The medicine has to be thrown out.

The study’s authors found that on average, 500 medication doses were prepared daily. Of those, 20 percent had been scheduled for administration after the order cancellation times. The estimated annual waste was $365,000.

Before the study, URMC pharmacy managers were considering increasing the number of batches produced each day from one to three to reduce the number of dose cancellations. However, the study showed Haas there was little efficiency to be gained from it. The higher labor costs associated with additional medication deliveries would outweigh any reduction in product waste.

Most changes in pharmacy operations are evaluated by collecting and counting wasted medication before and after implementing a process change, the authors write. Not only is this laborious, it also doesn’t provide enough information to set realistic objectives based on fact before the change is implemented.

The mathematical modeling allows for variations in batch size, scheduling, robotic versus manual production rates, and other factors—all before any changes take place.

“It’s a great tool that we will definitely be using as we move forward,” Haas says. “It’s a new way of thinking for us. Pharmacy departments are run by pharmacists. Not all of us have that business training and background.”

There are roughly 5,000 hospitals in the United States, Vera Tilson says. About 800 of them are
similar in size to Strong at the URMC. Some hospitals produce six or seven batches of medication
every day.

Due to regulations requiring data on the preparation and administration of medication, in-hospital pharmacies have data that might be used to learn from improvement efforts in other industries, the authors write.

Using simple mathematical modeling for CSP inventory, individual hospitals could realize tremendous savings, Tilson says. And if implemented nationally, relatively small process changes have the potential to save hospital pharmacy departments tens of millions of dollars every year.

According to Haas, the URMC will work with Simon again when it moves into a new cleanroom facility and larger main pharmacy in early 2014.


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