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Riding out the Economic Storm

Members Use a Variety of Strategies to Overcome Cuts to Staff, Funding

Oct 09, 2009

Scott Knoer, M.S., Pharm.D., pharmacy director of the University of Minnesota Medical Center, Fairview, Minn.

ASHP MEMBERS are using creative tactics to soften the blow from an economic recession that has reduced revenue and forced

layoffs and loss of staff hours in hospital and health-system pharmacies nationwide.

Pharmacy managers have been struggling to make do with lower budgets and Medicaid reimbursements at the same time that the number of uninsured patients under their care is rising.

According to a recent ASHP survey:

• 37 percent of members have had their staffing budgets reduced,

• 10 percent have laid off personnel, and

• 66 percent have been required to reduce their drug budgets.

Creative Approaches

“It’s like the perfect storm,” said Scott Knoer, M.S., Pharm.D., pharmacy director at the University of Minnesota Medical Center at Fairview, referring to the local and national economic conditions that led to layoffs of pharmacists and pharmacy technicians in his department.

Knoer and his staff have found creative ways to keep costs down, especially in the hospital’s overall drug budget. He believes it is important to communicate those savings to the hospital’s administration.

“My drug budget is a lot bigger than my salary budget, so I’m constantly working to find ways to achieve savings for the hospital through better use of drugs, prescribing, and working with physicians,” Knoer said. “Finding all drug cost savings that your pharmacists produce and articulating those savings to your senior administration is very important. You need to communicate that reducing labor is being penny wise and pound foolish, because pharmacists save more in drug costs than in salaries.”

For example, the pharmacy discourages the use of intravenous (I.V.) medications with short expiration dates, which would have to be thrown out if not used in time. And Knoer makes sure workloads are evenly distributed among pharmacists to increase efficiency. More than ever, pharmacists stress to physicians the important cost savings in prescribing formulary medications.

To avoid laying off any more pharmacists, Knoer reduced the hours of five new pharmacists. “Now, they all work four days instead of five,” he said. “That way, they can keep working and maintain their health insurance coverage.”

Knoer sees a silver lining in the recession in that staff members are staying put in their positions. “We’re not having the turnover we might have had in a good economy,” he said.

Therapeutic Equivalents

Even though Beaumont Hospital in Royal Oak, Michigan, hasn’t lost pharmacy staff to layoffs, it’s still feeling the fallout from the diminishing fortunes of the auto industry.

Kathy Pawlicki, M.S., FASHP, director of Beaumont’s pharmaceutical services, also turned to the drug budget to help reduce expenses. “We look for alternative drugs, therapeutically equivalent, at a better cost,” she said. “We have found some significant savings in wound care products.”

Pawlicki said her staff also uncovered savings by making different operating room product choices. “For example, instead of providing medication with a combination product, we are providing individual components at a lower cost,” she said. “We also consider whether patients can take medication orally rather than through I.V.”

Pawlicki advises pharmacy leaders to engage their staff members in uncovering potential savings. “Your staff sometimes knows where waste is occurring. We discovered unused syringes were being discarded in the operating room,” she said. “You need to get more and more people involved. They look under rocks and behind corners, and they have a lot of great ideas.”

Staying Ahead of the Curve

The pharmacy department at Silver Cross Hospital in Joliet, Illinois, has likewise implemented cost-cutting measures to avoid staffing layoffs.

Kathy Pawlicki, M.S., FASHP, director of pharmaceutical services at Beaumont Hospital in Royal Oak, Mich.

Because the hospital’s daily patient population declined 8 percent over the past year, officials decided not to fill an open technician position. Pharmacy director Frank Butler, Pharm.D., BCPS, acknowledges that other pharmacies are facing more hardships than his has. Yet he continues to look for small ways to shave costs and keep larger financial troubles at bay.

“One thing we’re doing is encouraging staff to use paid time off. It takes expenses out of the books,” Butler said. “If it’s a slow night at the pharmacy, the pharmacists can decide to let other staff members leave early. And we’ve been working real hard to get folks out of here on time so that there is no incremental overtime.”

Butler advises other pharmacies to always keep an eye out for ways to cut costs.

“Make sure you watch for savings opportunities, even if there is no crisis in your hospital,” he said. “You definitely want to stay ahead of the curve.”

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