Matthew McGuire, PharmD, manager of pharmacy supply chain and automation at University Hospitals Health System, based in Shaker Heights, Ohio, likes to put the problems he encounters in the intricacies of pharmacy supply chain management like this.
AN ISSUE
A routine trip to the grocery store reflects the challenges you face in navigating the multitude of options, weighing the value of generic alternatives versus brand loyalty, and dealing with fluctuations in availability and rising costs.
“As a pharmacist specializing in supply chain management, one of the most fulfilling aspects of my role is contributing to the delivery of superior patient care,” said McGuire. “However, this comes with its own set of challenges, including mitigating drug shortages, maintaining supply chain integrity and managing costs.
“In contrast, unlike grocery shopping, the pharmacy supply chain operates within the healthcare framework and cannot seamlessly follow a simple supply and demand model,” he noted. “While a customer could easily substitute one item for another due to preference or unavailability, the interdependent nature of medically necessary drugs often leaves little room for alternatives.”
Ensuring the availability of these key products is paramount to meeting patients’ medical needs and initiating effective care, he added.
“A comprehensive understanding of purchasing patterns is paramount to making informed decisions, particularly during periods of drug shortages or when faced with costly decisions,” he said. “By deeply studying buying patterns, invaluable insight can be gained that serves as a foundation for strategic decision-making.
“Traditionally, the primary method for quickly accessing such buying patterns has been through internally developed dashboards,” he continued. “However, while this approach has been beneficial, it has proven time-consuming to maintain, particularly given the complexity associated with procurement within larger integrated delivery networks.”
PROPOSAL
McGuire and his team turned to vendor QuicksortRx for help. Its platform evaluates real-time drug pricing, availability and purchasing trends across multiple facilities and their many account classes – group purchasing organization contracted pricing, 340B program pricing, and wholesale procurement costs.
“The proposal presented by the supplier aimed to revolutionize the evaluation process for pharmacy procurement by introducing an innovative real-time tool designed to solve the challenges commonly encountered in pharmacy supply chain management,” McGuire explained.
“At its core, the vendor sought to provide a solution that not only streamlines procurement operations, but also offers an unbiased and unified view of procurement data, thereby improving decision-making processes for pharmacy supply chain teams.
“The essence of the supplier’s offering lies in its ability to simplify complex procurement reviews by offering a user-friendly software interface,” he continued. “Using real-time data analytics, the software enables pharma professionals to easily identify and implement strategies that optimize procurement practices.”
This includes the immediate identification of contract changes, enabling teams to promptly assess when better pricing options become available or when contracts have been loaded incorrectly. Such functionality ensures that pharmacies can take advantage of cost-saving opportunities without delay, which ultimately leads to efficiency and cost-effectiveness in procurement operations, McGuire said.
“Furthermore, QuicksortRx’s proposition goes beyond basic procurement estimation functionality by providing comprehensive visibility into purchasing activity across multiple accounts,” he continued. “This feature allows the pharmacy supply chain team to gain a holistic understanding of their supply landscape.
“The vendor’s innovative spend analytics functionality presents a complete picture of the pharmacy within seconds, enabling teams to effortlessly identify trends, patterns and areas for improvement,” he said.
“In principle, the proposal represents a paradigm shift in pharmacy procurement by offering a sophisticated yet intuitive solution that empowers pharmacy supply chain teams to work smarter, not harder.”
MEETING THE CHALLENGE
Real-time drug information technology has transformed the university hospital health system’s procurement process by providing quick and transparent access to aggregated data, McGuire explained.
“This platform helps us skillfully address the challenges of drug shortages and overuse by providing insights and analytics that were previously unavailable in such a timely manner,” he said. “In our procurement team, the platform has become an essential tool for tracking and managing our procurement activities.
“The platform allows us to analyze real-time and historical purchasing patterns, enabling us to make informed decisions regarding procurement strategies,” he continued. “By providing insight into contract changes and price variances, the platform helps us identify daily opportunities for cost savings and optimization.”
One of the platform’s most influential features is tracking savings rates and swap overspending, he added.
“This tool allows us to quantify the benefits of switching products and track the savings over time,” he said. “By monitoring the quality of replacements on a daily basis, we are able to continuously assess the effectiveness of our procurement decisions and adjust our strategies accordingly.
“Additionally, the overspend rate dashboard provides insight into procurement anomalies and mismatched contracts, allowing us to take corrective action and prevent unnecessary expenditures,” McGuire said.
“The platform is used by our procurement team, including buyers and managers responsible for overseeing procurement activities,” he continued. “In its current state, the platform communicates directly with wholesalers to collect and process data, in addition to gathering other key details from stakeholders such as the American Society of Health-System Pharmacists.”
THE RESULTS
The implementation of real-time monitoring through the platform has produced significant hard results for the university hospital health system, primarily evidenced by sustainable seven-figure savings year after year.
“This achievement stems from several key areas enabled by the platform,” McGuire reported. “First, the ability to identify and execute desired product substitutions has led to significant cost savings. Using real-time data on purchasing patterns and market insights, we can identify opportunities for more cost-effective alternatives without compromising quality or patient care.
“Second, the platform’s ability to identify contract inconsistencies was critical in correcting pricing inconsistencies and ensuring compliance with contractual terms,” he continued. “This feature has helped us avoid unnecessary expenses and increase the value of our contracts. In addition, using QuicksortRx to identify, implement and track local contract savings has further contributed to our financial success by streamlining the tracking process behind optimized contract utilization.”
The market insights provided by the platform have allowed the health system to maintain flexible thinking and nimble action, especially as it maneuvers through a period of unprecedented drug shortages and supply disruptions, he added.
“By providing real-time data on supply failure rates and system-level utilization, the platform allows us to quickly assess the effects of shortages and design mitigation strategies,” he said. “This capability not only increases our ability to maintain continuity of care for patients, but also mitigates the financial risks associated with shortages.
“The active drug shortage monitoring tool combined with market share analysis tools has modernized our approach to shortage management by providing actionable insights and reducing sensitivity to supply fluctuations,” he continued.
In terms of cost avoidance and savings, the platform has produced tangible results with significant returns.
“It’s a platform robust analytics and tracking capabilities allowed us to accurately quantify savings and cost avoidance measures,” he reported. “By correcting inconsistencies in contracts and optimizing procurement strategies based on real-time data, we achieved significant savings year after year.
“The platform’s proven track record for health systems, along with our own experiences in delivering significant savings, underscore its effectiveness in driving financial management and operational efficiency,” he added.
ADVICE FOR OTHERS
For healthcare organizations considering implementing similar procurement technology, McGuire offered his colleagues some key advice to consider, regardless of the specific vendor.
“First, recognize that the adoption of procurement software represents a fundamental change in the way inventory procurement is managed,” he advised. “These automated platforms mark a key evolution in purchasing practices, moving away from manual processes to more efficient, data-driven solutions.
“The significant hard savings achieved through these platforms underscore the need for such technology in modern supply chain management,” he added.
Second, when evaluating potential procurement software, it’s critical to evaluate the relationship with the vendor, he continued.
“Look for a supplier that prioritizes partnership and collaboration, offering ongoing support and guidance,” he said. “A strengthened relationship with the vendor encourages a more seamless integration of the platform into your organization’s workflow and encourages proactive problem solving.
“Look for transparency and open communication in your partnership with platform developers,” he added. “Regular touchpoints and collaboration with vendor experts enable the platform’s features to be continually optimized and improved to better align with your organization’s needs and goals. By fostering collaborative partnerships, you can maximize the value and impact of procurement technology within your healthcare organization.”
Additionally, consider the level of empowerment staff will have in using the platform, he said.
“The user-friendly interface and intuitive features empower your team to take advantage of the software, realizing cost savings and improving inventory management practices,” he advised. “Ensuring that the platform provides the necessary tools and resources for your staff to take ownership of the procurement process will maximize its benefits.
“Finally, and probably most important to an individual’s success, emphasize the importance of standardized implementation processes and the active engagement of your team,” he concluded.
“Establishing a strong core team and implementing standardized procedures ensures consistency in procurement operations. Drive a ‘more with more’ mentality, where the combined efforts of your team contribute to delivering greater value from the platform.”
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