Consolidated Service Centers (CSCs) centralize many pharmacy services along with the inventory of a health system and capture significant savings through processes such as strategic buys, standardization, and low units of measure distribution, just to name a few. But the most frequently asked question by health systems implementing a CSC is: “How can I compliantly ship medications to my 340B covered entities and make it so they can still utilize their available 340B and GPO accumulations?
It becomes increasingly difficult to distribute drugs from a central location when the health system includes one or more 340B covered entities (CEs). Those of us who have worked in the 340B world understand that this is due to the complex rules and regulations covered entities must abide by along with the associated risks if found non-compliant. It is critical for health systems to tackle this problem because the advantages of a consolidated service center are drastically reduced if they are not able to ship products to their CEs.
For those of you evaluating the options surrounding central distribution and CEs, or for those of you looking to optimize, please allow us to share some of the observations and lessons learned along the way to becoming the leading team in the industry:
Should I just have a separate inventory?
Most who consider maintaining separate inventories quickly recognize space will be an issue. There are also serious concerns that multiple inventories would be more difficult to manage and pose a risk that orders will be picked from the wrong inventory, exposing you to 340B compliance violations. A combined inventory is more optimal.
Can I just purchase everything at my CSC on WAC?
You can purchase all your CSC inventory at WAC both initially and ongoing. The advantage of this approach is that you can compliantly ship to both CE and non-CEs and avoid additional tracking at the CSC. However, purchasing strictly at WAC would significantly increase the cost to the health system, limiting the number of products stocked, services offered, and value of your CSC.
What if I purchased everything at GPO?
You can choose to just have your CSC purchase strictly at GPO. This inventory could be provided to non-CEs and those CEs that are not subject to the GPO prohibition without additional tracking at the CSC. However, CEs subject to the GPO prohibition would only be able to purchase from the CSC if they have GPO accumulations. For any CE to take advantage of their 340B accumulations and purchase at the lowest cost, they would be required to place orders with their wholesaler or another direct vendor, bypassing the CSC. With this option, the CSC would not be the sole supplier of a product which would impact inventory turns and potentially the product dating.
A WAC or GPO based inventory that utilizes the accumulations of the covered entities for replenishment, rather than ignoring them, further reduces overall costs to the health system. Although maintaining a GPO based inventory is clearly the lowest cost, it requires a complex tracking process to maintain compliance. The upside of this approach is that the entire health system can utilize the centralized services and the products stocked at the CSC. CSCs are also able to function as the sole supplier of a product resulting in increased inventory turns, improved product dating, and less waste due to expiration.
Everyone who has started down the path of having a GPO inventory with accumulation-based replenishment ends up developing complex manual processes to maintain the compliance of their several CEs. The highest value is with this approach, but the tracking is tedious and next to impossible to manually manage compliance or the inventory levels at the CSC.
What is the best solution?
Trulla has developed a patent pending procurement solution that enables CSCs to compliantly distribute medications to your CEs while utilizing available 340B and GPO accumulations to maximize their savings. Utilizing a robust 340B compliance engine inside Trulla’s pharmacy procurement software, health systems can maximize savings and ensure compliance when shipping medications from their CSC.
Contact us at email@example.com to schedule a demo and learn more.
Are you considering a pharmacy CSC (consolidated services center) for your health system? This recorded webinar dives into what you need to know when considering a pharmacy CSC. Learn what services you should consider, challenges o watch out for, 340B complexities, licensure, and more!
This webinar is presented by Angela Whitney, RPh and Curtis McEntire, who have been integral in the planning and operations of multiple pharmacy CSC's around the country.
Click here to access the webinar.
There are various reasons to centralize targeted inpatient pharmacy services. Some of the reasons include process standardization, increased efficiency, medication safety, and the ability to capture cost savings for the company. Sterile, non-sterile, and hazardous compounding services typically top the list of services that are often consolidated. Other services that are centralized include packaging, low unit of measure distribution, cart fill, kit processing, medication order entry, contracting, buying, shortage management, and general pharmacy services for clinics within the system.
How do you know what services make sense for your hospital or health system to centralize?
It can be extremely difficult to fully understand the opportunities associated with a centralized service as well as the obstacles that will need to be faced in order to effectively take advantage of the prospect. We have assembled a team of experts, with this need in mind, that have first-hand experience centralizing a variety of pharmacy services. This diverse team can conduct an in-depth analysis of your hospital or health system to identify both improvement and cost savings opportunities. In addition, they can provide guidance on the best implementation strategy. Some hospitals or health systems will best be served by a consolidated service center while it may be most advantageous to use a hub and spoke model at others. With a well-designed business model which leverages the health systems’ investment in automation and highly trained personnel, consolidation will result in quality products and pharmacy services for the patients that are served while saving the company money. If you would like to learn more about what Trulla has to offer, please reach out by sending an email to firstname.lastname@example.org.
Disclaimer: The information provided in this article does not constitute legal advice and should not be construed as such. Readers of this document are encouraged to contact their attorney to obtain advice with respect to any particular legal matter. The views expressed in this document are those of the author and not those of the Trulla LLC. All liability with respect to actions taken or not taken based on the contents of this document are hereby expressly disclaimed. The content in this document is provided “as is;” no representations are made that the content is error-free.