It was the year 2012, I had been working in hospital pharmacies for over 22 years and felt like I had done it all. But then I was exposed to a new challenge: manage the pharmacy operations of our health system’s consolidated service center (CSC). We built our CSC with the purpose of better managing inventory, reducing expired medications, taking advantage of strategic purchasing, repackaging, and sterile and non-sterile compounding. Those all had clear value propositions that we had anticipated. The one activity that completely surprised me was providing pharmaceuticals and pharmacy support to our 300+ clinic locations.
Conventionally, clinics receive minimal support and information regarding the medications on formulary, purchasing contracts, suppliers, shortages and management strategies, and the quantities and cost of expired drugs from that location. Often pharmacies within a health system are tasked with supporting the clinics but do not have systems to support this service. Processes are generally developed that minimally meet the need with limited ability to communicate directly with those purchasing pharmaceuticals.
Most clinics receive their pharmaceuticals from the health system’s CSC, a nearby hospital pharmacy, or from a distributor like Henry Schein. Take note that it is typical for a clinic distributor to charge a “cost-plus” model while the hospitals are buying the same medications from their primary distributor in a “cost-minus” model. The swing for clinics to purchase most medications through their hospital pharmacy can be close to 10% in savings!
For clinic orders to a CSC or hospital pharmacy, the orders often arrive via email, fax, or even a paper requisition that may be hand-delivered to the pharmacy. If the department or clinic is to be charged for the products, then a manual process of entering the transaction information (e.g., drugs, quantities, cost) into a spreadsheet or other program for tracking follows. The transaction information is the submitted to finance periodically to initiate journal entries. At the clinic, drugs are received and accounted for via a few different mechanisms varying in formality. Some clinics simply look through the delivery and restock the drugs while others may be required to sign a paper order to indicate the products were received which is returned to the pharmacy. There is plenty of room for things to slip through the cracks with these manual, disjointed processes.
To address the issues described, a health system should consider obtaining a procurement system that will capture cost savings and simplify the ordering and fulfillment processes for their clinics. Finding a solution that addresses both the needs of those procuring pharmaceuticals and those fulfilling the orders can be challenging. Solutions have not historically been aimed at solving this problem. This is one of the reasons we developed Trulla, a pharmacy procurement system built for the entire health system, hospitals, and clinics.
Trulla provides valuable information at the point of ordering simplifying the experience for the individual while standardizing purchasing and concurrently capturing cost savings for their clinic. The solution efficiently guides them to purchase the preferred product from the preferred supplier each time with real-time product selection. The ordering process is the same whether the supplier is a hospital pharmacy, a CSC, a wholesaler, or a manufacturer. Trulla can also present a limited list of drugs to the user…only those that they are authorized to buy for patient safety and efficiency, with the ability to create templates easily for even faster ordering. For fulfillment, the system provides pick lists, shipping manifests, and automatic journal entries with updated pricing. For the clinic staff, the receiving process is effortless and supported electronically to improve tracking and accountability.
Utilizing a simple, efficient, and cost-effective solution to standardize purchasing for clinics will put smiles on the faces of both the clinic and pharmacy staff and will add time to their day!
Angela Whitney, RPh
Angela serves as COO for Trulla. She is a 340B ACE and has worked as a Director of Pharmacy, Manager of Pharmacy Operations at a Consolidated Services Center, and other pharmacy roles within a health system.
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 firstname.lastname@example.org 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 email@example.com.
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.