Centralized Services Centers have been implemented or are being considered by numerous health systems to improve efficiency, reduce medication errors, and for the potential cost savings that can be captured. However, inventory management is extremely challenging when the Centralized Services Center (CSC) provides medications to both non-covered and covered entities (CEs). Ensure that the inventory management model selected does not expose the CEs to a GPO prohibition violation if they are required to comply with this requirement.
For example, some health systems have centralized the sterile compounding of products such as TPN and various antibiotics. If any of these products are administered to covered outpatients and purchased on GPO by the CSC, the CE could be at risk for a GPO prohibition violation unless a strategy is in place to prevent this from happening. The 2013 HRSA 340B Drug Pricing Program Notice Release No. 2013-1, Statutory Prohibition on Group Purchasing Organization Participation states, “Organizations that are not part of the 340B covered entity are not subject to the GPO prohibition; however, the 340B covered entity is still prohibited from having organizations purchase covered outpatient drugs through a GPO on its behalf or otherwise receive covered outpatient drugs purchased through a GPO.”
One of several strategies to consider is to place these compounded products on a non-covered outpatient drug list. With this approach, they can be excluded from the 340B program and will not be subject to the GPO prohibition. The downside to this approach is that the individual ingredients cannot be purchased on 340B which could result in lost savings. If your health systems needs help determining a compliant approach, you can find a team of experts at Trulla (www.trullarx.com) or reach out to them directly by emailing firstname.lastname@example.org.
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.
In today’s environment, creating Centralized Service Centers (CSCs) to standardize medication processes, increase efficiency, improve safety, and to save money is quickly becoming a reality for many health systems. Centralized packaging, sterile and non-sterile compounding, and targeted purchasing allows the individual sites in a health system to order EXACTLY what they need instead of being forced to order the pack size available from the manufacturer. These services reduce the workload at the sites, the medication outdates and waste, along with the cost associated with each of these activities. Highly trained individuals that are working in an environment free from interruptions reduces errors and improves medication safety. It is easy to see why this is appealing to health systems as these CSCs have the ability to serve several inpatient pharmacies and outpatient clinics simultaneously.
Since this industry is moving so quickly in this direction, it is easy to forget that centralizing the services that involve controlled substances can be tricky and must be managed carefully. Remember, that the five percent rule remains in effect for CSCs that are registered as a hospital/clinic with the Drug Enforcement Administration (DEA). What this means is that the total number of dosage units of all controlled substances distributed by a pharmacy may not exceed five percent of all controlled substances dispensed by the pharmacy during a calendar year. If at any time the controlled substances distributed exceed five percent, the pharmacy is required to register as a distributor.
In addition, if the controlled substances are manipulated, such as being repackaged or used in compounding, the pharmacy may also need to register as a manufacturer. To add to this burden, distributors and manufacturers have additional record keeping and reporting requirements when compared to a pharmacy.
Remember, it is critical to have the correct DEA registrations in place BEFORE providing centralized services that involve controlled substances! If your health system needs experts to evaluate the activities of their CSC or to analyze their controlled substance compliance, please email firstname.lastname@example.org.
With the grouping of hospitals into health-systems, we are seeing more and more central distribution centers being created to leverage the purchasing power of the group. However, there are many options for what services can be provided, and some are more beneficial than others. It is a case of good, better, or best decisions, and of course there are just some bad decisions. Our team has hands on experience in planning, creating, managing, and leveraging these processes, and we can share this experience with you to ensure you are maximizing your savings sooner than later.
Disclaimer: The information provided in this blog does not constitute legal advice and should not be construed as such. Readers of this document should 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.