Countless hospitals are successfully managing medical/surgical supplies enterprise-wide through integrated and automated supply chain management (SCM) solutions. So why are most still using a patchwork of disjointed systems to handle drug inventory?
In my nearly 20 years of serving as a hospital pharmacist and consultant, I have seen first-hand the time and labor pharmacy teams spend on supply procurement and management. In speaking with pharmacy leaders, many still believe in common supply chain myths on why the hospital pharmaceutical supply chain can’t follow the same digital transformation path as the medical/surgical supply chain.
Here are five of the top hospital pharmacy supply chain myths I have heard and how to overcome them with today’s SCM technology.
Pharmacy Supply Chain Myth #1: The pharmaceutical supply chain is unique
Yes, drug products are strictly regulated, and hospitals must comply with numerous requirements that don’t apply to medical/surgical supplies: the Drug Supply Chain Security Act (DSCSA) enhanced drug distribution security requirements, medication management standards with The Joint Commission (TJC), U.S. Pharmacopeial Convention (USP) requirements for sterile and non-sterile compounding, drug diversion with the U.S. Drug Enforcement Administration (DEA), the federal government’s 340B drug discount pricing program, etc.
But that doesn’t mean pharmaceuticals must be managed in a silo.
An enterprise-wide, electronic and automated SCM solution can serve as the foundation for compliance with these requirements. With integration into standalone systems (e.g., electronic resource planning (ERP) system, drug inventory management technologies), a hospital can use the SCM solution to centralize purchasing, receipt, tracking, management, transfer, sales, movement to satellite locations, and consumption of pharmaceutical supplies alongside its medical/surgical supplies.
Pharmacy Supply Chain Myth #2: I can use my EHR system to manage drug inventory
Because pharmaceutical dispensing and storage software is integrated with the hospital’s electronic health record (EHR) system, pharmacy teams believe the EHR can be used for drug inventory management. But the EHR only houses data on drugs that were scanned in and out of these point solutions, and not the full inventory of pharmaceuticals that reside outside of them (e.g., in other storage locations, on shelves, etc.).
Furthermore, when pharmacy staff want to run a report on drug inventory housed-in solutions integrated with the EHR system, at most they can only access one week’s worth of transactions at a time. The EHR is not capable of quickly providing real-time inventory data or drug consumption and cost trends over a period of months or years. It is this bigger picture information — and not an isolated snapshot — that pharmacy leaders need to make strategic decisions on drug purchasing and inventory management.
On the other hand, an SCM platform that is integrated with the EHR and the pharmacy’s inventory management point solutions, serves as a single repository for all drug supply data. And with the application of advanced analytics, it can provide pharmacy leaders with real-time, actionable insights across all facilities and storage locations.
Pharmacy Supply Chain Myth #3: I can use my ERP system to manage drug inventory
There is also the belief that a hospital’s ERP system houses data on all its drug products, which can be used to guide inventory management decisions. Even if a hospital pharmacy procures most supplies from a wholesaler, they still rely on additional third parties (e.g., manufacturers, distributors) for other drug products. This means that while purchases from the wholesaler are transacted through the ERP system, it is still missing data on items procured outside of it without going into the wholesaler or distributor system to run canned or specialized reports.
Additionally, the ERP only contains drug product procurement information and not data on what happened to that drug once it arrived at the facility. Pharmacy and supply chain staff can’t use it to track products from receipt through use. Instead, they must rely on point solutions that lack integration with the ERP.
Again, an SCM platform that is integrated with the ERP, EHR and point solutions provides that full level of visibility and control to all pharmaceutical products throughout the hospital’s supply chain.
Pharmacy Supply Chain Myth #4: I need a huge team of writers to generate reports
During a session at the American Society of Health-System Pharmacists (ASHP) Midyear Clinical Meeting and Exhibition held December 4-8, 2022, in Las Vegas, one health system pharmacy described how they have built a five-person team dedicated to generating analytics. This was done to eliminate the long wait times they experienced when requesting reports from the hospital’s IT department.
When a pharmacy relies on disjointed systems housing silos of data, the process of compiling, normalizing and analyzing the information is largely manual. It is no surprise that a pharmacy would build a team to get it done faster. But in today’s environment of digital technologies and data, it just doesn’t make sense from a staffing or financial perspective to approach supply management this way.
Pharmaceutical supply reporting can be automated through an integrated SCM platform that serves as a single source of truth for drug purchasing, tracking and usage data. With all the data in one place, and the application of analytics, a pharmacy team has actionable insights at their fingertips.
Pharmacy Supply Chain Myth #5: I’m staying within my supply budget so there is no need to change
In many health systems and hospitals, the C-suite may allow its pharmacy team to operate outside of the purview of the central supply chain if they stay within budget, and clinicians and patients have the drugs that they need. But with rising drug costs and shrinking revenues, healthcare supply chain leaders are turning a more critical eye on their pharmaceutical spend.
Without visibility into how their choices impact the bottom line, pharmacy leaders may be losing money on their supply decisions. For example, perhaps they made the decision to outsource drug compounding at some point in the past because of a barrier to performing it in-house but that barrier no longer exists. Without analytics to assess the cost of outsourcing versus compounding in-house, the pharmacy could be throwing money out the window.
With an SCM platform delivering analytics on suppliers, supplies and their costs, a pharmacy leader can easily and quickly perform due diligence to determine the most cost-effective way to get drugs to their patients.
Pharmacy Supply Chain Myths: Busted
Hospitals that have made the move to a single, enterprise-wide supply chain strategy that encompasses all products, including pharmaceuticals, are maximizing staff and supply resources by increasing efficiency and reducing waste.