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    The Rise of the Consolidated Pharmacy Service Center

    Posted by: Valerie Bandy | November 14, 2023

    Consolidated Pharmacy Service Center

    Hospital pharmacy work has grown increasingly challenging over the decades. It’s a far cry from the days of pulling something off the shelf, sticking a label on it and dispensing it to a patient.  

    The responsibilities of pharmacy staff members keep expanding – from managing the complexities of 340B drug discount pricing to electronic tracing of drug products in compliance with the Drug Supply Chain Security Act (DSCSA) – all at a time when there’s a severe shortage of pharmacy technicians.

    Increased merger and acquisition (M&A) activity among healthcare organizations is adding an additional layer of complexity as pharmacy teams attempt to integrate disparate formularies, systems, processes and data – on top of their day-to-day tasks.

    This has led to a new era of pharmacy supply chain management – the rise of the consolidated pharmacy service center (CPSC), where operational, clinical and regulatory processes are centralized in one place using a robust supply chain or warehouse management solution.

    A consolidated pharmacy service center presents the opportunity for a healthcare organization to standardize and streamline all components of drug procurement, preparation, management, storage, replenishment, documentation, dispensing, analytics and reporting through automation in a digital environment that extends all the way to the point of use.  

    But pharmacy is different… 

    The medical/surgical supply chain pioneered the consolidated service center (CSC) approach and has long reaped the benefits of greater efficiency, lower costs and enhanced patient care delivery. Recognizing this success, healthcare organizations are now applying these methodologies, technologies and best practices to their drug inventory assets and workflows.  

    As a licensed and registered pharmacist with 25 years’ experience, I understand what comes into the mind of a hospital pharmacy leader when reading this – the drug supply chain differs greatly from the medical/surgical supply chain. And that’s true.

    Most drug products dispensed in the health system or hospital setting must undergo a series of preparatory steps before they reach the patient (e.g., mixing, compounding, repackaging, kitting). Many have temperature and/or humidity control requirements. Then there are the vast requirements for storage, tracking, tracing, administering, documenting and reporting.  

    But I would argue, the pharmacy and medical/surgical supply chains share many of the same core processes, challenges and goals. The consolidated pharmacy service center is not a cut and paste of the medical/surgical CSC approach, but rather, the application of the same best practices for warehouse and SCM with adjustments for the regulatory and workflow needs of pharmacy. 

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    5 benefits of pharmacy supply chain centralization and automation  

    When a healthcare organization approaches CPSC design and implementation by applying proven best practices in supply chain centralization and automation within the context of the unique aspects of drugs and their management, the benefits are impactful: 

    1. Compliance: Automate capture and tracking of lot numbers, expiration dates and full product pedigree to support compliance with the DSCSA, The Joint Commission (TJC) medication management standards, National Association of Boards of Pharmacy (NABP) and state boards of pharmacy, U.S. Pharmacopeial Convention (USP) sterile and non-sterile compounding requirements, 340B, and U.S. Drug Enforcement Administration (DEA) drug diversion regulations, as well as expired and recalled medication management.   

    2. Pricing: Improve management of medication pricing and contracting through real-time updates with forecasting and demand planning based on integrated storage areas and procurement and dispending date.  

    3. Productivity: Maximize pharmacy staff labor resources by centralizing and streamlining pharmacy services within the CPSC, such as purchasing, repackaging, kit and tray replenishment, medication and inventory management, specialty and mail orders, medication therapy and clinical patient management, EMS servicing, nuclear medicine, automated dispending machine (ADM) replenishment, deliveries to owned and non-owned facilities, and sterile and non-sterile compounding. 

    4. Control and cost savings: Gain real-time visibility into and control over drug inventory (e.g., medications in transit, stored in automated dispensing technologies, in storage rooms, in clinical departments, satellite pharmacies, outpatient areas, etc.); reduce inventory carrying costs and the waste/cost from expired medications by increasing stock turns (e.g., transfer and rebalance inventory).  

    5. Patient care and safety: Supply clinicians and their patients the drug products they need when they need them efficiently and safely; mitigate the risk of dispensing expired or recalled medications to patients; quickly identify, locate, transfer and remove recalled drugs from your supply chain.  

    Where to start 

    Consider the assessment, design and implementation of a consolidated pharmacy service center in an existing, planned or future warehouse space dedicated to centralized pharmacy services and purchasing. In my experience, pharmacy leaders have different approaches depending upon the maturity of their healthcare organizations’ overall supply chains.

    If your health system or hospital’s medical/surgical supply chain has an established CSC and is deriving value from this investment, you likely have the infrastructure in place to support the pharmacy’s transition. I suggest you take some time to speak with your medical/surgical supply chain counterparts, understand where there are similarities – and differences – in processes and determine what it takes to bridge any gaps.  

    On the other hand, if your medical/surgical supply chain does not have a CSC in place, the conversation and starting point will be different. Perhaps it’s a jumping off point to determine how both sides of the healthcare supply chain can collaboratively centralize, standardize and streamline processes through a joint CSC initiative.  

    If you face questions or resistance along the way, be sure to check out my recent blog post, 5 Hospital Pharmacy Supply Chain Myths Dispelled, where I describe five of the top hospital pharmacy supply chain myths I have heard and offer advice on how to overcome them. 

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