Parkview Health reviews formulary process, saves millions in non-labor costs amidst rising cost of drugs
For Parkview Health — a health system with a system-level formulary — their process involved evaluating more than 50 drug or drug classes in their formulary, determining where costs could be cut and analyzing the clinical viability of doing so. It garnered $8.2 million in non-labor cost savings and cost avoidance — an effort that both improved patient safety and boosted margins.
A formulary review initiative and ongoing formulary management is critical to any healthcare organization's financial success.
On the inpatient side, formulary review can help maximize savings opportunities and even insulate against drug shortages. On the outpatient side, strong formulary management drives overall net hospital revenues.
When managed correctly, healthcare systems can recognize the ultimate trifecta of improved patient outcomes.
Through the integration of data-driven analytics and collaboration with healthcare providers across the system's network of 14 hospitals, the initiative identified areas for improvement and implemented evidence-based interventions. They monitored outcomes including elevating standards of care, maximizing cost savings and driving sustainable margin enhancement. They asked questions like:
- Will it improve patient care?
- Is it clinically relevant?
- Is it evidence-based?
- Will it decrease the cost of care or will it improve margins?
They then reviewed the proposal and brought it to their pharmacy stakeholders before implementing the more than 100 strategic initiaitves.
"The cost of healthcare is very high throughout the country, so continuing to provide the best care for our patients at the best price is what we're always looking to do," said Abby Todt, pharmacy director at Parkview Health.
By standardizing processes, negotiating favorable contracts with suppliers and implementing evidence-based prescribing guidelines, the system achieved significant reductions in pharmaceutical expenditures while maintaining the highest standards of patient care.
"We were never cutting corners or picking the cheapest product — patient care always came first," said Robert Beckett, clinical standard coordinator at Parkview Health, who monitors the high-cost drug dashboard and helped conduct the formulary reviews and analyses. "We only made adjustments where the outcome to patient care was either neutral or would improve while saving costs at the same time."
For instance, when data analysis revealed patients were often prescribed high doses of NovoSeven®, not for its labeled use in hemophilia but for major bleeding in cardiovascular surgery, they provided physician education, adjusted default dosing options in the electronic medical record and limited availability to lower strength product presentations.
The team additionally monitored high-cost drugs on the inpatient side by utilizing the Vizient Clinical Data Base and benchmarking. Parkview Health identified high usage of intravenous acetaminophen compared to similar institutions. This led to a pharmacy resident project that evaluated the reasons why, emphasized adherence to internal restriction criteria and identified opportunities for optimization. They utilized the data to determine how best to adjust the system's usage of the drug.
"It was an ongoing, comprehensive approach that required a lot of work on the front end to make sure the initiatives would be carried out throughout the entire system," Todt said. "We were able to build on the strong relationships the pharmacy department has with numerous service lines and through this holistic effort, not only achieved significant cost savings, but also elevated standards of patient care."