Strengthening Financial Health: Efficiency in Pharmacy Operations, Labor, and Supply Chain
Productivity monitoring is becoming an essential strategy for health systems seeking to enhance operational efficiency, optimize labor utilization, and improve supply chain performance. Information from this monitoring can help leaders identify inefficiencies, allocate resources, and prioritize improvement efforts. Improving efficiency is a foundational competency of successful organizations and will be a top priority of health systems in 2025.
Best Practices
Whether leaders are just starting or have long-established metrics and systems, best practices in productivity monitoring include:
- Aligned and Balanced: productivity metrics should reflect organizational priorities and be balanced with other domains (e.g., patient experience, quality of care, safety)
- Engage multidisciplinary teams: Involve pharmacists, technicians, informaticists, data analysts, and external experts (quality, supply chain, nursing, physicians) in developing metrics to ensure they are practical and meaningful.
- Leverage advanced analytics: Whenever possible, use real-time data and analytics tools to monitor both performance and improvement efforts
- Benchmark against industry standards: regularly compare internal performance metrics with external benchmarks to identify areas for improvement and maintain competitiveness
- Communication with staff: regularly review performance with staff (e.g., huddles, visual management tools) to facilitate transparency and engagement
- Ensure inclusivity of area and role: metrics should span all areas (e.g., inpatient, retail, specialty pharmacy, pharmacy informatics, supply chain) and roles (e.g., pharmacists, pharmacy technicians, analysts, other pharmacy staff)
Pitfalls
While productivity monitoring can improve efficiency, leaders must understand potential pitfalls.
- Over-reliance on quantitative metrics: focusing too heavily on metrics (e.g., orders filled per hour) overlooks qualitative aspects like patient care quality, safety, and clinical outcomes
- Unbalanced metrics: efforts to improve efficiency can have unintended consequences on safety, quality, and patient and workforce experience
- Data challenges: inaccurate or incomplete data feeds can lead to incorrect conclusions
- Neglecting team-based contributions: metrics that only evaluate individuals or silos can undervalue the importance of teamwork
- Lack of standardization: differences in practice settings make benchmarking difficult
- Staff skepticism: staff may perceive monitoring as micromanagement or punitive, leading to resistance to improvement efforts and reduced morale
Operational Efficiency
For operational efficiency, the trends for strategies to drive improvement span medication dispensing and preparation, pharmacist order verification, medication monitoring, patient education, and many other patient-focused and product-focused operations. The strategy of highly efficient pharmacy enterprises includes:
- Automation: Implementing automated dispensing cabinets, carousels, robotics, and packaging increases speed and accuracy.
- Centralized or shared pharmacy service centers: Consolidating operations around purchasing, packaging, repackaging, sterile and non-sterile compounding, prior authorization services, call centers for specialty pharmacies and medication histories, creates economies of scale and expertise
- Improvement science: Training and supporting staff to lead improvement work through improvement science to eliminate waste and improve workflows
- Electronic health record and digital tools: Designing workflows and implementing functionality to identify and prioritize patients needing pharmacy services, optimizing prescriber order entry, facilitating the triage and processing of refill requests, using electronic prior authorization systems, and many others
- Tele-pharmacy and remote pharmacy services: Utilizing tele-pharmacy and other technologies to extend access to pharmacy services across inpatient, retail, specialty, and clinic settings
- Business growth: Optimizing specialty pharmacy and ambulatory infusion patient capture
Labor Efficiency
Historically, the focus on labor efficiency was due to financial benefit. However, workforce shortages and burnout are additional drivers of improving labor efficiency. There is an overlap in operational efficiency and labor efficiency; however, some of the more labor-centric strategies include:
- Skill-mix and role optimization: Assigning work to employees with the right skill-mix is a well-known but often poorly executed strategy. Too frequently, pharmacists perform technical tasks that a supervised delegate would more cost-efficiently perform. Examples include but are not limited to triaging phone calls, product verification, sterile compounding, and processing payment at a cash register.
- Standard work: Work-process variations can lead to waste and inconsistent outcomes. Implementing standard work clarifies expectations, simplifies training, facilitates cross-training and scalability, reduces errors, boosts staff confidence, enhances collaboration, and improves the ability to adopt technology and automation. Also, standard work helps identify low-value work and facilitate improvement efforts.
Supply Chain
Health systems are experiencing rising costs in both pharmaceutical and non-pharmaceutical supplies. Improving and maintaining supply chain efficiency is often the most impactful way to reduce pharmaceutical costs. Examples of supply chain improvements include:
- Contract compliance: the complexity of pharmacy procurement creates opportunities for errors in the price charged for products. To prevent overpaying, implement systems to audit contract compliance and resolve discrepancies.
- Inventory management: failure to optimize inventory leads to increased carrying costs and increased likelihood of waste from drug expiration
- Line-item optimization: opportunities for cost-per-dose savings exist through line optimization, which includes an evaluation of the cost differences of pre-mixed products, internal vs. external unit dose packaging, pre-filled syringes vs. vials, and tablet-splitting.
- Drug shortages: the recent intravenous fluids shortage demonstrated how costly drug shortages can be, from the direct impact of the increased costs of alternatives to the indirect costs of delayed or deferred care and human resources used to make electronic health record changes, move inventory, and communicate restrictions. Mitigating these costs requires systems to proactively monitor shortages, create and manage reasonable buffer inventories, strategically diversify suppliers, and coordinate with vendors on actual or anticipated demand shifts.
Consultants and Partners
Health systems engage consultants and partners to help with efficiency for several reasons, including gaps in expertise, desire for an outside perspective, project management, and improvement support resources. However, when selecting a consultant or partner, verify the use of best practices and assess for overall fit.
| Best Practices | Red-Flags |
|---|---|
| Tailor recommendations based on the unique needs, goals, and operational realities of the health system | Propose one-size-fits-all solutions without understanding the organization’s specific challenges |
| Engage all stakeholders, including staff and leadership, in decision-making and implementation | Leave out the perspectives and expertise of staff who perform the day-to-day work |
| Prioritize sustainable improvements rather than quick, superficial fixes | Focus exclusively on reducing costs, at the expense of quality or morale |
| Support recommendations with data and evidence whenever possible | Do not revise strategies when initial implementations encounter challenges |
| Measure the impact of implemented changes and adjust as necessary | Implement short-term fixes that create additional problems later |
| Provide tools and guidance with change-management | Do not clearly explain the rationale behind recommendations or fail to align changes with organizational goals |
| Identify opportunities for efficiency that preserve quality, safety, and experience | Propose changes without defining success metrics or tracking performance |
When applied effectively, productivity monitoring helps achieve financial goals and fosters a culture of accountability and continuous improvement, leading to improved patient care, experience, and employee engagement.
Calls to Action
- Develop a strategy to improve pharmacy productivity monitoring across operations, labor, and supply chain while optimizing ambulatory pharmacy business growth.
- Commit to completing three initiatives to improve pharmacy efficiency to help the organization’s financial health.
- Evaluate if engaging with a consultant or partner could help expedite efficiency gains to improve financial health without compromising safety, quality, and experience.
Looking for more information or assistance for your organization? Reach out to Visante today!
Subject Matter Experts: Steve Rough and Jim Lund