Engaging the Csuite to Advance Pharmacy Practice Providing

Engaging the C-suite to Advance Pharmacy Practice Providing quality patient care through progressive pharmacy practice Investing in pharmacy residency programs - What’s the value for Institution A?

Institution A Pharmacy Residency Program • 290 residents since 1963 • Recipient of ASHP Foundation Pharmacy Residency Program Excellence Award for producing leaders in the pharmacy profession

16 Current Institution A Residents • M. S. /Residency in health-system pharmacy administration – 8 administrative residents (4 junior, 4 senior) • Pharmacy practice residency (PGY 1) – 4 hospital residents – 1 community resident • Medication systems and operations residency – 1 MSO resident (2 year program) • Specialty residencies (PGY 2) – 1 critical care resident – 1 transplant resident

External Funding Cost Reduction & Avoidance Education & Scholarship Pharmacist Recruitment, Development, & Satisfaction Benefits of Pharmacy Residency Programs for Institution A Health New Business & Service Growth Quality, Compliance & Service Provider Satisfaction

External Funding Federal Government • Graduate medical education: “Medicare passthrough funds” (PTF) available for accredited PGY 1 pharmacy residency programs Other • State and national pharmacy associations – professional project (research) grants • Pharmaceutical industry grants

Ex: Medicare Pass Through Funds* Cost Item Direct Costs Resident Salary + benefits Travel Residency accreditation fee Tuition & related expenses Teaching time Program director Director – administrative time Preceptor – teaching time Preceptor – administrative time Preceptor travel Total direct costs Indirect costs Calculation ($) (38, 300 + 20% benefits) x 10 4 programs 9, 000 x 4 admin residents NET COST 459, 600 8, 605 4, 725 36, 000 (20% of salary + benefits) (5% of salary + benefits) (25% of salary + benefits) x 10 (5% of salary + benefits) x 10 41, 300 10, 325 312, 000 62, 400 2, 125 937, 080 (30% of total direct costs) 281, 124 Total educational costs Anticipated Medicare reimbursement Cost ($) 1, 218, 204 Medicare pt load (35. 6%) x total educational costs $433, 681 (1, 218, 789 -433, 889) $784, 523 *Assumes 10 PGY 1 pharmacy residents with a 35. 6% Institution A Medicare patient

Cost Reduction • All residents are responsible for completing one or more drug cost reduction projects each year* – On average, each project reduces drug costs by $40, 000 – Total annual cost reduction = $1, 280, 000 *Administrative residents complete three cost reduction projects per year, all others complete one per year

Cost Avoidance • Online staffing as clinical pharmacist – 12 hours/week avoids 0. 3 pharmacist FTE – 0. 3 RPh FTE (salary + fringe) = $41, 184 – 1 resident FTE (salary + fringe) = $46, 800 Avoids $650, 000 in pharmacist FTE per year 88% of the cost of a resident is covered by their staffing component alone

Cost Avoidance • • • School of Pharmacy (SOP) lectures SOP lab teaching assistants Monograph preparation Medication use guideline revisions PSN follow-up Site visit coordination Health Link go-live and upgrade assistance Audits Drug contract analyses Advertising, training, and relocation fees* *Average of 2 to 4 Institution A -trained residents are hired onto staff each year!!

Improved Provider Satisfaction • Nurse satisfaction – Resource for questions: drug interactions, compatibilities, administration rates, ect. – Aid in communication with MD/PA/NP – Assist in assuring patient doses are available to the nurses at the appropriate time – Assist in changing the dispensing location of medications for more timely administration of first doses – Change dosing times to standardized times to reduce time demands on nurses – Continuing education seminars

Improved Provider Satisfaction • Physician satisfaction – Dose medications to avoid complications – Contact prescriber regarding abnormal lab values and cultures found while monitoring patients – Knowledgeable about Institution A’s drug formulary and therapeutic alternatives – Drug expert for clinical rounds – Modification of inappropriate drug orders – Increase through-put and efficiency – Continuing education seminars

Improved Quality and Service • Patient care – Enhance pharmacists’ capacity and effectiveness with patient care rounding, clinical monitoring, medication reconciliation and patient teaching – Resource to research best way to manage very complex patient cases • Compliance (audits, projects) – CMS – TJC – Third party billing audits – Detailed follow up on ALL PSN reports

Improved Quality and Service • Enhanced achievement of external pay for performance quality indicators – Improved reimbursement for pay-for-performance and future accountable care organization measures • Increased reimbursement for medication therapy management (MTM) services in Institution A ambulatory pharmacies – Leads to direct revenue from payers (Navitus, Unity, Group Health, etc…) via patient teaching and care management

Improved Quality and Service • Recruitment of future (well-trained) pharmacists • Community service and professional activities • Enhance capacity of staff • Formulary review • Drug policy development • Opportunity for externally funded projects

Expanded Pharmacy Services • Every major new Institution A pharmacy initiative is powered by a pharmacy resident project • Second year administrative residents complete a rotation with the VP of Professional Services to help advance goals of senior leadership.

Expanded Pharmacy Services 2000 s – 2010 s 1990 s – 2000 s 1980 s – 2000 s 1970 s – 1980 s Advancement 1960 s – 1970 s s in patient care services Innovation in core pharmacy services New pharmacy business development Expansion of clinical services into ambulatory and alternate sites Drug policy and managed care pharmacy program development Implementation of fully automated medication use process Electronic medical record Innovative pharmacist roles New business ventures

Resident Projects • 1960 s – 1970 s – – – 100% unit dose dispensing Complete IV admixture system Fully computerized pharmacy order entry/ distribution system Pharmacist-managed drug information center Pharmacist-managed medication administration record for inpatients • 1970 s – 1980 s – – Med histories, reconciliation, discharge counseling for all patients Pharmacist participation on patient care rounds Pharmacokinetic dosing services Decentral pharmacy service in all areas from 0700 to 2300 and around the clock services for critical care areas

Resident Projects • 1980 s, 90 s, 2000 s – Pharmacists participate in >20 ambulatory clinics – Integrated ambulatory pharmacy network throughout Dane County • 13 pharmacies • Inpatient and in-home hospice services • Pharmacy management consultative services for hospitals in rural communities • 1990 s – 2000 s – Developing, implementing, maintaining, and monitoring policies related to the use of pharmaceuticals with in Institution A – Initiation of several external pharmacy contract services – Manage pharmacy benefit for Unity – Coordination of technology assessment programs – Centralized robot – Automated dispensing cabinets – Barcode medication administration software at point of care – “Smart” IV infusion pump – Medication carousel

Resident Projects • 2010 s (What will we do next? ) – Practice model and professional staff advancement through development and implementation of the pharmacist career ladder – Decision support expansion to maximize evidencebased care – Operational efficiency improvement – New technologies (IV Robot, etc) – Integration of pharmacists on primary care teams

Pharmacist Recruitment, Development, & Satisfaction Recruitment • Feeder-system for new and vacant positions • More costly to recruit, orient, and train outside candidates • Attract highly skilled candidates – best RPh’s want to precept residents Development • Training of new hires – technicians, interns, and pharmacists Satisfaction • Promotes workplace energy, practice reflection, innovation, and company dedication to quality improvement • Resident projects enhance workplace experience

Education and Scholarship • Residents are required to provide education to doctors, nurses, and pharmacists • Precept pharmacy students • Faculty-resident collaboration on scholarly efforts

Show me the Money… Pharmacy Residency Program Return on Investment (ROI) Analysis

Expense for Current 16 Residents Expense Item Salary and Benefits Travel Tuition Accreditation fee Recruitment Total Expense Cost $734, 400 24, 585 72, 000 5, 175 2, 185 $838, 345

External Funding for Current 16 Residents Funding Source Commercial Supporter grant Medicare PTF Funds ($) 40, 000 442, 604 Total Direct Income $482, 604

Cost Reduction for Current 16 Residents Drug Cost Reduction Project*: Resident Type Calculation Total Cost Reduction ($) Administrative 3 projects/yr x $40, 000/project x 8 res 960, 000 PGY 1 1 projects/yr x $40, 000/projects x 5 res 200, 000 MSO 1 project/yr x $40, 000/project x 1 res 40, 000 PGY 2 1 project/yr x $40, 000/project x 2 res 80, 000 Total $1, 280, 000

Cost Avoidance for Current 16 residents cont… Cost Item Calculation Cost ($) HL go-live assistance 50 shifts/yr x 4 hr/shift x $66/hr 13, 200 Medication audits 8 audits/yr x 15 hr/audit x $66/hr 7, 920 10/res/yr x 0. 3 hr/asmt x $66/hr x 16 res 3, 168 5 analyses/yr x 15 hr/analysis x $66/hr 4, 950 2 ads/position x 2 positions/yr x $5000/ad 20, 000 2 RPh FTE/yr x 40 hr/wk x 8 wks x $66/hr 42, 240 2 RPh FTE/yr x $4, 000/relocation fee 8, 000 Med rec assessment Drug contract analysis Position advertisement* New RPh training* New RPh relocation fee* Staffing ~12 hr/wk x 52 wk/yr x $66/hr x 16 res Subtotal 646, 272 $745, 750 *****continued on next slide*****

Cost Avoidance for 16 residents Cost Item Calculation Cost ($) Institution A SOP lectures $300/lecture x 5 lectures 1, 500 Institution A SOP lab TAs 40 hr x $66/hr x 5 res 13, 200 $30/CE credit x 25 RPh/tech attendees x 11 res 8, 250 10 hr/monograph x $66/hr x 10 res 6, 600 2 hr/revision x $66/hr x 10 res 1, 320 1500 PSN/yr x 0. 5 hr/PSN x $66/hr 49, 500 12 visits/yr x 10 hr/visit x $66/hr 7, 920 CE lectures Monograph preparation Med use guideline revision PSN follow-up Site visit coordination Subtotal $88, 290 Subtotal (previous slide) 745, 750 Total Cost Avoidance $834, 040

$ = I O R ( financial gain – annual expense )x 100

Return on Investment for Current 16 Residents Item Total Cost Benefit $838, 345 External Funding $482, 604 Cost Reduction $1, 280, 000 Cost Avoidance $834, 040 Total ROI ($482, 604 + $1, 280, 000 + $834, 040) – $838, 345 = $838, 345 $1, 758, 299 = 210%

ROI Breakdown per Resident Type* Cost per Resident ($) Financial Value per Resident ($) Margin ($) ROI Admin (n=8) 54, 937 195, 761 140, 824 256% PGY 1 (n=5) 49, 237 137, 998 88, 761 180% MSO (n=1) 48, 637 110, 964 62, 327 128% PGY 2 (n=2) 48, 937 80, 382 31, 445 64% * n= # of residents in current FY 11 budget

PROPOSAL

Residency Program Expansion • Add a permanent PGY 2 oncology resident position • Add a permanent PGY 2 nutrition resident position • Add an fifth administrative resident position for FY 12 + FY 13

Benefits of Oncology Resident • Oncology is core Institution A service line • Area of growth and expansion – key pharmacy specialty area • 25% of Institution A ’s $109 million drug budget is oncology drugs • At forefront of what we can do at ambulatory clinics • Hard to find and hire pharmacists with oncology specialty • MD demand • Services can be expanded while at the same time lowering total costs

Benefits of Nutrition Resident • Program was initiated 5 years ago, but has alternated between critical care and nutrition • Extremely successful program • High priority of Department of Surgery for both research and practice – funds 50% of nutrition pharmacist’s FTE • Shortage of nutrition pharmacists throughout the country • Services can be expanded while at the same time lowering total costs • Have seen 25% growth in consistent level of nutrition service to all patients

Benefits of Nutrition Resident # TNA Doses Administered at Institution A 7500 7000 # of Doses 6500 Adult Doses 6000 5500 5000 Total Doses 4500 4000 3500 3000 2007 2008 2009 2010

Benefits of Administrative Resident • Largest ROI (256%) • Record number of exceptional applicants in 2010 • Shortage of pharmacy administrators – Huge leadership crisis in pharmacy profession – A 2005 survey of pharmacy directors and middle managers found that 80% anticipate leaving their jobs in the next decade • Services can be expanded while at the same time lowering total costs

FINANCIAL IMPLICATIONS

Total Cost to Institution A • Cost of 3 new resident positions – Salary + Benefits + Travel = $152, 810 • In exchange, 0. 7* clinical pharmacist FTE will be removed – Salary + Benefits = $96, 096 • Total Investment = $56, 714 *0. 3 FTE for admin resident (FY 12 + FY 13 only) and 0. 2 FTE for each PGY 2 resident (permanent)

Can we afford more residents? $3, 000 $2, 500, 000 $2, 000 Cost $1, 500, 000 Benefit $1, 000 Margin $500, 000 Current Additional Onc & Onc, Nutrition, & Admin

Let’s Compare Total ROI Cost ($) Current Additional Onc, Nutrition, & Admin Difference Benefit ($) Margin ($) ROI 838, 345 2, 596, 644 1, 758, 299 210% 991, 155 2, 925, 448 1, 934, 293 195% $152, 810 $328, 804 $175, 994 Financial return is greater with the addition of oncology, nutrition, and administrative residents

Expanding both the number of residency positions and roles of pharmacy residents will benefit the pharmacy department, the hospital and most importantly, our patients!

Questions? ?

Additional References • Smith KM, Sorensen T, Connor KA, et al. ACCP White Paper: Value of conducting pharmacy residency training – the organizational perspective. Pharmacotherapy. 2010; 30(2): 490 e-510 e. • Pasek PA, Stephens C. Return on investment of pharmacy residency training program. Am J Health-Syst Pharm. 2010; 67: 1952 -1957 • White S. Will there be a pharmacy leadership crisis