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Plugging Medication Leaks in the OR

by Hannah Byam

Pharmacies are faced with increasing pressure to do more with limited budgets, particularly in reducing overall drug spend. Given its complexity, the OR remains one of the biggest challenges for hospital pharmacies when it comes to tracking the distribution and use of medications and continues to be a leaky bucket for Pharmacy in terms of time, inventory and budget.  

The Rise (and Fall) of the Dispensing Cabinet

Over the last decade, hospitals have spent millions of dollars to implement automated dispensing cabinets (ADCs) for the OR with ‘charge on dispense’ billing models. Many hospitals have found that in providers don’t dispense medications against patients as intended and, as a result, only a fraction of what is used is charged against the procedure, inventory visibility remains a black hole, and, for 340b sites, accruals are missed. Hospitals continue to lose hundreds of thousands of dollars in inventory, reimbursements and 340b savings despite the significant capital investments. This frustration is echoed in the results of our latest Hospital Pharmacy Operations Report where “automation challenges” were cited as a top issue for pharmacy leadership.

A “Better” Mousetrap for Charge Capture

To better account for perioperative medication usage, many hospitals have shifted to ‘charge on administration’ billing models. The hypothesis is that providers will more accurately document administrations on the patient record than dispenses from the ADC and, as such, patient charge accuracy and inventory visibility will improve. Hospitals are, once again, spending millions to license interfaces, build and test integrations, and retrain staff. Although this strategy has plugged some leaks, huge gaps still remain.

The Cost of Poor Inventory Management in the OR and How to Fix It

So how big are these gaps? We recently worked with two of our partner hospitals on a detailed charge loss analysis. Hospital 1 is a 240-bed community hospital with 11 operating rooms, managing non-controlled OR medications with a day tray model and charging based on administration documentation in the EMR:

  • 30% of “used” medications were undocumented in the patient record
  • $155,000+ in unaccounted for inventory over the course of a year
  • Loss rates for individual medications range as high as 56%

For Hospital 2, a 627-bed academic medical center using in-room ADCs in their 24 operating rooms and a change on administration model for billing, we found:

  • 36% of “used” medications were undocumented in the patient record
  • Nearly $1,000,000 in unaccounted for inventory over the course of a year
  • Loss rates for individual medications range as high as 55%

Given the complexities of the perioperative space, each hospital’s response to this data will be unique. Updating ERX entries to reflect current package sizes; changing the default entries available to Anesthesia for documentation; evaluating the viability of pre-filled syringes to reduce waste; and consolidating the locations where certain high-loss medications are stocked are all low-lift actions to increase inventory oversight.

Perhaps the best news for those reading: we were able to unearth these insights with very little work on the part of the pharmacy teams at our partner hospitals. We approach every problem with the goal of freeing up time, resources and budget so that you can focus on improving patient care.

Kit Check: More than Just a Tag

Many of our hospitals implemented Kit Check for their OR inventory to make restocking kits, trays and ADCs more efficient and safe. Over time, we’ve collected massive amounts of data about their drug usage patterns. Through Advanced Analytics and our team of Inventory Business Analysts, we’ve been able to dig into the data and find additional ways to help reduce inventory costs while improving safety, compliance and employee satisfaction.

Interested in figuring out how much you are losing in the OR and what to do about it? Contact Kit Check to learn more.

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