Market your pharmacy budget by building credibility
Presenting data clearly is crucial
Ask any pharmacy director about presenting budgets to a hospital's top managers, and you'll hear that it wasn't easy, especially when the budget projects a major increase in costs.
"When we first started budgeting for pharmacy across the whole system, it was at a time when there were significant increases in the annual drug budget," says Marianne Ivey, PharmD, MPH, FASHP, vice president of pharmacy services for Health Alliance of Cincinnati, OH.
"The budget number we gave the administration was often challenged, and they'd try to reduce it and ask us to reduce it by a certain percentage," Ivey says. "Then, what would happen is the pharmacy would be over budget by the end of the year, and people would be concerned."
Things changed once the pharmacy department began to use nationally recognized data to prove its case.
Also, the pharmacy director began to talk with hospital officials more frequently about the measures the hospital took to control utilization, Ivey says.
"We look for opportunities for savings," says Michelle Wiest, PharmD, BCPS, director of the health alliance clinical pharmacy program at Health Alliance.
For example, the health care organization might use a new generic drug that has equal efficacy and is cheaper, Wiest says.
"We'll work with the clinical pharmacist and medical staff to position those cheaper drugs," she adds.
"Also, we'll look at negotiating new contracts with the purchasing organization to try to save money and keep the budget on track," Wiest says.
Marketing a pharmacy's budget is all about building credibility, says William W. Churchill, MS, RPh, executive director of pharmacy services at Brigham & Women's Hospital in Boston, MA.
"Years ago, finance folks and senior management often didn't like the number the pharmacy was bringing to the table," Churchill says. "It wasn't the biggest expense line item on the budget, but when it comes in 10-20% bigger than the previous year, you do get a lot of scrutiny."
So the best defense is to be prepared, he says.
"You have to sell the reason why this has to happen," Churchill says. "You need to do your homework; you need credible information, and they need to buy into it."
One strategy for obtaining budget buy-in is through a budget hearing process. This could be attended by the finance department, chief executive officer, budget director, and pharmacy director, Churchill suggests.
"We put on a 15-20 slide presentation, showing where we are currently, showing the trended growth rate over time, and showing the slide with prognosticator that would say what our growth rate would be, and our actual growth rate," he explains.
The presentation includes information on whether the hospital's pharmacy spending is better or worse than the national average and why, if it's worse.
"I show the expenses that are driving up the budget," Churchill says. "Twenty percent of our drugs account for 80% of our expenses."
Then Churchill will narrow down the data to show which particular areas are driving the budget.
For instance, maybe the hospital has an active inpatient chemotherapy service with a huge population of patients who use very expensive drugs, he says.
"So long as we see these patients, this is what you can expect," Churchill says.
Then Churchill presents the benchmarked data, showing how the pharmacy budget compares with other hospitals around the country.
"We show productivity data," he says. "We give them all of this background information and prognostication."
Churchill also shows the hospital's senior leadership the price trends predicted by national experts, as well as data from the pharmaceutical wholesale company.
"We build a credible process, and we tell them that we're the experts here, and over time they begin to understand that," Churchill explains.
Hospital officials also will begin to see that when they cut money from the pharmacy department's budget, it will result in the department being over-budget at the year's end, unless they decide to stop taking care of certain patients or take some drugs off the formulary, he adds.
"We need this information to influence the senior leadership at the hospital because medication costs likely are going to be going up because of the acute nature of the patients we have at academic medical centers," Churchill says.
"People are living longer with more devastating diseases," he notes.
New technology and highly expensive drugs are keeping people alive despite their chronic illnesses, so hospitals need to ensure that these medications are used appropriately so that the right patients receive them at the right costs, Churchill adds.
To convince hospital leaders that the pharmacy budget is reasonable and accurate, it requires preparation and good communication skills.
Finally, it requires patience: "It took us five or six years to build credibility," Churchill says. "It took a while because you're coming at it with a lot of information, including a lot they may not understand, and you have to explain it to them in a way that they will understand."
Ask any pharmacy director about presenting budgets to a hospital's top managers, and you'll hear that it wasn't easy, especially when the budget projects a major increase in costs.You have reached your article limit for the month. Subscribe now to access this article plus other member-only content.
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