Does outsourcing mean opportunity or disaster?
March 1, 1997 4 minutes read
Does outsourcing mean opportunity or disaster?
Cost-control for hospital pharmacies gains ground
The IV shipment arrives early: boxes and boxes of pre-mixed bags, already tagged with the patient’s name and room number. The medication carts follow — pre-stocked and ready to roll. Pharmacists begin to stream in, wearing identical white coats. But the name tags over their hearts indicate an allegiance not to the hospital in question but to a corporation, contracted by the hospital to perform pharmacy services — all pharmacy services. The hospital pharmacy has become, in effect, an occupied camp, where the manager oversees someone else’s employees.
That’s the meaning of outsourcing — albeit on an ultimate scale. It’s the farming out of certain functions to a contract company that can usually perform those services at a lower cost. Airlines have been doing it for years. Many of the employees you see throwing baggage onto planes are outsourced. So have hotels. Outsourced employees are frequently found vacuuming the rugs and cleaning toilets.
Outsourcing is usually linked to low-skill jobs, where economies of scale can have a big impact. But outsourcing is gradually gaining acceptance in professional circles — especially pharmacy. While the most dramatic gains for outsourcing companies in health care have come in nursing, hospital clients outsourcing some pharmacy functions jumped nearly 18% between 1994 and 1995, according to an article in the Sept. 2, 1996, issue of Modern Healthcare magazine.
Clearly, outsourcing is changing the employment landscape for pharmacists, no matter what area of the profession in which they practice. Take retail pharmacy. If chain drug stores provided the initial wallop to the corner drug store, outsourcing has done the mopping up. Pharmacists who once might have worked behind a drug store counter are now monitoring machines and technicians at huge mail-order facilities. Nursing homes that once relied on retail pharmacies for service now have contracts with huge corporations. The retail prescription business has been forcibly outsourced and, increasingly, the same thing is happening to the chains.
How could outsourcing ultimately affect hospital pharmacies? Darwin Zaske, RPh, of the University of Minnesota College of Pharmacy in Minneapolis says it could come down to the single-employee scenario described above. "I can see where you can conceptualize it to the extreme — literally, the whole thing can be outsourced," Zaske says. "There may be an operator office intact to supervise it. I think pharmacies and pharmacists have to prepare for this."
Zaske says most pharmacists aren’t dealing with it. "They deal with this with denial. The pharmacists’ attitude is We’ll always have jobs.’ It’s not true." In fact, Zaske adds, most hospital consultants look at employees in three blocks: those who may keep their same jobs, those who will be outsourced, and those who will be fired.
Zaske recommends that pharmacists get ready to take advantage of outsourcing by setting up group practices. That way, outsourcing companies will be run by professionals vs. bean-counters.
But the bean-counters already have a leg-up on pharmacists when it comes to outsourcing. Drug wholesalers have moved into the business, and John Hammond of the National Wholesale Druggists’ Association says it’s an idea whose time has come. "In hospital pharmacy, any of the steps involved — from distribution and storage of pharmaceuticals, to inventory management, to IV admixtures — could be done more efficiently if an operation was geared to doing many of those a day."
As outsourcing becomes more palatable for hospital pharmacies, a schism is bound to develop between management and staff. Managers charged with reducing costs may find the economics of outsourcing irresistible. And Hammond encourages them to explore it:
"Anyone in pharmacy management ought to look at the strengths and weaknesses of the pharmacy and ask themselves Where are the opportunities for outsourcing?’" The bottom line to be guided by, he says, is whether better quality service will result along with the lower cost.
Hammond acknowledges, however, that in the rush to outsource, jobs could be lost. "It’s a very real concern. But opponents who charge there will be nobody left in the hospital [are wrong]. There will be people present to interact with patients where and when it’s needed." The only question, he says, is who will sign the paycheck.
That’s not the only question when it comes to outsourcing. There’s the issue of institutional loyalty, for example: whether an employee of a contract company will care less about a hospital’s needs than a regular hospital employee. For example, a few years ago regular employees of one major airline claimed outsourced individuals hired to clean planes were leaving the aircraft dirty.
Zaske says one creative, small-scale, and minimally disruptive way hospitals might outsource could involve sharing a single pharmacist. Zaske says a hospital he worked in did a time-sharing agreement with another institution for pediatric pharmacy services. The pharmacist involved had to do some additional traveling, but he kept his job.
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