PNS32 PREDICTED COST-BENEFIT OF A PHARMACY INVENTORY MANAGEMENT PROGRAM FOR US ACUTE-CARE HOSPITALS

Abstract

Over $27 million is spent by US hospitals on annual drug spend. Roughly 20% of hospital drug inventory is wasted or expires each year. Additionally, 50% of hospitals report manual drug inventory management methods. We created a cost-benefit model to predict the impact of a pharmacy management predictive analytics software on inventory costs. A cost-benefit model was created using Microsoft Excel to predict the economic impact of a pharmacy management predictive analytics software. Predicted benefit was calculated using a combination of drug cost data and drug utilization data. Three areas of cost-benefit were assumed: inventory reduction in patient care areas and central pharmacy, respectively, and reduction in wasted medication from more efficient management of min/max inventory levels. Inventory reduction was assumed to be a one-time cost-benefit, whereas savings due to waste reduction were repeated yearly. Cost was defined as the cost of the predictive analytics program. We analyzed cost-benefit over a five-year period using a large cohort of US acute-care hospitals. 61 acute-care hospitals were included in the cost-benefit analysis. The majority were located in the southeast (64%), had a bed size of 101-250 beds (44%), and were non-academic (39%). The model estimated annual medication spend ranging from $335,551 - $309,712,416 (median=$6,853,533). Ranges of estimated inventory reductions in patient care areas and central pharmacy were $3,000-$569,000 (median=$56,000) and $0-$1,851,000 (median=$13,500), respectively. Median projected yearly savings from waste reduction were $63,000 ($8,000-$1,443,000). Over a five-year period, cumulative cost-benefit rose from a median of $101,000 (year one) to $344,185 (year five). Estimated median ROI from adopting the intervention at year one and year five was 2.52 and 3.0, respectively. Predicted cost savings with the use of an analytics program potentially led to a five-year cumulative cost-benefit of $344,185 and a five-year ROI of 3.0. Future research should be performed to assess true/actual cost-benefit.