1. Developing a Business Case for Advancing Pharmacy Services
Presented by:
Steve Rough, RPh, M.S Scott Knoer, M.S., Pharm.D.
Director of Pharmacy Director of Pharmacy
University of Wisconsin Hospital and Clinics University of Minnesota
Medical Center

2. About Our Speakers
Steve Rough, M.S., R.Ph, is Director of Pharmacy, University of Wisconsin Hospital and Clinics, Madison, WI
He is a Clinical Assistant Professor at the UW-Madison School of Pharmacy
Scott J. Knoer, MS, Pharm.D. is the Director of Pharmacy at the University of Minnesota Medical Center (UMMC)
He is a Clinical Assistant Professor at the University of Minnesota College of Pharmacy and the Graduate Program in Social and Administrative Pharmacy

3. Objectives
Develop a successful business proposal to justify a new clinical program, service or personnel
Describe the key elements of a good executive summary
Discuss strategies for securing resources from senior administration
Produce a good return on investment (ROI) analysis that sells

4. Developing a business case for new programs, services and personnel

5. Project/Business Plan
Document outlining the external services you are trying to provide for a potential “business” partner (stakeholder)
Provides vision, lists objectives and provides task lists aimed at the completion of the project
Should be written to the level of the audience (administration vs. clinical)
Includes appendices of the work that has been completed (ROI, charts, etc.)
Remember… this can be thought of as a marketing guide or your “sales pitch” (stress the positive aspects of plan, minimize negativity)
Clearly states the benefits
Not pharmacy-centric

6. Project/Business Plan
Key Components of a Project/Business Plan
Executive summary
Table of contents
Background
Proposal of services to be provided
Benefits of the proposal
Resource requirements and financial implications
Milestones, schedule and action plans
Summary
Supporting documentation/appendices
Executive Summary page!!!! =Likely all that will be read.
Proposal (1-2 sentences)
Background (Project Concept)
Briefly describe current situation making case for change
Financial analysis
Benefits
safety, accuracy, service, compliance, etc
Conclusion

7. Executive Summary
High level overview, maximum of 1 page, lots of bullet points
Proposal (1-2 sentences about your program)
Background (succinctly make case for change)
Benefits to the organization (link to organizational goals)
Financial analysis
Conclusions
Don’t include anything not in the rest of the material
Think of this as your “abstract”
May be all that is read by people at higher pay grades than you
Executive summary Resource requirements/financial implications
Table of contents Milestones, schedule and action plans
Background Summary
Proposal of services to be provided Supporting documentation/appendices
Benefits of the proposal

8. Background Key literature review Best practices
Gap analysis versus desired state
Current situation in the organization
Regulatory
Quality/safety
Finances
Why is this important anyway?
Any data supporting the need for the project
Executive summary Resource requirements/financial implications
Table of contents Milestones, schedule and action plans
Background Summary
Proposal of services to be provided Supporting documentation/appendices
Benefits of the proposal 8

9. Proposal of Service to be Provied
Succinct statement of what you want to do and why
Strive to be very clear, succinct, believable
Target patient population of unit
Proposed activities, hours of service
Interaction with other departments
Commitment of resource
May highlight alternative routes
Executive summary Resource requirements/financial implications
Table of contents Milestones, schedule and action plans
Background Summary
Proposal of services to be provided 9. Supporting documentation/appendices
Benefits of the proposal 9

10. Example Proposal Statement…
What are you proposing (text)?
To increase patient safety, meet Joint Commission requirements and decrease costs associated with adverse events, the Pharmacy and Therapeutics Committee proposes implementing a pharmacist-based anticoagulation monitoring program
Executive summary Resource requirements/financial implications
Table of contents Milestones, schedule and action plans
Background Summary
Proposal of services to be provided Supporting documentation/appendices
Benefits of the proposal 10

11. Benefits of the Proposal
Sell based on organizational goals, look for win-wins
Patient safety (reduced error)
Patient satisfaction
Provider satisfaction
Operational efficiency
Cost savings/avoidance
Continuity of care
Reduced readmission rates
Revenue growth/capture
Reimbursement
Patient outcomes
Regulatory compliance
Quality indicators
Education/research
Improved throughput/MD efficiency
Warfarin Monitoring Service
Safety – decreased ADEs
Cost – decreased ADEs
Regulatory
Joint Commission
Efficiency / Service
Saves Physician time
Executive summary Resource requirements/financial implications
Table of contents Milestones, schedule and action plans
Background Summary
Proposal of services to be provided Supporting documentation/appendices
Benefits of the proposal 11

12. Resource Requirements/Financial Implications
Labor expense (salary plus fringe)
Pharmacists
Technicians
Others
Supplies
Travel
Computer
Office
Return on Investment (ROI) analysis
Executive summary Resource requirements/financial implications
Table of contents Milestones, schedule and action plans
Background Summary
Proposal of services to be provided Supporting documentation/appendices
Benefits of the proposal 12

13. Milestones/Action Plans
Be specific
Use Gantt charts and tables to show organizational sequence
Have clear actions and timeline (proposed schedule)
Measures of success to build credibility
What indicators will be used (process, outcomes)?
Who is responsible for auditing, measuring and reporting?
How often will it be collected and reported?
How will the report be shared?
Executive summary Resource requirements/financial implications
Table of contents Milestones, schedule and action plans
Background Summary
Proposal of services to be provided Supporting documentation/appendices
Benefits of the proposal 13

14. Summary Conclusion Succinctly tell ‘em what you told ‘em
Proposal
Benefits
Know the organization’s strategic plan and link to it
Executive summary Resource requirements/financial implications
Table of contents Milestones, schedule and action plans
Background Summary
Proposal of services to be provided Supporting documentation/appendices
Benefits of the proposal 14

15. Example Summary Statement…
University of XXX Medical Center should implement a pharmacist-managed warfarin dosing service which will reduce costs by $$$$ / year, reduce adverse drug events, improve physician efficiency and satisfaction and meet Joint Commission requirements
Executive summary Resource requirements/financial implications
Table of contents Milestones, schedule and action plans
Background Summary
Proposal of services to be provided Supporting documentation/appendices
Benefits of the proposal 15

16. Supporting Documentation/Appendices
ROI analysis
Organizational fit and linkages (Practice, IT, Quality)
Literature review (detailed) and/or detailed gap analysis
Flow charts
Pilot data details
Detailed project plan with specific deliverables and accountability
Letter of support from key stakeholder; especially physicians
Reference
Acknowledgements
Executive summary Resource requirements/financial implications
Table of contents Milestones, schedule and action plans
Background Summary
Proposal of services to be provided Supporting documentation/appendices
Benefits of the proposal 16

17. Where to Start?
Start with an example business case that was approved in your organization
Ask colleague elsewhere for a template
Discuss with your boss BEFORE you share it with them
Most bosses hate surprises
How many pages is it expected to be?
Scott 17 – 44
Clearly states the benefits
Not pharmacy-centric 17

18. Helpful Hints
Get a first draft ready in plenty of time to run it by 3-5 people for feedback
Develop FAQs/talking points for your boss
Build in assumptions for growth
“After the anticoagulation clinic enrollment is >300 patients, will add 0.5 FTE of technical support”
Know your organizational strategic plan
Know who has your back
Get decision support involved early
Give the credit away
Clearly states the benefits
Not pharmacy-centric 18

19. Always Think About Who are your key stakeholders? What’s their WIIFM?
What barriers might you face?
How will you obtain buy-in?
What are the one or two keys to your success?
What will you measure to demonstrate value?
Clearly states the benefits
Not pharmacy-centric 19

20. Keys to a Winning Proposal
Know your numbers
Published literature and your own
Make it personal with examples from your institution
Highlight benefits to others in the system
Use lots of figures, graphs, tables, large font
Help your boss advocate for you
Practice your “elevator speech”
Clearly states the benefits
Not pharmacy-centric 20

21. Elevator Speech
Quick second overview of a service, project or proposal
Perfect for communicating new initiatives to others outside of pharmacy
Focuses on:
What the project/service is
Why it is important
What the results will look like (WIIFM)
What is needed from the receiver
Clearly states the benefits
Not pharmacy-centric 21

22. Elevator Speech What the project/service is Why it is important
I want to let you know about a new pharmacy service starting next Monday. Pharmacists will automatically assess your patient’s meds and adjust doses daily for their renal function.
Why it is important
The Medical Executive Committee approved this project because many patients have rapidly changing renal function and it is often difficult for pharmacists to reach physicians to request dose changes when they are busy in the clinic or OR.
Clearly states the benefits
Not pharmacy-centric 22

23. Elevator Speech What results will look like
This service should optimize drug therapy and result in fewer phone call interruptions for you.
What is needed from the receiver
One thing we need from you is to let us know if you have intentionally dosed more or less aggressively than recommended so we do not modify those doses.
Clearly states the benefits
Not pharmacy-centric 23

24. Return on Investment (ROI) Analysis

25. ROI Year 1-? Volume Costs (capital and operating)
Assumptions (time per encounter, error avoided, etc)
Payer sources and reimbursement
Hard and soft dollar savings
Time savings for staff
Do NOT rely solely on number from the literature
Executive summary Resource requirements/financial implications
Table of contents Milestones, schedule and action plans
Background Summary
Proposal of services to be provided Supporting documentation/appendices
Benefits of the proposal 25

26. ROI
Financial tool that measures the economic return of a project or investment
ROI = Net benefits / costs X 1001

27. IRR IRR = Internal Rate of Return2
The discount rate often used in capital budgeting that makes the net present value of all cash flows from a particular project equal to zero. The higher a project’s IRR, the more desirable it is to undertake the project.
Allows comparison vs. other capital projects

28. ROI Adhere to financial standards and partner with finance
Enhances credibility
Costs incurred or reduced/avoided
Capital
Labor
Maintenance
Operating
Risk

29. ROI Case – Rx Automation
Current automation contract is expiring
Review medication distribution system
Safety and efficiency potential improvements
Organizational imperative to minimize labor costs

30. Cost Elements to Consider in ROI
Equipment
Installation
Labor for implementation
Renovations

31. Savings Potential for ROI
Labor
Reduction vs. redeployment vs. avoidance
Inventory
One time reduction, wastage reduction
Current costs of automation
What you were spending already
Safety/quality improvement savings
Medication incident cost

32. Model ROI Format
Example

33. Model ROI - Carousels Example AUTOMATED DISPENSING YEAR 0 YEAR 1
YEAR 0
YEAR 1
YEAR 2
YEAR 3
YEAR 4
YEAR 5
TOTAL
Capital Equipment /Interface (1)
$ (317,577)
$ (317,577)
Additional Interfaces (2)
$ (30,000)
Remodel Cost (3)
$ (50,000)
$ (50,000)
Support Fees
(31,128)
$ (155,640) $
Inventory Reduction (4)
$ ,078
Released FTE Savings (5)
$ ,600
$ ,408
$ ,300
$ ,279
$ ,348
$ ,935
Carrying Cost (6)
$17,045
$ ,493
$ ,065
$ ,771
$ ,375
Product Shrinkage (7)
Outdate Reduction (8)
$15,000
$15,750
$16,537.50
$17,364.38
$18,232.59
$ ,884
TOTAL INVESTMENT (with Inventory Reduction)
$ (397,577)
$ ,550
$ ,075
$ ,203
$ ,581
$ ,223
$ ,055
IRR
40%
Payback (years)
2.0
Example

34. Financial Analysis Hard costs
You can track these to the General Ledger
FTEs (under Salaries and Benefits on GL)
Must extend FTEs for Salary and Benefits (approx 15%)
One shift 7 days a week is 1.4 FTEs
Salary x FTEs x S&B multiplier
$100,000 x 1.4 x 1.15 = $161,000

35. Financial Analysis Other hard costs Physical space
Remodel workroom = $20,000 dollars
Work with facilities here
Rent
Space has a cost. We rent space from the U for $18 / ft2
1000 square foot room
1000 ft2 x $18 / ft2 / yr ÷ 12 months
$1,500 / month
Computers, refrigerators, supplies, etc…

36. Hard and Soft Dollars Hard savings Revenue Decreased costs
Real dollars that you can bill insurance
Increased script volume by doing discharge medication reconciliation
Decreased costs
Increased inventory turns, decreased inventory volume
Decreased waste in the IV room (real quantifiable waste)

37. Soft Dollars You can’t track these to the GL ADE avoidance
Literature says $2,000 / ADE avoidance3
Calculate ADEs avoided (soft)
Use the literature
Are you willing to take $ out of your drug budget based upon this proposal?
If not, they are soft dollars
Arch Intern Med. 2005;165(4):

38. Nursing Time – Hard or Soft Savings?
Potentially hard
If you get rid of nursing
Pharmacy generated MAR
Decreases transcription time for nursing
Are they actually going to get rid of nurses?
If so, hard savings
If not, soft savings
Don’t have to hire nurses to get other things done

39. Presentation Pearls

40. Presentation Pearls
Every business case should be accompanied by a PowerPoint presentation
Great student or resident project!
Present facts and data – uniquely
A picture’s worth a thousand words
Examples:
Big bag full of wasted meds
Digital pictures of ‘reality’

42. Presentation Pearls Pick 3-5 key points and emphasize OR Rx example
Explain how they support organizational goals and initiatives
OR Rx example
Increase charge capture and waste reduction offset labor costs
Current situation is not safe
We can do it in <100 days

43. Presentation Pearls Be prepared for being challenged OR Rx example
Consider all alternatives honestly
Acknowledge the risks of your proposal
OR Rx example
Limited space available, territoriality
We have no OR pharmacy experience…..
We could put an ADM in each OR suite, but…

44. Presentation Pearls Know how everyone is going to vote before the vote
Hallway conversations
Lobby the executives – be subtle
Get buy in from key physicians
Medical director of ???
P&T Chair
Who is deciding?
CEO
Sr. Leadership meeting of VPs
CFO
Your VP

45. Presentation Pearls Don’t overplay the regulatory card
If you use it every week, it loses its credibility
If you use it, make sure you put it in context:
This will meet JC requirement MM3.
This will “help” with meeting
Don’t overstate the impact on JC requirements
Are there different interpretations of the requirements that people in the room will bring up?

46. A Model Business Case: Pharmacist Justification for Inpatient Medication Reconciliation
Steve

47. Step 1 & 2: Prepare and Assess
Understand the literature, and use it
Start with admission process
Conduct a pilot project, and collect data to demonstrate pharmacist’s accuracy and accuracy of other providers
Identify key stakeholders, educate them and build their interest and support
Physicians, Nurses, QI, Fiscal, Administration, Risk Management

48. Step 3 & 4: Analyze and Plan
Quantify resource requirements
Quantify pharmacist accuracy vs. other providers
Assess skill level of current staff
Develop a business plan for investing in pharmacist resources
Quality safety impact (project annual error avoidance)
ROI with literature-based and institution-specific statistics (savings of avoided harmful errors)
Other benefits
Time savings for other providers
Improved pharmacist job satisfaction and retention
As pharmacist relations with physicians develop, it is easier to implement services that dramatically reduce drug cost

49. Medication Reconciliation Pharmacist ROI Framework
Example
Conduct a pilot with your pharmacists, students or residents.
Pharmacist performed medication reconciliation
Improves patient safety in a collaborative fashion
Reduces transcription errors (improves accuracy and completeness of med lists and orders)
Maintains continuity of care
Promotes physician collaboration
Improves pharmacist job satisfaction and retention
Decreases workload of nurses and house staff, increasing time available for other activities
Reduces mortality rates by 128/hospital/year
Reduced pADEs by 15% (RPh 2-3 times more accurate than MDs and RNs)
Makes future cost reduction projects more likely to succeed as MDs learn to trust and rely on pharmacists to help them care for their patients.
A business case can be made for obtaining pharmacist resources for medication reconciliation
Multidisciplinary collaboration is necessary
Medication reconciliation activities are only as good as the med list, and pharmacists are the most accurate
Need a clear owner of the process
It is simply the right thing to do for our patients
Pharmacist recruitment impact
Keep patients in the loop, improve patient satisfaction
Next logical steps
information form the hospital to the community pharmacist
automate this process

50. Medication Reconciliation Pharmacist ROI Framework
Example

51. Medication Reconciliation Pharmacist ROI Framework
Example

52. Step 5 & 6: Execute and Measure
Once approved, get started quickly
Develop protocol or procedures
Use forms from other organizations
Involve pharmacy clerkship students/residents
Consider pharmacy technicians if pharmacists aren’t easy to find
If new FTEs are not approved
Work on putting a pharmacist in the ED
Physicians may see big impact
Have pharmacy develop forms and procedures for other disciplines, and provide training
Keep trying
Measure and report outcomes

53. Step 7 & 8: Communicate and Replicate
Communicate updates and successes to key stakeholders
Work to gain credibility and leverage this for future initiatives
Once admission process is going well, repeat above steps again for discharge process
Schedule meetings with providers and pharmacists in the community to discuss two-way sharing of lists

54. Summary Pharmacist performed medication reconciliation
Improves patient safety in a collaborative fashion
Reduces transcription errors (improves accuracy and completeness of med lists and orders)
Maintains continuity of care
Promotes physician collaboration
Improves pharmacist job satisfaction
Decreases workload of nurses and house staff, increasing time available for other activities
A business case can be made for obtaining pharmacist resources for medication reconciliation
Multidisciplinary collaboration is necessary
Reduced mortality by 128 deaths per hospital per year
Reduces pADEs by 15%
Makes future cost reduction projects more likely to succeed secondary to improved MD trust and buy-in

55. Medication Reconciliation: A Golden Opportunity
Medication reconciliation activities are only as good as the med list, and pharmacists are the most accurate
Need a clear owner of the process
It is simply the right thing to do for our patients
Pharmacist job satisfaction and retention
Keep patients in the loop
Next logical steps
Information from the hospital to/from the community pharmacist
Today, we don’t do a good enough job of keeping patients in the loop on what is going on with their medications throughout their hospital stay.
They don’t know why they are on their drugs, what’s changing and why.

56. References
Calculating return on investment. BNET. Accessed May 24, 2010.
Internal rate of return. Investopedia. Accessed May 24, 2010.
Cornish PL, Knowles SR, Marchesano R, et al. Unintended medication discrepancies at the time of hospital admission. Arch Intern Med. 2005; 165(4):

57. Suggested Readings
Lazarou J, Pomeranz BH, Corey PN. Incidence of adverse drug reactions in hospitalized patients: a meta-analysis of prospective studies. JAMA. 1998;279(15):
Hohl CM, Dankoff J, Colacone A, Afilalo M. Ann Emerg Med. 2001;38(6):
Rozich JD, Resar RK. Medication safety: one organization’s approach to the challenge. J Clin Outcomes Manage. 2001;8(10):27-34.
Young D. Massachusetts moves ahead with patient safety initiatives. Am J Health Syst Pharm. 2004;61(5):434,
Whittington J, Cohen H. OSF Healthcare’s journey in patient safety. Q Manage Health Care. 2004;13(1):53-59.
Nester TM, Hale LS. Effectiveness of a pharmacist-acquired medication history in promoting patient safety. Am J Health Syst Pharm. 2002;59(22):
Michels RD, Meisel SB. Program using pharmacy technicians to obtain medication histories. Am J Health Syst Pharm. 2003; 60(19):