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

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

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

Developing a business case for new programs, services and personnel

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

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 1 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

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 6. Resource requirements/financial implications Table of contents 7. Milestones, schedule and action plans Background 8. Summary Proposal of services to be provided 9. Supporting documentation/appendices Benefits of the proposal

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 6. Resource requirements/financial implications Table of contents 7. Milestones, schedule and action plans Background 8. Summary Proposal of services to be provided 9. Supporting documentation/appendices Benefits of the proposal 8

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 6. Resource requirements/financial implications Table of contents 7. Milestones, schedule and action plans Background 8. Summary Proposal of services to be provided 9. Supporting documentation/appendices Benefits of the proposal 9

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 6. Resource requirements/financial implications Table of contents 7. Milestones, schedule and action plans Background 8. Summary Proposal of services to be provided 9. Supporting documentation/appendices Benefits of the proposal 10

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 6. Resource requirements/financial implications Table of contents 7. Milestones, schedule and action plans Background 8. Summary Proposal of services to be provided 9. Supporting documentation/appendices Benefits of the proposal 11

Resource Requirements/Financial Implications Labor expense (salary plus fringe) Pharmacists Technicians Others Supplies Travel Computer Office Return on Investment (ROI) analysis Executive summary 6. Resource requirements/financial implications Table of contents 7. Milestones, schedule and action plans Background 8. Summary Proposal of services to be provided 9. Supporting documentation/appendices Benefits of the proposal 12

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 6. Resource requirements/financial implications Table of contents 7. Milestones, schedule and action plans Background 8. Summary Proposal of services to be provided 9. Supporting documentation/appendices Benefits of the proposal 13

Summary Conclusion Succinctly tell ‘em what you told ‘em Proposal Benefits Know the organization’s strategic plan and link to it Executive summary 6. Resource requirements/financial implications Table of contents 7. Milestones, schedule and action plans Background 8. Summary Proposal of services to be provided 9. Supporting documentation/appendices Benefits of the proposal 14

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 6. Resource requirements/financial implications Table of contents 7. Milestones, schedule and action plans Background 8. Summary Proposal of services to be provided 9. Supporting documentation/appendices Benefits of the proposal 15

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 6. Resource requirements/financial implications Table of contents 7. Milestones, schedule and action plans Background 8. Summary Proposal of services to be provided 9. Supporting documentation/appendices Benefits of the proposal 16

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

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

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

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

Elevator Speech Quick 30-60 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

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

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

Return on Investment (ROI) Analysis

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 6. Resource requirements/financial implications Table of contents 7. Milestones, schedule and action plans Background 8. Summary Proposal of services to be provided 9. Supporting documentation/appendices Benefits of the proposal 25

ROI Financial tool that measures the economic return of a project or investment ROI = Net benefits / costs X 1001 http://www.bnet.com/2410-13240_23-66470.html?tag=content;col1

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 http://www.investopedia.com/terms/i/irr.asp

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

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

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

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

Model ROI Format Example

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) $ 284,078 Released FTE Savings (5) $ 93,600 $ 96,408 $ 99,300 $ 102,279 $ 105,348 $ 496,935 Carrying Cost (6) $17,045 $ 18,493 $ 20,065 $ 21,771 $ 77,375 Product Shrinkage (7) Outdate Reduction (8) $15,000 $15,750 $16,537.50 $17,364.38 $18,232.59 $ 82,884 TOTAL INVESTMENT (with Inventory Reduction) $ (397,577) $ 361,550 $ 98,075 $ 103,203 $ 108,581 $ 114,223 $ 418,055 IRR 40% Payback (years) 2.0 Example

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

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…

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)

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):424-429

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

Presentation Pearls

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’

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

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…

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

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?

A Model Business Case: Pharmacist Justification for Inpatient Medication Reconciliation Steve 45 - 56

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

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

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

Medication Reconciliation Pharmacist ROI Framework Example

Medication Reconciliation Pharmacist ROI Framework Example

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

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

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

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.

References Calculating return on investment. BNET. http://www.bnet.com/2410-13240_23-66470.html?tag=content;col1. Accessed May 24, 2010. Internal rate of return. Investopedia. http://www.investopedia.com/terms/i/irr.asp. 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): 424-429.

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):1200-1205. Hohl CM, Dankoff J, Colacone A, Afilalo M. Ann Emerg Med. 2001;38(6):666-671. 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):434,437-438. 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):2221-2225. Michels RD, Meisel SB. Program using pharmacy technicians to obtain medication histories. Am J Health Syst Pharm. 2003; 60(19):1982-1986.