Evaluating a new pharmacy acquisition system in multiple sites

Evaluation

and Program

Pergamon

Planning, Vol. 17, No. I, pp. 25-3 I, 1994 Copyright 0 1994 ElsevierScienceLtd Printed in the USA. All rights reserved 0149.7189/94 $6.00 + .oo

0149-7189(93)EOOOl-Y

EVALUATING A NEW PHARMACY ACQUISITION SYSTEM IN MULTIPLE SITES

FRANCES M. WEAVER, JOSEPH D. KUBAL, DIANE C. COWPER, and FRANK M. BONARIGO Health

Services

Research

and Development,

Hines VA Hospital

PAMELA STEIGMAN Department

of Sociology,

University

of Illinois

LAURIE DARCY Outcomes, Research and Development, Joint Commission on Accreditation of Health Care Organizations

JOHN G. DEMAKIS Health Services Research

and Development,

Hines VA Hospital

ABSTRACT This evaluation examined the impact of a newly instituted prime vendor (wholesaler) pharmaceutical system being tested in several Department of Veterans Affairs (VA) hospitals. A quasiexperimentalpreintervention, postintervention design involving 33 VA medical centers (VAMCs), which received theprime vendor system on a trial basis, and 32 hospitals, which served as matched comparison sites, was incorporated. Matching of sites was done by region of the country using several hospital characteristics. Mail questionnaires and in-person and telephone interviews were administered to relevant individuals in the pharmacy, fiscal, and acquisition and material management departments at each of the participating VAMCs. Results indicate that pharmacy and fiscal respondents were more satisfied with the prime vendor system than with the previous system. Drug availability and prescription fill rates improved and warehouse storage space and workload decreased. Drug costs and pharmacy storage space results were mixed.

The Department of Veterans Affairs (VA) currently purchases the majority of its pharmaceuticals through two principal sources: a) the VA depot system which uses national contracts to obtain high volume and high price/high volume drugs, and b) through individual

pharmaceutical vendors using Federal Supply Schedule (FSS) contracts. Each of the 172 Veterans Affairs Medical Centers (VAMC) purchase pharmaceuticals directly from well over 100 separate FSS contract (i.e., nondepot) manufacturers and wholesalers. Purchases of

This research was supported by the Department of Veterans Affairs Health Services and Supply Funds. Many thanks are extended to those individuals that provided assistance and advice in conducting this evaluation. These individuals include Dr. Gustave Rath, Dr. William Henderson, Dr. Kendon Conrad, Dr. William Stiers, Melba Weber, Lynette Kelecich, Cindi Pedersen, Rose Nieves, Steven Wade, Albert Patterson, Tom Osborn, Winston Smith, George Bracy, Dean Martell, the Hines Pharmacy staff, the VA National Acquisition Center, and the 65 participating VAMCs. We also wish to extend our thanks to Dale Duvall and his staff in VACO A&MM for reviewing an earlier draft of this article. Requests for reprints should be sent to Dr. Frances M. Weaver, Health Services Research and Development (151-H), Hines VA Hospital, P.O. Box 5000, Hines, IL 60141.5000.

25

26

FRANCES

M. WEAVER

nondepot drugs totaled $450 million in 1990 alone and accounted for approximately 40% of all VA pharmacy expenditures. Numerous steps (See Appendix A) are involved in the present FSS drug procurement process. These steps include: a) the placing of a paper order by pharmacy, b) the soliciting of a specific vendor, c) the processing and placing of orders with the actual vendors by Acquisition and Materiel Management (A&MM) Service, d) the obligating of monies by Fiscal Service, e) the receiving and checking-in of drug shipments at the facility warehouse, f) the receiving and checking-in of stock in the pharmacy, g) sending the request for payment to the centralized finance center in Austin, TX, and h) the issuing of a check to the vendor from Austin. This process routinely takes 30-45 days from inception to final vendor payment. It is a time-consuming process with many checkpoints and safeguards in place that has not logistically been analyzed for efficiency. In addition to the cumbersome ordering system, many hospitals keep large inventories of drugs to avoid out-of-stock situations. The average inventory value for pharmaceuticals in all VA warehouses was $35.6 million in 1990. Cost containment has been a major focus of VA. As a result of continually rising costs of pharmaceuticals and Federal budgetary constraints, VA has begun to examine viable alternatives to the current material management procurement and delivery system. A prime vendor (PV) system, already in use at many private sector hospitals, was suggested as a solution to these considerable problems. In fact, about 85% of U.S. hospital pharmacy purchases are currently made through wholesalers (Eli Lilly & Company, 1991). The principal component of PV is the procurement of drugs through a local or regional distribution center (i.e., a wholesale company). Theoretically, this type of system should provide the lowest drug prices, identify the best products, keep inflationary increases down, provide longer periods of fixed-prices, avoid unnecessary duplication of purchasing effort, and provide professional purchasing expertise (May & Herrick, 1984). In addition, the rapid turnover time associated with PV systems allow hospitals to reduce inventory stock and decrease the likelihood of stock outages. Under the new PV system (See Appendix A), pharmacy personnel order drugs directly from the vendor electronically through a vendor-provided computer system, orders are shipped directly to the pharmacy bypassing the warehouse, the receiving receipt serves as the invoice, and the vendor is paid based upon the invoice. This system takes advantage of new technological advances in material management such as bar coding, order entry using a telxon (a hand-held computerized input device) or another input device, and other just-in-time inventory concepts. Finally, this new system potentially should decrease the procurement cycle to 24 h, a pro-

et al

nounced improvement over the existing system, and should guarantee a 95+% fill rate. Although existing literature suggested several beneficial outcomes from utilizing a prime vendor (Richardson, 1981; Johnson & Herrick, 1984), this concept has never before been tested in a large government agency such as VA. As a first step, VA decided to pilot test the new system in one facility’s pharmacy. Based on the pasitive qualitative results obtained from this pilot study, VA enlisted the assistance of the Midwest Health Services Research and Development (HSR&D) Field Program to conduct a more rigorous quantitative evaluation of the system prior to implementing the PV in all 172 VA hospitals nationwide. The fundamental goal of the evaluation was to examine the outcomes relative to the use of the new PV systems. It was originally hypothesized that the implementation of the prime vendor system would: a) improve drug availability (i.e., percent of prescriptions successfully filled), b) decrease or stabilize the total cost of drugs acquired and reduce pharmacy inventory costs, c) reduce personnel time and cost spent processing orders (i.e., acquisition costs), d) decrease space required for inventory storage compared to the existing system and, e) improve staff job satisfaction. METHODS A preintervention, postintervention study to assess the benefits and drawbacks of the new system in the 33 VAMCs employing PV on a trial basis was proposed. Since these facilities were not randomly selected, 32 additional hospitals were identified as matched comparison sites resulting in a quasi-experimental design.’ Matching was accomplished based on region of the country and on six VA “complexity” groups within the four VA regions (a complexity group is a VA classification system founded on a hospital’s service type and size). Study participants included hospital personnel at each facility who were involved in various aspects of the current drug procurement cycle. These personnel included: a) individuals from pharmacy responsible for inventory, for development of the initial orders, and, in some cases, for receiving; b) staff from Acquisition and Materiel Management (A&MM) whose main duties include actual ordering from the vendor and receiving and; c) fiscal service staff who obligate existing funds and who are accountable for other financial matters in the procurement process. The number of respondents varied from the pretest to the posttest and from one questionnaire to another resulting in fluctuating degrees of freedom. ‘Although 33 test sites were selected for implementation of the prime vendor system, only 32 sites could be matched with comparable control (customary) facilities, since one test site was a free-standing domiciliary. It is the only one in the VA system, and thus no match could be made.

Evaluating a New System MEASURES Four areas which might be affected by the new PV system emerged from preliminary discussions with project initiators. These dependent variables included: drug availability, costs and inventory ordering behavior, storage space, and job satisfaction. Four mail questionnaires were developed to collect the data. Members of the PV task force, a group of VA professionals who are experts on pharmacy procurement, provided valuable input into the design of these survey instruments. Availability of Pharmaceuticals To assess the availability of pharmaceuticals, specific data were collected on drug name, reason for the outof-stock situation, usual vendor for the drug, and length of time the drug was out-of-stock prior to being dispensed using an out-of-stock tracking form. Every occasion of a prescription not being successfully filled or only partially filled was recorded for a one-week period. The overall number of out-of-stock situations was examined pretest and posttest and between test and comparison groups to see if there was a decrease in stockouts and a resultant increase in drug availability because of prime vendor. It was expected that the percentage of drug prescriptions filled would increase and the delay experienced by patients for out-of-stock prescriptions would decrease in PV sites. Inventory Cost Information Inventory cost information (e.g., total and quarterly dollars spent on drugs, number of purchase orders initiated, dollar value of unusable drugs destroyed, etc.) was obtained from VAMC pharmacies using the pharmacy inventory questionnaire. Additional supplementary information on inventory and costs was also obtained through VA central office. It was anticipated that inventory costs, number of purchase orders initiated and destroyed drugs would decrease as a result of the new system. Storage Space Storage space requirements were measured using cubic feet for pharmaceutical storage in both the pharmacy and the warehouse. In addition, data also were collected on shipment frequency and on time considerations from A&MM staff. It was anticipated that the storage space in both pharmacy and in the local hospital warehouse would decrease as less excess stock needed to be kept onhand for “emergency” purposes. Staff Satisfaction Finally, staff satisfaction with various aspects of current job satisfaction including drug procurement policies and procedures was collected from pharmacy, A&MM, and fiscal services. Using the Minnesota Satisfaction Survey (MSQ; Vocational Psychology Research, 1977) as a pattern, a modified job satisfaction questionnaire was con-

27

structed to assess satisfaction in the three departments involved with drug procurement. Individuals were asked to rate various aspects of their job using a five-point scale which ranged from very dissatisfied to very satisfied. In addition, two questions, specifically related to pharmacy procurement, were added to the questionnaire. It was hypothesized that satisfaction among staff should improve because of direct pharmacy ordering, reduced workload, and less redundancy. PROCEDURES Pretest surveys were mailed in January, 1991 to a coordinator at each facility. This individual then distributed the packets of surveys to pharmacy, A&MM, and fiscal service chiefs. Personnel in each respective area were instructed to return the survey forms to the contact person by a specified date. The site coordinator then mailed the information back to HSR&D for check-in, verification, and analysis. Posttest data were gathered during January, 1992 using the same methodology. In addition to the core questionnaires, a prime vendor perceptions survey was distributed to PV sites only. This survey was designed to obtain information on levels of satisfaction and dissatisfaction with the new system and information that would supplement and validate data derived from the other surveys. Questions included an overall satisfaction rating for their prime vendor, open-ended questions about the elements of satisfaction and dissatisfaction with PV, and comparisons of the workloads and the overall PV system to the former system. To determine whether the two groups were comparable prior to initiation of the prime vendor system, pretest data were compared between the test and comparison sites using t-tests and analysis of variance (ANOVA) procedures. The same statistical analyses also were employed using posttest information. Pre- to postimplementation changes in the dependent variables were analyzed over time separately for test and comparison hospitals using paired f-tests. These procedures helped to differentiate between the effectiveness of the prime vendor system versus the system currently in place. RESULTS Response rates of 9%100% were at.tained on the surveys in the pretest phase and response rates of 95-98% were achieved in the posttest phase. As anticipated, pretest results suggested that test and comparison sites were, for the most part, similar before prime vendor was incorporated in test facilities. Drug Availability Drug out-of-stock data revealed an increase in drug availability in test facilities after PV was implemented. In the pretest, 3,667 instances of drug out-of-stocks were

-_ * x7,-n r KAIVLC>

.“. IV1 WEAVER

et

al.

chase orders increased (See Table 1). These changes also illustrate that test facilities were indeed relying more heavily upon the prime vendor for their pharmaceutical orders while cutting back on other sources of supply at the posttest.

identified (48.8% from test sites and 51.2% from comparison sites [x2 (df = 1) = 2.18; p = ns]) whereas, during the posttest period, 3,568 out-of-stock instances were noted (27.8% vs. 72.2%, respectively [x2(df = 1) = 703.2; p < .Ol]). Not only did the out-of-stock rate improve at test facilities, but the delay experienced by patients for stockout prescriptions at the posttest was substantially shorter than in comparison sites (5.2 days vs. 2.0 days, t (df = 2283) = -34.1; p < .OOOl). Prime vendor had a significant positive impact on patients by reducing the likelihood that a drug would not be available and by reducing the delay experienced when an item was out-of-stock.

Storage Space An analysis of storage space data uncovered few significant differences between test and comparison sites, although two major differences were identified. Paired t-tests revealed decreases in the amount of cubic feet occupied by pharmaceuticals in warehouses at test sites and in the percentage of warehouse space dedicated to storing pharmaceuticals. The percentage of warehouse space devoted to pharmaceutical storage dropped from 15% to 13.4% [t(df = 32) = 1.71,p= .05] and the cubic footage of warehouse space occupied by pharmaceuticals dropped an average of over 2,000 cubic feet in test sites [t(df = 32) = 2.58, p = ,007; 7,900 ft3 to 5,800 ft3] following PV implementation. This trend indicates a diminished reliance on VAMC warehouses to store pharmaceuticals until needed by pharmacy. Unexpectedly, data from the pharmacy inventory survey showed no corresponding drop in storage space in VA pharmacies. Survey participants were contacted by telephone to help explain this anomaly. Many respondents simply indicated that although their actual storage space did not physically decrease, storage space was freed up. Stock was spread out in existing shelf space and removed from aisles, cabinet tops, and elsewhere and placed in the newly available space.

Costs and Inventory Ordering Behavior With respect to inventory and its costs, analysis of the pharmacy inventory data showed that test and comparison sites were comparable at the pretest. However, significant differences existed with respect to the number of purchase orders processed from VA depot, the local warehouse, and local wholesalers/distributors for each quarter of fiscal year 1990. Comparison sites consistently processed fewer orders than test facilities over time. An analysis of covariance (ANCOVA) conducted to account for baseline differences between test and comparison sites indicated that there were no significant differences in the number of purchase orders at posttest between the two groups when controlling for pretest differences. Comparisons over time also were examined. Ordering behavior between the fourth quarter of fiscal year 1991 (pre-PV) and the first quarter of fiscal year 1992 (post-PV) was examined in test sites to identify the impact of prime vendor. As expected, paired t-test outcomes from the inventory survey indicated that purchase orders decreased in test sites for manufacturers, wholesalers, and the VA warehouse while prime vendor pur-

Job Satisfaction Job satisfaction, particularly satisfaction with pharmacy procurement, was examined for pharmacy, A&MM, and fiscal employees. There were no significant differences

TABLE 1 COMPARING

FOURTH

QUARTER

PHARMACY

Purchase

Orders

1991

INVENTORY

TO FIRST QUARTER

1992

QUESTIONNAIRE

4th Qtr

1 st Qtr

FY ‘91

FY ‘92

T

df

P>T

for Test Sites

Manufacturers

6

216.2

3.86

34

0.0005

Wholesalers

259

37 6

31.4

3.06

34

0.005

VA Depot

28.2

29.7

VA Warehouse

57.7

47.7

0.9

17.3

10.6

9.0

Prime Vendor Other Total

397.5

Destroyed Depot

Drugs Drugs

Total

Note:

2.18

NS

34

0.04

-4.57

34

0.0001


34 2.47

36

$545

$323

1.18

25

$496

$401

1.78

25

$1286

Drug Purchases

34

NS 0.02

for Test Sates

Drugs

Nondepot

358.5


$1 ,l 10,832

NS = not statistically

signtficant

$1003 $969,565

0.79

26

2.28

38

NS 0 09 NS 0.03

Evaluating found when mean job satisfaction ratings were examined by test versus comparison sites in the pretest. However, there was a significant difference in mean job rating by department at the pretest [F(df = 2,610) = 9.59; p < .OOOl]. A&MM staff were slightly more satisfied with their jobs then either pharmacy or fiscal service staff. When the two additional questions regarding pharmacy procurement were examined individually, significant differences were noted by department but not by test versus comparison sites. Pharmacy respondents were predominantly responsible for these differences. Pharmacy respondents were significantly less satisfied with the current system for drug procurement [F(df = 2,620) = 92.97, p = .OOOl] and with existing policies and procedures for pharmacy procurement [F(df = 2,617) = 109.50, p = .OOOl] than either A&MM or fiscal respondents. Once again, at the posttest, no significant differences were found when mean job satisfaction ratings were compared by test versus comparison groups. In addition, there were no significant differences in mean job ratings by department at posttest. However, when the two pharmacy procurement questions were examined at posttest, significant differences were noted by test versus comparison sites. Satisfaction ratings were significantly higher in test sites than in comparison VAMCs for procurement policies [F(df = 234) = 16.45, p = .OOOl] and present procurement system questions [F(df = 231) = 45.75, p = .OOOl]. A series of paired f-tests were used to determine whether there were significant changes in satisfaction ratings over time as a function of prime vendor (See Table 2). There were no significant changes for the comparison sites, but pharmacy respondents at test sites showed significantly improved satisfaction for procurement policies [t(df = 32) = 3.76, p < .0007] and the system for procuring nondepot pharmaceuticals [t(df = 32) = 7.76,p< .OOOl]. Respondents from fiscal showed a slight increase in satisfaction with procurement, whereas A&MM respondents indicated slightly less satisfaction for the new system and its policies over the established system. Consequently, prime vendor appears to have had a positive effect in test sites. Prime Vendor Survey Findings Respondents at prime vendor sites also were sent a survey specifically asking about the prime vendor at the posttest. Results indicate that the vast majority of pharmacy respondents (84%) and fiscal respondents (70%) were satisfied with prime vendor. A&MM respondents were less satisfied overall with the prime vendor; only 38% of the A&MM responders were satisfied while almost 38% were ambivalent to the new system. This result may relate to increased anxiety on behalf of A&MM personnel who feared the loss of some job functions and who may have had apprehensions about layoffs or job realignments.

29

a New System TABLE 2 COMPARING PRETEST AND POSTTESl SATISFACTION QUESTIONS Pretest Mean A. Pharmaceutical Test

Posttest Mean

Procurement

T

df

P>T

Policies

Pharmacy A&MM Fiscal Control

2.53 3.86 3.48

3.25 3.48 3.64

-3.76 1.91 -1.64

32 32 32

Pharmacy A&MM Fiscal

2.66 3.56 3.54

2.59 3.52 3.48


31 31 31

0.0007 0.07 0.08 NS NS NS

B. Present System for Nondepot Pharmaceutical Procurement Test 0.0001 -7.76 32 2.41 3.84 Pharmacy NS 1.68 32 3.83 3.39 A&MM NS -1.32 32 3.46 3.60 Fiscal Control NS
The areas of dissatisfaction mentioned most frequently related primarily to implementation problems as many facilities were not fully operational at the time of the posttest evaluation. On the other hand, when asked about areas of satisfaction, respondents (particularly pharmacy) were satisfied with next day delivery, fill rates, ease of ordering and paying, and reduction in inventory and storage space requirements. Almost 100% of the pharmacy respondents, over two-thirds of A&MM, and over 75% of fiscal respondents felt that prime vendor was better than the previous system. Finally, respondents were asked to compare the workload requirements of the prime vendor to the previous system. There was a lot of variability in responses to this particular question. Most A&MM respondents (73%) said that PV was less work than the existing system. This was to be expected as many of A&MM’s former duties were being replaced or modified by pharmacy. Fiscal respondents were divided fairly evenly between less work, more work, and the same amount of work. Although 53% of pharmacy respondents said that the PV was less work, another 37% felt that the PV involved more labor than the previous system. One explanation might be that implementing a new system is generally more work than utilizing an older, established system with which everyone is familiar. In addition, since pharmacy persons had a much larger role in the procurement system as a result of prime vendor, it is not surprising that many felt that the workload did increase. Despite the workload considerations, respondents on the whole were satisfied with the prime vendor program.

FRANCES

30

M. WEAVER

COMPLICATIONS Several interesting problems were encountered during the conduct of this project. Coordination of 65 sites with one to two primary contacts and three to four secondary contact persons at each site was a major accomplishment of the research team. In spite of the size of the project, only one site did not provide any of the information requested at the pretest and for the ensuing follow-up (a compliance rate of 98%). One problem arose related to the job satisfaction survey. Protests were elicited from several hospital labor relations boards in response to the job satisfaction questionnaire which was mailed to hospital staff during the pretest phase of data collection. The labor boards were concerned that the information provided on such a survey could be used effectively to cut positions or realign jobs, particularly if the research results suggested that this was practical. A new cover letter was designed for the posttest which stressed that information derived from the questionnaire would be presented in aggregate form only and that no individual or institution would be separately identified. Individual participants also were given the opportunity to return the survey directly to the HSR&D research team rather than submit it through the facility contact. Some protests were still voiced on this matter during the posttest collection and the response rate was probably affected somewhat by this issue. General demographic information was even more suspect as some employees did not want to give “confidential” information on age, educational status, sex, race, etc. Another general problem related to the willingness of departments within VA hospitals to complete the questionnaires. Whereas pharmacy service was in favor of a PV system which would give them much more control in procuring pharmaceuticals, acquisition and, to some extent, fiscal services in many hospitals were wary of the PV system because they felt that some of their power, and potentially staff, would be taken away as a result. Some misinformation was circulated among A&MM staff which fueled further apprehension about the PV system. The prime vendor system originally was scheduled to be implemented in April, 1991. However, a major obstacle was encountered that impeded timely implementation of the new system. The contracts that were awarded to the four vendors were protested by other suppliers. The protests subsequently were overturned after going through a Government Accounting Office review but not without several months delay. The prime vendor system was finally activated at test sites in November, 1991. As a result of this delay, much of the posttest data was preliminary in nature. Posttest data were collected at a time when implementation was not yet fully completed at all sites. The PV was tested for only 3 months rather

et al

than the intended 6 month period. Nonetheless, the trends in the posttest data suggest that prime vendor is making the intended impact on the system.

DISCUSSION The pretest results suggest that pharmacy and A&MM staff felt that the present procurement system for Federal Supply Schedule (FSS) drugs could be improved upon. The system was too slow, there were too many steps involved, and there were too many vendors to deal with. Also, communication between pharmacy and A&MM was not always very good. Respondents suggested improving the system by reducing delivery time, eliminating A&MM as the middleman and allowing pharmacy to do direct ordering, and allowing greater flexibility in ordering from mandatory sources. The prime vendor concept was designed to improve upon the existing system, taking into account many of the suggestions proposed by pharmacy personnel. Pretest data on pharmacy inventory and warehouse storage suggested that close to 50% of all pharmaceuticals purchased by VA pharmacies were posted stock which tied up approximately 8,000 cubic feet of warehouse space, which equated to approximately $235,400 in storage costs per facility. This figure represents a significant amount of inventory dollars that could be utilized in other ways if storage were not necessary. The results of the posttest indicated that several areas improved as a result of prime vendor. Test sites reduced orders to manufacturers and wholesalers and began to rely on the prime vendor for FSS purchases. There were no significant reductions in storage space in test site pharmacies as a result of PV. This result was unexpected. However, several test sites indicated that whereas their total storage space did not change, they were able to take advantage of the additional room created by reduced inventory to spread their inventory out, thus eliminating the cramping that they experienced before PV. The storage space required in warehouses dropped an average of over 2,000 ft3 after prime vendor. The value of posted stock dropped an average of $75,00O/site in prime vendor sites as a function of the test. This drop represents close to a $2,500,000 reduction across 33 test sites in a l-year period. Instances of out-of-stock situations and delay to patients in test sites also decreased dramatically after prime vendor was initiated. Thus, prime vendor also indirectly affected quality of patient care. Satisfaction with the procurement system improved significantly after prime vendor began, particularly for pharmacy respondents. However, there were some areas that could be improved in the prime vendor system such as developing complete lists of FSS items, providing uniform standards for implementing prime vendor, and improving trust with prime vendor, particularly with regard to pricing issues.

Evaluating

The current evaluation played a critical role in expansion plans for Phase II implementation of prime vendor. A group of 80 additional sites were brought onto the new system in April, 1993. Tentatively, all VA hospitals nationwide will be using the prime vendor system for the procurement of nondepot pharmaceuticals by the end of 1993.

Respondents also were pleased with 24-hour delivery, fill rates, and the ability to order directly from the prime vendor. The workload incurred from prime vendor seems to vary by respondent. A&MM, in particular, noted reduced workload requirements. The vast majority of respondents considered PV to be a major improvement over the existing system. The total effects of prime vendor on test facilities were not fully captured due to the time constraints placed on the project and because of the later than anticipated signing of the prime vendor contracts. As such, all test sites were in various stages of implementation while the posttest evaluation was being conducted. Many pharmacy personnel mentioned that the full benefits from the system had not yet been realized at their facilities and that PV was just starting to impact the system at the time of the posttest evaluation. Nonetheless, the trends evidenced from the data after only 3 months of prime vendor indicate that prime vendor in Department of Veterans Affairs is an improvement. In addition to the reduced storage requirements, decreased spending and improved delivery and fill rates, patients benefitted from fewer out-of-stocks and reduced delays. If trends continue as anticipated, the prime vendor system should improve the efficiency and effectiveness of pharmacy procurement in VA.

REFERENCES LILLY & COMPANY.

ELI

1991: Survey

(1991). Lilly

of 1990 operational

data.

hospitalpharmacy surve_v, Indianapolis: Eli Lilly and

Company.

JOHNSON, L.H. & HERRICK, J.D. (1984). Evaluating group purchasing through a prime vendor. American Journal o.f Hospital Pharmacy,

41, 1783-1787.

MAY, B.E. & HERRICK, ment

alternatives.

J.D. (1984).

Amrrican

Evaluations

Journal

of’drug

of Hospiial

procure-

Pharmacy,

41,

for the small hospital.

Hos-

1373-1378.

RICHARDSON, pital

VOCATIONAL Satisfaction

AND PROPOSED

J.C. (1981). Purchasing

Management

APPENDIX THE EXISTING

31

a New System

Quarterl_v,

2(4),

45-48.

PSYCHOLOGY RESEARCH. (1977). Minneso/a Minneapolis: University of Minnesota.

Queytionnaire.

A

DRUG PROCUREMENT

SYSTEMS

stage 1

3

2

Current

4

5

Procurement System

Drug

(Non

6

Depot:Unposted

7

Drugs/Pharmacy

order

Fiscal

A&MM

Order

purchase

Send

from

obligates

generates

in Warehouse

Pharmacy

determined

Pharmacy

order.

receiving

Checked

or PPM

by A&MM

A&MM.

report

by A&MM

verify

Fiequres

Fiscal

Revalidated

product

Pharmacy

obllgatlon

Input

vendor

Fiscal

Any

Purchase

retypes

forms

reconciled

(by regulation)

from

order

to

by

Source

of

must

be

to to

for

declslon order

to stock

in

(Chance

Pharmacy

Order

determines

places

order

obligated

will

by either

source

directly

to

using

order

Vendor

1358

(Proposed

print placed

Prime

Vendor

in Fiscal.

to pnme

provides

(More

accurate

IFCAP

vendor

comprehensive

immediate

data

feedback

comparable

drug

prices

available.)

ease

for

determlnlng source

)

Austin

matches

report

report

to

orders,

pays

who

A&MM.

Fiscal

for

vendors

must the

PPM

to

input

to Log

I

verification

for

Order

(Allows

Receiving

by Pharmacy

)

Pharmacy

of

Days)

is not

Cost If

1358

input. adjusted (Fewer

obligations with

more

line

items

serve

System)

(Time. received

as the

either

or In

the

Pharmacy

recelwng

or

to Fiscal

pays the

for payment

vendor

Fiscal

pays

Receiving

using

1358

reports

Warehouse

(There

report.

with

PPM

A&MM

role

There

a one-time

Austin

IS the invoice

receiving

verification

)

The report

Pharmacy A&MM

to

1 Day)

is no

is weekly reconclllatlon. so sub-account costing.)

completed by faclllty

(Often

payment Mailed

or

not

current,

electronic

loss

distribution

payment

to cost

discount

center

Pharmacy

base

14-30

10

Receiving

pharmacy

errors

vendor

(Time

received

9

differences

by A&MM

Prime

Order

by Pharmacy

to

Prime Pharmacy

received

Supplies)

Place

Declslon

8

so

of prompt

)