Mid-Atlantic Purchasing Coalition Pharmacy Network’s members ask not only what the group can do for them, but what they can do for the group.
A broader outlook means greater savings – for members and their purchasing network. At least, that’s what the folks at Mid-Atlantic Purchasing Coalition Pharmacy Network (MAPC Rx), a VHA SupplyNetwork ™, have discovered. Since the group was started in 2012 to reduce acquisition costs through contract aggregation, its members have begun focusing less on the benefits to be had for their individual hospitals, and more on the advantages available to the network as a whole.
So, when negotiations were underway recently for a hemostatic agent, even though the new product would cost some members more than the brand they currently were using, they made the switch, knowing it would result in greater savings for the network. The mindset appears to be working. In its first year alone, MAPC Rx achieved over $2.9 million in implantable savings, with about a third of that coming from contracts. In 2013, the network’s savings grew by 48 percent to $4.3 million, and it anticipates a $5-million savings in 2015.
The Journal of Healthcare Contracting recently spoke with Allison Tauman, PharmD, MPH, director of pharmacy networks, performance services, VHA, Inc. and Chrissy Schabacker, PharmD, BCPS, pharmacy implementation manager, Mid-Atlantic Purchasing Coalition, about the network’s initiatives, which have driven its growth and financial success.
The Journal of Healthcare Contracting: How has MAPC Rx grown since it was founded?
Allison Tauman and Chrissy Schabacker: MAPC Rx has evolved into a member-driven collaborative that reduces pharmacy costs while also focusing on clinical outcomes. It is the fastest growing pharmacy network within VHA’s SupplyNetworks™, based on both number of member hospitals and total pharmacy spend. In 2012, MAPC Rx consisted of 17 hospital-systems. New members have been added each year, and the network now has a membership of 27 systems – a growth of 60 percent in less than three years. We anticipate adding new members in 2015 and in the future.
JHC: Have you found the network is providing members with more advantages than originally expected?
Tauman and Schabacker: MAPC Rx works diligently to combine contracting strategies with clinical initiatives around drug utilization that complement contracts. In fact, only 25-50 percent of our cost reduction projects are contracting strategies alone. Our approach to contracting includes the adoption of leading clinical practices and value-based purchasing. As a result, the majority of our members’ savings come from clinical and utilization initiatives. However, in pure contracting projects, the network’s ability to pull through purchase volume to a single supplier has benefited members and earned a positive reputation with suppliers.
JHC: What are the top intiatives MAPC Rx has pursued in the last 12 months?
Tauman and Schabacker: Our top priority contract in 2014 was for intravenous immune globulin and albumin, due to the high cost and large member spend on these medications. We standardized suppliers and now maintain over 80 percent market share for these products, which has resulted in roughly $1.4 million in savings.
A second key project has been to address the rapid price increase for IV acetaminophen. We have worked with the supplier to secure member savings through contracting. Additionally, we have reviewed national benchmark data and drug utilization patterns at the member level. Through collaboration with MAPC Rx prescribers, we have implemented new evidence-based protocols that have resulted in further savings.
A third area of focus has been oncology drugs. Most chemotherapy medications are single-source and clinical guidelines necessitate their use. As a result, there is not much opportunity to extract traditional savings in this class. However, whenever possible, we have worked with our oncologists to determine therapeutic equivalence within a class and to request proposals from suppliers for increased commitment. As an example, we have had success with a drug class used to treat prostate cancer, which has saved MAPC Rx members over $2 million.
JHC: How has being part of a regional pharmacy network enabled members to leverage their buying power?
Tauman and Schabacker: MAPC Rx’s track record as a high-performing and committed network is its biggest asset. This is a direct reflection of the therapeutic conversion work performed by member hospitals. Members have gotten better and smarter about taking off their what’s-in-it-for-me hat and replacing it with a MAPC Rx hat. A good example of this involved a recently negotiated contract for a hemostatic agent used in the operating room. There were members that could have stayed with the incumbent at a lower cost; however, the total available savings for the network were greater with the competitor. The members agreed to move to the new supplier for the overall benefit of the network. Currently, we are greater than 90 percent standardized to this hemostatic agent, and the new supplier has been a great partner.
JHC: Please explain the process whereby your pharmacy executives meet and make their decisions.
Tauman and Schabacker: MAPC Rx is comprised of pharmacy leaders from member hospitals – typically directors of pharmacy. David Grant, vice president of patient services, Summit Health, currently serves as the committee chair. The network acts as a single decision-making entity for the purpose of contracting and clinical cost reduction. Network members vote on contracting projects using a weighted vote based on pharmacy spend. The network is supported by a full-time and a part-time pharmacist, and a full-time senior analyst, all of whom are employed by VHA. The pharmacists and analyst provide clinical information and financial analytics to guide the decision-making process. Network members meet individually with VHA pharmacists each month to discuss the projects and how to overcome barriers to implementation of therapeutic conversions. The network members also meet monthly as a group, generally via conference call, to discuss the contracting projects, vote on new projects and to share leading practices. Additionally, four in-person meetings are held throughout the year for peer networking and project discussion.
JHC: Please explain how MAPC Rx co-exists with the GPO.
Tauman and Schabacker: MAPC Rx works with Novation to offer enhancements on existing base agreements. We also have a dedicated sourcing executive at Novation for the pharmacy networks who facilitates custom contracts when the GPO contract is not available. Additionally, MAPC Rx has increased flexibility to contract, and the suppliers appreciate the high level of commitment that our network members deliver.
JHC: How do you ensure that the interests of each of your member facilities are considered, and that each facility’s needs are met?
Tauman and Schabacker: MAPC Rx members collaborate to develop a project plan annually to determine which drug categories will be reviewed for the upcoming year. As part of the planning process, the VHA pharmacists and analyst review the projects to ensure the savings are balanced across the membership according to size. Within the project plan, there are points where the members can vote by majority to abandon it or continue, so there are always checks during the process and the ability to change course. Member satisfaction with the process and the network’s performance are measured annually with a survey, and the results have been consistently high.
JHC: Is it difficult to get buy-in to the network’s contracts from each of your facility’s physicians and staff?
Tauman and Schabacker: The pharmacists on the committee have great access to the physicians and decision makers in their hospitals. This has made it much easier to build consensus. The VHA pharmacists have also been available as a resource to work with physicians to help gain buy-in for therapeutic conversions and transitions to new evidence-based clinical protocols for medication management. The network also utilizes physicians from other member hospitals as references and for benchmarking data and clinical evidence to gain consensus. This has allowed MAPC Rx hospitals to enter into some aggressive, highly committed contracts with exceptional cost savings.
JHC: In additional to the cost-savings MAPC Rx has achieved through greater volume purchasing, what has been the greatest benefit of the network to its members?
Tauman and Schabacker: MAPC Rx members say they see tremendous value in the ability to problem solve and exchange ideas with each other, as well as to share policies, guidelines and other resources. The MAPC Rx staff maintains a website, which includes the clinical evidence and documents to support each project that has been implemented by the committee. Additionally, we are starting to look at procurement of alternatives during drug shortages, which is a big benefit.
JHC: How do you envision MAPC Rx in five years?
Tauman and Schabacker: Over the next five years, we would like to improve our benchmarking ability to provide even more insight for members about drug utilization trends within our network. We also envision MAPC Rx forming more creative ventures with suppliers, including, perhaps, more risk-sharing or data-share agreements for some of the single source newer branded drugs. We will also be pursuing purchased-services agreements and other non-pharmaceutical contracts related to hospital pharmacy services. As our network grows, we will continue to expand our ability to meet the needs of the members by providing new opportunities for cost reduction and clinical improvement.