Management consultant review of three departments of pharmacy to identify cost-reduction opportunities.

A review by a management consulting firm to identify cost-reduction opportunities at three hospital pharmacy departments is described. A multihospital corporation hired a management consulting firm to review the operating procedures of several departments, including pharmacy, and recommend measures for reducing costs. A team approach was adopted to enable the pharmacy department managers and the consultants to freely contribute their expertise; input was also solicited from staff members. A review of each pharmacy department's operating costs showed that drugs and i.v. supplies consumed 60-67% of the expenses, and salaries and wages 27-36%. Estimates of the full-time equivalents allocated to inpatient, clinical, support, and ambulatory and outside contract service activities were compared. The relative costs of personnel allocated to all inpatient drug distribution activities were also compared. Cost-reduction recommendations were divided into short- and long-term measures. Short-term measures involved decreasing drug expenditures, decreasing the number of personnel, and limiting decentralized services in one of the departments; savings of $500,000 were projected. Long-term recommendations involved increasing the use of technology, expanding the use of technicians, and consolidating the management staffs among the hospitals. Management consultants, in cooperation with pharmacy department managers and staff members, can identify cost-reduction opportunities without compromising patient care.