Prospective-pricing strategies for hospital and departmental effectiveness: the pharmacist's response.

Strategies a pharmacy department used to identify product costs and cost of drug therapy by case type are discussed. To define its intermediate products, the pharmacy identified 300 of 7500 line items on the formulary as representing 95% of its drug costs. This information, coupled with workload measures and component costs such as labor and supplies, was used to identify the cost of the pharmacy's products. A retrospective drug-therapy analysis conducted on total-hip-replacement procedures showed that drugs can be indicators of the severity of medical problems and hence good predictors of total hospital cost per case. Intermediate-product costing can be used to determine end-product profitability. Clinical pharmacists can help substantially in trying to determine the total cost of drug therapy, and they can help by developing standard treatment patterns with cost standards for treating patients in specific DRGs.