Purchasing compliance is difficult for any pharmacy. Adhering to a complex set of requirements for one vendor is hard enough in a deliberately opaque pharmacy purchasing ecosystem.
Health system pharmacies contend with an even more complicated landscape. On top of requirements with their primary vendor/wholesaler, many work with a group purchasing organization (GPO). These pharmacies must also differentiate 340B, WAC and GPO accounts and manage accumulation levels. With all those variables, are you certain your Health system pharmacy is always fully compliant?
There are significant risks to non-compliance. But even if you’re just meeting the requirements, you’re still missing out. On the other hand, by optimizing compliance—squeezing every advantage out of your agreements—you can drive savings, efficiency and team satisfaction. Keep reading to learn what’s really at stake.
The Difference When It Comes to Compliance
Source compliance rate, included/excluded products, market share rebate tiers, minimum purchase and more: Between your primary vendor and GPO agreements, there’s a staggering amount of requirements and data metrics to track! Yet when Health system pharmacies don’t maintain compliance, they lose money to non-compliance penalties and missed savings opportunities.
Keep in mind that compliance is a two-way street. It’s about more than your pharmacy adhering to its agreements. Submitting a purchase order should mean receiving the right product at the expected quantity for the agreed-upon price. But everyone, including vendors and GPOs, makes mistakes. When a vendor or GPO fails to comply, pharmacies lose big.
Looking at the variance between the value of received products versus how much pharmacies paid for those items, SureCost’s 2024 Smarter Purchasing Report found that one pharmacy had an actual dollar loss of $3.5M. They are paying for the wrong items, incorrect quantities or even products they didn’t receive.
Looking at GPO pricing, on average, annually, about 15% of GPO-qualified purchases were priced incorrectly. Some pharmacies saw almost 55% of their GPO spend lost to incorrect pricing. These pharmacies aren’t getting the prices they literally bargained for, another costly and frustrating consequence of non-compliance.
On the other hand, optimizing compliance means avoiding penalties, maximizing rebates and fully leveraging your contract terms to unlock savings, lower cost-of-goods-sold (COGS) and yield better margins.
The Best Solution to Optimize Compliance
A purchasing management solution empowers pharmacies to do more than just meet compliance. A system like SureCost integrates all of your vendor agreements so you see the potential impact of each purchasing option on compliance before you submit a purchase order (PO). That includes modeling rebates and checking availability. It also analyzes all vendor catalogs, including primary/wholesaler, manufacturers and tertiaries. With a truly unified catalog, you can shop an expanded vendor portfolio without worrying if you’ll compromise compliance.
A smarter purchasing solution also enables you to maximize your GPO agreement. For example, integration with 340B splitters (as well as EMR, wholesaler and manufacturer platforms) allows the system to automatically check for better prices across GPO, 340B and WAC accounts. A splitter may assign an item to 340B, but SureCost compares all purchasing options and shows you the best one.
With your entire purchasing process unified under one interface, receiving becomes easier and more accurate. In addition to confirming the product, quantity and price at receiving (and alerting you of any issues), you can easily track GPO and vendor rebates up to confirming receipt of accurate reimbursements.
With your entire purchasing process unified under one interface, a simple dashboard enables you to easily check generic compliance ratio, minimum/maximum spend and other compliance metrics. You can build a data-driven purchasing strategy to improve compliance performance and your team’s purchasing decisions. A “single source of truth” also simplifies record-keeping and maintains an accurate “electronic paper trail” in case of an audit.
The Right Choice for Busy Teams
While GPO and vendor agreements aren’t getting simpler, pharmacies have options to simplify how they integrate them into their purchasing. A solution like SureCost allows you to harness a single tool for compliance and accountability for your vendors and GPO. It also helps align staff on compliance and overall purchasing strategy without complicating their already full workload.
Staff shortages and burnout are on the rise. Turnover is expensive but increasingly common. Health system pharmacies need to give their teams every advantage and reduce their workload as much as possible so they stay satisfied and in their positions. The right purchasing management solution streamlines workflows while reducing repetitive tasks and tedious, error-prone manual processes. Instead of losing time and energy to non-clinical tasks, staff get back literal hours to focus on patient care.
Optimizing compliance should be integral to Health system pharmacy operations. Despite increasingly shrinking margins, there are huge cost-saving opportunities. There are also significant gains in efficiency and workplace satisfaction. But reaching those goals requires the right solution.
