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“In pharmacy, we’ve got big targets on our back … Any opportunity that we have to get better visibility, better accessibility, better pricing—those are opportunities that we should be really looking for.”
—Tyson Frodin, PharmD, assistant vice president of pharmacy supply chain for MultiCare Health System in Becker’s Hospital Review
The pharmacy supply chain has always been a linchpin for patient care at health systems. Rising drug costs, increased shortages and other industry challenges now reinforce that critical role while adding significant challenges to pharmacy procurement.
In this blog post, we’ll examine how MultiCare Health System proactively leverages business analytics, partnerships and pharmaceutical procurement strategies to serve patients, drive efficiency and boost savings in the face of these challenges.
Cost Optimization
U.S. drug prices are some of the highest worldwide. High demand, a dynamic marketplace and supply chain disruptions will remain factors for the foreseeable future. That’s why health systems must ensure they consistently find the best prices, which means leveraging data analytics to identify which drugs they’re paying too much for and to find better options.
For MultiCare, partnering with Mark Cuban Cost Plus Drug Company (Cost Plus Drugs) allowed them to reduce the wholesale acquisition cost (WAC) on 125 prescription drug products. Becker’s Hospital Review reports that MultiCare saved about one million dollars between April and October. Those savings provide meaningful reinvestment opportunities into new service lines, automation and technology.
Healthcare systems, as well as independent retail pharmacies and long-term care (LTC) facilities, also leverage advanced pharmacy procurement software to optimize pharmacy purchasing. A solution like SureCost integrates all vendor catalogs into a single interface, providing a comprehensive, real-time view of all available purchasing options. The solution instantly analyzes options based on actual cost and other variables alongside your pharmacy compliance requirements and organization’s goals.
Spend Transparency
MultiCare’s partnership also provided better visibility into spending. For example, even amid drug shortages, this healthcare system reduced its replacement therapy spend from $733K in 2023 to $350K the following year.
Similarly, SureCost users leverage enhanced business analytics to identify potential savings. Greater visibility into spending also allows these pharmacies to analyze where they’re losing money. For example, using SureCost, pharmacies realized they were overspending, on average, about 15% on incorrectly priced items from their group purchasing organization (GPO). One pharmacy’s percentage of total spend lost to GPO non-compliance was as high as 96%.
Download SureCost’s Smarter Purchasing Report for more information about the level of transparency and savings pharmacies gained from the right pharmacy procurement software.
Vendor Diversification
Multicare’s relationship with Cost Plus Drugs is an example of moving beyond traditional sourcing models. That doesn’t mean abandoning trusted partnerships; primary vendors and GPOs will always be your primary resource. But expanding your vendor portfolio, layering in alternative channels, opens up more options for savings.
Along the same lines, SureCost users have gained flexibility and responsiveness through enhanced pharmacy procurement. By using SureCost to shop outside the top 200 most frequently purchased generic drugs (the “top 200”), pharmacies reduced their cost of goods sold (COGS) by approximately 10%. HAC Pharmacies calculated that, through SureCost, they saved $200K within four months.
As healthcare systems expand and diversify their vendor portfolio, they’ll also need to monitor their compliance with vendor agreements and compliance by vendors (i.e., receiving the right product at the correct quantity for the agreed-upon price). Purchasing compliance is already difficult for any pharmacy; it’s a deliberately opaque pharmacy purchasing ecosystem. Health system pharmacies contend with an even more complicated landscape, including differentiating 340B, WAC and GPO accounts while managing accumulation levels.
Here, a unified pharmacy procurement solution is essential. You can shop an expanded vendor portfolio—including primary, GPO, secondaries, tertiaries, direct from manufacturers, etc.—without worrying if you’ll compromise compliance. The solution shows the potential impact of each purchasing option on compliance before you submit a purchase order, including rebate modeling and checking availability with pharmacy compliance software.
Supply Chain Resiliency
Vendor diversification also strengthens resilience against shortages. Healthcare systems have more options and back-ups when the next drug shortage hits. Resilience metrics (e.g., shortage spend, lead-time stability, drug availability) are now core business intelligence for competitive health systems. Instead of just reacting when the next drug shortage occurs, teams are empowered to anticipate risks and take action to maintain continuity of patient care.
Again, pharmacy procurement software makes all the difference. A feature like Drug Shortage Insights™ provides early alerts, duration forecasting and data-driven recommendations for alternates. Instead of just refreshing FDA updates, tools like this synthesize the latest FDA data with insights from a nationwide vendor network. Pharmacies can respond more quickly to disruptions and safeguard their margins, saving time and money while alleviating the impact of drug shortages on patients and healthcare teams.
Takeaways
Health systems should invest in robust data visibility and analytics tools that allow pharmacy and supply-chain leaders to compare prices and costs in real time, based on multiple factors tailored to their specific goals. Decisions rooted in data—not assumptions—enable targeted action without compromising quality or compliance. They should also adopt a multi-channel sourcing strategy to increase savings while minimizing supply disruptions and dependency risk.
Successful health systems leverage innovative practices and best-in-class technology to maintain high-quality patient care and enhance their operations. MultiCare’s pharmaceutical procurement strategy offers a strong case study in how a health system can rethink its pharmacy supply chain as a strategic enabler. SureCost users demonstrate how pharmacy procurement software, combined with innovative strategies, enables health systems to control costs and mitigate industry challenges, so patients don’t feel the burden.
