Managing a hospital pharmacy budget is no small task. With increasing medication shortages, evolving regulatory requirements, and rising operational demands, pharmacy directors, hospital administrators, and pharmacy purchasers face an uphill battle.
According to the latest Hospital Pharmacy Operations Report, the average hospital pharmacy budget is under immense pressure. But, the adoption of technology is emerging as a recurring theme, with 73% of respondents indicating plans to implement new technology solutions to address challenges. They’re looking for tools that are affordable, easy to implement, and offer tangible improvements to drug inventory management, diversion monitoring, and procurement.
This blog breaks down the insights from our report, highlighting actionable strategies to thrive within pharmacy budget constraints while improving patient safety, efficiency, and compliance.
Challenges in Managing a Hospital Pharmacy Budget
There are three common challenges health systems’ directors and administrators face when trying to manage their pharmacy budget:
1. Staffing Shortages
Staffing remains the top concern for hospitals, with facilities struggling to maintain adequate support on tight budgets. This ongoing issue impacts factors from dispensing functions to patient care quality, increasing the demand for solutions that automate tedious tasks and optimize workflows.
2. Medication Shortages
The average facility battles 10+ medication shortages at any given time, putting significant strain on pharmacy resources. 78% of respondents report that pharmacy teams are responsible for handling shortage mitigation. However, many cite the lack of predictive tools as a barrier to effectively reducing disruption.
3. Reducing and Managing Drug Spend
A staggering 77% of respondents emphasized reducing drug spend as their top financial priority. Striking the delicate balance between cost containment and high-quality care necessitates innovative cost-saving measures, from procurement software adoption to operational improvements.
How Drug Diversion Impacts Your Pharmacy Budget Plan
Drug diversion has shifted from being a top concern for hospitals to one monitored with selective investments. 66% of respondents reported dealing with a diversion event in the last year, and 43% of these were detected using specialized diversion software. While compliance was once the greatest driver in diversion prevention, employee and patient safety now take precedence. This shift reflects the growing enterprise-wide focus on holistic safety outcomes.
Hospitals are increasingly adopting drug diversion tools that integrate seamlessly with automated dispensing cabinets (ADCs) and electronic medical records (EMRs) to streamline investigations, provide proactive alerts, and improve reporting. Simplifying workflows and improving system-wide reporting remain top priorities for both compliance and cost-effectiveness.
Where Medication Management Comes In
Advances in RFID technology are providing inventory visibility and increased patient safety within hospital pharmacies. 87% of respondents already leverage RFID in their central pharmacy, while many aim to expand its use to vaccines, chemotherapy drugs, and commonly diverted non-controlled substances. Primary benefits cited include:
- Inventory Optimization: Easier restocking and par management for shortages.
- Improved Compliance: Recall mitigation and better process standardization.
Interestingly, a significant portion of hospital pharmacies has begun transitioning to a hub-and-spoke procurement model (43%), benefiting infusion centers most significantly.
Drug Purchasing and Procurement Priorities
Efficient drug procurement has become a focal area in hospital pharmacy budget preparation. 95% of respondents identified streamlining purchasing as a priority, with a growing trend towards leveraging procurement and analytics software. This shift reflects a move away from reliance on wholesalers and consultants toward technology-driven solutions.
Procurement Statistics:
- 77% of respondents focus on operational improvements for cost savings.
- 37% purchase medications from 7+ vendors, indicating a need for tools to simplify vendor management.
- 66% of respondents are tasked with meeting savings goals this year.
Despite these improvements in emerging technology, respondents highlight the importance of leveraging advanced solutions that predict shortages using artificial intelligence and machine learning to minimize disruption and keep operations running smoothly.
340B Management Challenges
The landscape of 340B management is increasingly complex, with regulatory oversight expected to intensify. Top concerns include:
- Addressing manufacturer restrictions.
- Adapting to rebate-driven models.
- Mitigating financial impact from decreased reimbursement rates.
Monthly claims audits and continuous program compliance remain top stressors for pharmacy leaders, underscoring the need for 340B software that streamlines reporting and offers regulatory insights.
How to Overcome Hospital Pharmacy Budget Constraints
Hospital pharmacies must adopt a forward-thinking pharmacy budget plan that prioritizes both cost management and operational efficiency.
Below are actionable steps based on the findings from our Hospital Pharmacy Operations Report:
1. Leverage Health Systems Technology for Pharmacy Budget Management
Investing in the right technology can significantly improve your pharmacy budget management process and increase your operational efficiency.
- Tools like procurement software can streamline drug purchasing processes, ensuring efficient and cost-effective ordering.
- Inventory tracking systems, such as those using RFID technology, help monitor inventory levels in real time, reducing waste and preventing overstocking or stockouts.
- Predictive analytics can forecast potential shortages, allowing organizations to address issues proactively and avoid disruptions to patient care.
2. Standardize Processes Across Locations
Standardizing pharmacy budget preparation processes across various settings reduces inefficiencies and inconsistent operations. For example, standardizing surgical kits and trays can not only save time and reduce costs but also help maintain compliance with industry regulations.
This approach minimizes variability, decreases errors, and simplifies training for staff across multiple sites. Furthermore, 67% of respondents in our recent survey indicated plans to implement standardization initiatives, highlighting its growing importance in health system operations..
The Path Forward
By leveraging the right technology, standardizing processes, and focusing on predictive solutions vs. reactionary tools, hospitals can implement practical solutions to overcome pharmacy budget constraints.
For a comprehensive analysis, download the full Hospital Pharmacy Operations Report now and unlock in-depth insights to improve your pharmacy’s financial strategy and performance.