IS OUTSOURCING REALLY TOO EXPENSIVE?

Most hospital pharmacists appreciate the benefits of outsourcing unit dose repackaging to an FDA regulated repackaging service provider. Some, however, have a perception that outsourcing is too expensive. Let’s explore this a bit further. . .

In the March 2012 issue of Pharmacy Purchasing & Products, Gary Magnus, RPh, MS Pharm at MedStar Montgomery Medical Center in Olney, Maryland, provided some interesting insight into the question of outsourcing unit dose packaging.

As bar-code-assisted medication (BCMA) becomes more prevalent in hospitals (nearly 50% of hospitals with 200 or more staffed beds have implemented BCMA), there are many products and patient situations that require facilities to either package or repackage a medication to ensure BCMA system compatibility. Thus, the question at many health care facilities arises: To outsource or repackage in-house?

Magnus suggests that, to make this decision wisely requires a good understanding of the cost and value of outsourced services and the time and labor involved to repackage in-house. Magnus goes on to say the decision should also include factors such as "...whether the wholesaler has the products you want in unit dose or your facility uses enough of a given product that buying it in bulk and having it repackaged is fiscally responsible."

Magnus states that the decision to outsource or repackage bulk medications in-house is their hospitals' tipping point of 100 doses a year, where less than that amount of use falls to in-house packaging. Magnus states, "For our commonly used drugs that do not come in unit dose, routing these through the repackager provides us with safe, properly packaged doses every time without us having to expend the labor and time of doing ourselves."

Addressing outsourcing costs, Magnus suggests the health care provider does its homework to determine the best outsource provider for the institution's needs.

In speaking with other hospital pharmacists, I have found that there are components of the overall cost of repackaging in-house that are not included in their cost analysis. Usually, at least one of the following cost components are missed, including the repackaging FTEs plus benefits, the capital and maintenance cost of equipment, packaging material acquisition and inventory, usage of limited pharmacy space including overhead, and the cost of quality (pharmacist check). Taking all of this into consideration, the cost of in-house repackaging is approximately 18-cents per dose, whereas, the cost to outsource may be as low as 10-cents per dose, as outlined in a 2009 survey conducted by the independent consulting firm Shack & Tulloch, Inc., and presented in a 2010 White Paper presented by McKesson Corporation.

The argument to outsource or repackage in-house continues to be dependent on many factors, including the size of the health care institution. However, in making this decision, it's wise to consider other factors, including safety (i.e., reducing the risk for packaging error with a qualified third party repackager whose core competency is packaging and labeling accurately), reducing or totally eliminating the capital expenditure to acquire packaging equipment, better use of technicians and pharmacists' time to the core competency of the department, which is patient care and pharmacy clinical services. Additionally, an analysis of the bulk cost of a drug vs. the cost of that drug in unit dose form may more than offset the cost of utilizing the outsource repackaging service.

In the final analysis, it's in the best interest of the health care institution to perform due diligence to determine what is ultimately in the best interest of their pharmacy, their patients, and their bottom line.

Here's to better solutions,  

             Dave Bystrom