The Business Case for Bar-Code Readiness

Aligning Acute Care Hospital Goals

with Pharmacy Objectives to Ensure Patient Safety,
Operational Efficiency and Cost Containment

By Janet Silvester, R.Ph, MBA, FASHP and Chris Jones, R.Ph

About the Authors
Janet A. Silvester, R.Ph, MBA, FASHP
Director of Pharmacy and Emergency Services
Martha Jefferson Hospital
Charlottesville, VA

A past president of both the American Society of Health-System Pharmacists (ASHP) and the Virginia
Society of Health-System Pharmacists (VSHP), Janet A. Silvester has more than 30 years experience
advancing pharmacy practice in a hospital setting. She currently serves as Chair of the ASHP
Executive Vice President Search Committee and Chair of the Virginia Pharmacy Congress. She has
received numerous honors, including VSHP’s Pharmacist of the Year award. Janet is a participant in the
ASHP Pharmacy Practice Model Initiative.

Chris Jones, R.Ph

Senior Executive Pharmacist Consultant
Six Sigma Advanced Green Belt
McKesson Automation Inc.

An Executive Pharmacist Consultant with McKesson for the past 10 years, Chris Jones has worked
with hundreds of hospital pharmacies across the country to improve medication safety and
operational efficiency. Chris has over 22 years of hospital pharmacy experience, including
leadership roles as a former Director of Pharmacy and former Clinical Coordinator. He is actively
involved at the local, state, and national level of various pharmacy organizations, including past service
on the Board of Directors for the North Carolina Association of Pharmacists and as an ASHP delegate.
Chris is a two-time winner of the North Carolina Innovative Pharmacy Practice award and a recipient of
the McKesson Automation President’s Award of Excellence.

2
Table of Contents
Executive Summary ....................................................... 4

Drivers for Change ......................................................... 6

The Evolving Pharmacist Practice Model .......................... 9

Building Your Business Case ......................................... 15

Conclusions ................................................................ 17

Appendices ................................................................ 17
Appendix A: Advantages of Patient-Focused Dispensing
Appendix B: Examples of the Impact of Bar-Code-Based Automation
Appendix C: Business Realization Measurements
Appendix D: Things to Keep in Mind

3
Executive Summary
While electronic health records (EHR) have garnered a significant amount of attention from U.S. hospital
administrators, bar-code-based medication systems have quietly gone about doing their job of protecting
patients, improving efficiency, and containing costs.

The implementation of bar-code-based systems in the hospital is both good medical practice and good
business. Several studies have shown that bar-code technology can reduce errors in medication
dispensing, and this message has obviously hit home with hospital administrators and Directors of
Pharmacy. In one survey, a significant 41% of hospitals responding were using bar-code medication
administration in 2010.1

Bar-code readiness is defined as having implemented the systems that serve as the foundation leading
to full, enterprise-wide bar-code medication administration (BCMA) and bar-code, electronic medication
administration record (MAR) systems. By this definition, hospitals vary widely in terms of their bar-code
readiness. We believe this will change, as more hospitals implement the appropriate systems. This will
be largely driven by three important developments:

1) Requirements of the Patient Protection and Affordable Care Act (H.R. 3590). Beginning
in 2013, this legislation will begin to penalize hospitals that do not meet performance measures
established by the Centers for Medicare and Medicaid Services (CMS). Sixty-five percent of those
measures are related to medication use and safety; further implementation of bar-code-based
technology will make it easier for hospitals to maintain full reimbursement.

2) Greater clinical involvement by hospital pharmacists. Pharmacist involvement in patient care

has been widely accepted as a way to improve patient outcomes. In fact, 97.3% of hospitals responding
to the 2009 American Society of Health-System Pharmacists (ASHP) national survey of hospital
pharmacy practice have pharmacists regularly monitoring medication therapy in some capacity.2
According to an analysis of 298 studies published in the October 2010 issue of the journal Medical
Care,3 pharmacist participation in patient care was associated with a nearly 50% decrease in adverse
drug reactions, along with fewer medication errors, improved patient compliance with drug regimens,
higher overall quality of life scores, and improved outcomes, including better diabetes control, lower
blood pressure, and lower cholesterol. Bar-code-based pharmacy automation is largely responsible for
freeing pharmacist time and allowing them to assume expanding clinical responsibilities. This continuing
trend points to further adoption of bar-code systems moving forward.

1
State of Pharmacy Automation. (2010, April). Pharmacy Purchasing & Products. 8(4).

2
Pedersen CA, Schneider PJ, Scheckelhoff DJ. ASHP national survey of pharmacy practice in hospital settings: Monitoring and patient
education—2009. Am J Health-Syst Pharm. 2010; 67:542-58.

3
Chisholm-Burns MA, Kim Lee J, Spivey CA, Slack M, Herrier RN, Hall-Lipsy E, Graff Zivin J, Abraham I, Palmer J, Martin JR, Kramer SS, Wunz
T. US pharmacists’ effect as team members on patient care: systematic review and meta-analyses. Medical Care. 2010; 48(10):923-33. 4
 3) The effect on the bottom line. Bar-code-driven
According to an analysis of
automation helps reduce the incidence of adverse drug
298 studies...pharmacist events (ADEs) and avoid their associated costs; can
increase revenue through better medication charge
participation in patient care capture; and also can result in reduced medication
inventory, labor efficiency, and other savings. Few
was associated with a nearly
hospitals are in a position to ignore this collective
50% decrease in adverse positive impact on their balance sheet,4 making it
highly probable that bar-code readiness will gain
drug reactions. increasing attention in hospital board rooms and
executive offices.

Economics and patient centricity, then, make a strong case for bar-code readiness as the essential
requisite step toward bar-code-driven dispensing technology and BCMA. Given the length of time
needed for planning and implementing bar-code-enabled systems, there is some urgency to doing so in
advance of H.R. 3590 taking effect. It is also worth noting that bar-code readiness meets the definition
of “meaningful use” described in H.R. 1, the American Recovery and Reinvestment Act of 2009,
making some or all of a bar-code readiness initiative eligible for federal funding. Hospitals should
understand, however, that the stimulus package does not fund the introduction of new systems, only
systems already under consideration. For this reason, now is the time for Directors of Pharmacy to
engage with C-level administrators to formally acknowledge bar-code readiness and BCMA projects and
initiate project planning stages.

Achieving bar-code readiness with bar-code-assisted distribution systems in the pharmacy frees
pharmacists from other tasks and can significantly increase the time they have available for clinical
duties that improve patient care. At the same time, these technologies also increase patient safety
through greater accuracy in the medication distribution process within the hospital.

Percentage of Hospitals Using BCMA, 2002-20095

In this white paper, you will learn:
• how to overcome common cost and 30% 27.9%

technology obstacles to achieving 25.1%

bar-code readiness; 20% 19.6%

• how to align bar-code processes with 13.2%

administration’s outcomes-based goals; and 10% 9.4%

• quantifiable benefits of bar-code readiness at 3.2%

4.4%

1.5%
hospitals that have successfully established 0%

the essential bar-code medication 2002 2003 2004 2005 2006 2007 2008 2009

foundation.

4
Kiselev M. Hospitals in Distress: How the Economy has Affected Financing of Health Care. Illinois Business Law Journal. March 16 2010, 15:34.

5
Pedersen CA, Schneider PJ, Scheckelhoff DJ. ASHP national survey of pharmacy practice in hospital settings: Monitoring and patient
education—2009. Am J Health-Syst Pharm. 2010; 67:542-58. 5
Drivers for Change
The Patient Protection and Affordable Care Act (H.R. 3590) is a significant driver for change faced by
hospitals, and should serve as a major impetus for technology investments related to bar-code readiness.
The bill establishes value-based purchasing of hospital services, emphasizing quality of care over quantity
of care. This will have financial repercussions for hospitals. Beginning in 2013, for example, Medicare
and Medicaid reimbursements will begin to be awarded – or withheld – based on a hospital’s score
according to performance measures determined by the government. Fully 70% of the measures involved
are Centers for Medicare and Medicaid Services (CMS) Performance Measures; the remaining 30% will
be based on the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey
of patient priorities. The percentage of reimbursement at risk begins at 1% in FY13, rising to 1.25% in
FY14, 1.50% in FY15, and so on. In a mid-sized hospital, 1% of reimbursement can total millions of
dollars in a single year, so meeting or exceeding performance standards will be critical.

Centers for Medicare and Medicaid This aspect of the bill is, in itself, a convincing case
Services (CMS) Performance Measures
for investment in pharmacy automation and bar-code
readiness. Analysis of the CMS measures shows that
two-thirds of care indicators (27 of 40) are related to
medication use. This comprises more than half of the
OTHER
13 total performance score on which reimbursement will be
based. In addition, 15 of 26 indicators of the Joint
CARE INDICATORS
27 Commission Center for Transforming Healthcare’s
RELATED TO
MEDICATION USE quality measures are also medication-related.

Centers for Medicare and Medicaid Services (CMS) Performance Measures: Medication-Related Indicators

Medication-Related Indicators
Pneumonia 5 of 7
Heart Failure 2 of 4
Acute MI 6 of 9
Surgical Care Improvement Project 6 of 10
Hospital Outpatient Measures 5 of 7
Children’s Asthma Care 2 of 3
Pregnancy and Related Conditions 0 of 3
Process of Care Measures 27 of 40

Hospital Consumer Assessment of Healthcare Providers and 1 of 10

Systems (HCAHPS)
6
Joint Commission Center for Transforming Healthcare: Medication-Related Indicators

Medication-Related Indicators
Perinatal Care (PC) 1 of 5
Hospital Based Inpatient Psychiatric Services (HBIPS) 2 of 7
Stroke National Hospital Inpatient Quality Measures (STK) 7 of 8
Venous Thromboembolism Measures (VTE) 5 of 6
Process of Care Measures 15 of 26

H.R. 3590 and the CMS measures align the interests of hospital administrators with those of the pharmacy.
Medications are used in nearly every area in the hospital, all of which would benefit from safe systems
that employ bar-code technology. Bar-coded medication administration, partially enabled and strongly
supported by pharmacy automation, addresses enterprise-wide medication issues that can dramatically
affect performance scores – more so, for example, than computerized physician order entry (CPOE).
The drug administration step is the last in the medication-use system where a medication error can be
detected and a potential adverse drug event (ADE) prevented. Indeed, a 2005 study showed that the
use of bar-code technology reduced the rate of potential ADEs due to dispensing errors by 63%.6 BCMA
thereby provides a wider-ranging safety net in the medication-use process and greater potential safety
gains, with a greater potential positive impact on performance scores.

At a hospital dispensing The decrease in ADEs has a significant financial

aspect, as well. Each ADE equals $2,2007 in
millions of medication doses
additional hospital costs; each preventable ADE,
every year, bar-code $8,750.8 At a hospital dispensing millions of
technology can prevent medication doses every year, bar-code technology
can prevent thousands of ADEs. The savings can
thousands of ADEs. The
run into millions of dollars annually.9
savings can run into millions
of dollars annually.

6
Poon E, Cina J, Churchill W, Mitton P, et al. Effect of Bar-code Technology on the Incidence of Medication Dispensing Errors and Potential
Adverse Drug Events in a Hospital Pharmacy. AMIA Annual Symposium Proceedings. 2005.

7
Classen DC, Pestotnik SL, Evans RS, Lloyd JF, Burke JP. Adverse drug events in hospitalized patients: excess length of stay, extra costs, and
attributable mortality. JAMA. 1997; 277:301-306.

8
Aspden P, Wolcott J, Palugod R, Bastien T. Preventing Medication Errors. Institute Of Medicine. 2006; 115-117.

9
Poon E, Cina J, Churchill W, Mitton P, et al. Cost-Benefit Analysis of a Hospital Pharmacy Bar Code Solution. Archives of Internal Medicine.
April 23 2007. 7
In addition to the potential for safety gains realized by bar-code-driven pharmacy automation equipment,
pharmacy automation and bar-code readiness are also critical to achieving meaningful use under the
American Recovery and Reinvestment Act of 2009 (H.R. 1). Meeting the meaningful use requirement is
necessary to receiving government funding for hospital technology projects. Bar-code infrastructure and
effective closed-loop medication management solutions are considered “meaningful” since they
are necessary for successful deployment of clinical systems that directly relate to the Federal
government’s overall healthcare goals.

The significant importance of medication issues to the enterprise also argues for pharmacy involvement
in technology decisions currently made at the executive level, even when those decisions reach beyond
the pharmacy. Certainly, for any technology that may in any way touch the administration of medication,
it is only logical. Additionally, in most hospitals, the pharmacy has consistently been an early adopter in
the implementation of technological advances, often developing a project management skill set that can
contribute to the overall planning of the system and is useful as additional technologies are implemented.
The value of the pharmacy in examining these solutions should not be undervalued.

Also driving change is ASHP, an early and consistent leader in recognizing the game-changing aspects of
a bar-code-based medication system. ASHP’s official position on bar-code readiness and BCMA states,

“The American Society of Health-System Pharmacists encourages

hospital and health-system pharmacies to incorporate bar-code
scanning into inventory management, dose preparation and
packaging, and dispensing of medications. The purpose of such
scanning is to ensure that drug products distributed, deployed to
intermediate storage areas, or used in the preparation of patient
doses are the correct products, are in-date, and have not been
recalled.”10

10
ASHP Statement on Bar-code Verification During Inventory, Preparation, and Dispensing of Medications. June 2010. 8
The Evolving Pharmacist Practice Model
As the use of bar-code-based pharmacy automation systems has spread, the role of the hospital
pharmacist has been changing. The hospital pharmacist’s role is becoming more an integrated position
with increased clinical responsibilities,11 as automation allows the delegation of many tasks that do not
require clinical judgment to well-trained technicians, freeing pharmacist time. Indeed, the ASHP’s
Pharmacy Practice Model Initiative sees pharmacists providing ever higher levels of patient care –
including medication prescribing as part of a collaborative team – as certified pharmacy technicians
assume virtually every distributive function that does not require clinical judgment.

Pharmacist Involvement in Therapeutic Drug Monitoring for Inpatients11

100%
90% 87.8 92.3

80% 75.6 75.5 80.1

73.2
64.6 79.2
70% 63.1
69.1
60% 63.3
58.6
50% 47.3
40% 36.5 35.5 37.9
30%
20%
10%
0%
2000 2003 2006 2009

— Inpatient Pharmacists Routinely Monitor Medication Levels

— Pharmacists Have Authority to Order Initial Serum Medication Level
— Pharmacists Have Authority to Adjust Dosage for Routinely Monitored Medication
— Pharmacists Are Notified When Medication Levels Fall Outside of Therapeutic Range

11
Pedersen CA, Schneider PJ, Scheckelhoff DJ. ASHP national survey of pharmacy practice in hospital settings: Monitoring and patient
education—2009. Am J Health-Syst Pharm. 2010; 67:542-58. 9
Studies involving care programs with expanded clinical involvement by pharmacists, such as The
Asheville Project,12-15 are showing significant improvement in clinical outcomes and may be encouraging
hospitals to accelerate the trend. In the Asheville study involving hypertension and dyslipidemia, for
example, the period of pharmacist clinical involvement showed a 53% decrease in risk of a cardiovascular
event (CV) and greater than 50% decrease in risk of a CV-related emergency department or other
hospital visit.12

In the 2009 ASHP survey, the trend toward pharmacist clinical involvement is clear:
• 64.7% of hospitals used clinical generalists in an integrated pharmacy practice model.
• 97.3% used pharmacists to regularly monitor medication therapy, with nearly 50% of those
pharmacists monitoring 75% or more of patients.
• In more than 92% of those surveyed, pharmacists monitor serum medication concentrations or
surrogate markers; in 80.1%, pharmacists can order initial serum concentrations, and in 79.2%, adjust
serum dosages.
• In 27.9% of hospitals, pharmacists provided medication education to patients.16

Activities Implemented to Improve Patient Outcomes

As the value of the pharmacist’s clinical involvement has become clearer, hospitals have turned to various
methods to stimulate pharmacist clinical practices. For instance, during the past several years, common
methods included promoting the value of clinical pharmacy services, increasing access to patient-specific
data, and expanding pharmacy technician responsibilities. Not surprisingly, considering the role of automated
systems in freeing pharmacists to assume more clinical duties, 29.9% of hospitals have implemented
automated dispensing systems. In addition, 35.4% expanded pharmacy technician responsibilities, and
23.5% redeployed pharmacists to patient care units. This latter number is especially significant since,
according to an analysis of 298 studies published in the October 2010 issue of the journal Medical Care,17
pharmacist participation in patient care was associated with a nearly 50% decrease in adverse drug
reactions, along with fewer medication errors, improved patient compliance with drug regimens, higher
overall quality of life scores, and improved outcomes including better diabetes control, lower blood pressure,
and lower cholesterol.

12
The Asheville Project: Clinical and Economic Outcomes of a Community-Based Long-Term Medication Therapy Management Program for
Hypertension and Dyslipidemia. Journal of the American Pharmacists Association. January/February 2008.

13
The Asheville Project: Long-Term Clinical, Humanistic, and Economic Outcomes of a Community-Based Medication Therapy Management
Program for Asthma. Journal of the American Pharmacists Association. March/April 2006.

14
The Asheville Project: Long-Term Clinical and Economic Outcomes of Community Pharmacy Diabetes Care Program. Journal of the
American Pharmacists Association. March/April 2003.

15
The Asheville Project: Participants’ Perceptions of Factors Contributing to the Success of a Patient Self-Management Diabetes Program.
Journal of the American Pharmacists Association. March/April 2003.

16
Pedersen CA, Schneider PJ, Scheckelhoff DJ. ASHP national survey of pharmacy practice in hospital settings: Monitoring and patient
education—2009. Am J Health-Syst Pharm. 2010; 67:542-58.

17
Chisholm-Burns MA, Kim Lee J, Spivey CA, Slack M, Herrier RN, Hall-Lipsy E, Graff Zivin J, Abraham I, Palmer J, Martin JR, Kramer SS, Wunz
T. US pharmacists’ effect as team members on patient care: systematic review and meta-analyses. Medical Care. 2010; 48(10):923-33. 10
The argument can be made for a correlation between the use of automated dispensing technology and the
ever-greater share of dispensing responsibilities assumed by technicians over the past several years.
Bar-code-based automation greatly reduces the chances of error and requires significantly less expert
human supervision. This would allow moving the dispensing process into the purview of non-pharmacist
personnel and enabling pharmacists to evolve into more integrated roles. The cumulative growth of both
dispensing automation and technician responsibilities since 1997 may well have laid the groundwork for the
accelerated expansion in the number of hospitals employing an integrated pharmacy practice model – and the
broadening of pharmacist practice area involvement and influence – seen in the most recent ASHP studies.

Comparative Growth of BCMA and Integrated Pharmacist Practice Model18

25.1 27.9
9.87
19.6
7.94
6.71
9.4 13.2
5.51

5.1

2005 2006 2007 2008 2009

— Percentage of hospitals using BCMA

— Mean number of integrated pharmacist positions per 100 occupied beds

Freeing Pharmacists to Be Pharmacists

Technology is increasingly available to support the safe use of medication. Its use continues to improve
the medication-use system and is at the heart of a classic “virtuous circle”: as the pharmacy automates,
pharmacists are freed for clinical work, improving patient care, thereby helping to support further
automation, and so on.

The use of automated dispensing cabinets has become widespread, and while BCMA and CPOE
technologies are being utilized in less than half of U.S hospitals, their use is decidedly growing, with
BCMA adoption outpacing CPOE in 2009. CPOE systems with clinical decision support systems were in
place in 15.4% of hospitals in the 2010 ASHP survey, BCMA systems in 27.9%, smart infusion pumps in
56.2%, and complete EMR systems in 8.8%.18

18
Pedersen CA, Schneider PJ, Scheckelhoff DJ. ASHP national survey of pharmacy practice in hospital settings: Monitoring and patient
education—2009. Am J Health-Syst Pharm. 2010; 67:542-58. 11
Technology Use, Inpatient Dispensing19

ROBOTICS 42% 47% 54%

CAROUSEL 77% 72% 69%

AUTOMATED
DISPENSING CABINETS n/a n/a 90%

BAR-CODE PACKAGING 66% 64% 71%

2008 2009 2010

Bar-code readiness and BCMA initiatives add an additional safety check to the final step in the
medication-use system, and this no doubt explains to a large degree the speed with which they have
been and are being adopted:

• 27.9% of U.S. hospitals live on BMCA systems in 2009, compared to just 1.5% in 2002*
• 233% growth in central pharmacy automation systems, 1999-200620
• 500% growth in “machine-readable coding”* used to verify doses before dispensing, 2002-200821
• 61% growth in hospitals outsourcing unit-dose bar-code packaging, 2002-200821
• 86% of the 500 most frequently prescribed oral solid medications are available in manufacturer
unit-dose, bar-coded packaging22

* Robots, carousel systems, and sometimes manual unit dose pick stations use machine-readable coding for safety and
inventory verification purposes.

Technology Use, Prescribing and Drug Administration23

BAR-CODE DRUG
ADMINISTRATION 29% 33% 41%

CPOE 28% 31% 35%

2008 2009 2010

19
Pedersen CA, Schneider PJ, Scheckelhoff DJ. ASHP national survey of pharmacy practice in hospital settings: Monitoring and patient
education—2009. Am J Health-Syst Pharm. 2010; 67:542-58.

20
Pedersen CA, Schneider PJ, Scheckelhoff DJ. ASHP national survey of pharmacy practice in hospital settings: Monitoring and patient
education—2006. Am J Health-Syst Pharm. 2007; 64:507-20.

21
Pedersen CA, Schneider PJ, Scheckelhoff DJ. ASHP national survey of pharmacy practice in hospital settings: Dispensing and administration—2008.
Am J Health-Syst Pharm. 2009; 66:926-46.

22
McKesson Health Systems data report 2010. Oral solids sales data.

23
State of Pharmacy Automation. (2010, April). Pharmacy Purchasing & Products. 8(4). 12
Pressure for 24/7 Pharmacy Service Coverage

Another argument for bar-code readiness can be inferred from the rise in 24/7 pharmacy service
coverage. According to the 2010 ASHP survey, 41.2% of hospitals provided 24-hour inpatient pharmacy
services, up dramatically from 30.2% in 2005. The average number of hours per week pharmacy
departments were open and available to provide services has also increased, from 101 hours in 2005,
to 103.8 hours in 2007, to 106.2 hours in 2008, to 112 hours in 2009.24-28

From strictly a patient care point of view, around-the-clock on-site pharmacy services are preferable to
more limited hours of operation, even with the inevitable drop off of demand during nighttime hours.
The primary barrier to extended or 24/7 coverage has traditionally been financial, since more hours
significantly increase pharmacy labor costs without necessarily generating commensurate medication
services income. Over the past five years, perhaps the largest single change in many hospitals is the
increased use of pharmacy automation. That increase and the growth in 24-hour inpatient pharmacy
services have been simultaneous, suggesting that the efficiency, staffing, and cost-reduction benefits of
automation have been notable enablers of longer pharmacy hours.

This seems more than plausible when comparing the variation in extended hours growth among
hospitals of different sizes. As might be expected, large hospitals with 600 or more staffed beds had
the highest incidence of 24-hour pharmacy services, at 98.4%, while only 8.8% of the smallest hospitals
(fewer than 50 staffed beds) operated around-the-clock pharmacies. Certainly, need plays a significant
part in such a wide discrepancy, but it must also be noted that larger hospitals are far more likely to
employ pharmacy automation than the smallest institutions.

Supporting the Drivers for Change

In terms of pharmacist duties, bar-code automation technology is enabling change that is being driven
by the need for increased patient safety (H.R. 3590) and also for process efficiency as a response to
cost constraints.

The effects of central pharmacy automation solutions are allowing patient monitoring to increasingly be
performed by integrated pharmacists performing both distributive and clinical roles. The use of
distributive pharmacists to monitor medication therapy has declined and the use of other pharmacists to
monitor medication therapy has steadily increased over the past nine years. In 2000, 49.2% of hospitals
had distributive pharmacists monitor medication therapy, 40.6% used clinical pharmacists, 51.3% used
integrated pharmacists, 9.4% used pharmacy residents, and 24.5% used student pharmacists.28

24
Pedersen CA, Schneider PJ, Scheckelhoff DJ. ASHP national survey of pharmacy practice in hospital settings: Dispensing and
administration—2008. Am J Health-Syst Pharm. 2009; 66:926-46.
25
Pedersen CA, Schneider PJ, Scheckelhoff DJ. ASHP national survey of pharmacy practice in hospital settings: Prescribing and
transcribing—2007. Am J Health-Syst Pharm. 2008; 65:827-43.
26
Pedersen CA, Schneider PJ, Scheckelhoff DJ. ASHP national survey of pharmacy practice in hospital settings: Monitoring and patient
education—2006. Am J Health-Syst Pharm. 2007; 64:507-20.
27
Pedersen CA, Schneider PJ, Scheckelhoff DJ. ASHP national survey of pharmacy practice in hospital settings: Dispensing and
administration—2005. Am J Health-Syst Pharm. 2006; 63:327-45.
28
Pedersen CA, Schneider PJ, Scheckelhoff DJ. ASHP national survey of pharmacy practice in hospital settings: Monitoring and patient
education—2009. Am J Health-Syst Pharm. 2010; 67:542-58. 13
In 2009, of the 97.3% of facilities where pharmacists regularly monitored medication therapy for patients,
44.6% had distributive pharmacists regularly perform this function, 44.6% used clinical pharmacists, 65.2%
used integrated clinical–distributive pharmacists, 13.5% used pharmacy residents, and 38.3% used student
pharmacists.29

Pharmacist involvement in medication safety initiatives, including technology adoption, continues to be

strong, interconnected to others and focused on the medication-use system. Interdisciplinary committees
reviewed ADEs in 89.3% of hospitals. Prospective analysis such as failure modes and effects analysis was
conducted in 66.2% of hospitals and retrospective analysis such as root cause analysis was conducted in
73.6%. Safety culture had been assessed by 62.9% of hospitals. ADEs were reported to external groups by
60.7% of hospitals.29

Looking Ahead

The 2010 ASHP National Survey reveals pharmacy directors’ future plans for the pharmacy practice model
in their hospitals. Directors from all sizes of hospitals expected a transition toward a more patient-centered,
integrated model and away from a centralized drug distribution-centered model. Some pharmacy directors
at smaller hospitals envisioned moderate growth in the use of a clinical specialist-centered model, while
some pharmacy directors at larger hospitals envisioned a moderate decline in the use of a clinical
specialist-centered model.

To keep pace with the needs of patients, the desires of personnel, and technological changes, 46.7% of
hospital pharmacy departments were working to change their practice models or had already done so in
the past three years. The most common barriers were a lack of pharmacist staff resources, a lack of
pharmacy staff with needed training, and resistance to change from current staff. Other barriers included a
lack of automation to support change, a lack of hospital leadership support, and a lack of qualified
technician staff. Only 9.7% of hospitals had not experienced barriers to their practice model changes. Staff
issues represented significant challenges to envisioned practice models of hospital pharmacy directors.29

Current and Expected Future Structure of Pharmacy Practice29

DRUG DISTRIBUTION-
CENTERED 24.4 4.1

PATIENT-CENTERED,
INTEGRATED 64.7 83.6

CLINICAL SPECIALIST- 10.9 12.3

CENTERED
2009 Future

29
Pedersen CA, Schneider PJ, Scheckelhoff DJ. ASHP national survey of pharmacy practice in hospital settings: Monitoring and patient
education—2009. Am J Health-Syst Pharm. 2010; 67:542-58. 14
Building Your Business Case
The ASHP organizes the medication-use process into six areas: prescribing, transcribing, dispensing,
administration, monitoring, and patient education. Examining the dispensing function in detail illustrates
how bar-coding across these multiple steps and hand-offs can ensure accuracy, resulting in
improvements in safety, operational efficiency, and inventory management. This makes bar-code
readiness and bar-code-based systems vital to any patient-focused dispensing initiative or patient-centric
business model.

Bar-code scanning has been shown to increase safety and reduce errors at all of these dispensing points:

• Receipt from the distribution center

• Stocking into automation systems or manual pick stations
• Dispensing in pharmacy for patient-specific purposes
• Dispensing in pharmacy for cabinet restocking purposes
• Quality assurance checking by pharmacists or technicians (tech-check-tech)
• Restocking at automated medication cabinet
• Dispensing at automated medication cabinet
• Delivery to nurse server, inpatient medication cabinet, or workstation on wheels near patient room

Over the five years of the The Correlation Between Safety and Savings
study, bar-code system While it’s widely accepted that pharmacy bar-code
costs totaled $2.24 million. systems reduce the incidence of dispensing errors,
The net benefit after five there are some who question the financial
years was $3.49 million. implications of this increased safety. In 2006, a five-
Break-even was reached year study was completed at a “large, academic,
nonprofit tertiary care hospital pharmacy”30 in order
within one year.
to assess the actual costs and benefits of a pharmacy
bar-code system implementation.

The results were impressive. Over the five years of the study, costs for implementing and maintaining
the pharmacy bar-code system totaled $2.24 million. The dispensing error rate after system
implementation was reduced by 31%. Even more striking, the potential ADE rate dropped by 63%.30 As
noted earlier in this paper, additional hospital costs per ADE are $2,200 and $8,750 per preventable ADE.
In terms of avoided ADEs alone, the hospital realized annual savings of $2.20 million over the course
of the study. The net benefit after five years was $3.49 million. Break-even was reached within one
year of the system becoming fully operational.30

30
Poon E, Cina J, Churchill W, Mitton P, et al. Cost-Benefit Analysis of a Hospital Pharmacy Bar Code Solution. Archives of Internal
Medicine. April 23 2007. 15
 Granted, the hospital in question is a large facility, dispensing more than six million medication doses
annually. However, the research found that implementation of a similar bar-code system at a smaller
hospital would show a significant return on investment (ROI), as well. Even with changes in details of
system implementation and use, such as leasing, purchasing, or repackaging costs, any hospital with
a minimum of 1.75 million annual doses could expect to realize a positive ROI within a five-to-ten-year
period.31

Cost and Benefits of Pharmacy Bar Coding31

$600,000

$400,000
Cost/Benefit

$200,000

$0

-$200,000

-$400,000

1 2 3 4 5

Years
— Benefits — Recurring costs — 1-time costs

31
Poon E, Cina J, Churchill W, Mitton P, et al. Cost-Benefit Analysis of a Hospital Pharmacy Bar Code Solution. Archives of Internal
Medicine. April 23 2007. 16
Conclusions
The question no longer is if hospitals will become bar-code ready but, simply, when. The economic
and professional drivers, along with real-world bar-code readiness and BCMA results, are making it
an inevitability. The performance demands of H.R. 3590 and the demonstrated patient care benefits
of increased clinical involvement by pharmacists are creating a perfect storm that aligns the goals of
administrators and the pharmacy. Increased pharmacy automation and increased pharmacy
involvement in enterprise technology decisions are the logical outgrowth.

Pharmacy automation and bar-code readiness are also critical drivers in achieving meaningful use
under H.R. 1. However, hospitals should bear in mind that the stimulus package does not fund the
introduction of new systems, but rather is meant to accelerate the adoption and implementation of
systems already under consideration. For this reason, now is the time for Directors of Pharmacy to
engage with C-level administrators to formally acknowledge bar-code readiness and BCMA projects
and initiate project planning stages, if they have not done so already.

We are in the midst of an important and exhilarating period for health-system pharmacists and the
institutions and patients they serve. Bar-code readiness is central to the trends already in progress, and
will become only more important to the entire enterprise in the years directly ahead.

Appendices
Appendix A: Advantages of Patient-Focused Dispensing

Automated patient-centric dispensing:

• Assures proper patient-centered pharmacotherapy
• Establishes effective drug use and control
• Establishes bar-code foundation necessary for BCMA
• Improves safety by scanning every medication before leaving pharmacy
• Reduces pharmacist dispensing labor, freeing pharmacists for patient-specific roles
• Reduces nursing labor by reducing med-prep time and multiple trips to patient rooms
• Brings meds closest to patient (WOWs, nurse servers, etc.)
• Significantly reduces cabinet overrides (including overrides of medications that cannot be scanned
which reach patient bedside without pharmacist oversight)
• Reduces nursing complexity, interruptions, and workarounds (associated with cabinets)
• Positions hospitals for “just in time” delivery to coincide with medication administration
• Introduces standardization and scalability (census increases, fill for multiple sites, etc.)
• Increases pharmacy technician labor efficiency
• Minimizes duplicative medication inventory on nursing units and waste associated with expired
medications
• Provides capital cost certainty (no cabinet scope creep)
• Eliminates variability in medication processes
• Delivers fast time to value and strong ROI
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Appendix B: Examples of the Impact of Bar-Code-Based Automation

Evergreen Hospital Medical Center

Kirkland, Washington
250-bed community-based facility

• Improved medication dispensing accuracy to 99.9%

• Conducted nearly 24,000 clinical interventions annually, saving approximately $1.9 million
• Cut first dose fill labor by 78%
• Reduced cart fill labor by 72%
• Decreased crediting labor by 50%
• Strengthened narcotics management

Shore Memorial Hospital

Somers Point, New Jersey
300-plus bed, not-for-profit acute care facility

• Established bar-code foundation to support patient safety, productivity, and inventory

management initiatives
• Projected 28% ROI in less than five years, and a project net present value of more than $700,000
• Projected 3% annual revenue increase over ten years (totaling $220,000) as a result of accurate
charge capture of floor stock and controlled substance medications
• 220% increase in documented clinical interventions by pharmacists, resulting in additional yearly
savings of $416,000 through reduced ADEs
• 90% reduction in pharmacist checking labor
• 42% increase in medication inventory turns, effectively cutting inventory costs by 30%, and saving
$166,000
• 80% reduction in the number of medication stockouts on nursing units
• 93% reduction in time required for narcotics reconciliation

Comanche County Memorial Hospital

Lawton, Oklahoma
283-bed community hospital

• Established bar-code foundation to support patient safety, productivity, and inventory management
initiatives
• Projected 42% ROI in less than eight years, with 7% cost of capital and project net present value
of more than $17 million
• Projected eight-fold increase in time spent by pharmacists on clinical intervention activities,
resulting in annual 10% reduction in ADEs and related costs
• 90% reduction in pharmacist checking labor
• 33% improvement in technician picking labor and 33% decrease in technician training time
• 92% decrease in missing doses and 75% decrease in medication cabinet stockouts
• $26,000 savings per year through bulk medication purchasing
• $80,000 gain in additional annual revenue through automated medication charge capture during
administration
• 54% reduction in annual cost of medication write-offs due to expired medications

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St. Dominic-Jackson Memorial Hospital
Jackson, Mississippi
535-bed, not-for-profit, acute care hospital

• Established closed-loop, bar-code-based system throughout medication-use process

• Immediate BPOC 99.9% scan rate enabled by bar-code automation foundation
• 801% increase in the number of pharmacist-patient interventions over five years
• Improvement from 0% to 78% of pharmacist time spend on clinical activities
• $1.8 million in annual cost avoidance through pharmacist-patient interventions
• $204,000 reduction in cost of medication inventory over five years

Hybrid Distribution Case Study

(Multiple-hospital analysis of pharmacy-to-bedside hybrid medication distribution system by Shack &
Tulloch, Inc.)
730-bed Spartanburg Regional Medical Center, Spartanburg, South Carolina
649-bed Mississippi Baptist Medical Center, Jackson, Mississippi
512-bed The Medical Center, Bowling Green, Kentucky (contains three hospitals)

• 99% robot dispensing accuracy

• 96% reduction in picking errors with automated carousel
• 50% reduction in missing medications
• 75% reduction in expedited medications
• 10% reduction in ADEs
• 60% increase in technician productivity
• 39% increase in pharmacist time for clinical activities
• 8% increase in nursing time with patients
• 75% reduction in expired medication costs
• 30% reduction in medication purchase costs
• 15% improvement in medication inventory costs
• 40% reduction in cabinet assets
• 58% composite ROI (6-year project life, no terminal value)

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Appendix C: Business Realization Measurements

An oft-repeated management mantra says, “You can’t manage what you don’t measure.” Here are
some common metrics pharmacies use for process improvement and for reporting to hospital
administration. Tracking these and other relevant metrics can help reassure administrators that
pharmacy automation and bar-code readiness have been worthwhile investments.

Medication Dispensing Stage Unit of Measure

Length of Patient Stay Days
Pharmacist Labor $/hr.
Tech Labor $/hr.

Nurse Labor (Vending, Travel, Patient Care Time, Reduced Steps/ $/hr.
Improved Workflow, Time, and Motion)

Medication Inventory (Turns, Stockouts, etc.) $

Medication Turnaround Time % or #/hr.
Medication Availability for Administration % or #/hr.
Technology ROI/TCO $/5 years
Technology Integration with Existing Systems $/interfaces
Unit-Dose Readiness of Meds (Scan Readability) %
Employee Satisfaction (Nurse, Pharmacy, Physicians) %
Patient Satisfaction %
Employee Turnover/Employment Stabilization %

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Appendix D: Things to Keep in Mind

Pharmacy automation supports Bar-Code Medication Administration

• Positive bar-code identification of drug and patient at point of care
• Supports IT strategic plan and provides safety net for nursing
• Helps ensure the “five rights” – right medication, patient, time, dose, and route

Positive BCMA results are only possible if the right infrastructure is in place
• Bar-coded medications
• Bar-coded patient ID bracelets
• Bar-coded employee badges
• Wireless network
• Point-of-care hardware

Some common challenges/ barriers

• Competing priorities between clinical/quality measure work and order entry requirements for
pharmacists
• Bar-code packaging burden
• Changing NDC codes requiring database changes
• Space – balance needs for technology, medication storage, and workflow
• Hard to keep the vision over many years

Operational tips for bar code use

• Scan entire order prior to bringing in pharmacy
• Identifies NDC changes to correct in database for scanning
• Identifies product changes due to drug shortages that must be added to database
• Scan test all drugs after packaging – assures “scanability” at bedside
• Continually optimize robotics and ADC inventory, check SA/LA drugs in matrix drawers
• Make one technician responsible for packaging to create equipment “expert”

Lessons from the real world

• Engage with the C-Suite early, educating them on the benefits and challenges of automation and
bar-code readiness
• Talk about the changes often – staff need time to get used to process change
• Communicate the benefits – people buy in easier if it helps patients and supports a better
practice model
• Automation doesn’t equal faster, just safer
• Go back to C-Suite and show them the positive outcomes – remind them they made a good
decision
• Share with the media

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McKesson Corporation — Automation
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