How health systems are saving money with centralized pharmacies

A growing number of health systems are centralizing pharmacy services to capture millions of dollars in savings and build up those revenue streams. 

Health systems are expanding facilities to bring drug inventory, fulfillment and distribution under one roof with the help of technology. The centralized model can cut down on medication and workforce redundancies, as well as mobilize one team to handle supply chain needs for dozens of care sites, system executives said.

We’re seeing more systemization of hospitals, and as those systems form or mature, there are obvious opportunities for efficiencies, whether it’s financial or whether it’s for workforce,” said Michael Ganio, senior director of pharmacy practice and quality at the American Society of Health-System Pharmacists. 

Related: How one system boosted revenue through specialty pharmacy

Centralization can also help systems navigate a rapidly evolving pharmaceutical industry amid crippling drug shortages and changes to federal policies such as the 340B program, said Michael Abrams, managing partner at consulting firm Numerof & Associates.

“There are safety requirements and a number of new regulatory changes that call for consistency and accountability in medication management, and so for all of those reasons, [centralization] is a good idea and likely to become better over time,” Abrams said. 

Here’s a look at how four health systems are centralizing pharmacy services and why doing so made sense for their bottom line. 

The University of Virginia Health is building a pharmacy central services center that will house inventory, supply management and prescription fulfillment for 10 ambulatory pharmacies, including a specialty and home delivery pharmacy. 

The 40,000-square-foot center in Charlottesville, Virginia, will use robotics and a conveyor system to triple UVA Health’s fulfillment capacity. The site will also include a central call center that uses artificial intelligence and other technology to reduce wait times and support self-service platforms.

Danielle Griggs, chief pharmacy officer at UVA Health, said the center’s goal is to offload volumes and free up resources at individual pharmacy locations. She said many of the locations have outgrown their space. 

UVA Health is trying to strategically grow its pharmacy service line because it drives a lot of value for the system, Griggs said. The health system wants to reach more patients with specialty medications, infusion therapies and home delivery options. 

“As new medications are brought to market, new specialty medications are developed, we want to make sure that we have pharmacy services to support patients in all of their medication needs,” she said.

Griggs said the centralized model saves money by eliminating unnecessary duplicates of expensive drugs across care sites. She said the health system is estimating $1 million in initial savings.