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In-house IV Admixture Business Plan/OUTSOURCE Facility Contract Termination I. Signature Page Sign-off by all responsible parties. II. Executive Summary The Department of Pharmacy recommends that Anywhere Hospital Pharmacy end the outsourcing agreement for the routine production of IV admixtures. Anywhere Hospital Pharmacy can substantially reduce expenses, enhance service levels, and maintain patient safety by directly providing IV admixture services. Due to grossly inadequate clean room facilities, the Department of Pharmacy made the decision to outsource routine sterile production to an OUTSOURCE FACILITY. OUTSOURCE FACILITY has provided routine, non-urgent sterile compounding services for inpatients for over ___ years. OUTSOURCE FACILITY functions as a state licensed Pharmacy. It prepares patient specific doses using Anywhere Hospital Pharmacy’s drug inventory and delivers finished IV products to the main pharmacy. All other supplies and resources including staffing are provided by OUTSOURCE FACILITY. OUTSOURCE FACILITY charges Anywhere Hospital Pharmacy a service fee for each dose. With few commercial competitors, their service fees increase significantly with each new contract. Last year, OUTSOURCE FACILITY unilaterally increased fees by approximately [insert percent%] when Anywhere Hospital Pharmacy tried to extend the current contract. As part of the pharmacy reorganization plan, Anywhere Hospital Pharmacy built a USP Chapter <797> compliant clean room capacity for onsite production of all IV admixtures. The return on investment is immediate and substantial. Conservatively, the expected net savings is [$insert cost] in year 1 and [$insert cost] over the next five years. We have provided detailed financial analyses in the business plan. Lastly, moving all production on site reduces risks of disruptions in dispensing due to weather emergencies. Historically, Anywhere Hospital Pharmacy had to temporarily move OUTSOURCE FACILITY (personnel, equipment and supplies) onsite for weather emergencies. III. Program Overview Inpatient volumes had grown at a rate that exceeded the capacity of the Inpatient Pharmacy Sterile Production Area. In [insert date], the Department of Pharmacy made the decision to outsource some of its sterile production to an OUTSOURCE FACILITY. OUTSOURCE FACILITY has provided routine, non-urgent sterile compounding services for our Inpatient Pharmacy Services for over [insert usage]. OUTSOURCE FACILITY, functioning as a licensed Pharmacy, prepared patient specific doses using Anywhere Hospital Pharmacy’s drug inventory. All other supplies and resources including staffing are provided by OUTSOURCE FACILITY. OUTSOURCE FACILITY fees for service funded the outsourcing business. Developed and/or shared by the American Society of Health-System Pharmacists More information is available at www.cspinsourcing.org There are few commercial competitors to OUTSOURCE FACILITY, and their fees increase significantly with each new contract. Due to recent USP Chapter <797> renovations and expansion in the Main Pharmacy, we now have suitable space for this IV production to take place onsite. Approval of this business plan will enable Pharmacy to sever its ties with OUTSOURCE FACILITY, and drastically mitigate the costs associated with this relationship. In [insert date], the inpatient pharmacy was renovated to accommodate current needs and future growth in all areas of Inpatient Pharmacy Services through a new Satellite Pharmacy and the main pharmacy. Over the previous year, one of our major Departmental goals has been to standardize our policies and procedures to promote the safest and highest quality of care that we provide for our patients. In our original design of the new Satellite Pharmacy, we allocated two biological safety cabinets for chemotherapy production in one room, and six biological safety cabinets for nonchemotherapy production in the adjacent room. Our major limiting factors to pulling back our current outsourced IV production in house are the facility renovations and the required staffing needs to prepare all of the existing outsourced production. Pharmacy leadership has worked extensively over the past [insert duration] to determine the feasibility of ending the OUTSOURCE FACILITY contract, and have determined it is in the best interest of ANYWHERE HOSPITAL PHARMACY to increase its IV production at the main pharmacy. This team is highly committed to fully executing this plan, and their analysis and due diligence demonstrates this project will lead to an estimated annual savings of approximately of [$insert cost] in year 1 and approximately [$insert cost]/per year beginning in year two. IV. Measurable Program Objectives The OUTSOURCE FACILITY contract is up for review/renewal in [insert date], and we would like to be prepared at that point to terminate our relationship. We are optimistic this business plan will be approved during this calendar year [insert date], and by [insert date] we will begin recruiting for the essential staff. There are three major factors in the successful implementation of this program: New Pharmacy facility renovations, additional staffing needs, and current OUTSOURCE FACILITY contract renewal deadline. New Pharmacy Facility Renovations Sterile Production Area construction is scheduled and the estimated date of completion for this project is [insert date]. Upon completion of facility renovations, one week will be necessary for terminal cleaning, and two weeks will be required for Environmental air sampling. Each step is required to meet our goal implementation date of [insert date]. The total renovation costs for the New Pharmacy will be [$insert cost]. Additional Staffing Needs OUTSOURCE FACILITY prepares over [insert usage] intravenous doses each month. This ranges from simple intravenous admixtures of one drug added to a base solution to complex intravenous formulations with up to twenty different ingredients in each intravenous solution. There are six different categories of intravenous medications that require various amounts of work. Our goal is to absorb all six categories of medications. Total Parenteral Nutrition (TPN) products require additional technology to prepare in-house, and we will need to implement the software and hardware prior to implementation. Currently, OUTSOURCE FACILITY is preparing an average monthly volume of [insert doses] at a cost of [$insert cost]. Annual expenditures based on current Developed and/or shared by the American Society of Health-System Pharmacists More information is available at www.cspinsourcing.org volumes are estimated to be [$ insert cost]. In order to absorb this workload, we will need [insert FTE number] additional staff members at an annualized cost of [$ insert labor cost] including benefits. With this many additional staff, we will need at least 3 months to hire and train everyone prior to the implementation date of [insert date]. OUTSOURCE FACILITY Contract Renewal We have a multi-year contract with OUTSOURCE FACILITY with an annual option to renew. The current option ends on [insert date]. In the contract there is a clause where either party can completely back out of the contract with 30 days’ notice. For this reason, we have to be prepared to absorb all of the sterile preparation that is currently performed by OUTSOURCE FACILITY. Based on the premise of absorbing the majority of the outsourced work from OUTSOURCE FACILITY, we will need to have everything in place prior to the contract renegotiation in [insert date]. V. Detailed Program Definition and Description Over the previous [insert duration] years we have been working on pulling back outsourced production to be handled more in-house. To date, we have implemented an Intravenous Push policy and added many of the ready-to-use products to our controlled access cabinets on the nursing units. This was one of the added benefits of storing more medications in our controlled access cabinets, thus making the medications readily available for our patients. We have absorbed all additional workload to date from our existing staff allocation. We gained some efficiencies in our processes via the installation of automated carousels. The carousels allow us to automatically generate purchase orders to our wholesaler and we have reduced our automated dispensing cabinet refill time to less than [insert percentage] of previous processes. We are currently at the stage of pulling back our manual preparations from OUTSOURCE FACILITY, which requires additional facility requirements and personnel. Facility Requirements We prepare over [insert volume] sterile IV admixtures per day in our current inpatient sterile IV Room. OUTSOURCE FACILITY prepares an additional [insert volume] sterile admixtures. Approximately [insert volume] are non-chemotherapy, and [insert volume] are chemotherapy sterile admixtures. We currently have eight nonchemotherapy biological safety cabinets in our main pharmacy, and 3 of them are dedicated for our existing usage. We have 5 additional hoods that we can utilize to absorb the doses from OUTSOURCE FACILITY. We prepare approximately [insert number] chemotherapy doses per day in our existing chemotherapy sterile room. We have 2 chemotherapy hoods in the New Satellite Pharmacy that we will utilize to absorb the additional [insert number] doses from OUTSOURCE FACILITY. Additional Equipment/Supplies The New Satellite Pharmacy has been equipped with major fixtures and equipment (biological safety cabinets, refrigerators, and shelving). We will need to purchase additional drug storage bins, repeater pumps (6), metro finishing carts, and scales with printers (6). All additional equipment is estimated to cost less than [$insert cost]. Operational Structure The New Satellite Pharmacy will operate from the hours from [insert times] every day. All inpatient ICU and chemotherapy production will be prepared in this satellite pharmacy. This will allow us to coordinate the Developed and/or shared by the American Society of Health-System Pharmacists More information is available at www.cspinsourcing.org delivery of these medications to the nursing units. Implementation of this project will be the primary responsibility of one Lead Pharmacist and two Lead Technicians for this area. We will have one each for the day shift and evening shift to cover the time the satellite will be open. Staffing The most critical step in this project is obtaining the necessary staff to prepare the work that had previously been outsourced. Staffing needs have been determined based on a time study of our current technicians preparing items in each of the six outlined categories. Based on the predicted volumes and estimated preparation times, we will need [insert number] pharmacy technicians and [insert number] pharmacists. We will also need one lead pharmacist and two lead technicians to oversee the operations and provide managerial support for the staff. Total annual personnel costs for this project are estimated to be [$ insert cost]. In order to meet our implementation deadline of [insert date], we will need to recruit and hire our staff prior to [insert date], to allow for approximately [insert time] full months of our training program for all new hires. The additional training expense of [$ insert cost] was not included in the financial analysis, but this will be an additional incurred cost for the institution. VI. Market and Competition Profile and Market Development Plan This type of service is very unique in that there are few local competitors for this type of service. Before the original facility renovations for the Inpatient Pharmacy in [insert date], we did not have the option of absorbing this volume within our facility. Further, we are the only [insert area of state] institution using OUTSOURCE FACILITY for full service patient specific IV production. VII. Financial Analysis This project’s financial analysis and ROI is centered on the monetary savings associated with executing this business plan. We are already performing this service at the main campus. This initiative will simply expand upon our existing production responsibilities. Incremental volume and revenue projections were unnecessary to consider when evaluating the viability of this initiative because its motives are not geared towards increasing volume or revenue. This project’s main goal is to save the institution money by terminating an existing costly contract. This proposal will allow us to accommodate the long-term hospital expansion project with a remaining sterile production facility/equipment capacity of up to [insert percentage] of current production volumes. In [insert date], we paid OUTSOURCE FACILITY [$ insert cost] to provide routine, non-urgent sterile compounding services for our Inpatient Pharmacy Services. To have the capability to support this service onsite we will need to hire a variety of additional staff. Based on the predicted volumes and estimated preparation times, we will need [insert number] pharmacy technicians and [insert number] pharmacists. We will also need one lead pharmacist and two lead technicians to oversee the operations and provide managerial support for the staff. Total annual personnel costs for this project are estimated to be [$ insert cost]. Additionally, in the first year of this initiative, we will incur an expense of [$ insert cost] for necessary equipment and supplies. Since OUTSOURCE FACILITY used Anywhere Hospital Pharmacy’s inventory to prepare patient specific doses, no additional drug expenses are needed. We estimate a realized savings of [$ insert cost] in the first year alone. Over the next five years, we anticipate a total savings of [$ insert cost]. When compared to our existing contract with OUTSOURCE FACILITY, bringing this service onsite will never result in a financial loss. Now that we have Developed and/or shared by the American Society of Health-System Pharmacists More information is available at www.cspinsourcing.org the capability to perform this production onsite, we are ready to terminate our contract with OUTSOURCE FACILITY. Anywhere Hospital Pharmacy cannot legally recycle doses prepared by outside pharmacies, i.e., OUTSOURCE FACILITY. Thus most unused patient specific doses are routinely destroyed. Anywhere Hospital Pharmacy can recycle unused doses we prepare. Also, Pharmacy will prepare patient doses closer to the scheduled administration time, reducing wasted or unused doses. Although not currently included in this business plan, pharmacy will quantify this additional financial savings during the implementation. VIII. Implementation, Monitoring, and Exit Strategy There are several key steps that are required before implementing this project. We need to have the facility modifications on the New Pharmacy Satellite, hire and train additional pharmacy personnel, set up the New Pharmacy Satellite with supplies and drugs, renegotiate the OUTSOURCE FACILITY contract, and adjust the pharmacy information system interfaces to process the orders onsite. Implementation The primary coordinator for each phase of the project will be the responsibility of the Inpatient Pharmacy Manager. Individual Responsibilities are assigned as follows: o New Pharmacy Satellite Renovation – Facility Project Manager o Hire additional Pharmacy Staff – Inpatient Pharmacy Manager o Set up New Pharmacy Satellite – Inpatient Lead Pharmacists o Renegotiate OUTSOURCE FACILITY contract – Pharmacy Finance Manager o Modify Pharmacy Information System Interface –Pharmacy Informatics Manager Monitoring Most of the work for this project will be done prior to go live, but we will need to monitor the change in the pharmacy information system interface. We will be able to manually confirm that the interface is correct by comparing the orders with the medication labels. We physically check each item that comes from OUTSOURCE FACILITY, and we can directly sign off on the orders to ensure there are not duplicate orders or missing doses. We will have to create a catch-up batch to ensure that the routing differences are easily transferred to our inhouse sterile preparation batches. All other monitoring will be done in the same manner that we currently perform. We routinely monitor our clean room environment for particle counts, bacteria, and cleaning procedures. This will remain the same in our new area. We will quantify the value of destroyed IV waste before and after implementation to document additional savings. Exit Strategy Developed and/or shared by the American Society of Health-System Pharmacists More information is available at www.cspinsourcing.org We will document the progress of each phase of the project within our project plan. The five major phases listed above will be tracked for completion. If one of the phases is not completed, then we will have multiple options. We can proceed with individual categories of medications based on their individual requirements. The five phases are required to pull back all sterile production from the outsourced company, but individual categories of sterile preparations can be completed based on the requirements. For example, the TPN Compounder is required only for the preparation of TPNs. This item can continue at OUTSOURCE FACILITY if everything is not in place prior to [insert date]. Our overall goal is to move all outsourced production back onsite, but there is some flexibility based on individual categories of sterile preparations. Another limiting factor may be the number of staff that we are able to hire and train prior to [insert date]. We can also limit the number of categories that we pull back based on the number of additional staff that we have trained. Developed and/or shared by the American Society of Health-System Pharmacists More information is available at www.cspinsourcing.org