Download I. Signature Page

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