Key Takeaways
- Centralizing purchasing and standardizing product selection across all facilities yielded immediate cost reductions and optimized 340B pricing compliance.
How does a 13-hospital health system cut $7.5 million in pharmacy costs—without sacrificing quality or patient experience? For MultiCare Health System, a nonprofit health system based in Washington, the answer lies in a sophisticated reimagining of the pharmacy supply chain.
Tyson Frodin, PharmD, MHA, Assistant Vice President of Clinical Pharmacy, Pharmacy Supply Chain, and Technology at MultiCare, led a sweeping transformation that achieved a 24% reduction in inpatient drug spend and set a new industry benchmark. In this exclusive interview, Dr. Frodin breaks down the strategic moves, cultural shifts, and data-driven partnerships that delivered multi-million-dollar savings—while improving patient access and experience, especially in rural communities. Whether you lead pharmacy operations or simply want a blueprint for supply chain excellence, this is the inside story you need.
MultiCare’s journey to pharmacy supply chain excellence began out of necessity and vision. Dr. Tyson Frodin explains: “MultiCare, we’ve definitely been on a journey to become world class, and that’s one of the things that we’ll continue to drive moving forward, is how do we become not only a world class pharmacy enterprise, but a world class health system that drives significant improvements in care for our patients and populations.”
Several converging factors made pharmacy supply chain optimization a high-stakes imperative:
-Rising drug costs: With $375 million in annual drug spend, even small efficiency gains meant big dollars saved. -COVID-19 disruptions: The pandemic exposed weaknesses in procurement, inventory, and rural hospital support. -Expansion into rural markets: MultiCare’s growth into Idaho, Montana, Alaska, and Oregon required new strategies for small, remote hospitals.Dr. Frodin’s rural roots shaped his focus: “The thing that brought me to MultiCare was the opportunity to have MultiCare grow into northern Idaho, Western Montana, Alaska, as well as Oregon... my experiences as a chief operating officer and director of pharmacy in critical access hospitals really lend themselves to helping this expansion and growth over other rural facilities across those other states.”
Rural hospitals are not just small, isolated facilities—they are essential strategic partners for health systems. Dr. Frodin emphasizes that these facilities, often operating under cost-based reimbursement, can be leveraged to optimize patient flow and finances:
“Right now there’s over 700 hospitals, rural facilities that are at risk for closing. That concerns me because those are my friends, my family. If you understand the ins and outs... being cost-based reimbursed, having access to swing bed, they can be a huge blessing to larger healthcare organizations, especially when looking at, well, how do I get rid—I don’t want to say get rid of—how do we transition patients that are in acute care setting, that are eating up our length of stay and our DRG? Well, if you have that relationship with a critical access hospital... you then can swing those patients.”Key benefits of integrating rural hospitals into the pharmacy supply chain:
-Shorter inpatient stays at large hospitals: Transition patients to swing beds in rural facilities, freeing up acute care beds and reducing length of stay. -Cost recovery and reimbursement: Administer high-cost medications in critical access settings for cost-based reimbursement. -Enhanced patient experience: Patients recover closer to home, minimizing family disruptions and travel costs.“From that standpoint, it really enhances the patient experience by being able to get the emergency treatment that’s needed upfront to get them stabilized and then go back home... where family members can go and visit and help provide that support that’s needed for them to recover faster and better.”
The first and perhaps most crucial step was building a centralized, coordinated purchasing structure across all MultiCare hospitals. Before Dr. Frodin’s tenure, purchasing was fragmented, with each hospital operating independently. He changed that:
“Within six months, we achieved close to $650,000 in savings by just selecting the best preferred product across our system. It drove savings, but with MultiCare being a 340B eligible entity, it also helped our 340B team clean up our crosswalk and enhance accumulations across our health system and get better 340B pricing.”
Why don’t all health systems do this? Dr. Frodin is candid: “I think a lot of it is, it might be something that’s easily overlooked. It’s just one of those things that you would assume that it’s already being done. But it also is quite a significant lift... We committed to that. We saw the value in doing that, and it was easy to see the success from that with the savings that we were able to achieve over that initial six months.”
After centralized purchasing, the next lever was upgrading pharmacy automation to enable perpetual inventory management and waste reduction. MultiCare invested in:
-Pharmacy carousels at all sites -Automated dispensing cabinets (BD Pyxis MedStations) and anesthesia carts -Health Site Inventory Optimizer (HSIO) for advanced data analyticsThese technologies allowed MultiCare to:
-Track inventory in real time -Identify and eliminate unused or expired medications -Reduce carrying costs and stockouts (to less than 0.8%) -Engage nursing in more efficient workflows“By doing that, we were able to reduce stockouts to less than 0.8% across our entire system, really improving nursing workflows. Nursing was super engaged and super excited about that work. As well as reducing our overall inventories and reducing our waste... we’re able to reduce that dramatically.”
The real breakthrough came from leveraging best-in-class data analytics to identify hidden savings opportunities and optimize supplier relationships.
Dr. Frodin partnered with QuicksortRx, a specialized pharmacy spend analytics platform. Here’s how it worked:
“They did the analysis, identified about a $1.25 million opportunity for MultiCare and we hit the ground running... because we’d already created that centralized coordinated purchase structure, and had done the legwork to update our pharmacy automation... we were able to triple that savings value that first year. Instead of saving $1.25M, we saved $3.5M that first year, and it’s been an amazing opportunity and it continues to drive about a 12 to one ROI for MultiCare.”
The cumulative result: $7.5 million in acute care pharmacy savings over 2.5 years, and a 24% reduction in inpatient pharmacy spend—compared to the industry’s 7% benchmark for similar organizations.
With superior data, MultiCare could now select the best vendors for every line of business. Notably, they added Mark Cuban’s Cost Plus Drugs Marketplace (For Business) as a secondary wholesaler for retail pharmacy, yielding another $1.8 million in savings.
Dr. Frodin breaks down the rationale: “With the data analytics that we used, we could see where [our GPO and wholesaler] were increasing pricing and where they were making their money. When it comes to the retail space, looking at oral generic solids... that’s where they’re making a lot of their markup. So by utilizing data analytics... it made it easy for us to be able to identify savings opportunities with other strategic partners.”
Key partnerships included:
-Mark Cuban Cost Plus Drug Company: Used for retail, oral generics; significant cost reductions versus legacy wholesalers. -Meg (online platform): Used for inpatient generic IV injectables, buying excess manufacturer stock at a discount. -Direct-to-manufacturer deals: Data analytics enabled MultiCare to quickly compare utilization and pricing, making direct contracts viable and efficient.The next evolution: building an Integrated Services Center (ISC), a central warehouse sourcing directly from manufacturers.
Dr. Frodin explains the logic and potential: “We can purchase directly into that hub direct from a manufacturer. And when manufacturers are shipping direct to you, they’re bypassing all the admin fees from your traditional wholesalers and GPOs, and they can pass that enhanced savings onto us as an organization. And so we’re seeing anywhere from 15 to 20% increased savings, even based off of any of the GPO pricing or 340B pricing that we’re seeing out there.”
“If you’re having all that brought in centrally and sending it out on one truck versus having one truck per each service line, just on the logistics piece, you can save a ton of money for your organization.”
When does a central warehouse make sense? Dr. Frodin advises that a 500-bed system is the tipping point for strong ROI, but organizations with robust ambulatory or specialty pharmacy programs can benefit at smaller sizes—especially if they centralize additional services.
MultiCare’s pharmacy supply chain transformation is a playbook for any U.S. health system feeling the pressure of rising drug costs and tight margins. The essential steps:
-Centralize purchasing and standardize processes. -Invest in perpetual inventory and automation. -Deploy advanced data analytics to benchmark and identify opportunities. -Leverage data to pursue new vendor relationships and direct sourcing. -Consider integrated distribution hubs as your system grows.As Dr. Tyson Frodin says: “We’re all in this together. Any opportunities we have to collaborate and work together, it’s time well spent... Looking to emulate what MultiCare has achieved? Please feel free to reach out.”
For more stories and strategies from the frontlines of healthcare supply chain, follow the American Journal of Healthcare Strategy and connect with Tyson Frodin on LinkedIn.
This article is informed by a podcast interview with Tyson Frodin, PharmD, MHA, Assistant Vice President, Clinical Pharmacy, Pharmacy Supply Chain and Technology, MultiCare Health System. For complete resources and links, see the episode notes.
<p>you can really capitalize on the logistic savings. So looking at having supply chain lab uh sterile processing um and other strategic partners in that space. If you're having all of that brought in centrally and sending it out on one truck versus having one truck per each service line just on the logistics piece, you can save a ton of money for your organization. [Music] Hello everyone. This is Cole from the American Journal of Healthcare Strategy joined by a special guest.</p> <p>uh I came across kind of a viral LinkedIn post from him and kind of got invested in everything going on with his organization as well as several of the partners uh they've been working with and I was so thrilled when we were able to bring him on the show. Uh Dr. Tyson Froden, please introduce yourself. Cole, first and foremost, thank you so much for having me. It's a real pleasure to be here.</p> <p>super excited to be able to talk about what MultiCare has been able to do and execute on to drive value and and success for our organization. But as far as introduction goes, my name is Tyson Fin. I'm the AP of clinical pharmacy, pharmacy supply chain and technology at Multicare. Um I've been with Multicare just coming up on five years now. I've been in this specific role a little over four.</p> <p>Um and I oversee all things to do with our inpatient clinical services as well as pharmacy procurement across the entire organization. I oversee our PNT uh medication safety uh pharmacy rev cycle team as well as all the pharmacy automation technology across the pharmacy enterprise. That is great. We're really thrilled to learn some really interesting things that you guys are doing and also from your experience.</p> <p>you got your farm D from the looks of it back in 2010 and you've kind of been working in administration and doing uh management ever ever since. It seems like you've kind of taken the lead in a lot of situations. Uh is there any kind of personal passion or personal reason why you really went into leadership, management, administration over kind of the traditional, you know, pharmacy path? Ooh, really interesting question. Yeah, I think you everybody gets to that point in their career.</p> <p>It's like, well, which direction do I go? Do I become the the the the clinical pharmacy expert or do I move into more of an admin, you know, CEO or or seat speed ro or things along those lines? And based off of personality and my love to engage teams and mentor and teach, the the admin role always just kind of had a good fit. So early on in my career, I really thought that I was going to work in community pharmacy.</p> <p>I would go work for 10 hours a day, go to work, come home, and not have to bring work home with me. Zero responsibility, zero managerial experience. And really early on in my career, that just did not happen. So, I've always been kind of thrust into these roles where I've been an administration and I've been a you whether a director, a supervisor, an AVP.</p> <p>Um, and that's really kind of what's led to the progression in my career of being a director of pharmacy and then being a chief operations officer at a critical access hospital and then moving into a larger health system where I was trying to get back into the world of pharmacy but as a assistant vice president of pharmacy. Yeah.</p> <p>when you and the reason I ask that as well is because when you look at the resume, you notice that you were doing leadership, like you said, you were COO at at a really important institution that was caring for, you know, vulnerable populations, but you transitioned at this time in July, it looks like, of 2020, right, when COVID and these things were about to hit big time and really take their toll on healthcare. What was that like?</p> <p>Or or maybe more specifically when you became the director of pharmacy in July of 2020. What were some of the issues that you really became attuned to that maybe you hadn't seen before? Well, so March of 2020 is when COVID really started to to to come to life and nobody really knew what was going on. And at that time I was already interviewing and looking for opportunities to continue to grow my career. Um I loved being a chief operations officer.</p> <p>Um and you had mentioned I was at a critical access hospital, you know, 25 beds or less, usually very rural and I love rural facilities. I love rural care. I love rural populations. I'm originally from southern Idaho. The hospital I was born in was a critical access hospital and that's where I really cut my teeth in healthcare. Um, and still am very passionate about rural healthcare.</p> <p>The thing that brought me to multicare was the opportunity to have multiare grow into northern Idaho, western Montana, Alaska, as well as Oregon. And I really thought that I could use the skills that I had learned being a chief operations officer at a critical access hospital to really help drive that growth specifically in rural populations.</p> <p>You look at northern Idaho when we got one large acute care facility, the rest of critical access as well as western Montana and then into Alaska and then into Oregon. So I really felt that the experiences that I had working in rural health as a chief operating officer and as a director of pharmacy at the same time I oversaw pharmacy as well as being a chief operations officer would really lend itself to helping this expansion and growth over other rural facilities across those other states.</p> <p>So that was the big thing that attracted me to coming to multiare was that future footprint and that growth that they were projecting.</p> <p>That's a tough way to grow though like rural I mean that's challenging you know focusing on rural growth and expanding to rural markets not a lot of people want to crack that right they don't want to work in that area I mean is there anything particular that draws you to that or that you think is unique about that environment that you want to you know build your career around yeah so once again you know when I look at those communities those are my family and friends that I'm that I'm caring for coming from southern Idaho Um, and when I was in southern Idaho, I was working at another critical access hospital as a director of pharmacy.</p> <p>And I had the opportunity to create my own telear pharmacy service where I was able to cover seven other critical access hospitals after hours and on weekends and provide 24-hour roundthe-clock service to those facilities. And that really filled my cup and that's one of the things that I'm very passionate about.</p> <p>Now, when looking at larger health systems, I think that that might be a missed opportunity that a lot of people don't consider is how do we incorporate these smaller facilities, these rural facilities, these critical access hospitals or that have the emergency designation to really be a key component of your health care strategy. You know, right now there's over 700 hospitals, rural facilities that are risk for closing.</p> <p>that concerns me because once again those are my friends those are my family members those are people that I care about relate to and if you understand the ins and outs of how those facilities works some of the benefits you know being costbased reimbursed having access to swing bed you know they can be a huge blessing to larger healthc care organizations especially when looking at well how do I get rid I don't want to say get rid of because that's sounds negative but how do we transition these patients that are in acute care setting that are eating up our length of stay and our DRG.</p> <p>Well, if you have that relationship with a critical access hospital that is outpatient that has swing bed, you then can swing those patients where it's still driving significant revenue for the critical access hospital. They're costbased reimburse. So, you can administer those expensive medications and get reimburseed cost. Whereas, if you work in an acute care facility, it's all BRG bundle based and you're not getting any extra reimbursement for those patients.</p> <p>And so, you potentially could lose money. So by having that strategy of having the larger health systems where you've got centralized services as well as partnering with those critical access hospitals or those rural facilities, it's really a win-win. And how do you leverage that aggregate spend to get better contracting, access to technology, electronic health records, and you're looking at more specialized things like antimicrobial stewardship, you know, quality and safety.</p> <p>You really have the ability to help support those smaller facilities. and at the same time support those smaller smaller facilities by offering access to emergency medicine, OB, emergency surgeries, lifellights, ambulances, all of that stuff that would drive value and revenues for a larger acute care facility and then once that patient stabilized, have them go back home to a rural facility where they're from to receive that best of care via swing bed admission.</p> <p>So, it's really a a a win-win when you can understand those rural facilities and how they can incorporate back into a larger health system. And that's where having worked in rural facilities has lent so much success to my career and wanting to grow and be able to help shape what that strategic opportunity would be for multiare moving forward.</p> <p>Are there critical access hospitals that we could partner with to prevent health care deserts moving forward where a critical access hospital might not have the needs or ability to stay viable based off the financial situation that we currently find ourselves in? How does that affect the patient experience?</p> <p>Because I know like what you're saying sounds great from a logistical and financial perspective, but my other question with anything is does this enhance the patient experience or does it make it more difficult? What does it look like from that? It sounds to me like it might make it a lot easier because they'd be closer geographically to where they already live. Wait, you're you're spot on when you're looking at a lot of these situations.</p> <p>You know, they might not be able to offer the level of care needed to initially treat a patient. So, that patient would be, you know, shipped somewhere else to be admitted, but then you have this person who's now far away from home, whose family is having to travel, having to either leave school, leave work. Um, so there's tons of missed opportunities. There's travel, there's lodging, there's meals, there's there's all of these other financial implications when having to travel for health care.</p> <p>But by these partnerships and helping these rural facilities stay financially strong, by having these opportunities to leverage better contract pricing and access to services, these larger facilities then can return those patients back to a facility that's closer to home where family members aren't having to miss work. They're not having to miss school. They're not having to travel.</p> <p>they're not having to have all these extra expenses associated with having health care provided by another larger facility that's farther away from home.</p> <p>And so from that standpoint, it really enhances the patient experience by being able to get the emergency treatment that's needed up front to get them stabilized and then go back home where they're treated by family and friends that are usually working at that same critical access hospital they're working at, where family members can go and visit and help provide that support that's needed for them to recover. faster and better. So, it's very impressive.</p> <p>Multicare is doing really a tremendous amount of work across the spectrum to improve metrics and to reduce spending. That's kind of one of the things I like from talking with you is there's this focus on reducing cost while improving quality. It's not one or the other. Sometimes we can drift in one of the other directions, but I really like that commitment to both.</p> <p>Um, when we're looking at pharmacy specifically, and I am new to the pharmacy space, so you might have to explain how some of these things work, but there's metrics going on on the internet saying, you know, 25% savings, you know, $10 million reduction in spend. How are you achieving that? And where did that mission start? Because you've been, you know, here five, six years. When you zoom out, where did that start when you got here?</p> <p>Did the mission to reduce spend start like day one or did it gradually appear over the you know the years following co yeah well multiare we've definitely been on a journey to become world class and that's one of the things that we'll continue to drive moving forward is how do we become not only a worldclass pharmacy enterprise but a worldclass health system that drives significant improvements in care for our patients and populations and so based off of the work that I had previously done at or other organiz organizations.</p> <p>That was really the the the base for what we did at Multicare. Now, being in a critical access hospital, being a director of pharmacy, you're usually a one-man show. So, I literally was a one-man pharmacy team. I had a technician who did a lot of our purchasing and, you know, refilling our automatic dispensing cabinets and things along those lines. But, it was really between me and a technician. So, we got a lot of bread, not a whole lot of depth, but we got to wear tons of different hats.</p> <p>And one of the things by being in charge of pharmacy procurement for a critical access hospital, I still remember my my monitor and all the little sticky notes that I had saying, "Buy this product from this company or buy it through the the wholesaler or look to buy direct through the manufacturers. These are the best ways to get this drug at the best price for the organization." Now, that was for a single 25 bed critical access hospital with a million dollars in drug spend per year.</p> <p>Now you flash forward to multicare now being 13 hospitals over 2500 beds across the state of Washington with about $375 million in drug spend. It's a lot and it's like come on there's a lot of work that needs to be done to ensure that we're getting the best bang for our buck when it comes to our pharmacy procurement process. Now each of our sites has a purchaser. There's a pharmacy technician or a purchasing coordinator at each of those sites who's doing the purchasing.</p> <p>And when we first started, when I first started this role back in uh July of 2021, there wasn't a lot of coordination amongst those purchasing coordinators. So, one of the first things that we did and this is first and foremost on this journey was we created a centralized coordinating coordinated purchasing structure across the organization where we identified two purchasers to oversee all of the purchasing and help coordinate the purchasing amongst all of our 13 hospitals.</p> <p>Now, the first thing that they did was they started reviewing the orders that the purchasers created before they were submitted to align best NDC seeds and those preferred markers across our wholesaler. And within 6 months, we were able to get all of that cleaned up. We were able to get all of our preferred markers saved. And we drove significant savings just in that work. In 6 months, we I think achieved close to $650,000 in savings by just selecting the best preferred product across our system.</p> <p>It drove savings, but with Multiare being a 340B eligible entity, it also helped our 340B team clean up our 340B crosswalk and enhance the 340B accumulations across our health system and get better 340B pricing on those accumulations. So, that was the first part. We created this coordinated structure that really drove a lot of the future success we saw down the line. Why doesn't everyone else just do this right away? Like why isn't this already done everywhere?</p> <p>You know, because it's it's 2025, right? There these capabilities ex have existed. Yeah. Why are we still seeing waste in areas like that? I think a lot of it is it might be something that's easily overlooked.</p> <p>It's just one of those things that you would assume that it's already being done, but it also is quite a significant list, especially when you're having to pull, you know, frontline purchasers, create a coordinated centralized product or or structure where they're then reviewing those orders. So, we committed to that. We saw the value in doing that and it was easy to see the success from that with the savings that we were able to achieve over that initial six months.</p> <p>So that might be something that's easily overlooked by a lot of health systems just because it's it's such an obvious thing that you can look to do right off the bat. Yeah. Wow. That so that that's very it's impressive. I mean $650,000 is I mean that's a pretty substantial amount of money, you know, even for huge health systems nowadays. That's a lot. Yeah. Right.</p> <p>Um, and for for multi-are, you know, right now with our size of about $375 million, only about 10% of that currently is in that inpatient space. So when you're looking at, you know, you might have $37 million in impatient space, $650,000 is even that much more meaningful as far as savings for the organization. Um, so Cole, that was really the first piece that we looked at. The second piece that we targeted was really updating our pharmacy automation across the entire pharmacy enterprise.</p> <p>We really had the focus on looking at how do we have a perpetual inventory? How do we manage that inventory to really reduce inventory values, reduce our our our carrying cost of that medication, and ultimately lead to a decrease in waste? How do we become more proficient at managing our inventories? So we did a huge lift across the pharmacy enterprise where we updated all of our pharmacy automation. We're a BD house. So we implemented terracel at all of our sites.</p> <p>We utilize our, you know, our Pixus or BB Pixis med stations as well as anesthesia carts. And we also use BB's data analytic product called HSIO or Health Site Inventory Optimizer to really maximize those PAR values to look at meds that haven't been touched in 90 days and how do we remove those or eliminate those from our automatic dispensing cabinets and also look at our expired meds and how do we reduce waste across the the the the pharmacy enterprise and we saw tons of success with that.</p> <p>So by doing that we were able to reduce stockouts less than 08% across our entire system really improving nursing workflows and nursing was super engaged and super excited about that work as well as reducing our overall inventories and reducing our waste that we see is just normal our normal part of business. We were able to reduce that dramatically.</p> <p>So that was the second part is really utilizing our automation to create a perpetual inventory to decrease our inventory values and decrease pharmacy spend. Wow. Now the third part of this journey is where we've seen the most success and that's partnering with a data analytics company to manage our drug spend. Now, coming into this role, I knew that, you know, creating pivot tables and tracking on, you know, the little sticky notes around my my monitor, that wasn't going to cut it for this. Yeah.</p> <p>So, I really started looking for a partner to help us manage our drug spend. and I looked at everybody that was available and I continue to look at other new coming uh platforms in that data analytics space. But the company that really rose above everybody else and has been head and shoulders above the rest of the competition has been Quicksort RX. Now what Quicksort RX did is they analyzed our pharmacy spend over the course of 12 months. Now we're 340B.</p> <p>That means we purchase GPO, whack, and on 340B accounts. And each of those accounts has different pricing points. So what they did is they analyzed that data. They took the total spend of each of those buckets, divided it by the total denominator of products purchased and identified what our blended cost was. They then took that blended cost and compared that to the rest of the wholesaler catalog.</p> <p>Now, normally when you purchase through a wholesaler, you have visibility to 1DC or distribution center. Well, with Quicksortter X, we now had visibility to every NDC at every distribution center across the country. So, we really had line of sight to the best product pricing based off of our utilization of multicare. And so, when looking at them, they did the analysis, the identified about a $1.25 million opportunity for multicare and we hit the ground running. Now, two things.</p> <p>one because we had already created that centralized coordinated purchase structure. We had done the leg work to update our pharmacy automation. So we're on the latest and greatest version with data analytics. We were able to triple that savings value that first year. So instead of saving 1.25, we saved $3.5 million that first year. Wow. And it's been an amazing opportunity and it continues to drive about a 12 to1 ROI for multicare. Wow.</p> <p>So over the course of two and a half years, we've been able to identify and achieve $7.5 million in savings across our acute care space. And during that time, we've reduced our impatient spend by 24%, which is just remarkable when looking at industry standards or benchmarks that are running about a 7% decrease across other organizations that are not for-profit non-government facilities like ours. Yeah. Yeah. So, we've really moved the needle.</p> <p>Now, with that data analytics approach, it's really helped us identify strategic partnerships that go above and beyond your traditional go and wholesaler arrangements that everybody relies on. And with that data analytics, we were able to find a partnership with Mark Huban's cost plus drug. And we just hit the one-year mark utilizing their services. And we're able to achieve $1.8 million in savings in our retail setting. So in our communityarmacies by utilizing them as a secondary wholesaler.</p> <p>That's interesting because yeah that's okay. So I I have to pause here and ask a kind of a middle question. You're saying and we talked about this before as well before we started recording how important the initial steps were such as data analytics. I understand how having that kind of coordinator team is very vital to the success. But can you explain why the data analytics allowed you to seek out partnerships with like cost plus uh you know in organizations like that?</p> <p>What did it actually enable you to see? Well, you start to see overall the strategy of a lot of the GPOs and the wholesalers and the way that they make their money.</p> <p>Now, when it comes to your traditional GPOS, and this is not to vilify anybody, we have an amazing relationship with our GPO, which is Vizant, as well as with McKessen, who is our wholesaler, and they are amazing partners, but everybody has to be able to employ their staff, give raises, invest in infrastructure, keep the lights on, so on and so forth. And so with the data analytics that we used, we could see where they were increasing pricing and where they were making their money.</p> <p>Now, when it comes to looking at generic IV injectables that we use in the impatient space, GPOS, when they're going out and negotiating pricing on our behalf, they usually maintain a markup on those products and that's where they generate their revenue.</p> <p>When it comes to the retail space, looking at oral generic solids, so your tablets, your capsules, your creams, your inhalers, that's where they're making a lot of their markup or their money is by marking up those products and and charging a premium. So by utilizing data analytics to be able to see what the costs are based off of our utilization in those areas, it made it easy for us to be able to identify savings opportunities with other strategic partners.</p> <p>So looking at Mark Cuban's POS plus drugs as a secondary wholesaler for the retail space um it really aided us in working with Medigene on the inpatient space as an online platform where we can go and register our facilities to create an account where we have access to 80 different manufacturers that are trying to liquidate excess inventories at a discounted price.</p> <p>And so by utilizing that data analytics, it really paints the picture of where there might be enhanced opportunities whether it be through the mediges for IV generic injectables, whether it be through the Mark Cuban's cost plus drug when looking at the generic oral solids. That's where we've been able to really utilize data analytics to identify new opportunities that do enhance savings that do generate revenue because we're getting things at a decreased cost.</p> <p>And you can turn around and take that savings and reinvest in multicare to be able to look at new automation to look at new technologies uh that provide enhanced access to care that drive value patient safety um and really enhance the experience for our patients and our communities.</p> <p>And and one of those areas that we've been able to invest in is Bend RX and these dispensing cabinets that we're able to put outside of our EDS as well as our urgent cares so that patients aren't having to travel around to other community retailies to pick up their scripts. They can get those filled at that point of care right outside the door of the ED or outside the door of our urgent care. Wow. I'm I'm very impressed.</p> <p>I also think you make a very important case for data analytics because there's all these solutions out there uh and we've seen them you know cost plus does have marketing vendor X does have marketing you know all these organizations are marketing but if you don't know what's going on within your organization how do you identify what solution is best especially if you're trying to be very optimal and your experience in the the space of having to be financially constrained right where you're uh trying to save what your past institutions's entire budget is, right?</p> <p>Or if not more, right? So I I think that that's a unique skill set that you bring to this that's made you really good at it. Last question is what do you see happening in the future? Now this is the question I absolutely love. So more and more health systems are going to identify this opportunity when it comes to data analytics.</p> <p>And as more people get on board, it's really going to change the way that we look at pharmacy supply chain because traditionally it's always been your GPOS that go out and negotiate pricing on your behalf and then they load that pricing through a primary wholesaler that you buy your drugs directly from. As we continue to develop and enhance this analytics and as more people join on board, it's going to open up a whole lot of new opportunities.</p> <p>Now, one of the opportunities that we've seen is how do we utilize this data analytics to go out and enhance pricing direct to manufacturers. Now, this happens to me all the time. This this this is a daily occurrence. I'll have a manufacturer reach out to me to say, "Hey, Tyson, you know what? at our company, company X. Here's our new portfolio of drugs. Why don't you go through this portfolio? Let us know which NDC's you're interested in.</p> <p>And when you do, pull your utilization for us, your GPO, WAC, and 340B. Let us know certain price points where it would be beneficial for you to look to come direct to us, and then maybe we can come up with a an agreement where you'll buy your drugs direct from us as a manufacturer. Well, Cole, I'm not going to lie. My knee-jerk reaction was, "No, I don't have the time. I don't have the resources.</p> <p>My purchasers don't have the Excel savvy or knowhow to create a pivot table to track, you know, our current cost, create a blended cost, identify what those pricing points were going to need to be. We just didn't have the capability or the functionality.</p> <p>Well, now with data analytics, in literally a matter of three clicks, I can generate a spreadsheet with all the NDC's that that manufacturer makes, and I can pull my utilization where I'm buying that same NDC from a different manufacturer with the utilization values, whether it's my average monthly utilization, my average quarterly utilization, my average yearly utilization, and also price points that would make it worthwhile for me to go direct to the manufacturer.</p> <p>And so by utilizing this data analytics, it's really going to change the way that we purchase drugs. Oh yeah.</p> <p>So one of the things that we're looking at as a strategy for multiare is how do we build out an integrated services center for our health system which essentially is a giant hub or a giant warehouse where instead of purchasing from a wholesaler we purchase direct for manufacturers into this central hub and create a spoke process where we're able to ship those drugs out to each of our facilities whether they're hospitals whether they're clinics urgent cares or off-campus EDS or infusion centers we can purchase directly into that hub direct from a manufacturer.</p> <p>And when manufacturers are shipping direct to you, they're bypassing all the admin fees from your traditional wholesalers and GPOs. And they can pass that enhanced savings on to us as an organization. And so we're anywhere from 15 to 20% increased savings even based off of any of the GPO pricing or 340B pricing that we're seeing out there.</p> <p>And so for us, that's where we see the value of all this moving is how do we create this integrated services center where instead of buying 90% of our drug from a wholesaler, we're looking to go 70 to 80% direct to manufacturers to purchase and really leverage that spend. Now, that also does some other strategic things for your organization. One, you can do bulk forward buys where you're able to get enhanced savings by saying, "I'm going to buy a full year at once." Yeah.</p> <p>then you can receive that and store it in your warehouse. Two, you can buy that buffer stock. That way, if a shortage does occur, you've already got buffer on hand, so you might not even experience that shortage. And then three, if you get strategic and start placing other service lines in that same space, you can really capitalize on the logistic savings. So, looking at having supply chain, yeah, lab, uh, sterile processing, yeah, um, and other strategic partners in that space.</p> <p>If you're having all of that brought in centrally and sending it out on one truck versus having one truck per each service line just on the logistics your organization. That's extremely impressive. I'm I'm very impressed. I think this is a good lesson in in kind of uh process improvement in and logistics as well. One of the questions I have just I know that was the last question, but now I have another last question. when we're talking about scale, right?</p> <p>One of the the ideas was that, you know, it's cheaper for a a wholesaler to do this because that's all they do and they can feed 50, 100, 200 hospitals, etc., right? But you're only one system with 13 hospitals. I know you have many more other facilities, but how big do you have to be before having this central warehouse makes sense? Really good question. I really think it would come down to the size of the organization based off of where you could get the ROI for the data analytics.</p> <p>Now, so it's the data that's the problem then. Look, yep. So, once again, it's going to come down to that data analytical capability. And for us working with our partner, you know, they say, you know, maybe 500 beds. If you have over 500 beds, that's when it really starts to make wow the ROI worthwhile in the savings. And once you're able to generate that ROI based off of the data analytics, then everything else falls into place.</p> <p>Now, there might be organizations out there that, oh man, we're just shy of that. Well, that's just, you know, kind of a a rough ballpark. But there's other opportunities you have to look at. Impatient spend is only about 10% of our total drug budget. When you look at that ambulatory space, if you've got community pharmacy, you're looking at doing central fill, you're looking at centralizing other service lines. Is it Medre? Is it prior raw?</p> <p>Um, that's where you can be smaller than that and still see the value in centralizing that purchasing and using that data analytics. Now multiare we've got a very robust we've got a very robust ambulatory footprint and that's one of the areas that we're going to look to continue to grow because that's what's going to be driving margin and revenue moving into the future. It's not the impatient space.</p> <p>Impatient space is going to continue to get hit hard with inflation and reductions in Medicare and Medicaid reimbursements. And with the new uh administration, who really knows what's going to happen with 340B, with Medicaid, with Medicare? So, what can you do to really build out that ambulatory space that's going to drive revenue and margin for your organization and eventually subsidize that inpatient space?</p> <p>So even while you might not have, you know, 500 beds, if you're looking at having specialty pharmacy, infusion, alternate site infusion, home infusion, um, retail, central fill, um, and then looking at centralized other strategic, uh, service lines, Medre, you know, centralized sterile compounding, non-sterile compounding, you know, that's where these opportunities start to multiply and really show the value in doing it.</p> <p>So you might not be a 13 hospital organization, you might be a five hospital organization with a robust ambulatory footprint that would make this well worth the while to to go after and and try to execute on. And I think that's the signal for some big changes then ahead. That's a that's an interesting point. Great answers. Thank you, Tyson, for this amount of time. I know you spent extra time.</p> <p>I really do appreciate it and I hope we can have you on again, especially after we start to uh get involved in that ambulatory care space more and more. Oh, I' I'd be happy to. Thank you so much for Cole Cole for having me. This has been an awesome experience. And if there's ever any other questions that come up or if anybody reaches out looking for help, support, you know, um looking to emulate what Multicare has achieved, please feel free to reach out. You know, we're all in this together.</p> <p>Any opportunities we have to collaborate and work together is time well spent. So looking forward to any opportunities to collaborate with other healthcare healthcare organizations that are looking to undergo the same journey becoming world class. We are going to link all of your information in the episode notes uh as well as on YouTube and on the website. So please go and seek out Tyson. He has some great posts on LinkedIn as I was mentioning that have have gone viral. Check those out.</p> <p>Uh and also follow Multicare. I've not heard of Multicare before I had met Tyson. And so I think that was really awesome to see how much there really is going on in innovation even from organizations that you might not have heard of. So, uh, thank you, Tyson, and we'll talk again</p>
Want to reach healthcare executives and decision-makers? Join industry leaders like HealthMap Solutions on our podcast.
Become a Guest