How Scripps Uses Data Analytics to Contain Drug Costs

A pilot program at two Scripps Health hospitals is using data analytics to generate $1 million in annual spending reductions on prescription drugs.

Scripps Health is banking on data analytics to help contain spending on prescription drugs.

In a pilot program launched this year at a pair of Scripps Health hospitals (684-bed Scripps Mercy Hospital San Diego and 183-bed Scripps Mercy Hospital Chula Vista, CA), the health system is expecting to generate annual cost savings of about $1 million in 2016 and 2017 mainly from purchasing medications from low-cost sources.

Kenny Scott, executive director of pharmacy operations at Scripps Health, says "It has helped us a great deal in terms of identifying potential opportunities just in the early stages of using the new system."

San Diego-based Scripps Health operates five acute-care hospitals, with a total of 1,495 licensed beds. For the fiscal year ending September 2015, the system posted total annual operating revenue at $2.8 billion, with patient services accounting for $2.2 billion of the health system's revenue.

It generated a $143 million positive operating margin in FY2015.

Now, with help from a third-party partner, Scripps Health is starting to compare the organization's internal database for prescription drugs against a broader set of potential sources for purchasing medications

"In healthcare," says Scott, "everyone is very concerned about costs and trying to get their arms around costs. Scripps has "been challenged with our data system in terms of being able to extract data" that would lead to opportunities for cost reductions.

Sentry Data Systems has helped Scripps Health identify at least $1 million in annual savings from optimized purchasing of prescription drugs, he says.

"We have identified the drugs that we had opportunities to purchase at a lower cost—there were opportunities to improve that in terms of looking at the charge master that we were using within our database compared to what Sentry had," says Scott.

By applying data analytics to examine prescription-drug spending and utilization, Scripps has been able to:

• Understand what's being purchased versus what's being used.

• Look at variation in terms of utilization by physician.

• Make sure it is purchasing drugs at the lowest price possible.

The tool helps Scripps know "fairly easily where the opportunities are from procurement, to prescribing patterns, to utilization within the hospital, and also making sure those drugs will be administered in the most appropriate site," says  Scott.

Care Setting Affects Drug Costs

"When a patient receives oncology agents in the hospital, it's at a higher cost; but if we have that patient receive the medication in the clinic setting, the costs of the setting would be less as well as the fact that we can leverage the 340B program and get a 35% to 50% reduction in the cost of the drugs," he says.

Scott says harvesting data and sharing the bounty with clinical teams has reduced intravenous acetaminophen use at Scripps Health hospitals.

As a result of the work of the Scripps' newly formed system-wide pharmacy and therapeutics council, "which used the data and analysis to reduce the utilization of IV acetaminophen," improvement was seen.