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McKesson and IPC                                                                             Independent Pharmacy
Trusting relationship benefits independent pharmacies                                         Cooperative
by Nicole M. Martin
                                                                                             IPC started 25 years ago as a coopera-
                                                                                             tive of seventy independent pharmacies
                                                                                             in Dane County, Wisconsin. Initially fo-
                                                                                             cused on Dane County, IPC expanded to
                                                                                             include pharmacies across Wisconsin.
                                                                                             The program has expanded over the
                                                                                             years, and IPC now serves pharmacies
                     or more than 20 years,   two projects with Six Sigma. The phar-         in all fifty states.
                    McKesson and the In-      macy expertise of IPC and the data of
                   dependent Pharmacy Co-     McKesson will deliver better buying deci-      IPC is a member-owned organiza-
                                                                                             tion; all profits and benefits go back
                 operative, Inc (IPC) have    sions to the customer,” states Bill Hamik,
                                                                                             to the respective members based on
                been working together to      senior vice president of McKesson. “The        patronage.
              benefit independent commu-       work couldn’t have been done indepen-
nity pharmacies. Ten years ago, McKesson      dently, but by working together, we can        To assist independent pharmacies
and IPC began the Community Pharmacy          help the stores. We both worked together       in managing the business end of
Commitment Program, providing fund-           and we both shared our expertise and data      pharmacy, IPC has taken some of the
ing to state pharmacy organizations in        to bring value to the stores that indepen-     responsibility in-house to a staff of
                                                                                             professionals to utilize economies of
support of activities and lobbying efforts     dent pharmacies would not have the time,
                                                                                             scale. Pharmacists can focus on the
that in turn, benefit community pharma-        expertise, or data to do.”                     professional side of practice and depend
cies.                                             Both IPC and McKesson have an              upon IPC and McKesson to take care
    IPC began nearly 25 years ago in Wis-     ongoing relationship with PSW as well.         of the business end. One of the main
consin. As a member-owned company,            Through the Community Pharmacy                 functions of IPC is making business
all profits and benefits go back to the         Commitment Program (CPC), PSW is               decisions regarding generics. With a
members based on patronage. Initially,        granted money to use on behalf of IPC/         staff of four pharmacists and supporting
IPC was composed of approximately 70          McKesson customers. PSW uses the funds         technology, IPC can assist pharmacists
pharmacies around Dane County. It ex-         for lobbying efforts, educational confer-       by making decisions on their behalf with
panded statewide, then across the nation.     ences, and other programs of interest to       product pricing and availability.
IPC has member pharmacies in all 50           IPC members.
states. McKesson has been the wholesaler          The collaboration among the three
for IPC since the cooperative’s inception.    organizations is successful because “we’ve
Nearly 85% of McKesson’s independent          developed a dialog and relationship, a
customers are IPC members. Three years        meaningful one, between the members of         McKesson
ago, IPC signed a ten-year exclusive sup-     the organizations,” states Chris Decker. “It   McKesson Corporation is a multifaceted
ply agreement with McKesson. “We have         allows issues and opportunities to be ad-      business, providing services to pharma-
a high level of confidence in the relation-    dressed that otherwise would be difficult        cies, health care providers, and health
ship with McKesson,” states Steve Nie-        to address.” Niebauer adds, “The invest-       care payors. Pharmacy services include
bauer, president of IPC.                      ment we have made in PSW has been              pharmaceutical distribution, repackag-
    In addition to supplying member phar-     returned to us many times over. That’s         ing of bulk pharmaceuticals, electronic
                                                                                             order-entry systems, pharmacy admin-
macies, IPC and McKesson are looking          through their [PSW’s] efforts on behalf
                                                                                             istration systems, automated robotics,
to expand the services they offer. “We’re      of IPC members and all pharmacists in          and automated cabinets for storing,
trying to evolve other characteristics that   Wisconsin.”                                    dispensing, and tracking commonly
member pharmacies don’t have yet, or              Hamik states, “Large companies like        used medications.
provide services that members cannot pro-     McKesson have to be in sync when issues
vide for themselves,” states Niebauer. “We    arise that affect the distributor, the buying   McKesson customers include more than
feel that there is a tremendous amount of     group or the independent and small chain       25,000 retail and 5,000 health systems
                                                                                             pharmacies nationwide. Customers in-
data that we can facilitate managing that     owners. The relationships help foster an
                                                                                             clude large national chains, community
stores cannot do for themselves. We can       environment that keeps everyone up on
                                                                                             pharmacies, and hospital pharmacies,
help members make better business deci-       what is going on in the pharmacy arena in      as well as outpatient clinics.
sions when it comes to purchasing. Our        Wisconsin.”
3,500 individual members could not do             The CPC began in 1996 to provide as-            WWW.MCKESSON.COM
this alone. But systems-wise, we could do     sistance to pharmacy organizations that
this on behalf of 3,500 stores.”              worked on behalf of community pharma-
    “McKesson and IPC have partnered in       cies. Small pharmacies seldom have the

26   JPSW March/April 2005
time or resources that larger organizations      about relationships. At the end of the day,   for our customers and PSW provides it,
have. The leaders of IPC and McKesson            if you ask a customer why they work with      from a professional standpoint, for all of
felt it was important to support groups          their particular wholesaler, it’s probably    Wisconsin’s pharmacies.” ●
that already had programs established,           the relationship with the sales rep or the
such as PSW. “It’s better strategically and      company. But when you get to the bot-         Nicole Martin is a 3rd-year PharmD student at
likely more successful to support the or-        tom line of the IPC/McKesson scenario,        the UW School of Pharmacy. She is completing
ganizations that are currently designed to       you have pharmacists looking out for          an independent study project exploring phar-
do that, instead of starting from scratch,”      pharmacists. IPC provides that service        macy journalism.
states Decker.
    The programs and services that PSW
is enabled to provide are as diverse as the
members served. The funding provided
through the CPC program enables PSW
to dedicate and employ staff to work on
                                                 Medication management: A unique
the areas vital to the IPC member and            perspective of pharmacy practice
McKesson customer. Those activities ben-         by David A. Ehlert, PharmD
efit other pharmacists as well, but that’s
OK with the group. The organizational
leaders follow the theory, “a rising tide              am pleased to have been invited to share with the readers of JPSW my somewhat
floats all boats.” PSW receives financial                unusual pharmacy practice. Before I explain what I do, I thought it would be
support from other pharmacy wholesalers               helpful to describe the path that led to my current position.
as well, but not nearly to the same de-             I graduated from UW-Madison with my post-baccalaureate Doctor of Pharmacy
gree as McKesson and IPC. That’s partly          degree in May of 1999. Upon graduation, I completed a pharmacy practice residency at
because these companies are the market           St. Luke’s Medical Center (Aurora Health Care) in Milwaukee. At the ASHP Midyear
leaders in Wisconsin, but Decker quickly         Clinical Meeting in December of 1999, I learned of a relatively new specialty residency
adds that PSW would welcome and uti-             program in pharmacy management. After many discussions with the program co-direc-
lize similar support from others. “As an         tors and after careful consideration of my options, I decided to pursue this specialty
association, PSW’s activities are only lim-      residency. The first six months of my training were on-site at the UW Hospital and
ited by the resources available. The more        Clinics, while the second half of the year was devoted to working on McKesson Medi-
resources, the more we can do.” PSW has                                         cation Management (MMM) projects at the corporate
taken an active role in government af-           McKesson                       and field level. The program provided an opportunity to
fairs that impact pharmacy. The current                                         develop both drug use policy and medication use process
focus is on the Governor’s proposed state
                                                 Medication                     management skills within an integrated health system as
budget, which would dramatically reduce          Management                     well as a corporate pharmacy practice setting.
reimbursement for state-funded programs          provides                          Upon completion of my residency, I decided to stay on
                                                                                with McKesson Medication Management in a leadership
and have a negative impact on pharmacy
practice across the state. And, although         services that                  development program. This program was structured such
critically important, the state budget is        range from                     that I would gain exposure to the different facets of the
just one of many legislative issues being                                       business unit. I spent nine months with our new business
addressed by the organization.                   consulting                     and due diligence team as a new business transition spe-
    PSW has also been a continuing pres-         to full                        cialist, and another nine months with our implementation
ence in the patient safety improvement
arena, working with many other profes-
                                                                                             implementation specialist. In January
                                                 outsourcing of team as an the role of director of clinical services. of 2003,
                                                                                I accepted                                         In June
sional and patient advocacy groups to de-        the pharmacy of 2004, I was promoted to vice president of clinical ser-
sign practices that would reduce medical         department.                    vices within McKesson Medication Management.
errors. Quality improvement, practice de-
velopment, and payment for performance           WHAT IS MCKESSON MEDICATION MANAGEMENT?
are each priority areas of activity for PSW      McKesson Medication Management (MMM) is a relatively small business unit within
that also relate to the patient safety initia-   the McKesson Corporation. The McKesson Corporation has annual revenues that ex-
tive. Improving medication use is the bot-       ceed $69 billion making it the 16th largest industrial company in the United States.
tom line objective.                              The McKesson Corporation is best known for its role as a drug wholesaler, but is also
    “Without the support of IPC/                 well known for many of its pharmacy automation products (e.g., ROBOT-Rx™, Acu-
McKesson, we would not be able to do             Dose™, Baker Cells®) and information systems (e.g., Horizon Meds Manager™, Phar-
what we do as an organization,” said             maserv®). MMM provides pharmacy management services that range from consulting
Decker, “and Wisconsin pharmacies are            to full outsourcing of the pharmacy department. The majority of these services target
the better for the collaboration.”               acute care, but the company also has services geared toward retail pharmacy as well as
    Hamik states, “This business is really       pharmacy services in outpatient and alternate care settings such as prisons and mental

                                                                                                                   March/April 2005 JPSW   27
health facilities. McKesson Medication         near misses that precipitate medication     ment, 2) clinical program implementation
Management manages pharmacy facili-            safety concerns and cause the hospital to   and operationalization, and 3) drug spend
ties throughout the United States as well      seek the expertise of a pharmacy manage-    (and related data) tracking and trending.
as in Canada and Puerto Rico. Although         ment provider to design a medication use    While I have been in this role, I have
MMM’s corporate headquarters are in a          strategy that improves medication safety.   helped to expand the company’s focus and
suburb of Minneapolis, the majority of         In other cases, hospitals may utilize a     investment in program development and
employees live and work throughout the         pharmacy management company to assist       data tracking and trending.
United States.                                 with an impending visit from the Joint         Our approach with clinical program
                                               Commission on Accreditation of Health-      development is to create standardized
WHY WOULD A HOSPITAL                           care Organizations (JCAHO) or the state     programs and toolkits that help the sites
OUTSOURCE ITS PHARMACY?                        board of health.                            we manage deliver safe and effective medi-
Approximately 10-12% of the estimated                                                      cation use. We have two broad categories
6,000 acute care hospitals in the United       COMMON MYTHS OF PHARMACY                    of programs and toolkits: 1) pharmacy
States outsource their pharmacy services.      OUTSOURCING                                 practice standards and 2) medication uti-
In the past few years, there has been          One of the common myths of pharmacy         lization and safety toolkits. The pharmacy
a trend toward larger hospital systems         outsourcing is that McKesson Medica-        practice standards are designed to ensure
exploring full or partial outsourcing of       tion Management (or Cardinal Pharmacy       a mandatory level of practice across the
their pharmacy services. Other pharmacy        Management) only uses McKesson (or          sites that we manage. The pharmacy prac-
management providers include Cardinal          Cardinal) technology in the hospitals that tice standards are focused on two broad
Pharmacy Management (formerly Owen             they manage. In reality, MMM and other      domains: 1) high-risk patients (e.g., pe-
Healthcare), CompleteRx, Comprehen-            pharmacy management                                               diatrics, geriatrics) and
sive Pharmacy Services, and Pharmacy           companies have to be ad-       Approximately                      high-risk medications
Systems, Inc.                                  ept at optimizing a wide                                          (e.g., parenteral nutri-
   The specific reasons for outsourcing a       variety of pharmacy auto-
                                                                              10-12% of the                      tion, chemotherapy).
pharmacy department vary by hospital           mation products and phar- estimated 6,000                         The medication utiliza-
(or other practice setting), but often stem    macy information systems. acute care                              tion and safety toolkits
from concerns in one or more of the fol-       Often, a hospital’s decision                                      include policies and
lowing areas: 1) pharmacy leadership,          to outsource all or part of    hospitals in the                   procedures, drug use
2) escalating drug costs, 3) labor short-      the pharmacy management United States                             guidelines, medication
ages, 4) inadequate clinical programs, 5)      services is completely inde-                                      use evaluation crite-
medication safety, and 6) regulatory or        pendent from the decisions
                                                                              outsource                          ria, literature reviews,
accreditation issues. Hospital executives      related to pharmacy auto- their pharmacy                          order forms and other
                                                                                                                 information designed
may perceive that the pharmacy has in-
sufficient leadership to ensure a safe and
                                               mation and technology.
                                                  Another myth is that
                                                                              services.                          to ensure appropriate
efficient medication use process within the      pharmacy management                                               medication use by ther-
health system. Escalating drug costs and       companies bring in all new staff to run      apeutic category as well as disease state.
pharmacy labor costs are another reason        the pharmacy. In some cases, I have en-        The operations of MMM are organized
why hospital executives may consider           countered the perception that pharmacy      by regions. The regions are organized
outsourcing their pharmacy department.         management companies are like a fire         based on multiple factors including geog-
Pharmacy management companies are              department with a team of fire fighters       raphy, bed size, type of practice setting,
often viewed as a means to mitigate drug       (or pharmacy staff) waiting at the fire       etc. Each region is supported by a regional
inflation, achieve predictability in cost       house for the alarm to sound. Although      vice president, a regional clinical coordi-
structure, and minimize financial risk.         we do have interim staff and other project nator, a regional director of finance, and a
Outsourcing the pharmacy department is         managers who are dispatched to respond      regional human resources manager. Each
a strategy that can be employed by hospi-      to various “fire alarms,” we do not have     of the regional clinical coordinators re-
tals faced with labor shortages and staffing     entire pharmacy departments that can        ports to me. The regional clinical coordi-
crises. The ability to recruit on a national   be sent in to a new account. Instead the    nators work with each of the sites in their
level may be an advantage to hospitals lo-     pharmacy employees (pharmacists, tech-      region to establish a clinical action plan
cated in rural areas and other hard to staff    nicians, and pharmacy management) at        for implementing and operationalizing
locations. Inadequate clinical programs        the site frequently become employees of     a variety of clinical and drug utilization
are another reason why a hospital may          McKesson Medication Management.             initiatives.
choose to outsource. Pharmacy manage-                                                         Just as it is throughout pharmacy prac-
ment companies can provide clinical            MY ROLE
                                                                                           tice, it is essential for MMM to be able
programs and drug utilization initiatives      As the vice president of clinical services, to document and quantify the impact of
that a smaller hospital may otherwise be       I oversee the corporate clinical services   pharmacists. MMM is in the process of
unable to provide. In other cases, hospi-      team. My team is responsible for three      implementing a system that will allow
tals will have had sentinel events and/or      main areas: 1) clinical program develop-    standardized intervention and medica-

28   JPSW March/April 2005
tion occurrence tracking across all of the
sites that MMM manages. This system
will allow us to generate reports and track
                                                       Hospital Medication Safety
and trend these metrics across each of our              Self Assessment Reports
sites. It is also critical to be able to have
data systems in place that help identify           Improved in Virtually Every Category
drug spend trends and to be able to es-         America’s hospitals are making important improvements in the crucial area of medica-
tablish the etiology of various drug spend      tion safety practices according to recently released data from a survey developed by the
trends. MMM has also invested in vari-          Institute for Safe Medication Practices (ISMP). Results from the ISMP’s 2004 Medication
ous data sets to help us better categorize      Safety Self Assessment® show significant advances in many safety practices, when
and identify adverse drug spend trends by       compared to the initial assessment, which was completed in 2000.
therapeutic category.
                                                The self assessments, conducted by ISMP in partnership with the Health Research
    Because I have a national role, I spend     and Educational Trust (HRET) and the American Hospital Association (AHA) through
a great deal of time traveling across the       a grant by the Commonwealth Fund, allow U.S. hospitals to gauge their use of nearly
country. Although I am a preferred travel-      200 practices that most significantly influence safe medication use and compare their
er with a number of airlines, hotel chains,     current systems and practices to similar hospitals nationwide. More than 1,600 hospitals
and rental car agencies, the frequent flier      participated in the 2004 assessment, many of which were able to chart their progress
miles and other traveler perks are no sub-      over the last four years by comparing results with their responses to the 2000 survey.
stitute for being home and spending time
                                                The largest changes in medication safety have occurred in the areas of quality pro-
with family and friends. Despite the trials
                                                cesses and risk management, drug order communication, staff education, and patient
and tribulations of being a “frequent flier,”    education.
I do find that my job is very professionally
satisfying. The ability to meet pharmacy        Quality Processes and Risk Management
practice advocates and other profession-        Comparison of 2000 and 2004 data reveals a 43% increase in non-punitive, system-based
als from around the country, Canada,            approaches to error reduction, including providing positive incentives for error reporting
                                                and incorporating specific medication safety objectives in strategic plans. Preliminary
and Puerto Rico has proven to be very
                                                data in this area also shows a 29% increase from 2000 scores in practitioners’ ability
rewarding. I have also been very fortunate
                                                to detect, report, and analyze errors, and in the use of redundancies and independent
to have multiple individuals serve as men-      double-checks to detect and correct serious errors before they reach patients.
tors. The active role that they have taken
in my professional and personal growth          Methods of Communicating Drug Orders
has influenced me greatly. The part of my        Methods of communicating drug orders is another area of significant improvement when
job that I enjoy the most is the ability to     compared to the 2000 self assessment. The 2004 self assessment results show a 30%
impact the profession of pharmacy on a          increase in implementation of standardized automated methods of communication,
                                                including linking computer systems with pharmacies, establishing lists of error-prone
broad scale. I believe that companies like
                                                drug abbreviations, and following specific policies for verbal or telephone medication
McKesson Medication Management are              orders.
uniquely poised to affect the practice of
pharmacy by implementing the vision ad-         Patient Education
vocated by various pharmacy leaders and         There was a 23% increase over the last five years in the category of patient educa-
professional organizations (e.g., American      tion—patients being involved as active partners in their hospital care by being provided
Society of Health-System Pharmacists,           with information about their medications and ways to prevent errors. Hospitals indicated
                                                that more patients are being encouraged to ask questions about their medications and
American Pharmaceutical Association). ●
                                                are being provided with written, up-to-date information about critical drugs prescribed
                                                at discharge.

                                                Other Data Highlights
                                                In addition, the self assessment revealed a 29% improvement from 2000 in efforts to
                                                minimize problems with look/sound-alike drugs. Survey items queried to what extent
                                                hospitals were regularly reviewing current medical literature to identify potential problems,
                                                implementing computer alerts for problematic drug names and using auxiliary warnings
                                                or other label enhancements.

                                                Preliminary comparative national data for the 2004 self assessment is now available
                                                to participating hospitals. Organizations that submitted data can access preliminary
                                                reports online through with the same secure password they used during
                                                the submission process. An article with complete survey findings will be submitted for
                                                publication in 2005.

                                                Released February 1, 2005 by the Institute for Safe Medication Practices.

                                                                                                                        March/April 2005 JPSW   29

Description: Starting a Retail Pharmacy Business from Scratch document sample