The six trusts that make up the West Yorkshire Association of Acute Trusts (WYAAT) are working collaboratively to examine new approaches to medicine management. Together, they manage almost £500m of medicines spend and along with other Trusts in Yorkshire, were collaborating on medication procurement in order to reduce unwarranted cost variation in drugs.
Pharmacy was identified as a major area of opportunity in the Carter Report, which identified collaboration and shared functions as a major source of future value for the NHS.
INSIGHT
The medicines value chain is inherently complex. We set out to analyse the supply channels in a way that captured the complexity while allowing stakeholders to take actionable decisions through the project process. The project identified the opportunity to reduce Pharmacy operating costs at Trusts individually, and across the group as a whole through consolidation of inventory and activity, and aggregation of transactions. The process identified other services (e.g. management of shortages) that could be more efficiently delivered by a joint function.
We developed a number of analytical tools to accelerate the scenario modelling and business case development including Pharmaceutical warehousing and transport models, tipping point models for evaluation of manual vs. automated activities and a top-up performance model.
ACTION
Our consultants gathered and analysed Pharmacy spend, contract and activity data from across WYAAT Pharmacy operations, segmenting and baselining costs by segment and provider. We engaged key stakeholders from across WYAAT Pharmacy’s to understand current arrangements, key challenges and risks, and customer requirements.
We led the engagement with leading providers, incumbent and competitor, to understand the leading Pharmacy supply models and to identify relevant value opportunities. We completed a detailed options appraisal, modelling a range of delivery options and developed a recommendation.
We documented an Outline Business Case, which was approved to move the project from the design phase to the procurement process.
RESULTS
We played a key role in delivering a pioneering collaboration project for a pharmaceutical network that could achieve recurrent efficiency savings of over £17m with a one-off saving of £4.5m through consolidation of stockholding as well as further operational savings of £13m through the proposed operating model.
Key tangible benefits include inventory reduction of 15-25%, a net operating cost reduction of 10-15%, an incremental reduction in waste, improved regional contracting and supply chain performance, improvements in visibility and quality control, enablement of more complex supply models (dose banded products) and aggregated demand planning to take place as well as reduced risk throughout the hospital pharmacy value chain.