OBJECTIVES

Over $27 million is spent by US hospitals on annual drug spend. Roughly 20% of hospital drug inventory is wasted or expires each year. Additionally, 50% of hospitals report manual drug inventory management methods. We created a cost-benefit model to predict the impact of a pharmacy management predictive analytics software on inventory costs.

METHODS

: A cost-benefit model was created using Microsoft Excel to predict the economic impact of a pharmacy management predictive analytics software. Predicted benefit was calculated using a combination of drug cost data and drug utilization data. Three areas of cost-benefit were assumed: inventory reduction in patient care areas and central pharmacy, respectively, and reduction in wasted medication from more efficient management of min/max inventory levels. Inventory reduction was assumed to be a one-time cost-benefit, whereas savings due to waste reduction were repeated yearly. Cost was defined as the cost of the predictive analytics program. We analyzed cost-benefit over a five-year period using a large cohort of US acute-care hospitals.

RESULTS

: 61 acute-care hospitals were included in the cost-benefit analysis. The majority were located in the southeast (64%), had a bed size of 101-250 beds (44%), and were non-academic (39%). The model estimated annual medication spend ranging from $335,551 - $309,712,416 (median=$6,853,533). Ranges of estimated inventory reductions in patient care areas and central pharmacy were $3,000-$569,000 (median=$56,000) and $0-$1,851,000 (median=$13,500), respectively. Median projected yearly savings from waste reduction were $63,000 ($8,000-$1,443,000). Over a five-year period, cumulative cost-benefit rose from a median of $101,000 (year one) to $344,185 (year five). Estimated median ROI from adopting the intervention at year one and year five was 2.52 and 3.0, respectively.

CONCLUSIONS

: Predicted cost savings with the use of an analytics program potentially led to a five-year cumulative cost-benefit of $344,185 and a five-year ROI of 3.0. Future research should be performed to assess true/actual cost-benefit.