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5 Financial Benefits of Improving Your Medication Management Program

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The top reason a healthcare organization should work to improve its medication management program is to enhance patient care. An effective medication management program can better ensure patients get the right prescriptions at the right times for the right purposes and help patients take their medications appropriately. When all these steps are accomplished, the risk of adverse drug events (ADEs) or other medication-related complication decreases and the likelihood of successful treatment increases.

But another reason why improving medication management should be a high priority for healthcare organizations is that there are financial benefits — potentially significant ones — to strengthening a program. Such benefits have the potential to not only cover the costs associated with making the necessary changes to achieve program improvements, but they can even deliver a strong return on investment for a healthcare organization. There are substantial potential patient monetary benefits as well.

Saving and Making Money With Better Medication Management

The following are five of the financial benefits associated with a stronger medication management program.

1. Cost savings associated with optimized therapy

As we regularly highlight here are Cureatr, researchers at the Skaggs School of Pharmacy and Pharmaceutical Sciences at the University of California San Diego estimate that illness and death resulting from nonoptimized medication therapy costs about $528 billion annually — or what translated to roughly 16% of total U.S. healthcare expenditures in 2016. These costs are associated with nonadherence and instances when a patient's medication regimen is not optimized to treat a treatable condition properly and safely.

As Dr. Jonathan Watanabe of the Skaggs School of Pharmacy and Pharmaceutical Sciences at UC San Diego stated in a news release, "Nonoptimized medication therapy is a massive avoidable cost. If medications were prescribed, monitored, and taken properly, we wouldn't face this cost, and patients would be healthier."

To reduce costs and achieve better incomes, Watanabe, who led the study that determined the $528 billion figure, and his research team advocated for expanding comprehensive medication management (CMM), a direct patient care model led by clinical pharmacists in collaboration with prescribing clinicians.

2. Savings associated with reducing avoidable readmissions

Research has shown that billions of dollars in costs are associated with avoidable hospital readmissions. As we discussed in a previous blog post, many readmissions correlate with poor medication management — and more specifically prescription errors and suboptimal patient monitoring/education around medication use, such as adherence issues. One study showed that ADEs accounted for approximately 13% of 30-day preventable readmissions. Improving medication management by reducing mishaps, consistently performing medication reconciliation post-discharge (MRP), and undertaking other initiatives should translate to decreasing avoidable readmissions and the costs associated with those readmissions.

Readmissions can hit a healthcare organization's bottom line in another way: penalties. For the fiscal year (FY) that began Oct. 1, 2020, more than 2,500 hospitals received lower Medicare payments than they received in the previous FY. The reason: excessive readmissions as per the rules stipulated in the Hospital Readmissions Reduction Program. The average reduction is 0.69%, with more than 600 hospitals receiving a penalty of 1% or more, reported Fierce Healthcare.

If a healthcare organization has entered into a value-based/outcomes-based contract — which are expected to increase in the coming years — readmissions will drive up what the organization must spend on providing patient care. Reducing avoidable readmissions will allow an organization to hold onto more of the payment.

Then there's the impact of avoidable readmissions on patients. The average readmission cost associated with any diagnosis was about $15,000 in 2018. Not only might a patient need to cover some of this expense, depending upon their insurance coverage, but there are a plethora of other potential expenses depending upon the patient's personal situation. Such expenses can include caregiver services, babysitting, and pet sitting. A patient may also lose income from working fewer days or be forced to use valuable sick and vacation time. A patient's spouse, partner, and/or supporting family member may also incur expenses that are a direct result of the readmission. With every avoided readmission, patients and sometimes their family members save money that can quickly approach thousands of dollars.

3. Reduction in lawsuits

Do an Internet search for "medication error lawsuits" and you'll have your pick of law firms eager to help patients pursue a medical malpractice lawsuit. You'll also find many stories about successful settlements, some surpassing $1 million.

Lawsuits are expensive for those being sued, regardless of whether the lawsuit is successful. A stronger medication management program that reduces errors and patient harm will help reduce the number of lawsuits a healthcare organization faces and how much it must spend on legal fees.

4. Bottom line impact of reputation

Patients and their family members are increasingly taking to reputation platforms to express their displeasure — and sometimes pleasure — with their healthcare experiences. A bad experience tied to poor medication management, especially one that leads or contributes to an ADE, readmission, patient harm, and/or lawsuit, can quickly find its way onto one or more of these websites, harming the reputation of the organization.

Just how important is a healthcare organization's reputation? An article in Medical Principles and Practice notes that not only has research shown that a hospital's reputation is associated with better clinical care results, but it also "… acts also as a shield against litigation, and it may help the hospital to attract and retain talented professionals. In the absence of relevant information to guide patients' choices of a healthcare provider or hospital, decisions are frequently made on reputation."

Let's break this down further. We already discussed the cost of litigation. What about talent? A report from nurse recruitment and retention firm NSI Nursing Solutions that included data and discussion about hospital registered nurse (RN) staffing, states, "…the average cost of turnover for a staff RN is $40,038 with the range averaging from $28,400 to $51,700 and resulting in the average hospital losing $5.1 million per year. Annually, RN turnover costs a hospital between $3.6 million – $6.5 million. Breaking this down even further, each percent change in RN turnover will cost/save the average hospital $270,800 per year."

An organization with a better reputation should save money on its staff recruitment and retention. In addition, reducing staff turnover can have a direct, positive affect on patient care. High turnover can result in staffing shortages and overworked healthcare personnel, which can contribute to a decline in the performance of a medication management program and subsequent increases in errors and all their potential ramifications.

Finally, in communities fortunate enough to have multiple healthcare options, there is a battle between healthcare organizations for patient volume. Organizations with better reputations are more likely to be the location of choice for patients. Another way of looking at this: Organizations with worse reputations — perhaps due to reports of patient harm — are more likely to be bypassed when patients are faced with a choice of a provider.

5. Increasing staff productivity

When medication management processes are not clearly defined there tend to be several ramifications. An essential process, such as medication reconciliation, is more likely to be missed, which can contribute to an increased patient risk. It can also lead to an organization scrambling to find someone who can perform the process when it's needed or when the organization discovers that the process was overlooked. Any reactionary actions are likely to abruptly pull a staff member away from a current task or responsibility, thus disrupting workflow and productivity. If such disarray is commonplace, it can contribute to staff burnout.

Declines in staff productivity can directly impact an organization's bottom line. That's why we suggest that for greater accuracy and consistency of performing medication management processes, such as med rec, an organization should "choose a consistent owner … meaning that one type of person is accountable for the accuracy and completion of information."

Strengthening Medication Management: A Sound Investment

Any way you look at it, there's no downside to an organization investing in its medication management program. Even small improvements will translate to reduced patient harm, saved lives, and decreased costs, among many other benefits. By partnering with Cureatr, an organization can expect to achieve much more than little enhancements. Rather, there is the potential that an organization could take its program to a much higher level — one that generates a substantial clinical and financial return on investment. To learn how this and more is possible, contact Cureatr today.

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