McKesson’s Utilization Analytics: More Than Just a Pharmacy Tool

By: Nicole Mayo

With hospital operating margins continuing to shrink, leadership teams are reinventing their approach to cost containment. And while there are a plethora of technology and data driven solutions on the market, these products often address only a narrow scope of the business needs. A recent report constructed by the American Hospital Association reported that “hospital drug expenses per patient have increased 19.7% between 2019 and 2022.”¹

With drug procurement costs being a significant expenditure in hospital budgets, it is clear why pharmacy analytics tools have traditionally focused on drug procurement costs. However, today’s hospital pharmacy model is multidimensional and requires a holistic lens of the business.

Currently, McKesson offers a suite of products to assist our customers with managing the various aspects of their business. One of these tools, Spend Analytics, is aimed at aiding health system pharmacies with pinpointing and understanding trends within their purchase data. Spend Analytics was developed to give customers the flexibility to view their historic purchase data using customizable reports. While Spend Analytics users can leverage the tool to identify procurement trends and monitor drug expenditures, customers have expressed the need for additional data points to determine drug profitability.

To address the evolving needs of our health system customers, McKesson created the Utilization Analytics tool. With dashboards organized to provide both inpatient and outpatient insights, Utilization Analytics allows users to better understand how medications are being utilized and reimbursed across their health system. This, in turn, aids in the execution of well-informed formulary and procurement decisions. Additionally, having access to drug margin and profitability data within the Utilization Analytics tool equips pharmacy leaders to address more complex pharmacy business questions.

While pharmacy leaders are experts in understanding drug procurement costs, they often lack visibility into billing, reimbursement, and contract arrangements. Without these critical reference points, formulary and procurement decisions are frequently made without knowing the true impact to pharmacy revenue. Utilization Analytics allows users to quickly identify suboptimal reimbursements, examine profitability of medications within drug groupings, monitor drug profitability across multiple facilities, and pinpoint revenue opportunities. Once data is extracted and analyzed from the Utilization Analytics platform, the information can then be disseminated and steps to implement operational changes can begin.

For more expansive change, assistance from key decision-makers outside of the pharmacy department is often necessary. Users of the Utilization Analytics tool have begun establishing collaborative workgroups consisting of representatives from the pharmacy, finance, billing, revenue cycle, and hospital senior leadership teams. The resulting transparency across the enterprise business teams has translated to a more efficient process improvement and the establishment of best practices.

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¹Cost-of-Caring-2023-The-Financial-Stability-of-Americas-Hospitals-and-Health-Systems-Is-at-Risk.pdf (aha.org) (PDF, 322 KB)