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Pharmacy managers need to embrace financial management skills
Good budgets start with good leadership
Pharmacy managers need to embrace the notion that one part of their skills has to include financial management and creating a proper budget, an expert advises.
"We probably all got into this profession because we wanted to improve the health care of patients, but we chose management as a specialty because we thought we had leadership potential," says Steven B. Cano, MS, RPh, FASHP, senior director of pharmacy and chief pharmacy officer at Cambridge Health Alliance in Cambridge, MA.
But part of leadership and management is handling a budget, and this is an area in which some pharmacy leaders need improvement.
"It's a challenge and a tactical exercise, a way of saying, 'This is how I'm going to manage the pharmacy department's money,'" Cano says.
"What pharmacy managers don't do as good a job of doing is strategic budgeting and looking three years out," he says. "Ask yourself, 'How does our financial position help us or hinder us from attaining our strategic goals?'"
A first step is to develop constructive relationships with hospital leaders.
"You can pick up a textbook about creating a budget, but the art to all of this is creating a relationship with the decision makers in an organization where you're considered essential to the health of the organization," Cano says. "If you manage that relationship then we all do well, and if you mismanage that relationship then it will eventually catch up with you and not produce a good outcome."
Financial planning that's done without considering goals, including the goal of continuing to build trust with hospital leaders, is incomplete.
Cano offers a few suggestions for how to improve budgeting and financial planning:
• Put your organization's interests first.
"Another challenge is really being willing as a pharmacy manager to put the organization's interest ahead of your own professional interest," Cano says. "We're interested in furthering the profession, but when it comes to the budget, it's inappropriate to put your own personal objective ahead of the organization."
For example, a pharmacy director's goal might be to expand the department's clinical services, and he or she sees an opportunity to create an anticoagulation clinic, he says.
"Let's say the organization says, 'Propose a service, and let's see what happens,'" Cano says. "You are aware that pharmacists do a fine job of managing these clinics, but you know that nurse practitioners also do a good job."
If pharmacy directors look out for only the pharmacy department's interest, then they might recommend the hospital hire a pharmacist for the job as the only option.
"But what if a nurse practitioner costs the organization less and would do as good a job as a pharmacist?" Cano says. "So what are you willing to suggest?"
It's irresponsible for pharmacy directors to use their good reputations and cultivated trust among hospital leaders to push through programs that will benefit the pharmacy but not the hospital, Cano adds.
Most of the time this type of choice isn't an issue since most programs that benefit the pharmacy will benefit the hospital too, he notes.
"You can accomplish things for the pharmacy that are good for the organization," Cano adds. "But there are times when there might be better ways of doing things than what you have planned."
• Do self-assessments.
In many organizations there often are so many competing priorities that administrators fail to pay attention to new programs after their initial launch, Cano notes.
"So it's incumbent on you to do a self-evaluation to bring value to the program," he says.
There likely are programs that were great 10 years ago, but are not working as successfully today, he adds.
It's tough to admit that perhaps a program should be changed or discontinued, but recognizing these realities is part of a pharmacy leader's job, Cano says.
"You can say, 'I've redeployed that resource,'" he suggests. "Acknowledge that we're not spending as much time on that program so you've asked the pharmacist to do something else that will add value to the organization."
• Consider future national trends.
Pharmacy directors need to be aware of the broader environment and understand what is broken in U.S. health care, Cano says.
"To understand what's wrong with the current environment, you need to understand what's going on in health care financing," he says. "It's really in everyone's best interest to understand what health care reform will mean and how changes will impact the flow of money in and out of an organization."
Pharmacy leaders should keep up with federal changes to health care as part of their efforts to plan for the future. This includes strategic planning and writing budgets that go out as far as three years, Cano suggests.
"In the context of health care reform, pharmacists have a great opportunity to step in and play a heightened role because busy primary care physicians can't always focus on things like anticoagulation management," he says. "In my personal opinion, we've never had the opportunity we have now, which is being driven by health care reform."
Pharmacists can take on the role of focusing on specific medications, understanding their costs, and keeping up with the literature on their optimal use with hospital patients.
If it appears there will be national health care changes in how medical care is paid, such as a move away from fee for service, then pharmacy leaders should be prepared to come up with strategies to handle these changes.
Some thought leaders say the current health care system should move to capitated care, and if that happens then there will be greater incentives for good quality care that is delivered in the most cost-efficient way possible, Cano says.
"In that scenario, pharmacists play a huge role because they are less expensive than physicians, and they're not likely to waste resources," he says. "So they have a great opportunity there."