Expert Perspectives

Leveraging the power of data analytics

Four tips to reduce your drug spend and improve patient care

By Yen Nguyen, Pharm.D., Director of Clinical Analytics, McKesson Pharmacy Optimization®

As health systems face new performance-based reimbursement models, diminishing resources, and increasing prescription drug spending that is expected to grow at a rate of 5% annually over the next five years, pharmacy leaders are turning to data analytics.1 Yet, it is estimated that 70 to 80% of business intelligence initiatives fail to deliver promised results.2 This is because tracking and analyzing data often takes longer and is more costly than expected.

By leveraging best practices and powerful technology, you can harness the power of data analytics and transform this challenge into your hospital pharmacy’s competitive advantage.

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Best practices for improving your pharmacy’s clinical, financial and competitive outcomes

Effectively using data to manage your drug spend while driving quality patient care requires a clear view into your purchasing history and spending trends, plus the ability to turn that robust information into results. Here are four best practices to help you achieve your goals.

  1. Determine priorities through collaborative analysis
    Prior to launching your data initiative, invite a cross-functional team to define the patient care priorities, cost objectives and desired outcomes. This team should include hospital executives, supply chain leaders, directors of pharmacy, physicians and nurses to ensure that everyone influencing drug use has a voice in the process. Then keep these stakeholders regularly informed about the insights gained from data analysis so they can understand the impact of their actions and adapt their practices accordingly.
  2. Ensure that data is accessible, meaningful and usable
    Your analytics will only be as effective as your source data. That’s why it’s important that IT platforms throughout your health system have electronic data interchange (EDI) functionality. In addition, the data that you gather should be organized and formatted in a way that makes it easy for your cross-functional team to understand and to use. And data should be tied to patient records in a meaningful way, while protecting patient privacy.
  3. Automate analysis to reduce manual hours and increase insight
    Today many pharmacy leaders are tracking and analyzing data manually using tools such as Microsoft Excel. This is a cumbersome, slow process that leaves significant room for human error and generally doesn’t yield a clear view into their drug spend. Another challenge with this format and similar 80/20 reports is that they often lack key features, making it difficult to identify and track clinical initiatives.

    In contrast, an automated digital solution can give you greater insight into your pharmacy spending trends, reduce valuable time spent on analysis, ensure accurate, comprehensive and timely reporting, and allow you to make more informed decisions.

    When choosing a platform, look for an interactive, intuitive dashboard that is highly visual. Make sure there is a clear path to accessing desired data quickly and easily, with the ability to drill down further. You’ll want a solution that updates drug spend data automatically on a daily basis and includes at least 24 months of historical data to give you both immediate and a long-term perspective on trends and variances.

    The small amount of time that you initially invest in learning how to use an interactive data analytics tool will save you a tremendous amount of time and energy in the long run. You could even delegate others on your team to capture and track data according to your specifications, giving you back precious time to analyze and take action on the findings.

  4. Review drug spend frequently, identify trends and respond immediately
    By dedicating resources to regularly evaluate and leverage drug spend data that reflects your strategic priorities, you can discover trends and variance that help you determine how to alleviate inappropriate usage. The two primary trends to consider are drugs that are increasing in utilization or price.

    When you see a significant increase in utilization of a drug, you can evaluate why usage has increased and if the drug is being used inappropriately. Whereas, when you identify drugs with price increases or cost inflation, you have justification for spending that does not indicate inappropriate use. And you can plan for how these costs affect your budget.

    It’s important that you respond to the trends and variances you identify immediately by taking steps to arrive at your desired outcomes. The more frequently you review your drug spend, the more proactive you can be about addressing variances. Compare this to quarterly reporting, where you’re getting a picture of the past that doesn’t give you the opportunity to course-correct in present time.

Analyzing drug spend is becoming a strategic necessity

Pharmacy directors face increasing pressure to leverage data analytics to reduce costs, help with budget forecasting and fiscal year tracking, and drive quality patient care. When implemented strategically and collaboratively using the right tools, this kind of investment can yield meaningful drug spend analysis, giving you the evidence you need to effectively establish and track cost containment initiatives. This can help you lower drug spend, reduce manual work hours and improve efficiency so you have more time to focus on medication safety and patient care.

To learn how McKesson can help improve your drug spend, visit

Author bio:
Yen Nguyen, Pharm.D., is the director of clinical analytics, McKesson Pharmacy Optimization. She has over 24 years of experience in pharmacy and product management, including leading, developing and implementing clinical programs and quality improvement efforts for acute care facilities. Her program development experience includes developing clinical guidelines and protocols, medication use policies, medication safety programs and staff education and training. Yen has also published articles in numerous trade journals.


1 Pharmacy forecast 2016–2020, ASHP Foundation, December 2015
2 Reaping rewards with healthcare analytics: How to start, Health Data Management, February 10, 2016

Note: The information provided here is for reference use only and does not constitute the rendering of legal or other professional advice by McKesson. Readers should consult appropriate professionals for advice and assistance prior to making important decisions regarding their business. McKesson is not advocating any particular program or approach herein. McKesson is not responsible for, nor will it bear any liability for the content provided herein.