How Automated Compounding Can Reduce Hospital Costs

The $200 million fund created to compensate victims of the 2012 meningitis outbreak tied to tainted drugs is an extreme example of how expensive compounding errors can be.

The $200 million fund created to compensate victims of the 2012 meningitis outbreak tied to tainted drugs from the New England Compounding Center is an extreme example of how expensive compounding errors can be.

But compounding errors don’t have to cause multistate disease outbreaks in order to be costly. A single error can cost a hospital tens of thousands of dollars if it causes an adverse patient reaction.

Automated compounding technology can help curb these errors and reduce related costs, according to 2 studies.

One study published last year in Hospital Pharmacy simulated potential errors and associated patient outcomes throughout every step of a manual compounding process.

In doing so, the authors found that the use of an automated intravenous (IV) preparation device could virtually eliminate compounding errors, potentially reducing hospital costs related to adverse drug events (ADEs) such as emergency intervention, extended hospitalizations, patient injury and additional treatment.

In fact, the average of 1000 simulated IV preparations prevented 5420 medication errors and produced associated savings of $288,350 annually.

Another 2012 study commissioned by BD and published in American Health & Drug Benefits uncovered exorbitant costs from ADEs related to injectable medication errors, including compounding ones.

These authors determined that preventable ADEs associated with injectable medications cost up to $5.1 billion annually in the United States, averaging $600,000 per hospital each year. Furthermore, medical professional liability for inpatient ADEs from injectable medication costs up to $610 million annually, averaging $72,000 per hospital each year.

Based on these findings, the researchers concluded that “reducing the risk for injectable medication errors is a clear target” for curbing unnecessary costs.

Automated compounding systems can save money in other ways, too.

For instance, many hospitals purchase common compounded sterile preparations (CSPs) from independent vendors, often in prefilled syringes. Automated compounding technology allows hospital pharmacies to “insource” production of CSPs, reducing costs substantially. Producing medications in-house not only lowers the cost-per-dose, but also reduces inventory costs.

In 2012, a 649-bed acute care hospital located in the southeastern United States provided my company with a prescribing profile and costs for the 22 medications it purchased from commercial compounding pharmacies. Based on costs verified by hospitals with similar automated systems, we found that using an automated system to prepare all of those medications in-house would result in significant savings.

For example, the 100-mL potassium phosphate IV bags that the hospital purchased for more than $21 each could be made by an IV robot for a little over $2 each, including the cost of materials. Similarly, the sodium bicarbonate syringes that the hospital bought for almost $15 each could be made using automation for about $3.25 a dose. The combined savings rate for all 22 medications was more than 70%.

Multiplied across the number of doses purchased annually, insourcing just these 22 medications would save the hospital more than $395,000 a year, increasing cash flow by almost $33,000 every month. Over 5 years, the hospital would accrue net savings of approximately $2.3 million—more than recouping the cost of investing in automation technology.

Cost is a critical and constant issue for hospitals that are already grappling with increasing demand and declining reimbursements. Although the research cited above employed different methodologies and parameters over a period of years, it all points to the same conclusion: by reducing errors, decreasing the need for outsourcing, and lowering the cost-per-dose, automated compounding can help hospitals save money.

Niels Erik Hansen, PhD, is president and CEO of ARxIUM, a pharmacy solutions provider. He has more than 30 years of experience in technology engineering and production with emphasis in motion control, fluid management, and environmental engineering.