Supply Chain Management at the National Naval Medical Center Pharmacy

Abstract

EXECUTIVE SUMMARY: Supply Chain Management at the National Naval Medical Center Pharmacy The National Naval Medical Center (NNMC) in Bethesda, Maryland is the U.S. Navy’s flagship of medical centers and is the Navy’s third-largest medical center.1 NNMC provides medical services to approximately 46,000 patients annually,2 and its pharmacy has an annual budget of $46M for drugs dispensed to NNMC patients.3 This consulting project, completed with the support of the NNMC Pharmacy Department Head and facilitated through the Naval Postgraduate School Executive MBA Program, applied operations management and supply chain management principles to the processes used by the NNMC pharmacy to find potential efficiency improvements. Specifically, the consultant team evaluated drug purchasing data from the Defense Medical Logistics Supply System (DMLSS) and dispensing data from the Composite Healthcare System (CHCS) for specific high-cost and high-volume drugs to identify optimal inventory levels and order points. The NNMC Pharmacy Staff selected the following six drugs for analysis: _ Arimedex (anastrozole) – a breast cancer prevention drug. _ Intelence (extravirine) – an HIV treatment drug. _ Procrit (epoetin alfa) – an anemia treatment drug. _ Seroquel (quetiapine) – depressive disorder (bipolar & schizophrenia) treatment drug. _ Topamax (topiramate) – an anti-seizure/epilepsy medication. _ Vfend (voriconazole) – fungus and yeast infection treatment drug. 1 NNMC Public Affairs Document “National Naval Medical Center at a Glance,” www.bethesda.med.navy.mil 2 Ibid. 3 Personal Interview with LT Bradley Gotto, 29 July 2010 After analyzing historical ordering and dispensing data for these drugs and touring the NNMC drug storage facilities, the consultant team’s primary recommendation is that NNMC pharmacy should adjust re-order points, re-order quantities, and safety stock for the subject drugs to reduce high levels of inventory and unnecessary safety stock. Since the NNMC pharmacy can obtain drugs at low cost with minimal (1 day) lead time, NNMC can reduce the average inventory of these drugs and shift the burden of inventory management to the drug suppliers. This has potential to simplify the restocking process at the NNMC pharmacy and reduce the manpower required to fill new orders. Other secondary recommendations to improve the NNMC Pharmacy operations include: _ Perform a full inventory of drugs held at the NNMC Pharmacy to develop a full accounting of all drugs on hand. _ Expand analysis to determine required safety stock for other drugs. _ Promote adoption of a consolidated system to replace DMLSS and CHCS to coordinate ordering and dispensing operations.