Is the Formula Magic?

Gwen B. Turnbull, RN, BS, CETN

Even though we wish there were, there is no alchemy that will solve the myriad problems plaguing our healthcare system and the overworked providers who deliver it. We are overwhelmed with the shear physical demands of our jobs, the lack of respect and recognition we receive, and the ever-changing payment structures and complex regulations under which we are required to deliver state-of-the-art care and technology at breakneck speed for a lower-than-ever-before cost. Government watchdogs, consumers, and attorneys are scrutinizing our every action to ensure that our interventions are evidence based, cost effective, appropriate, sequential, and timely. Heaped on top of this Herculean task are a flood of new products and their accompanying marketing material, sales calls, and competition for our limited healthcare dollars. We are not bewitched. We are bothered, bedazzled, bewildered, and befuddled. The burden of making the right decision about what product to use when and how much we should pay for it has become a bad dream.

Don't lose heart! There is a "magic formula" that can help weave many of these difficulties together. The "thingamabob that does the job" these days is called a formulary, and it doesn't take a fairy godmother, a pumpkin, a handful of mice, a magic wand, or even Harry Potter to make it a reality. It's not a new concept--in fact, drug formularies have been in place in hospitals for over 185 years! What's new, however, is how this notion has transformed and evolved in virtually all healthcare settings to a systematic approach that creates a seamless tapestry of evidence-based medicine, cost effectiveness, and efficiency that helps pave the road to improved health outcomes.

At first, hospital drug formularies were developed as a way to provide a list of drugs "approved" by physicians practicing within the institution. Physicians continually revised the compilation of pharmaceuticals to reflect the current clinical judgment of the in-house staff. Today, the Academy of Managed Care Pharmacy and The American Society of Health System Pharmacists state that the purpose for ongoing management of the formulary system is to "optimize patient care through rational selection and use of drugs and drug products within the healthcare setting."¹ The bottom line? The goal of a formulary is simple--superior therapeutics--the best, most cost-effective product used the right way at the right time.

In its most basic form, a formulary is a list of drugs or medical products that excludes the use of certain products within the organization or institution for which it was designed. However, formularies vary in three or four ways related to their structure and mechanism. An "open formulary" is one on which the list of items serves only as a suggestion without a penalty on the patient or physician for prescribing or using products not listed. For obvious reasons, this formulary structure is becoming less common. "Restricted formularies" (sometimes called modified formularies) limit drug or product classes to generics or classes of products or drugs. These lists are often coupled with a health benefit (frequently used by HMOs) that places more of a financial burden for the cost on the patient for name brands or products not listed. The third formulary, known as a "closed formulary," places the entire financial burden for the product onto the patient if it is used but isn't listed on the formulary. Obviously, this type of formulary can vary significantly based on the number of products listed. For example, a formulary with 1,000 products will have a different impact on the health plan, prescribers, or patients than a formulary of 50 products. Despite controversy, closed formulary designs continue to grow. The fourth formulary structure is a hybrid called "selective/partially closed" and is the most rapidly growing formulary design. These lists have a limited product list as well as a selection of nonformulary items available with prior approval (PA). Many Medicaid programs use this type of system.

Okay, so what significance does all this chatter about drug lists have for you, gentle reader? Believe it or not, a formulary of wound, continence, and/or ostomy supplies can help link all of the aspects and requirements of today's patient care. Think about it.

The first step is for the organization to identify its unique patient population, for example, the number of ostomy patients seen per year, the types and severity of wounds treated, or the specific type of incontinent patient that presents most frequently. Once the "in-house" patient population is identified, an interdisciplinary team, consisting of members from the clinical, management, administrative, regulatory, billing/payment sectors of the organization, as well as a representative from industry, should be built. This team's goal is to develop critical pathways, algorithms, or standardized care plans to be used within the organization for each of the patient diagnoses or conditions previously identified.

Inherent in any of these process tools are preapproved, evidence-based, cost-effective products that are tied to specific clinical events and time lines within the episode of a patient's care (used here, the word episode refers to the period of time a patient is treated by an organization). Research regarding what product to use when, the cost effectiveness and outcome of the particular intervention, the negotiation with a supplier for best price, and investigation into the efficacy of the individual product should be undertaken by the team developing these care/process tools. The next logical step is to implement the program and then oversee cost, control inventory, track usage, monitor continuous quality improvement, limit waste, ensure that the products are used appropriately, and capture valuable outcomes data. The "thingamabob" that does this job is a formulary.

A product formulary can be designed to be simple or sophisticated according to the size and needs of the organization. Many manufacturers and distributors offer suggestions or pre-set formularies for their customers according to the organization's needs. Purchasing one product line rather than "mixing and matching" brands usually garners the best price and contract options. Businesses called Pharmacy Benefit Management (PBM) companies contract with payers to manage the prescription drug and medical supply benefits of certain private or employee health plans.

Several safeguards must be incorporated into a formulary regardless of its size, structure, or level of sophistication. These safeguards are especially helpful when nonspecialized healthcare providers are delivering wound, ostomy, or continence care and using related supplies. What quantity of supply will be dispensed at a time? How will "off formulary" needs be met? Who will have the authority to approve them? What is the process for attaining that approval? Who will pay for them? How does the product contribute to cost effectiveness and the outcomes of its intended use? Will the product's use net a profit or a loss to the organization? How will it be reimbursed? What is the reimbursement amount for the product from the most prevalent payer to whom the organization submits claims? Who will be responsible for the ongoing evaluation of the formulary's effectiveness? Who will continue to evaluate new products as they appear on the market?

Above all, the one safeguard to remember is: the cost of the product has nothing to do with its cost effectiveness. The "magic" in developing a wound, ostomy, and continence product formulary comes in finding and mixing the right combination of ingredients: expert professionals, savvy and forward-thinking management, effective products, cost-effective care, and improved health outcomes.

Snape put them all into pairs and set them to mixing up a simple potion to cure boils. He swept around in his long black cloak, watching them weigh dried nettles and crush snake fangs. He was just telling everyone to look at the perfect way Malfoy had stewed his horned slugs when clouds of acid green smoke and a loud hissing filled the dungeon. Neville had somehow managed to melt Seamus's cauldron into a twisted blob, and their potion was seeping across the stone floor, burning holes in people's shoes.

"Idiot boy!" snarled Snape. "I suppose you added the porcupine quills before taking the cauldron off the fire?"²

Poor Neville. If he'd only had a formulary. Think of the money he would have saved in cauldrons and shoes...and the outcomes he would have seen had he cured all those boils. There's magic in the formula. ***

References

Hoffman L. Emerging trends: Drug formulary. Jacksonville Medicine. Feb 1998. Available at: http://www.dcmsonline.org/jax-medicine/1998journals/february98/formulary.htm. Accessed August 21, 2001.

Rowling J. Harry Potter and The Sorcerer's Stone. New York, NY: Scholastic Inc., 1997.