The State of Formularies

Developing product formularies is a complex but highly beneficial process

With hundreds of thousands of products on the market, it’s overwhelming to determine which ones are the right fit for a healthcare system. After all, a hospital doesn’t need six different brands of bedpans or three different receiving blankets. To make product selection more efficient, most facilities use formularies—a preselected set of products endorsed by a healthcare system.

Limiting product variation not only improves outcomes clinically, but also operationally, says Jared Dougherty, DNP, MBA, RN, CNML, CCRN-K, Senior Director of Clinical Resource Analysis at HCA Healthcare Supply Chain.

“With so many suppliers and so many different products out there today, it can feel a bit like a jungle trying to find the right product to support patients within your health system,” says Dougherty, who works with HealthTrust on HCA Healthcare’s nursing formularies. “Formularies take a lot of work on the front end, but at the end of the day, they make everything much easier.”

Reducing practice variation for clinicians

One of the biggest benefits of formularies is they reduce practice variation for clinicians, explains Missy Pennington, BBA, RN, AVP of Clinical Resource Analysis for HCA Healthcare’s Supply Chain.

Several years ago, some facilities saw an increase in the hospital-acquired infection rates from indwelling urinary catheters. Data has found these infections can stem from catheter insertions. So the team decided to switch to a product that offers a step-by-step process for catheter insertion.

This standardization is critical, especially for an organization as large as HCA Healthcare, which employs thousands of clinicians. For example, if a nurse moves facilities or starts working on a different floor, Pennington says, they’re using the exact same product. This, in turn, streamlines education, as there are fewer products on which to educate and train nurses and doctors.

Worth the cost

With the large number of acute care facilities and surgery centers that HCA Healthcare operates within the U.S., Pennington says it was an investment to switch the catheter insertion trays across the country. However, doing so reduces patient infections, which in turn reduces readmissions and average lengths of stay. As Pennington explains, “We are trying to lessen the number of patient infections by driving nursing best practices, even at a higher cost of the supply.”

HCA Healthcare’s switch to more expensive catheter insertion trays dispels the myth that formularies are primarily centered around cost. “People unfamiliar with formularies always assume they’re just the cheapest products,” Pennington says. “That’s not how we build formularies. We are cost conscious, but if the best value product does not meet the clinical need, it’s not going to be on a formulary.”

Operational benefits

While selection for some formulary products, like the catheter insertion trays, is more clinically driven, other product selection can be more operationally driven. For instance, plastics is a category in which operations and cost are more often taken into consideration, since products like basins and medicine cups have little clinical impact.

“None of the color variation and very little of the configuration of the items themselves has any difference in clinical value,” Pennington says. “The formulary determines the best-value product that a facility would routinely use that meets the clinical need first, and then the financial need.”

A formulary approach to selecting products makes clinicians’ jobs easier, but it also improves a health system’s overall operations, says Matt Porter, AVP of Supply Chain Solutions at HealthTrust. For example, if you have a warehouse with 2,500 items versus 10,000, there’s an entirely different level of overhead involved with storing those products. “The fewer products you can stock and store, the better,” he adds. “When you look at some of the duplicity in this industry, it begs for some standardization and, ultimately, a formulary approach.”

An added bonus of formularies: They often lead to thriving supplier relationships. Porter says having the buying power and pull of an existing relationship often leads to a higher level of communication and commitment. “When you’re committed to the vendor, the vendor is going to be more responsive,” he explains.

Compliance is key

Formulary compliance is essential because it reduces practice variation for clinicians, improves operational efficiency and maintains good financial balance, Dougherty says. But external factors often complicate things. Sometimes, products are back-ordered. Or, there are shortages, which was commonly seen at the height of the COVID-19 pandemic. Dougherty explains that it wouldn’t be surprising if compliance has been down nationally over the past few years due to the lingering effects of COVID.

Because shortages or supply chain disruptions can happen at any time, it’s important to remain agile. For example, if a supplier switches a product or something goes on backorder, you need to pivot.

“You never want to lock yourself into a product so completely that you’re entirely dependent on it,” Dougherty says. “You want to maintain enough agility between formulary items and relevant cross references from other suppliers.”

It takes a village

Dougherty, Pennington and Porter agree that collaboration is the most important component of creating and managing formularies. Key stakeholders from all areas of a healthcare system must be involved in the decision-making process.

When people feel their opinions have been heard and valued, the benefits will be more impactful. Porter says it’s crucial to know what the clinicians need and want, as well as knowing how the product impacts everyone along the supply chain. For example, if employees on the receiving dock say the product packaging is often damaged in the shipping process—that’s relevant information. “Everyone has something to contribute when it comes to making smart decisions for a formulary,” Porter says.

It takes significant time and effort to create a formulary of products that are optimal for a healthcare system. But that doesn’t mean the work is done once the formulary is created.

“You’re never really done,” Porter says. “It’s an ongoing process. What’s your scorecard to measure vendor or product performance? When you get a bad score, you do better research, and you get more people involved to figure out how you can improve.”

For more information, please visit Supply Chain Solutions.