Monetary incentive for pharmacists to control drug costs

An incentive program that paid hospital pharmacists at United Hospitals Incorporated (UHI) and Children's Hospital Incorporated (CHI) a percentage of the money saved by the pharmacy on drug and i.v. expenses in 1984 is described. Hospital administration, as part of a hospitalwide incentive program, approved the pharmacy department's proposal for a monetary incentive program. Pharmacy managers hoped that, by rewarding all pharmacists for their efforts to control costs, they could potentiate other cost-containment programs (stronger formulary control and improved purchasing and inventory control) and improve clinical services while maintaining quality of care. The incentive calculation was derived from the percentage of expenses saved on drugs and i.v. solutions and sets relative to budget. The payout, to be applied to 1984 salaries of pharmacists, could not exceed 10% of salary or more than 35% of the total savings to the hospital. A screening mechanism was established to protect the hospital from paying an incentive if the total pharmacy expenses exceeded budget. In fiscal 1984, drug and i.v. expenses per adjusted case decreased 1.55%, which led to each full-time pharmacist receiving an average payout of $500. This payout was less than had been anticipated because of a nursing strike at other hospitals, which resulted in an influx of intensive-care patients. The monetary incentive program for pharmacists is a useful tool for controlling drug and i.v. expenses and for rewarding pharmacists for successful cost-saving approaches.