By Niels Erik Hansen, Ph.D.

Recent news of a $200 million fund to compensate victims of the bankrupt New England Compounding Center (NECC) is an extreme example of how expensive manual compounding errors can be. Contaminated compounds produced by NECC were linked to a 2012 meningitis outbreak that killed 64 people in 20 states and sickened more than 750.

But compounding errors don’t have to result in multi-state disease outbreaks to be costly. In fact, a single compounding error can cost a hospital tens of thousands of dollars (or more) if it causes an adverse patient reaction. Research has found automated compounding technology, such as the RVA system, can help reduce costs by eliminating errors. Automation also reduces the cost-per-dose of medication. A closer look at costs reveals some compelling facts.

A study by researchers at the University of Arizona published last year in Hospital Pharmacy Journal modeled potential errors in each step of a manual compounding process and associated patient medical outcomes. The report found automation could virtually eliminate compounding errors, potentially reducing hospital costs related to adverse drug events such as emergency intervention, extended hospitalizations, patient injury and additional treatment. In fact, across 1,000 simulated dose preparations, the authors concluded that eliminating errors through automated compounding could save hospitals more than $280,000 annually.

A 2012 study in the journal American Health & Drug Benefits found exorbitant costs from adverse drug events (ADEs) related to injectable medication errors, including compounding errors. Researchers found preventable ADEs due to injectable medications cost up to $5.1 billion annually in the U.S., an average of $600,000 per hospital. Further, medical professional liability for inpatient ADEs from injectable medication costs up to $610 million annually, averaging $72,000 per hospital. The authors conclude that “reducing the risk for injectable medication errors is a clear target” for reducing unnecessary costs.

Automated compounding systems like RIVA save money in other ways too. For example, many hospitals purchase common compounded sterile preparations (CSPs) from independent vendors, often in pre-filled syringes. RIVA allows hospital pharmacies to “in-source” production of CSPs, reducing costs substantially. Our analysis shows that producing medications in-house not only lowers the cost-per-dose, but also reduces inventory costs.

As part of due diligence when considering the purchase of a RIVA system in 2012, a 649-bed acute care hospital in the southeastern U.S. provided us a prescribing profile and costs for 22 medications it purchased from commercial compounding pharmacies. Based on costs verified by hospitals with RIVA systems, our evaluation found using RIVA to prepare all of the 22 medications in-house would result in significant savings – from approximately 40 percent to more than 80 percent per dose.

For example, the 100 mL potassium phosphate IV bags the hospital purchased for more than $21 each could be made by RIVA for just over $2 each, including materials. Sodium bicarbonate syringes the hospital bought for almost $15 each could be made by RIVA for about $3.25 a dose. Combined savings for all 22 medications was more than 70 percent.

When multiplied across the number of doses purchased annually, in-sourcing just these 22 medications would save more than $395,000 a year (increasing cash flow by almost $33,000 every month). Over five years, the hospital would accrue net savings of approximately $2.3 million, more than recouping the cost of investing in RIVA technology.

Cost, of course, is a critical and constant issue for hospitals already grappling with increasing demand and declining reimbursements. Although the research examined above employs different methodologies and parameters, and was undertaken over a period of years, it all points to the same conclusion. By reducing errors, decreasing need to outsource and lowering the cost-per-dose of medication, automated compounding helps hospitals cut costs and save money.