The Financial Benefits of Technology

PC: Given the technological capabilities that currently exist, how long does it take to see a reduction in annualized drug spend?

MacDonald: I was talking to a health system last week, and they had sitting in current state, $1.6 million worth of savings. So just out of the gate, their perspective was, our pricing is wrong. Let's correct the pricing. That's $1.6 million savings. Then, once you get some of that low-hanging fruit of the prices that are set wrong, then you layer on.

Now the prices are changing. Do I want to make decisions about it that will change my behavior? Do I want to make some strategic changes from one drug to another? I would say that what you're typically seeing is some large fraction of a percentage savings out of the gate, and it might take you a little while to filter that through— with rebates from your wholesalers and your manufacturers—but you get to a world where you can be saving 2, 3, 4% of your drug spend in the first year, and then that continues year-over-year.

We just had one health system pass the $10 million saved mark. It’s very frequent that you're getting million-plus dollar savings in a mid-sized system within 6-12 months. It's pretty remarkable, so I'd say instantly, but you also then see that ramp up over time, and you may see different types of plays in different time horizons.