The Cost of Implementing Inpatient Bar Code Medication Administration

Bar code medication administration can be an effective and potentially cost-saving solution to prevent harmful medication administration errors in the community hospital setting.
Published Online: February 11, 2013
Julie Ann Sakowski, PhD; and Alana Ketchel, MPP, MPH
Objectives: To calculate the costs associated with implementing and operating an inpatient bar-code medication administration (BCMA) system in the community hospital setting and to estimate the cost per harmful error prevented.

Study Design: This is a retrospective, observational study. Costs were calculated from the hospital perspective and a cost-consequence analysis was performed to estimate the cost per preventable adverse drug event averted.

Methods: Costs were collected from financial records and key informant interviews at 4 not-forprofit community hospitals. Costs included direct expenditures on capital, infrastructure, additional personnel, and the opportunity costs of time for existing personnel working on the project. The number of adverse drug events prevented using
BCMA was estimated by multiplying the number of doses administered using BCMA by the rateof harmful errors prevented by interventions in response to system warnings. Our previous work found that BCMA identified and intercepted medication errors in 1.1% of doses administered, 9% of which potentially could have resulted in lasting harm.

Results: The cost of implementing and operating BCMA including electronic pharmacy management and drug repackaging over 5 years is $40,000 (range: $35,600 to $54,600) per BCMA-enabled bed and $2000 (range: $1800 to $2600) per harmful error prevented. Conclusions: BCMA can be an effective and potentially cost-saving tool for preventing the harm and costs associated with medication errors.

(Am J Manag Care. 2013;19(2):e38-e45)
Bar code medication administration (BCMA) can be a cost-saving solution for preventing harmful medication errors. Implementation costs include system design and planning, IT infrastructure, interfaces with other information technology systems, training, and the BCMA system itself. In addition to routine maintenance and operating expenses, ongoing expenses should include system quality control and refinement, training, and user support. BCMA effectiveness at preventing patient harm may be greatest when implemented in settings where the risk of adverse events from medication errors is highest and the processes are optimized to ensure appropriate use of BCMA.
Medication errors are a significant source of avoidable healthcare costs and patient harm. The Institute of Medicine (IOM) estimates that 400,000 preventable drug-related injuries, or adverse drug events (ADEs), occur in hospitals each year.1 In addition to their well-documented impact on morbidity and mortality, 2,3 preventable ADEs produce a significant financial burden. Although difficult to definitively calculate, published studies estimate that each preventable inpatient ADE results in additional healthcare costs of between $3100 and $7400 (2008 dollars),1,4-6 much of which is likely absorbed by hospitals.7

The medication use process involves multiple steps: prescribing, transcribing and documenting, dispensing, administration, and monitoring. The opportunity for medication errors and preventable ADEs can occur in any of the stages of this process, but three-fourths of these errors occur during the prescribing (49%) and administration (26%) stages.2 Hospitals have been adopting health information technologies (HITs) such as computerized provider order entry (CPOE), automated dispensing systems, and point-of-care bar code medication administration systems (BCMA) to help prevent medication errors during various stages of the medication-use process.8-16 The HIT presented in this paper, BCMA, is used to prevent errors during drug administration by ensuring that the right medication in the right dose is delivered to the right patient at the right time.13,17 HIT that focuses on the medication administration process can have a profound effect on reducing preventable ADEs. Although prescribing errors are more frequent, errors that occur in the administration stage have less chance of being intercepted and are thus more likely to reach the patient.2,18

BCMA uses scanners similar to those used in grocery stores to read bar codes placed on medications and patient identification bands. Once a medication is ordered, the hospital pharmacist enters the order into the system and dispenses the bar code–labeled unit dose of the drug to the floor. The clinician administering the dose uses the BCMA scanner to scan his or her identification badge, the patient’s wristband, and the drug. The BCMA system electronically compares the drug being administered with what was ordered, alerts the user to any discrepancies, and automatically creates an electronic medication administration record.

Studies have shown BCMA may prevent errors in 1% to 2% of attempted inpatient medication administrations because clinicians changed their behavior based on the system-generated warning and averted a potentially harmful action. Hospitals have reported experiencing more than a 50% reduction in medication administration errors and a relative risk reduction of 11% in the rate of ADEs after implementing a BCMA system.9,19-23 However, these systems are expensive and little is known about the cost-effectiveness of this technology. The purpose of this study is to estimate the cost of implementing and operating BCMA for inpatient care in a community hospital setting.

This study fills a significant gap in the literature. HIT is believed to hold great promise to significantly improve the quality and safety of health services and potentially contribute to reducing healthcare costs.24,25 However, there is little empirical evidence documenting the financial and economic ramifications of investing in medication safety–related HIT. The largest body of cost-related literature for medication safety technologies is focused on computerized order entry (CPOE). The limited number of thorough assessments that have been published on medication safety HIT other than CPOE, such as bar-code dispensing systems and BCMA, tend to examine their use in academic medical center settings. This study can help guide future BCMA adoption decisions, prioritize settings where the technology might produce the greatest

benefit, and shed insight into opportunities to improve the cost-effectiveness of this technology.


This retrospective, observational analysis estimates the cost of incorporating BCMA in the acute-care setting to identify and intercept potentially harmful medication errors.26,27 Costs and medication administration errors intercepted by BCMA were estimated at 4 community hospitals for a period of approximately 5 years spanning from the initial planning kickoff at each site through 2008. We adopted the broad definition of costs commonly employed in financial capital budgeting calculations including transactions that affect cash flows, opportunity costs, and collateral impact on other programs.28 Our comprehensive cost estimate, calculated from the hospital’s perspective, includes the direct expenditures associated with the implementation and operation of BCMA and an allocation of the costs of existing resources, such as salaried personnel, working on the BCMA project.

Study Sites

Our study sites were 4 community hospitals affiliated with a large not-for-profit network of hospitals and physician groups located in Northern California. These hospitals implemented the same commercially available BCMA in their adult inpatient acute care units. The BCMA solution implemented was a stand-alone system and not integrated with CPOE or an electronic health record. The characteristics of the hospitals included in the study are presented in Table 1. These facilities varied not only in attributes such as size but also in how they chose to implement and operate their BCMA system. The design, planning, and system roll-out stages of each BCMA installation lasted from 7 months to more than a year at each site. At roll-out, the BCMA system was pilot tested in 1 or 2 adult inpatient care units, usually a general medical-surgical care unit, and then additional nursing units were brought online sequentially over varying periods of time. By the end of 2008, our study sites had fully implemented BCMA across their facility into a wide variety of nursing units including intensive care, labor and delivery, and telemetry. As of the end of our study period, however, none of the study sites had incorporated BCMA into the surgical suite, emergency department, or hospital-based ambulatory services (Table 2).

BCMA Work Flows

Although our study sites implemented the same BCMA system, they were given discretion on setting system design specifications and operating policies. There were minor variations in how they configured their BCMA system and incorporated it into their existing processes, but all sites employed the same basic work flow. All sites maintained their existing paper-based, non-electronic prescribing procedures where new drug orders written on paper forms are hand delivered or faxed to the pharmacy. Pharmacy staff reviewed these orders and transcribed the information into the electronic pharmacy management system. This electronic pharmacy management system is linked with the BCMA software. The interface between the BCMA and pharmacy systems creates and populates an electronic medication administration record (MAR), which becomes part of the patient’s medical record. This electronic MAR creates a worksheet to inform the clinicians what medications each patient is scheduled to receive and when they are due. The system automatically records the date and time of each medication dose given. Some facilities that did not have 24-hour pharmacy coverage contracted with an outside vendor to provide remote pharmacy order review and entry, to minimize any time delays in getting new orders written after hours entered into the MAR. However, we considered this an expansion of existing services and did not include it in our cost estimates.

Measuring Costs and Benefits

Costs. Similar to other examinations of the costs associated with the implementation of HIT technologies, we collected cost data through a combination of examination of financial records and key informant interviews.29 BCMArelated costs were divided into direct capital costs and personnel costs for time spent during planning, staffing, training, and monitoring. Capital purchases consisted of the BCMA hardware, such as computers, servers, carts to move the computers from room to room, handheld bar-code scanners, and auxiliary computer batteries to ensure a consistent power supply. Also included were the software licenses, interfaces with other computer applications, ongoing maintenance/service support contracts for BCMA, and other systems and supplies necessary to make BCMA operational. Infrastructure capital investments such as building wireless capacity, drug repackaging equipment needed to support bar codes and construction (eg, to accommodate new repackaging equipment), were also included if these infrastructure improvements were incurred as part of the BCMA project.

Time costs include the value of time administrators and staff spent planning for the implementation of BCMA, including project management activities, hardware component selection, software parameter specification design, and integration with existing work flows. We also included personnel costs related to system implementation preparations and management, including the initial and ongoing training for BCMA users and “super users” who would become the onsite

experts and provide basic local user support. Finally, these costs include personnel monitoring ongoing BCMA operation and utilization, including reviewing reports produced by the BCMA system, following up on errors, and process improvement.

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