Sydney Uni software helps hospitals cut medicine bill

If hospitals across the country adopted the software, they could save up to $100 million a year.

Dr Li said staff were forced to make complex choices between rebate brands and non-rebate brands.

A software platform developed at the University of Sydney could save Australia’s hospitals more than $100 million by simplifying their drug purchases.

The software, built by the university’s Sydney Informatics Hub in conjunction with Westmead Hospital, can replace the highly laborious task of selecting the most cost-effective pharmaceuticals to use in hospitals.

“There are several thousand lines of pharmaceuticals that are procured and managed across Westmead, and pricing for each is influenced by market dynamics — that is, competition, patent expiry, supply chain and government policy,” the hospital’s head pharmacist David Ng said.

“With a monthly spend of around $3m, the objective of our pharmaceutical procurement is to ensure that essential medicines are available uninterrupted and at the most cost-efficient price.

“Given the number of product lines and pricing variances, we needed a decision support tool.”

The hospital turned for help to the University of Sydney, which has a large presence in the Westmead health precinct.

Aldo Saavedra, from the university’s faculty of health sciences, and Erick Li, from the business school’s discipline of business analytics, worked on the problem

They realised the manual purchasing process was very complex because of constantly changing supplier discounts, government subsidies and competing branded and generic products.

For example, Dr Li said, staff were forced to make complex choices between rebate brands and non-rebate brands.

“In some cases, the hospital stayed with the rebate brand to avoid losing an accumulated rebate reward, whereas in other cases the hospital was able to capitalise on low prices offered by non-rebate brands,” he said.

He said the software was able to take into account all the complexities and make the optimum choice. With some modification, Dr Saavedra and Dr Li said, their procurement software could be installed in any hospital in the country

One estimate put the savings in the Westmead hospital pharmaceutical bill at 5 per cent. If that level of savings applied to Australia’s annual hospital drug spend of over $3 billion, the savings nationally would be more than $100m.