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Executive Summary

Hospital pharmacies purchased 57% of their drugs and related items from whslrs. in 1983, up substantially from 47% the year before, according to the Lilly Hospital Pharmacy Survey 1984 edition. "Whslr. purchase percentages increased across all bed ranges when compared with the previous year's figures," the survey found. "Goods obtained from whslrs. during 1983 by hospitals with fewer than 200 beds amounted to over 60% of total pharmaceutical purchases, whereas hospitals in the 200-to-500-bed range order, on average, about half their drugs and related items from whslrs." Whslrs. picked up their largest share gains in the 50-to-500-bed hospital segment. In the 50-99-bed group, whslrs. increased their business from 53% of purchases in 1982 to 65% in 1983. Similarly, in the 100-199-bed group, whslrs. increased from 52% of the purchase to 62%. The Lilly survey, covering 2,102 hospital pharmacies, affirms the trend toward increased whslr. purchases by hospitals. The Natl. Wholesale Druggists Assn.'s (NWDA) annual "Operating Survey" released in August reported a 30% increase in whslr. sales to hospitals in 1983 after a 31% gain in 1982 ("The Pink Sheet" Aug. 13, p. 8). "Profit hospitals order 69% of their pharmacy merchandise through a whslr. (up from 57% reported last year)," the Lilly survey stated. "Private, nonprofit institutions purchase 59% of goods via the whslr. (up from 51% in 1982). Govt. facilities buy 53% of their stock from a whslr. -- an increase of 8% over last year's figure." The Lilly survey found that only one group of hospitals, federal hospitals, reduced the amount of goods moving through whslrs.: 7% in 1983, down from 8% in 1982. Large Hospitals Using Whslrs. Had Lower Purchases, Lower Inventory, And More Inventory Turns The Lilly survey compared figures from two groups of large (over 500-bed) hospitals to determine the effect of whslr. buying on inventory levels. One group of hospitals (purchasing less than 39% of its goods through whslrs.) showed average inventory of $498,777 in 1983, total purchases of $4,113,596, and 8.2 inventory turns. The group of similarly sized hospitals with over 39% of purchases through whslrs. had lower inventory ($349,550), lower purchases ($2,998,015), and higher number of inventory turns (8.6 times). Both these groups of large hospitals showed improvement in inventory management in 1983. The hospitals with low whslr. use improved the number of turns in 1983 to 8.2 from 7.3 the year before. The whslr. hospitals increased turns from 8.2 in 1982 to 8.6 in 1983. Overall, the survey found an average hospital pharmacy had inventory of $121,552 in 1983 and purchases of $879,431. The inventory figure was up 8.3% from 1982 and purchases were up 18.4% -- another indication of improved inventory management. Lilly survey figures also reflect the increasing dominance of cooperative purchasing groups. "A total of 1,904 (91.1%) participating hospital pharmacies belong to a cooperative purchasing group (up from 90.4% last year)," the report said. Cooperative buying groups were least prevalent in the West South Central (87.3%) and Mountain (87.5%) regions. In the West North Central area, just short of 95% of the hospitals in the survey were members of a cooperative buying group.

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