McGaw Fills a Pharmacy Need : Medicine: Irvine drug firm uses computer system to handle prescriptions for a growing number of hospitals.
With muted rock music setting the mood, Sonia Jacinto, an intern pharmacist for McGaw Inc., tackles a fast-growing pile of drug orders. At an increasingly rapid pace, Jacinto hooks plastic sacks of intravenous solutions to mixing machines, fills them, seals them and marks them for same-day shipments to local hospitals.
Call it rush hour in the City of Hope.
“It’s really hopping at this time of the day,” said Daniel Gelber, head pharmacist at the Irvine-based drug company’s “sterilized” pharmacy at the City of Hope Medical Center in Duarte. Indeed, in less than three hours, McGaw’s computer system took thousands of dollars worth of orders from 40 Southland hospitals, all of which are connected by modem to the pharmacy.
The Central Admixture Pharmacy Services, known as the CAPS division, is McGaw’s solution to a difficult problem: how to get custom prescriptions filled for individual patients in dozens of hospitals--some of which are hundreds of miles away--and delivered within hours.
By most accounts, McGaw is well on the way to solving the problem--and is making a profit at it.
“They are really the pioneer in this area,” said Vivian Wohl, an analyst for the brokerage Robertson, Stephens & Co. in San Francisco. “It is a strategy that they are really rolling out now.”
Founded about 18 months ago, the CAPS division now has seven pharmacies across the nation and computer hookups to 75 hospitals, said McGaw President James Sweeney. The other CAPS facilities are in San Clemente, Houston, Chicago, New York, Miami and Birmingham, Ala. An eighth facility is being set up in Detroit and should be on line with local hospitals by the fall.
Sweeney estimates that the CAPS division will contribute about $12 million to McGaw’s revenue for 1993. The company, which had 1992 revenue of $309 million, began selling its stock publicly in March. After going on the NASDAQ market at $8 a share, the stock has risen in price, closing Wednesday at $10.875 a share, down 12.5 cents.
The company hopes to eventually take a large portion of the computerized hospital pharmacy market, which analysts estimate is worth $250 million a year. The company, they note, has taken a giant leap ahead of such drug giants as Baxter International in Deerfield, Ill., and Abbott Laboratories in Abbott Park, Ill.
“We don’t have anything like that,” said Abbott spokesman Dan Brackman. “It sounds like a good idea.”
Getting hospitals to accept the service, however, has been a slow process, Sweeney said.
“Hospitals are quite appropriately conservative when it comes to change,” he said. “It has taken a couple of years of crawling to show them that it is a good idea.”
Hospital pharmacies typically buy their intravenous drugs in bulk and mix them on the premises before delivering them to patients’ bedsides. Often, however, they do not have “clean rooms”--the ultra-sterilized workstations that McGaw uses.
McGaw argues that CAPS facilities are safer and more cost-effective than regular hospital pharmacies. They buy intravenous drugs in large quantities, a cost saving. Then, following prescriptions fed into the computer system by individual doctors, they mix the drugs, seal them and ship them in cold storage either by truck or overnight air freight. The next time the intravenous bags are opened is when they are delivered to the patients, thus eliminating potential contamination before the mixture is administered.
Hospitals that have contracts with McGaw are hooked into the firm’s computer network. After completing morning rounds, hospital staff doctors fill out intravenous prescriptions, which are then entered into the system by noon. The prescription orders are transmitted instantaneously to McGaw’s CAPS sites and immediately filled. By late afternoon, the orders are ready for shipment.
“We have to be better than the hospitals at doing this,” Sweeney said, “or it wouldn’t sell.”
Among Southern California hospitals that have contracted with McGaw are Anaheim Memorial Hospital; Fountain Valley Regional Hospital and Medical Center; Childrens Hospital of Los Angeles; Martin Luther King Jr. Hospital/Drew Medical Center, Los Angeles; and Hospital of the Good Samaritan, also in Los Angeles.
Dr. Ira Poltorak, director of pharmacy services at Fountain Valley Regional, said he was wary at first of signing with the CAPS system.
“My reservation at the beginning was that I felt there was a lack of direct control,” Poltorak said. But after visiting the Duarte facility, he said, “I became more comfortable.”
Now, a year later, the Fountain Valley hospital uses CAPS services to order specially mixed drugs that are used to keep hearts from contracting during open-heart surgery.
The most recent hospital to sign with McGaw was M.D. Anderson Cancer Center on the Houston campus of the University of Texas. That deal was signed June 21, the company said.
The next market for the intravenous prescription business, Sweeney said, is home health care agencies such as Homedco Group Inc., Fountain Valley; Abbey Healthcare Group Inc., Costa Mesa; and Critical Care America, based in Massachusetts.
“This will be our way of getting at the business wherever we can,” Sweeney said.
