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Cardinal Health to Highlight Cost-Control Approach in ASHP

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Cardinal Health Inc. (CAH - Free Report) recently announced that it will highlight a comprehensive cost-control approach at the 2018 American Society of Health System Pharmacists (“ASHP”) Midyear Clinical Meeting in Anaheim, CA. Per management, hospital pharmacies will be able to save 5% or more year after year by adopting this unique approach.

Notably, Cardinal Health helps hospitals to identify hidden savings, improve patient outcomes and drive supply chain efficiencies. The stock currently carries a Zacks Rank #3 (Hold).

The Cost-Control Approach at a Glance

The company’s latest approach will showcase four key steps pertaining to drug cost control.

The first step is implementation of an RFID (Radio Frequency Identification)-enabled consignment model for inventory management. The approach uses RFID technology to monitor inventory in real time, focus on actual pharmacy usage and send alerts for recalled products. It also tracks inventory through a cloud-based platform.

The second step is improvement of patient assistance programs. While continuous scrutinization of real-time drug expenditures and utilization data is the third step, the fourth and the most important step includes enhancement of productivity so that resources can strongly focus on patient care and cost control.

Significance of Cost Control in Healthcare

The global healthcare industry is witnessing a shift in drug spending with ‘specialty pharmaceutical’ surpassing the ‘traditional pharmaceutical’ growth.

Not to forget, in spite of providing various advantages, these specialty pharmaceuticals pose challenges to storage, usage as well as costs and often witness unpredictable demand. Notably, the already-established traditional pharmacy cost savings fail to offset these pressures. In this context, Cardinal Health’s new cost-control approach might prove to be beneficial for the healthcare industry.

Share Price Movement 

Cardinal Health underperformed its industry in a year's time. The stock has lost 8.1% compared with its industry's 1.2% decline and the S&P 500's gain of 1.8%. A sluggish macroeconomic scenario and tough product pricing environment are likely to impede growth.

 

Key Picks

A few better-ranked stocks in the broader medical space are Quidel Corporation (QDEL - Free Report) , STAAR Surgical Company (STAA - Free Report) and Veeva Systems (VEEV - Free Report) .

Quidel Corporation has a long-term expected earnings growth rate of 25% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

With a Zacks Rank #1, STAAR Surgical delivered an average four-quarter positive earnings surprise of 400%.

Veeva Systems’ long-term earnings growth rate is projected at 19.3%. The stock carries a Zacks Rank of 1.

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