Paying for Formula Puts Hospitals in Control

October 11, 2013
By Cindy Hutter

Keys to Transitioning to Paid Formula
  • Get leadership on board to realize the change is affordable.
  • Educate leaders, staff and healthcare providers on the International Code of Marketing of Breast-milk Substitutes.
  • Prepare nurses for the culture change of no freebies. Invest in training for all staff.
  • Approach the change from a business perspective. Negotiate a good rate (remember, formula companies used to give their products away for free) and be ready to find a new formula provider if you can’t come to agreeable pricing terms.
  •  Involve the hospital’s materials management and supply chain departments. Formula should be treated as just another product that the hospital orders.
  •  Block vendors’ access to the maternity unit.
  • Use an automated dispensing machine to track formula. This helps with the management of formula coming in, appropriate use, and tracking which patients it goes to and when to reorder.
It seems like a no brainer. Formula companies should be happy to have hospitals say no to freebies and insist on paying for formula. But hospitals seeking to improve breastfeeding rates have found the opposite to be true: formula companies are threatened by the potential loss of exposure for their brands in maternity units. This has made it particularly challenging for hospitals intent on paying for formula, an evidence-based tactic to improve breastfeeding rates.

“We don’t get free oranges or free diapers or other things we use in the hospital, so what makes it OK to get free formula for our infants?” questions Rebecca Law, manager of Lactation and Child Birth Education at Texas Health Harris Methodist Hospital Fort Worth, one of the hospitals participating in the Texas Ten Step Star Achiever Breastfeeding Learning Collaborative. “Through the Baby-Friendly and Texas Ten Step initiatives, our clinicians have been educated on the benefits of exclusively breastfeeding and realize giving away free formula could interfere with establishing a breastfeeding relationship between mom and baby.”

With large supplies of free formula on hand, healthcare professionals are likely to give moms who don’t need it formula. However, hospitals still need some formula for babies whose mothers aren’t able or choose not to breastfeed, or other babies needing special supplementation.

The shift to paying for formula hasn’t happened overnight. Susan Davis, RN, director of Obstetrical Services and Programs at Sharp Mary Birch Hospital for Women & Newborns in San Diego, California says the hospital was quoted outrageous numbers from formula companies on the amount of free formula they were getting – worth over half a million dollars – when discussions first started four years ago. Sharp Mary Birch Hospital has one of the largest neonatal intensive care units (NICU) in the state and delivers more babies than any other hospital in California. There were real concerns about the financial impact on the hospital if it paid for formula, primarily for babies whose mothers can’t breastfeed or NICU babies needing special supplementation.

“We have wanted to go Baby-Friendly for so many years, 10-15 at least, but we were worried about the cost of paying for formula,” says Susan Davis, RN, director of Obstetrical Services and Programs at Sharp Mary Birch Hospital for Women & Newborns in San Diego, California. “As of July 2013, we stopped receiving free materials, formula, supplies and other items from any formula companies. I’m thrilled beyond words because I always thought this was going to be a major obstacle.”

Davis is part of a team at Sharp Mary Birch Hospital participating in Best Fed Beginnings, a national quality improvement project that aims to help hospitals improve maternity care and achieve Baby-Friendly status. The Baby-Friendly designation is granted to facilities that adhere to the evidence-based Ten Steps to Successful Breastfeeding. As part of the designation, hospitals must adopt the World Health Organization-endorsed International Code of Marketing of Breast-milk Substitutes. The code was developed to ensure mothers are not discouraged from breastfeeding by aggressive marketing, such as receiving gift bags with free formula.

Law says her hospital’s formula provider used the same tactic to try to scare administration. The hospital’s formula company shared a dollar amount based on how much free formula the hospital was receiving, not what it actually needed, thus inflating the cost figures.

“We did our own cost analysis based on our hospital breastfeeding rate, the number of babies receiving formula and how much they would need during their stay,” says Law. “With the real numbers, we were able to make a case for how affordable it was, especially compared to the numbers the formula company provided.”

“We don’t get free oranges or free diapers or other things we use in the hospital, so what makes it OK to get free formula for our infants?” – Rebecca Law, Texas Health Harris Methodist Hospital Fort Worth

With support behind their efforts to follow Baby-Friendly practices, Law says making the case to leadership to fund the formula purchasing wasn’t difficult.

When it came time to negotiate with the formula vendors, longstanding relationships took a back seat to business. “We essentially said, if we aren’t going to get good pricing from you then we’ll go with another vendor,” says Davis. “That was the turning point. The companies realized we were serious about paying for formula and if they wanted to stay as the primary vendors in our hospital they would have to offer price points that would be feasible.”

One key to the culture transition at the hospital was blocking vendor access to the maternity units. In the past, vendors would stop by the unit two or three times a week to check formula inventory, provide free educational material and gifts like lanyards and pens. Vendor representatives would offer free dinners at some of the nicest restaurants in the city so they could provide education on their new products. It was a hard culture change for long-time staff to accept, says Davis.

Now at Sharp Mary Birch, all vendors need a special badge for access. They are only allowed on the floor with the storage room where no patients are located, and vendors have to make appointments to speak with any staff. But since the hospital started purchasing the formula, staff members do the inventory checks so there is even less need for vendors to visit at all.

While formula vendors may be losing ground in hospitals, Davis and Law say they are seeing the companies shift promotion efforts toward obstetric and pediatric offices as well as directly to new mothers.

“They continue to try to get in different ways,” laments Law. “I’m not surprised.”