It's all but impossible for an outsider to imagine how many thousands of dollars worth of prescription medication the average nursing home might waste, or to picture the reams of paperwork it takes to care for a single patient.

	John Beale, Post-Gazette CEO Gary Duty describes how one of the company's automated pharmacy systems works -- "Realistically, we could be over a $100 million [in revenue] within five years." Click photo for larger image.

Nobody needed to tell Gary Duty or Lena Sturgeon.

Duty knew because he had founded a specialty pharmacy that catered to long-term care institutions and became an executive with another after merging with it.

Sturgeon knew because she had worked in nursing homes, first as a bedside nurse and later in administrative positions, and owns a small assisted living facility herself.

Now, Duty, a co-founder and president of Marshall-based Millennium Pharmacy Systems, and Sturgeon, the company's chief operating officer, are rolling out an automated pharmacy system for nursing homes that is designed to reduce paperwork, stem deliveries of prescriptions that would otherwise go unused and thwart medication errors.

At a time when runaway drug costs are a concern for individuals and institutions alike, the prescription savings alone have been enough to sell some inaugural customers on Millennium's technology.

"It's an excellent system as far as I'm concerned," said Dave Parkhill, regional director for four Eastern Pennsylvania nursing homes operated by Penn-Med Consultants, based in Allentown, Lehigh County. "The most significant part of the cost savings is [on] wasted drugs."

Parkhill said the Millennium system has cut prescription drug costs by roughly 54 percent at two of the homes he oversees, while the other two haven't had the system long enough to estimate results. In a single 100-bed facility, which typically ordered $10,000 worth of prescriptions monthly, that amounted to roughly $5,400 a month, he said.

The reason is that big specialized pharmacies that cater to nursing homes and assisted living facilities often fill prescriptions with punch-out cards containing 30-day supplies. By law in Pennsylvania and most other states, any unused portions must be destroyed.

That happens more than one might think. "If the patient is discharged, or dies or the [prescribing] physician changes the order, the drug is wasted," Parkhill said.

John Beale, Post-Gazette Millennium Pharmacy Systems COO Lena Sturgeon and CEO Gary Duty next to their company's automated pharmacy equipment. Click photo for larger image.

Millennium combats the waste by dispensing prescriptions in plastic packets containing single doses of all of the pills or capsule-form medications an individual patient needs and by delivering the packets in two- or three-day supplies.

The company estimates that its system might save the average nursing home, with roughly 125 beds, as much as 35 percent of its prescription costs.

Millennium's system combines electronic medical record keeping technology that it installs at the nursing homes with order entry software that sends prescriptions directly to the company's own pharmacies. At the pharmacies, medications are dispensed from automated, bar-coded, bulk canisters into the bar-coded plastic packets.

As the medications are delivered to patients' bedsides from carts, nurses scan the barcodes into laptop computers, verifying that the correct medications are being given and automatically compiling "administration" records mandated by the state. Without the automated system, nurses would typically have to pry each pill out of a punch card and fill out handwritten records showing that patients, who each take an average of nine medications at nursing homes, received them.

To anyone who hasn't seen the paperwork usually associated with the process, Millennium's technology hardly seems revolutionary.

But customers said that in addition to cutting drug costs, it saves them reams of paper and hours of time spent filling out forms by hand.

Before Millennium's automated system was installed at Loyalhanna Care Center, a 116-bed facility in Latrobe, administrator Patti Benford said each order from a physician, whether for a medication or treatment, "had to be written down in at least six places."

Among other reasons, the orders, which nurses usually take by phone from physicians, had to be faxed back to doctors' offices for signature and then returned. The signed orders were then faxed to a pharmacy vendor.

Even doctors' orders that didn't involve medications -- whether dietary or for special care and treatments such as wound dressing -- were sent to the specialized pharmacies, which took on record management functions for nursing homes in the 1980s in an effort to offer a higher value service than retail drug stores.

In addition to delivering pharmaceuticals, large specialized pharmacy operators such as Kentucky-based Omnicare Inc. and NeighborCare Inc., based in Baltimore, store all those orders in their computer systems and send printed copies back to their nursing home customers.

At Loyalhanna, Millennium's electronic record keeping system has changed all that, Benford said.

"This system saves an enormous amount of time for the licensed staff," she said. With nursing shortages plaguing the health-care industry, the time savings has translated into fewer overtime hours at her facility, Benford added.

Further, there's more accountability for nurses because records show when a patient, who might be occupied with something else when medications are delivered, misses a dose of medicine or refuses it for some reason, Benford said.

Finally, she added, the system reduces the chance of medication errors not just because of bar-coding, but also because there's no handwriting to interpret at the pharmacy.

Medication errors have been the subject of much discussion in health care ever since 1999 when the National Academy of Sciences' Institute of Medicine spotlighted them among an array of quality problems at hospitals that cause as many as 98,000 deaths a year. In February, the federal Food and Drug Administration issued a ruling that requires acute care hospitals to use bar-coding in their pharmacies by 2006.

Duty, Millennium's president, said that means it's just a matter of time before the regulations "trickle down" to long-term care facilities.

Along with the company's other co-founders, Chairman William Gatti and Steven Brody, a director, Duty actually started planning the start-up in late 1999 and incorporated it in July 2000. Its initial funding, roughly $3 million, came from their own investments and an individual outside backer. An additional $2.7 million in funding came from a private stock offering that closed in October.

The founders had deep knowledge and contacts in the industry. Duty had sold his own specialty pharmacy, based in Beaver Falls, to another that Gatti owned. That firm, known as Gatti LTC Services, was taken public under the name American Medserve. The leading company in the long-term care pharmacy industry, Omnicare, later acquired the company and Duty worked for it.

Developing and testing of Millennium's automated pharmacy system, which combines hardware from vendors with their proprietary software, took nearly four years.

The founders used their combined experience in the specialized pharmacy industry, coupled with Sturgeon's detailed knowledge of nursing home operations, to develop software incorporating not just the pharmacy ordering functions, but all of the record keeping nursing homes must perform.

"We took the proverbial clean sheet of white paper and that's how we started," said Duty.

Millennium did the initial testing of its system at Nor-Ridge, the assisted living facility that Sturgeon operates in Irwin.

Although the privately held company won't disclose financial results, Duty said Millennium, which began marketing its system at the beginning of this year, already operates two pharmacies and serves seven Pennsylvania nursing homes with a total of 750 beds.

Millennium plans to add additional nursing home customers at a rate of one a month through the third quarter of 2004 and hopes to ramp up to two monthly toward year-end.

As for longer term goals, Duty said, "Realistically, we could be over $100 million [in revenue] within five years."