Retail Pharmacy

Pharmacy Chain Inventory Management System and Financial Reporting Evaluation

IndustryRetail Pharmacy
ProblemA mid-sized regional pharmacy chain requested an independent assessment of their pharmacy inventory management system and financial reporting to identify issues and address concerns. The chain was hoping to optimize a systematic process to better manage their pharmacy inventory and improve the accuracy of their financial reports.
PHSI SolutionPHSI reviewed the pharmacy operational policies and procedures, wholesaler agreements, pharmacy practice management system manuals and training guides. PHSI conducted on-site interviews with corporate and retail pharmacy management to understand current financial reporting and inventory management processes. PHSI reviewed financial reports and identified the source of inconsistent output and developed solutions leading to accurate reporting. PHSI provided insight on inventory control functionalities within the pharmacy system, metrics for measuring inventory management effectiveness, including methods to control cost and enhance efficiency.
ResultsThe regional pharmacy chain implemented consistent financial reporting and inventory management practices leading to improved operational results.

Retail Pharmacy Profitability on 90 Days’ Supply Prescriptions

IndustryRetail Pharmacy
ProblemA retail pharmacy chain was concerned whether aggressive third party 90 day reimbursement rates were profitable and if third party contracts should be continued for 90 days’ supply. The retail pharmacy chain feared they were losing money overall on 90 day prescriptions, particularly with brand medications.
PHSI SolutionPHSI first collected and analyzed the claims of the largest third party plans served by the pharmacy chain. The prescriptions were categorized into four prescription types: 30 day generic, 30 day brand, 90 day generic, and 90 day brand. These segmented claims allowed PHSI to evaluate the profitability of each group independently.
ResultsAfter reviewing the claims data, PHSI was able to demonstrate the value of the 90 day contracts with the client. PHSI explained that while there was some loss on selected 90 day brand prescriptions, they are marginally profitable. However, 90 day generic prescriptions are the most profitable of the four segments analyzed. The ratio of profitable 90 generic prescriptions more than made up for the few unprofitable brand prescriptions. The resulting analysis supported the overall profitability of 90 day at retail contracts and provided insight for the client on the various profit margins for each subgroup of prescriptions.

Generic Discount Programs – Monitoring and Measuring Uptake and Retention

IndustryRetail Pharmacy
ProblemA mid-sized regional pharmacy chain implemented a generic discount and free antibiotic program with assistance from PHSI. Years later, senior management wanted to measure the value these programs brought to the pharmacy. The chain lacked the resources needed to analyze the data and evaluate the financial impact of the programs.
PHSI SolutionThe client provided PHSI with transaction data used to measure uptake and retention from the generic discount and free antibiotic program. PHSI also measured patient, prescription and dollar volume for each program segment and determined the additional business program patients bring to the pharmacy in the form of non-program prescriptions.
ResultsPHSI continues to monitor drug movement, producing actionable reports with recommendations allowing the client to fine tune their program to meet sales and profit objectives.

PHSI Identifies $3 Million in Opportunities to Improve Gross Margin

IndustryPharmacy
ProblemA national long term care (LTC) provider was concerned that they were not maximizing third party margins based upon their prescription pricing and operational procedures. They needed outside expertise to provide an independent assessment of their pricing strategies and negotiating tactics with PBMs.
PHSI SolutionPHSI reviewed pharmacy operations and pricing as it pertained to the third party contracts. PHSI developed model contract language for the client to use to maximize reimbursement. We undertook an exhaustive claims analysis to identify opportunities to improve pharmacy margins through changes in procurement, pricing, and staff training. Functional specifications were developed for the client’s IT department to write software code to insert into their proprietary dispensing system to realize the margin opportunities and prevent losses.
ResultsPHSI identified over $3 million in opportunities to improve margins and the client has implemented PHSI’s recommendations to improve profitability.

Pharmacy Chain Pricing Support

IndustryRetail Pharmacy
ProblemA pharmacy chain needed to revise their prescription pricing strategy as they implement a new pharmacy practice management system. In addition, the system needed to display the preferred generic drug manufacturers to pharmacy users in order to assure proper drug product selection to control and ensure uniformity across the chain.
PHSI SolutionPHSI worked with the pharmacy administrator to develop pricing formulas that allowed the company to properly price their prescriptions and assure profitability. PHSI created files which included the necessary pricing information and proper references for preferred generic drug products. These files make it easier for pharmacists to select the most cost effective drug when substituting for the brand.
ResultsThe pharmacy chain was able to implement their new pharmacy management system on schedule and with up-to-date, accurate retail cash pricing and algorithms. The pharmacy chain’s administrative implementation work load was decreased.

Nursing Home Pharmacy’s Operations and Financials Dramatically Improved

IndustryPharmacy
ProblemA privately held nursing home company with ten facilities opened a pharmacy to service their homes. Pharmacy management had failed to improve operating results and additional funding was required from the parent company.
PHSI SolutionPHSI worked on site with the chief operating officer and general manager to evaluate the functional areas, understand the workflow, assess the capabilities of the dispensing system, and create a turnaround plan. A perpetual inventory system was created using dispensing software and purchase information from the wholesaler. PHSI helped the company set specific goals for inventory turns that enabled the pharmacy to free up $300,000 in inventory while maintaining service levels. Operational reports were created to assist management in assigning duties to the staff. Meetings were held with the pharmacy billing staff, facility administrators, and directors of nursing to discuss outstanding prior authorization issues, requests from facilities for non-covered items, and cycle fill procedures. A standard set of operating processes and procedures were jointly developed and implemented to improve operating efficiency and profitability. Pharmacy workflow was revamped to increase dispensing efficiencies and better allocate resources to improve customer service.
ResultsOwnership regained control of the pharmacy operation with new business processes and internal controls that freed up over $400,000 tied to excess inventory, supplies, and staffing.

PHSI Helps Supermarket Chain Move Toward Providing Pharmaceutical Care

IndustryRetail Pharmacy
ProblemA division of a national supermarket pharmacy chain was exploring the idea of implementing patient care services but had been unable to determine, prepare, and present a business case to senior management on how to proceed.
PHSI SolutionAfter identifying the client’s needs, wants, and desires, PHSI targeted strategic areas that needed to be addressed including software, training, marketing, opportunity cost analyses, compensation, and payment for services.
ResultsA business plan was developed and presented to senior management driving the stalled project to completion.

Pharmacy Validates Business and Information Technology Practices

IndustryRetail Pharmacy
ProblemA client needed to validate a recently completed project that documented business and information technology practices for its pharmacy operations. They wanted a best practices comparison with leading organizations in the industry.
PHSI SolutionPHSI evaluated the new business practices relative to industry best practices and provided the client with a report outlining the findings through a GAP analysis.
ResultsThe client used the research to plan enhancements to its own product development list to improve pharmacy efficiency and profitability.

U&C Pricing Strategy Critical for Chain Expansion

IndustryRetail Pharmacy
ProblemAlthough well over 90% of customers have prescription drug coverage, those who do not have coverage pay the usual and customary (U&C) cash price for their prescriptions. The U&C price impacts third party reimbursement through the lower of provision in pharmacy network contracts. A client was planning an accelerated expansion and needed to maintain a consistent U&C pricing strategy across their chain.
PHSI SolutionPHSI developed a U&C pricing strategy that required minimal day to day maintenance based on the client’s pricing philosophy. Specific pricing strategies were set for top-selling brand and generic drugs, and a default strategy was determined based on current third-party reimbursement rates. PHSI understood and took into account the constraints of the client’s pharmacy practice software in order to make pricing maintenance manageable.
ResultsPHSI provided a consistent strategy for U&C pricing at every pharmacy in the chain. Top-selling drugs were priced so that the client remained competitive in the cash market but increased third party profitability.

PHSI Tests Pharmacy’s Dispensing System Software

IndustryRetail Pharmacy
ProblemA pharmacy chain developed a new dispensing system that required case use development and systems testing before deployment to identify software defects and fixes.
PHSI SolutionPHSI developed test cases to validate the system functionality and matched business requirements to test case scenarios. PHSI consultants identified defects and provided direction to programmers to fix errors prior to rollout. Fixes were tested and verified.
ResultsThe client reduced the time and effort needed to convert to their new dispensing system and eliminated costly errors by leveraging PHSI's pharmacy and technology expertise.