My Operations Management (OM) Professor in B-school had one question for our final exam.

Explain if this course will or will not be relevant in your chosen profession or career path?

I revisited my short summary a few days ago and considered the role of the Pharmacist in relation to the current healthcare model. How can Pharmacists help create efficiency when we see inefficiency? How can individual Pharmacists help bring order to a process and fill in the gaps when we see an opportunity to help?

I believe the Pharmacist can fill in the “gaps” and find an opportunity to serve in new ways.  This will further our value to the healthcare team. Dispensing medications correctly should always be the foundation of our Profession, yet there are more bricks to be put in place to create the final framework in our bid to be seen as “healthcare providers”. With the broad knowledge base that Pharmacists have in their toolbox, there is an opportunity to be more than “retail or clinical.”

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December 4th 2015 at 9:53PM I submitted the following.

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Sam Blakemore, PharmD

Personal Operations Management

I have been a practicing Pharmacist for three years.  In that time period, Walgreens purchased Alliance Boots, CVS Caremark purchased Target’s in store pharmacies, and most recently Walgreens made another large investment in agreeing to purchase Rite Aid Pharmacies.

The number of patients that the healthcare system takes care of will continue to rise due to more people having access to healthcare with the implementation of the Affordable Care Act.  Yet, the reimbursements for these services has become more competitive due to increased demand for better pricing by federal and state funded programs.

The Affordable Care Act has made mergers the new norm. Hospitals, Pharmacies, and Home Health Care Agencies have decided that the key to survival is to become as “lean” as possible. In becoming “lean”, the merged companies streamline operations by initiating new workflow processes, retire outdated facilities, and layoff under-performing workers in the hopes of increasing productivity and profits.

Mergers within the pharmaceutical industry are creating shifts in the supply chain. This will impact the drug companies, wholesalers, and retail pharmacies both independent and chain. In the article Drug Partnership Could Trigger Major Supply-Chain Changes, the author states the following:

For now, drug manufacturers mostly use wholesalers like AmerisourceBergen to ship their product to pharmacies. But if manufacturers are squeezed too much by the arrangement, some could opt to bypass wholesalers altogether and peddle their drugs straight to the drug stores…¹

Pharmacy mergers have increased for the purpose of survival in a market with a reimbursement structure that changes by the day. In the article, Reassessing the pharmacy supply chain for a healthier bottom line, the author states the following:

The unpredictable and shrinking reimbursement landscape requires these organizations to reassess expenses and processes –especially within the supply chain—across all facilities and departments to determine cost-effective operational strategies.²

Forecasting reimbursement and cost of drugs in pharmacy is key to success. As an example, Rite Aid Pharmacies earnings per share decreased due to a cut in Medicare reimbursement rates.

Rising generic drug prices are hurting drug store operators as insurers and pharmacy benefit managers have been slow in raising reimbursement rates for those drugs…reimbursement rates for Medicare Part D drug plans, which cover prescription drugs for senior citizens and the disabled, are falling due to growing competition to win these contracts.³

Appropriately forecasting revenues and expenses, using lean/six sigma principles to eliminate drug errors, and having a firm grasp of inventory management are the big three principles I will remember from this course. Having a firm grip on these concepts can be the difference between thriving and failure in this market. It is imperative that a pharmacist have a firm grasp of operations management to thrive in this market and differentiate one’s self against other pharmacists they’re competing against for a job.

I want my patients to have a good experience. I want them to receive the right drug, at the right dose, at the right time, and for the right price. With that in mind, this quote grabbed my attention when I first read it.

“With the country focused on controlling the escalating costs of healthcare, every entity in the healthcare system is under increased pressure to lower costs—while at the same time not jeopardizing the quality of care that patients receive.”⁴

It is my opinion that schools of medicine, nursing, pharmacy, public health and so forth should require or offer as an elective an operations management course. This course has challenged me to reconsider how I manage employees and myself. This operations management course offered me the information, vocabulary, and resources that I’ll be able to draw from in a healthcare environment that is rapidly undergoing change due both to increased competition and decreased net margins.

References

1.) Martin, Timothy W. Drug Partnership Could Trigger Major Supply-Chain Changes. 22 March 2013. http://www.wsj.com/articles/SB10001424127887324373204578374801163395308. Accessed 23 Nov. 2015.

2.) Piotrowski, Cary. Reassessing the pharmacy supply chain for a healthier bottom line. 17 July 2015. http://www.beckershospitalreview.com/finance/reassessing-the-pharmacy-supply-chain-for-a-healthier-bottom-line.html, Accessed 18 Nov.

3.) Ramakrishnan, Sruthi. Rite Aid cuts full year forecasts citing reimbursements. 17 Sept. 2015. http://www.reuters.com/article/2015/09/17/us-rite-aid-results-idUSKCN0RH1I920150917#BMoHOwRPdPZFJMVo.97. Accessed 18 Nov. 2015.

4.) Pharmacy Inventory Project: Improving Inventory Management at Genesis Healthcare System Pharmacies. 19 Nov. 2014. http://fisher.osu.edu/supplements/10/14252/white_paper_genesis_2014_2.pdf. Assessed 18 Nov. 2015.

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Sam Blakemore is the Pharmacy Manager of Peds Rx Pharmacy Solutions. Connect with him via: LinkedIn