admin exam 1 Flashcards
Inventory
Usually represents a pharmacy’s largest current asset
Also the least liquid current asset (cannot be turned into cash until sold or distributed)
Value continues to rise due to increasing variety and expense of pharmaceutical products
Proper management has a significant impact on the financial and operational aspects of any pharmacy
Costs associated with inventory
Acquisition and procurement – the act of obtaining or buying goods and services like drugs
Carrying – the cost associated with having inventory on the shelves
The above costs generally place little stress on pharmacy staff but can negatively affect operating margins if not monitored
Costs associated with inventory
Stock-out or shortage
- Represent failure in customer service
- May lead to lost sales
- May lead to a decrease in the quality of patient care if you do not have the drug that they need
- Currently represents a large impact on pharmacy practice
Drug shortages
Big issue currently in pharmacy practice
- when the manufacturer does not have the drug
- issue: consumers do not have the drug that they need and they may need to switch to another drug that may or may not work better
Implications of drug shortages
In community pharmacy
In institutional pharmacy
In ambulatory care
Effective inventory management
Decreases costs of goods sold and operational expenses
Results in increased gross margins and net profit
Important in meeting customer demands for goods and services
This means minimizing the investment in inventory while balancing supply and demand
Purchasing objectives
To obtain the right product
To obtain products in the right quantity
To obtain products at the right time
To obtain products at the right price
To obtain products from the right vendor
In purchasing the pharmacy manager must consider
Past usage
Target market
Pharmacy image and goals
Formularies
Industry data
Industry representatives
Consumer information
When is the right time to order
In community pharmacy
- consumer info.
In the institutional setting
Technology can help determine
How much is on hand
At what point to reorder
How much to order
Determining stock depth
Stock depth: the point where it is reasonably certain that the item will be available on demand
Involves consideration of
- An item’s rate of sale (average demand)
- The length of time between stock checks (review time)
- The period of time between placing and receiving an order (lead time)
- A safety stock to account for variations in average demand during the buying time (review time plus lead time)
Factors to consider in inventory management
Selection of brand vs generic products
Reduction of inventory size
Return-goods policies
Waste
Management of unclaimed prescriptions/unused patient-specific medications
Monitoring shrinkage (shoplifting, employee theft, waste, non-returnable products)
Right price
Buying direct from manufacturers
Discounts
Selecting wholesalers
- Having a vendor that meets the needs of your pharmacy is important
Group purchasing organizations
- Use the purchasing power of hundreds of hospitals to negotiate the best acquisition costs
Inventory management
Inventory: the stock of products to meet future demands
Acquisition cost: the price the pharmacy pays for the product
Procurement cost: the costs associated with purchasing the products
Carrying costs: refer to the storage, handling, insurance, cost of capital to finance the inventory, cost of loss through theft, deterioration, and damage
Methods of inventory management
Visual method
Periodic method
Perpetual method
Visual method
Requires a designated person to look at the number of units on hand for an item and compare them with a predetermined number of how many of the item should be carried
When the item amount falls below the desired quantity (min), the item is re-ordered(brought back to the max) max is predetermined
how many bottles of the drugs that we have and comparing to the minimum amount to order up to the maximum
Periodic method
Requires the designated person to count the stock on hand at predetermined intervals and compare it with the minimum desired levels
If the quantity is below the minimum, the product is ordered
Visual and periodic methods
May utilize a hand-held scanning device that scans barcodes on the product packaging or shelves
- The order is then transmitted electronically
Perpetual inventory systems
Computerized inventory management systems(IMS)
The most efficient method to manage inventory
Allows inventory to be monitored at all times
The entire inventory must be accurately entered into the computerized system
All dispensing as well as inventory receipts must be accurately deducted or added to the inventory to maintain this system
Setting minimums and maximums
Used in perpetual and visual inventory systems
Preset values that trigger inventory to be re-ordered
Assumes complete accuracy in the dispensing (electronic removal) of meds from inventory from all storage areas
Other inventory methods
Many community chain pharmacies receive daily wholesaler orders and scheduled “warehouse” orders where these warehouses are owned by the chain pharmacy
Hospitals often have a “general store” supplied inventory in addition to daily wholesaler orders where the “general store” is a department within the hospital that does larger-scale ordering and purchasing
Current topics in inventory management
The Food and Drug Administration Amendments Act (FDAAA) of 2007 increased the FDA’s responsibility with respect to postmarketing surveillance
The FDA can now require risk evaluation and mitigation strategies (REMS) for specific drugs or drug classes
Current topics in inventory management
Risk evaluation and mitigation strategies
REMS strategies vary by drug product
Strategies aimed at ensuring safe drug use, including restricting drug distribution
Examples
- The FDA REMS program requires healthcare providers who prescribe OxyContin to receive training. Dispensers will have to be trained and authorized also and will be required to provide a Medication Guide about the product to each patient
- Onsolis FOCUS program
- Orphan drugs
Integrity of the drug supply chain
The distribution of drugs from the manufacturer to the pharmacy has to be scrutinized
The potential for counterfeit products is real and needs to be discussed with all pharmacy staff
The FDA requires drug distributors to provide documentation of the chain of custody for drug product packages, especially those with the highest risk for counterfeit (expensive brand name drugs)
need to know about inventory
costs
- acquisition & procurement cost - the cost associated with getting the product
- carrying cost - the cost of carrying the product so it includes, storage, handling, expiration etc
methods (visual, periodical etc)
- visual: looking through the shelves at what we have
- periodic - looking through the shelves at set intervals to determine what products we have
- perpetual - the best kind of inventory where a computerized inventory management system (IMS) is used to keep track inventory. It must be entered in correctly
what pharmacy manager needs to consider
- selection of brand vs generic products
- Reduction of inventory size
- Return-goods policies
- Waste
- Management of unclaimed prescriptions/unused patient-specific medications
- Monitoring shrinkage (shoplifting, employee theft, waste, non-returnable products)
what are mins and maximum
- mins: the least amount of a product we can have
- max: the most amount of product we have
- these values determine if we need to make another order or not
Case 1
In small rural acute care hospitals, the patient is admitted with very expensive non-formulary eye med on their med rec order. Eye drops are not an emergent med and you know it will not harm the patient to go without them for a few days.
What methods are available to procure this medication?
- let the provider know that this is nonformulary and that we do have it cause we usually do not order nonformulary meds
What are the pros and cons of different approaches?
What would you choose to do and why?
-
Case 2
Community pharmacy, one of your patients has a chronic med that costs the pharmacy about $3000 per prescription fill.
What are some strategies to manage carrying costs but still allow you to meet the needs of the patient?
- in the community: reorder after the patient picks it up. do not let it sit there and expire
- for independent pharmacy: ask for a 5 days notice from the patient for what they need it
Merchandising
The main objective of all merchandising efforts is to attract customers to the store and invite them to make purchases while they are there
- A proper mix of convenience, price, and service will benefit the store’s appeal to customers
Given the decline in profit margins in the prescription department, the success of a pharmacy’s “front end” is crucial to the overall success of the business
- Important to keep in mind that most of the items sold in a pharmacy can also be purchased online or in other retail outlets
Pharmacy design and size
Commonly determined by industry averages or by evaluating sales per sq. ft. of various pharmacy depts.
- Industry information can be obtained from wholesalers and other vendors, as well as professional organizations (e.g. NCPA, NACDS)
- The ideal size of a dept. can be calculated by taking an estimate of total sales from that department and dividing it by its expected sales per sq. ft.
don’t need to memorize but know that there are industry standards for the size of pharmacy?
Pharmacy design – ADA considerations
The Americans with Disabilities Act (ADA) of 1990 is a federal mandate that prohibits discrimination based on any form of disability
- Allows for reasonableness in designing stores without undue hardship on daily operations
The goal is to have a store that offers equal access for all customers
Pharmacies may be required to adjust:
Counter heights
Aisle widths
Telephone equipment
Doorways
Almost any other physical aspect of their operations
Pharmacy design – HIPAA considerations
The Health Insurance Portability and Accountability Act (HIPAA)
- Federal mandate designed to protect the confidentiality of patient information
The design and layout of a pharmacy need to ensure (through reasonable efforts) that disclosure of protected health information is minimized
Such efforts include:
- Installation of a partition extending the height of the pharmacy counter
- Redesigned storage areas for prescriptions that are waiting to be picked up by customers
- Designated staging areas for patients waiting to be served by pharmacy staff
- Private patient consultation areas
- Disposal bins for PPI
Pharmacy layout
The arrangement of fixtures should be designed to move patrons around
The prescription department should be prominent and visible from all parts of the store, as it’s what makes pharmacies unique from other retail stores
Pharmacy layout
Grid layout
Free-flow layout
Theft reduction
- Items that may be liable to theft (such as high-cost items) generally are placed in open areas where staff can observe both the items and shoppers easily
Avoid placing such items in corners or near exits
- Tools to prevent theft
Security personnel
Video surveillance equipment
One-way mirrors
Security sensors on products
Locked cabinets
Lower aisle height
just know that they are different between stores
Merchandising the prescription department
Front of the prescription department is typically used to highlight:
- Vitamins and herbal products
- Products that commonly require a pharmacist’s advice for proper use (e.g. glucose monitors)
- High-priced specialty items that would be at risk for theft if stocked in a less visible area (e.g. smoking cessation)
- Patrons feel more comfortable approaching the pharmacy staff with questions when the prescription department is designed to be open
- Pharmacy design should also include a:
Patient waiting area
Patient consultation area
Drive-through window (in some cases; when feasible)
Case 3
As the manager of record of a busy community pharmacy in a rural area you have the responsibility of merchandising the areas adjacent to the pharmacy department. What items would you choose to place in the area? Why did you choose these items? What measures would you utilize to prevent theft of the items in the area you are responsible for?
smoking cessation
vitamins
diabetic supplies
