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Therapeutics + Fall 2022 > Management Final Pneumonics & Definitions > Flashcards

Management Final Pneumonics & Definitions Flashcards

1
Q

AWP

A

Average wholesale price: has a large markup, pharmacies buy at lower amount

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2
Q

AAC

A

Average acquisition cost: what the pharmacy ACTUALLY paid for the product

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3
Q

EAC

A

Estimated acquisition cost: what we predict the cost of products to be

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4
Q

MAC

A

Maximum available cost: the maximum cost insurers will pay for a product (usually generics)

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5
Q

AMP

A

Average manufacturer price: the price wholesalers pay manufacturers. One standard for Medicaid reimbursement.

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6
Q

Why do independent pharmacies struggle more to pay less for products compared to chains and hospitals?

A

They have much less purchasing power/leverage

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7
Q

ASP

A

Average selling price: what CMS uses to calculate drug reimbursement, slightly higher than AMP.

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8
Q

CMS

A

Center for Medicare and Medicaid Services: determines federal standards for reimbursement

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9
Q

FUL

A

Federal upper limit: the maximum reimbursement allowed for drugs according to the Social Security Act.

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10
Q

ACA

A

Affordable Care Act: FUL reimbursement rates to brand name Rxs and generic RXs from multiple sources

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11
Q

Procurement Costs

A

Associated cost to purchase products

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12
Q

Carrying cost

A

Cost associated with holding inventory (x% of total inventory value)

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13
Q

What is the golden rule of inventory management?

A

Should budget 12% budget/year for inventory carrying costs (should only be paying 1%/month)

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14
Q

Shrink

A

Internal or external loss; increases the COGS since inventory decreases without payment.
Difference between physical and paper inventory

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15
Q

What is 340B Drug Discounting?

A

Manufacturers are required by law to sell drugs to eligible HCOs at a reduced price. For FEDERAL clinics/hospitals etc.

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16
Q

Central/cooperative buying

A

Groups of pharmacies form a buying group for improved/increased purchasing power (volume discount)

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17
Q

What three things can you negotiate down to maximize inventory efficiency?

A
  1. Discounts
  2. Dating and credit terms
  3. Transportation charges
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18
Q

Trade discount

A

Largest discount, general discount

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19
Q

Quantity discounts

A

The more you buy the less you pay per unit

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20
Q

Cash Discount

A

Discount for prompt payment (1-2%)

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21
Q

Serial discount

A

COmbination of trade, quantity and cash discount

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22
Q

Dating and credit terms

A

Negotiable timeline of payment due date. Sometimes there is a discount for prompt payments (cash discount) otherwise we want to delay as much as possible to get reimbursed by insurance first.

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23
Q

Consignment

A

Manufacturers retain ownership of products, we just sell on their behalf and take the profit. Manufacturers responsible for carrying cost.

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24
Q

Who pays for transportation of goods?

A

Wholesalers either include it in price (aka free shipping) or add additional shipping/handling

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25
Q

FOB

A

Free on board: when the risk of loss shifts from the seller to the buyer (and whoever pays the cost of shipment)

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26
Q

Elastic Demand

A

If price goes up just a little, big drop in demand (ie. Sports cars, luxury items)

Non-necessities, so demand can fluctuate easily

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27
Q

Inelastic demand

A

Necessities (ie. Food, water) where no matter the price the demand will always be the same

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28
Q

Directed demand

A

When a demographic/influence directs the price of a product. Mostly necessities (similar to inelastic) but prices are customer-directed.

Ie. The more consumers who buy gas, the higher the prices will go.

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29
Q

Derived demand

A

When a finished products’ supplier has an increase in demand, that will cause an increased demand in the intermediate products.

Ie. Flying Car suddenly in demand! So the demand from the supplier for the motor used in the car also increases.

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30
Q

Competitive Demand

A

The change in demand (usually negative) that comes with increased businesses in the market (more competition = less demand per business).

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31
Q

Complimentary Demand

A

When one item’s demand increases, the paired/dependent item’s demand will also go up.

32
Q

What is economic order quantity?

A

The idea amount to order to balance out procurement costs and carrying costs. The amount we want!

33
Q

What 4 things improve cash flow in inventory management?

A
  1. Cash flow statements
  2. Keep A/R current
  3. Budgets
  4. Inventory control
34
Q

Periodic System

A

Use for large volume of low cost items (generics)
Sales/revenue is only recorded at the end of the period.

35
Q

Perpetual system

A

Requires cost of goods and selling price to be recorded at sale time, Tedious, for small inventory/expensive drugs.

36
Q

FIFO

A

First in, first out: for things that are decreasing in price.

Ie. Buy at $3, sell for $5
Product is now $2
Report to govt. that you only made $2 profit

If you have 10 items left, report that they each cost $3

37
Q

LIFO

A

Last in, first out: for things that are Increasing in price. Must rotate merchandise.

Ie. Buy at $3, sell for $5
Product is now $4
Report to govt. that you only made $1 profit

If you have 10 items left, report that they each cost $4

38
Q

Average (compared to FIFO/LIFO)

A

Weighted cost of items over period (average of price fluctuation)

39
Q

GMROI

A

Ratio between turnovers and gross margin

Ie. If want to sell for cheap, must have high turnover
If want to sell for expensive, no need for frequent turnovers

40
Q

Fiebs’ Deep Discount Theroy

A

If you are able to increase turnover (more customers!) then you can afford to decrease price to be more competitive!

However, must balance inventory carefully!

41
Q

Pareto’s Law

A

20% of inventory from 80% sales (high demand & high turnover)
65% of inventory from 5% sales (low demand low turnover)

42
Q

ABC System

A

Classify each item into A, B, C
A = expensive and small % of inventory
- tight control, complete and accurate records
- FREQUENT REVIEW
B = less control, decent records, regular review
C = cheap, large % of inventory (generics)
- simple controls, minimal records and periodic review

43
Q

Kotler Negative Demand

A

Consumers do NOT want it and do not want to pay for it!
Ie. Healthcare!

44
Q

We need to convince patients of their needs. For example?

A

Vaccines!
Convince patients they could be at risk wo it

45
Q

No Demand

A

Customers do not see value of service

46
Q

Full Demand

A

Supply and demand are balanced

47
Q

Overfull demand

A

When demand&raquo_space; supplies

48
Q

Hunt Marketing Theory: Positive vs Normative

A

Positive: Science based prediction of market
Normative: Non-science based, what an org “should do”

49
Q

Relationship marketing

A

Use of customer databases (pre-existing relationships) to show preferred customers promotional materials

50
Q

One-on-one marketing

A

Building close relationships to clientele, one on one!

51
Q

It takes _x more $ to recruit a new customer compared to keeping an old customer

A

6x

52
Q

Internal customer

A

Employees who also are your customers/use your facilities! Keep your employees happy so they continue to be your customer

53
Q

Customer chain

A

Link between external and internal customer

54
Q

T/F: easier to change a product than change the public’s attitude

A

T

55
Q

What is social marketing?

A

What is “good for the consumer is good for society!”
Ie. Ethical, moral, eco

56
Q

A business has an idea phase, a growth + marketing phase, a maturation phase (peak) and business death. How do we avoid the inevitable death of a business idea?

A

Innovation! Help making it better and the demand will stay hogh

57
Q

Guerilla marketing

A

Unconventional, imaginative and unique marketing
Often surprise, very memorable

58
Q

Competitive pricing

A

“Meet or beat” competitors
Be a price leader

59
Q

One price policy

A

Same markup for all products

60
Q

Varied price policy

A

Dynamic markup depending on item and demand of customers

61
Q

Pricing of goods is often ______-based

A

Demand

62
Q

What is the most essential aspect for marketing?

A

Location!! (Like on a busy street or on a corner!)

63
Q

Active advertising

A

Must be read/actively seeking advertising. More memorable to audience

64
Q

Inactive advertising

A

Less effort for audience, passive. Harder for the audience to internalize the advertising.

Ie. Broadcasts

65
Q

Company _______ relies on successful marketing.

A

Profitability

66
Q

What is the most important marketing element from the SELLER’S standpoint? From BUYER’S standpoint?

A

Seller = promotion
Buyer = price!

67
Q

What does SWOT in SWOT analysis stand for?

A

Strengths
Weaknesses
Opportunities
Threats

68
Q

ROI

A

Return on Investment

69
Q

What is a Rising Star business?

A

High $ usage, high $ generation
Fast-growing, newer business
Likely will become a cash cow over time

Ie. OTCs, herbals

70
Q

What is a Cash Cow business?

A

Low $ usage, high $ generation
Fully invested in already, only generating cash now
Companies do not invest any more $ in it

Ie. Dispensing

71
Q

What is a Question Mark/Problem Child business?

A

High $ usage, low $ generation
Usually a new business/franchise
May be able to infuse enough $$ to convert to a rising star

ie. MTM, CDTM

72
Q

What is a Dog business?

A

Low $ usage, low $ generation
No market share
Break even or losing $
Terminate this business!

Ie. DME

73
Q

What is the Star business model?

A

Customer-based model, not business based

74
Q

What is a Chicken?

A

“Lays lots of eggs”
Consistent, recurring small transactions
Many regular customers

75
Q

What is a Pig?

A

One-time only, large transaction or contract!
No real business relationship
May be for a seasonal/fluctuating demand

76
Q

What is a Black Widow?

A

One or two customers dominate your business, meaning you must cater to them specifically (HIGH RISK!)

77
Q

What is a Locust?

A

Many small, one-time transactions. No business relationship
(Loss-leader items, fad items)

Therapeutics + Fall 2022 (3 decks)

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