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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
FOB
Free on board: when the risk of loss shifts from the seller to the buyer (and whoever pays the cost of shipment)
26
Elastic Demand
If price goes up just a little, big drop in demand (ie. Sports cars, luxury items) Non-necessities, so demand can fluctuate easily
27
Inelastic demand
Necessities (ie. Food, water) where no matter the price the demand will always be the same
28
Directed demand
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.
29
Derived demand
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.
30
Competitive Demand
The change in demand (usually negative) that comes with increased businesses in the market (more competition = less demand per business).
31
Complimentary Demand
When one item’s demand increases, the paired/dependent item’s demand will also go up.
32
What is economic order quantity?
The idea amount to order to balance out procurement costs and carrying costs. The amount we want!
33
What 4 things improve cash flow in inventory management?
1. Cash flow statements 2. Keep A/R current 3. Budgets 4. Inventory control
34
Periodic System
Use for large volume of low cost items (generics) Sales/revenue is only recorded at the end of the period.
35
Perpetual system
Requires cost of goods and selling price to be recorded at sale time, Tedious, for small inventory/expensive drugs.
36
FIFO
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
LIFO
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
Average (compared to FIFO/LIFO)
Weighted cost of items over period (average of price fluctuation)
39
GMROI
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
Fiebs’ Deep Discount Theroy
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
Pareto’s Law
20% of inventory from 80% sales (high demand & high turnover) 65% of inventory from 5% sales (low demand low turnover)
42
ABC System
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
Kotler Negative Demand
Consumers do NOT want it and do not want to pay for it! Ie. Healthcare!
44
We need to convince patients of their needs. For example?
Vaccines! Convince patients they could be at risk wo it
45
No Demand
Customers do not see value of service
46
Full Demand
Supply and demand are balanced
47
Overfull demand
When demand >> supplies
48
Hunt Marketing Theory: Positive vs Normative
Positive: Science based prediction of market Normative: Non-science based, what an org “should do”
49
Relationship marketing
Use of customer databases (pre-existing relationships) to show preferred customers promotional materials
50
One-on-one marketing
Building close relationships to clientele, one on one!
51
It takes _x more $ to recruit a new customer compared to keeping an old customer
6x
52
Internal customer
Employees who also are your customers/use your facilities! Keep your employees happy so they continue to be your customer
53
Customer chain
Link between external and internal customer
54
T/F: easier to change a product than change the public’s attitude
T
55
What is social marketing?
What is “good for the consumer is good for society!” Ie. Ethical, moral, eco
56
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?
Innovation! Help making it better and the demand will stay hogh
57
Guerilla marketing
Unconventional, imaginative and unique marketing Often surprise, very memorable
58
Competitive pricing
“Meet or beat” competitors Be a price leader
59
One price policy
Same markup for all products
60
Varied price policy
Dynamic markup depending on item and demand of customers
61
Pricing of goods is often ______-based
Demand
62
What is the most essential aspect for marketing?
Location!! (Like on a busy street or on a corner!)
63
Active advertising
Must be read/actively seeking advertising. More memorable to audience
64
Inactive advertising
Less effort for audience, passive. Harder for the audience to internalize the advertising. Ie. Broadcasts
65
Company _______ relies on successful marketing.
Profitability
66
What is the most important marketing element from the SELLER’S standpoint? From BUYER’S standpoint?
Seller = promotion Buyer = price!
67
What does SWOT in SWOT analysis stand for?
Strengths Weaknesses Opportunities Threats
68
ROI
Return on Investment
69
What is a Rising Star business?
High $ usage, high $ generation Fast-growing, newer business Likely will become a cash cow over time Ie. OTCs, herbals
70
What is a Cash Cow business?
Low $ usage, high $ generation Fully invested in already, only generating cash now Companies do not invest any more $ in it Ie. Dispensing
71
What is a Question Mark/Problem Child business?
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
What is a Dog business?
Low $ usage, low $ generation No market share Break even or losing $ Terminate this business! Ie. DME
73
What is the Star business model?
Customer-based model, not business based
74
What is a Chicken?
“Lays lots of eggs” Consistent, recurring small transactions Many regular customers
75
What is a Pig?
One-time only, large transaction or contract! No real business relationship May be for a seasonal/fluctuating demand
76
What is a Black Widow?
One or two customers dominate your business, meaning you must cater to them specifically (HIGH RISK!)
77
What is a Locust?
Many small, one-time transactions. No business relationship (Loss-leader items, fad items)

Therapeutics + Fall 2022 (3 decks)

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