PPA 2- Exam 1 Flashcards
Well managed pharmacies:
Constantly watch practice and technology changes
Leaders vision
Comply with regulations
React to competition and environmental changes
Mission/Objective of modern management
Quality of patient care, happy and motivated staff, profitable operations
Modern management
process that brings together resources to achieve goals and objectives.
Planning, leading, organizing, controlling
The management process
Planning, organizing, controlling, leading
Planning
Determine objectives, establish strategies for achieving them.
Vision, mission, goals, implications, business plans
The process of setting objectives and determining how the objectives should be achieved
Organizing
Process of delegating and coordinating tasks and allocating resources to achieve objectives.
Tasks and authority relationships that support the objectives.
Division of labor, departmentalization, span of control, coordination
Controlling
Implementing mechanisms to ensure objectives are achieved
Standards established, measure and report performance, corrective/preventative actions
Leading
Process of influencing employees to work effectively toward objectives
Communication, motivation/discipline, conflict resolution and performance appraisal
Management by Objectives (MBO)
Focuses on clearly defined achievable goals (results)
Staff has clear understanding about the organization and individual objectives and know their own roles and responsibilities.
Uses SMART principles
SMART
Specific Measurable Attainable Relevant Timely
Mission statement vs objective
Mission statement: Big picture
Objective: grounded and more attainable than mission
Goals vs objectives vs outcomes
Goals: general statement of your program purpose
Objectives: Intented results, more concrete/specific on how to achieve the goals
Outcomes: Actual results
Value of MBO?
Participative (Sharing of) decision making, accountability
Key result areas of an MBO
efficiency, quantity, quality, time, cost
Types of objectives
Routine- normal work output to meet standards
Improvement- find better solutions
Innovative- add benefits, something new/change
Objectives must
align with organizational mission and vision. They need to be feasible and challenging, Connect staff with career objectives. Balance between short and long term objectives. Staff involved and buy in
Managers
Individuals who use principle of management services to guide/direct others.
Types of managers
First line management
Middle management
Top management
Secondary skills of managers
Communication
Computer
Skills required to be a manager
Technical, analytical, decision-making, communication, people, computer, conceptual
Managerial roles
Interpersonal, informational, decisional
First-line management primary skills
technical, decision making, people
Middle management primary skills
Analytical, decision-making, people
Top management primary skills
Analytical, conceptual, decision making, people
3 P’s that influence top line sales
Purchasing, patients, people (payroll/expenses)
Profit/loss statement
Revenue (sales)
Cost of goods (how much did we buy?)
Expenses
Gross profit
Cost of goods- Revenue
How do we get net profit into our business?
Increase revenue, decrease COGS, keep expenses manageable
Big 3 factors influencing patients
How many patients do we have?
Gains and losses of a patient- relationships with patients is vital
Prescriptions per patient- assess adherence, increase by med sync
Big 3 for payers
Who are my top payers?
What is the payer mix?
Has there been a major change in a contract? If you see a decrease in reimbursements, we need to do better in other P categories
Big 3 for product
What is the % of generics?
Has there been a major product shift?
Is there a change in specialty or compounding?
Purchasing
Wholesaler contract and rebate maximization
- helps net profit
- maximize rebate by understanding contract and making purchasing decisions based on it.
Secondary purchasing
Identify top products and potentially buy in 3 month intervals
Improves product consistency, convenience, frees up staff time
People (payroll/expenses)
Controlling payroll expense (keep between 10-11%) is the most important cost to control
Budget for pharmacists 1st
Gross profit
Revenue- product cost (COGS)
What margin am I making on this script?
Operating expenses
All expenses separate from cost of the product needed to run the business (payroll, electricity, supplies)
Operating income
Gross profit-operating expenses
PBM’s negotiate with
manufacturers for rebates
PBMs contract with
pharmacies and reimburse them at certain rates over the course of the contract
Patients get prescriptions from the pharmacy and
Pay premiums
Who pays the PBM?
Insurer or employer pays the PBM to continue managing their drug costs
PBM revenue is driven by
rebates, fees, and spread pricing
DIR Fees
Direct and indirect remuneration fees
Initially a method for CMS to increase transparency regarding the real cost of drug transactions.
Can be attributed to “pay to play”- have to pay x amount of dollars to be in network.
True-ups
Getting penalized by PBM if under rate.
Example of reimbursement model w/ DIR fees
- Pharmacy buys drug through wholesaler for $85.
- Pharmacy submits claim to PBM for $100 based on benchmark price
- PBM adjudicates the claim and remits payment back to pharmacy for $100 with a gross profit of $15
- Months later, the PBM claws back a $7 DIR dee from the pharmacy, cutting gross profits in half.
What is the fastest area of growth by PBMs?
Discount cards
Discount cards
Low reimbursement, high hidden fees
Used in place of insurance- unable to show insurance that the patient is adherent
Excluded from rate guarantees
Going toward value-based care models
Strategies to offset lower gross profit margins
Focus on quality measures, expand scope of practice, partnerships with nursing/LTC, group purchasing organizations, reduce overhead cost
Budget
Itemized summary of estimated/intended expenditures or revenue along with sources
Variance analysis
Monthly and year to date financial comparisons of budgeted vs actual revenue and expense
Financial statement
A report providing financial statistics relative to a given part of an organizations operations or status.
The 2 common financial statements
Balance sheet and income statement
Fiscal year
time period the organization chooses for financial period
Gross revenue
Amount hospital charges to insurance companies and Medicare/Medicaid for the drug
Budget for gross billing
Overall growth of hospital and project growth of units that drive pharmacy revenue
Net revenue
Gross billing- deduction rate
deductions/deduction rate
Difference between what the hospital charges and what is collected from insurance companies, State, federal payers, and self-pay
[We charge $100, we collect $60 then the deduction rate is $40 (40%)]. Deduction rate is typically 45-50%.
Net margin (operating margin)
Profit.
Net revenue- total expenses
Not-for-profit
hospitals that are mission driven. Attempt to generate a net margin, but do not distribute to shareholders. Reinvest profits/net margin directly back to the hospital
For profit
hospitals that could be mission driven. They distribute net margins to shareholders
How to budget for drugs
Project drug volume based on revenue (census) growth. Add in any cost increase (typically 5-6%)
Spinraza
Treatment of SMA
Zolgemsa
Gene therapy treatment of SMA
Luxturna
Gene therapy treatment of mutated retinal dystrophy
How to budget for salary
Add the annual increases to individual salaries. Project OT for the next year based on the previous year and take into consideration any changes in the next fiscal year. Added any new positions to the budget
Salary
Includes regular salary, PTO, and OT salaries
Salary expense categories
Regular pay PTO OT Non-productive pay Sick/FML pay
How to budget for supplies
Look at the trend over the past years and consider any new requests for old/replacement equipment
Supply cost category
Clinical supplies Minor equipment Office supplies Computer software Poster/abstracts
Includes medical and office supplies/equipment
Expenses in the pharmacy
Drugs
Salary
Supplies
Purchased services/other
Productivity
Have to prove that staff is being used appropriately Revenue/pt days Revenue/clinic visit Revenue/prescription FTE's/adjusted pt day Hours worked/weighted pharmacy pt day Relative value unit (RVU)/time
Inventory turns
Total drug expenses/average inventory on hand
Hospital industry average ranges from 10-12 times/year
Increasing inventory turns, decreases the inventory cost and increases profitability
Pharmacy department revenue vs cost center
Determined based on % of government funded reimbursement
ACO
Hospital reimbursement sources
Federal- Medicare State- Medicaid Commercial Self-pay Indigent- hamilton county levy
Questions for clinical pharmacists regarding cost of drugs
- Charge to patient
- Acquisition cost to hospital: 340b discount program vs. Contract price
- Average wholesale price (AWP): Published $ amount in Redbook
- Average Sales Price (ASP): Medicare basis for drug reimbursement
Break-even analysis
to determine the effect of changing costs, prices, or revenues on pharmacy profits
Fixed costs
Costs remain the same regardless of volume change
Pharmacists salary, rent, depreciation,etc
Variable costs
Costs increase in direct proportion to increase in volume
COGS, hourly wages, vials, etc.
Classical theory
Focuses on the job and management functions to determine the best way to manage
Scientific management
Stresses job efficiency through technical skills.
Job specialization, plan and schedule work, standard methods, wage incentives
Administrative theory
Stresses rules and the structure of the organization, principles, and functions of management
5 management functions of the administrative theory
planning, coordinating, organizing, controlling, commanding
Behavioral theory
focuses on people, their motivation and behavior to determine how to manage.
Shifted focus from the job to the people
What is the difference between classical and behavioral theories?
Behavioral theories shifted focus from the job to the people
McGregor Theory X and theory Y
X- assumes people dislike work and need supervision
Y- assumes people like work and no need for close supervision
Theory Z
focuses on the well-being of employees on and off the job; increases employee loyalty, promotes stable employment, high productivity, high satisfaction
Based on Japanese culture
Management science
Focuses on mathematics to aid in problem solving and decision making
Integrative perspectives
Systems theory
Sociotechnical
Contigency
Systems theory
Organization as a whole and its interchangeable parts
Sociotechnical theory
Integrating people and technology
Contigency theory
Determining the best management approach for a given situation
Stable environment- mechanistic approach used (like classical theory), Good for mass production technology
Innovative environment- organic approach (like behavior theory)- small batch products
Classic views of management
Hierarchial relationships
Authority went unquestioned
Workers did as they were told
Management styles
Autocratic style
Consultant style
Participative style
Empowerment style
Autocrative style
Highly directive and less concerned with relationships. Appropriate for low-capability employees. Give very detailed instructions and closely supervise.
Consultant style
highly directive and highly supportive actions, direct instruction, work no relationships
Moderate capability employees
Participative style
Focus on end result, less directive but highly supportive actions. Dont tell how to do but asks how they will accomplish the task at hand. High capability employees.
Empowerment style
Very little direction or support. Answer their questions, they make their own decisions
Outstanding employees
Two aspects of employee capability
Ability- knowledge, experience, education, skills, training
Motivation
Human characteristics needed for employees
Courage and compassion
Top 5 complaints of employment
retaliation, race, disability, sex, age, LGBTQ
Title VII civil right act 1964
Prohibits job discrimination, promotes qualified candidates. Criminal background checks
Keep good records
EEOC meeting- tracks things, accommodation, looks at the sample
FLSA
Fair Labor Standards Act
Improve american worker standard of living to help the nation
Minimum wage and exemptions, overtime pay, child labor
ADEA
Age discrimination in employment
ADA
Americans with disabilites
Prohibits discrimination against qualified people with disabilities. Provide reasonable accommodations
OSHA
Occupational safety and health act
PDA
Pregnancy discrimination act
USSERA
The uniformed services employment and reemployment rights act
EPA
Equality pay act- women pay equally
IRCA
The immigration reform and control act
Standards patients use to evaluate services
friendliness, fairness, control, give options, information
Labor unions
Understanding labor unions and the national labor board
Working with labor unions in the workplace.
Unionization is believed to result from 3 issues- wages, benefits, and employee perceptions about the workplace
Rules core values
Respect, inclusion, diversity, honesty, integrity, safety
OIG exclusion
Prohibits participation in any federal health care program
4 levels of success
financial success
Productivity success
Customer success
Employee success
The #1 motivator for people
is feedback on results
Position agreement
Results statement
Reporting positions
Areas of accountability
Measuring standards
5 critical factors in one minute goal setting
customer relations, skills, communications and staff relations, adherence to policies, inventory
One minutes managers
One minute goal setting
One minute praising
One minute reprimand, redirect
4 components of one minute praising
deliver immediately, be specific, share your feelings, encourage them to keep up good work
5 steps to train winners
tell them what to do, show them what to do, delegate, observe, praise progress
One minute reprimand/ redirect
Only for people who are trained and know better
4 parts of a one-minute redirect: be immediate, specific, share feelings, tell person how valuable they are
Performance=
motivation x ability x resources
Results=
I want to x I can x I have what I need
Motivation from an individual perspective
is an inner desire to satisfy an unsatisfied need
Motivation from a business perspective
willingness to achieve org objectives or go above the call of duty
Influence
how to get anybody to do anything
Motivation process
Need, motivation, behavior, consequence, satisfactory/dissatisfactory
Working model for motivation
motivation= reward x probability of success x effort
Motivation theories
content motivation
Process motivation
Reinforcement theory
Hierarchy of needs theory
Content motivation theories
focus on identifying and understanding employees needs
Process motivation theories
Focus on understanding how employees choose behaviors to fulfill needs
Reinforcement theory
propose that the consequences of behavior will motivate employees to behave in predetermined ways
Hierarchy of needs theory (Maslow)
proposes that employees are motivated by 5 levels of needs.
Physiological, safety, social, esteem, and self-actualization
Hierarchy of needs model 4 major assumptions
People have 5 levels of needs
Peoples needs are arranged in order or a hierarchy from basic to complex
People will not be motivated to satisfy a higher-level need unless the lower level needs have been met
Only unmet needs motivate
ERG theory
Employees are motivated by 3 needs Existence (physiological and safety needs) Relatedness (social needs) Growth (esteem and self-actualization) Reorganization of Maslows hierarchy
Two factor theory (Herzberg)
Proposes that employees are motivated by motivators (higher-level needs) rather than by maintenance factors (lower-level needs)
Acquired needs theory
Employees are motivated by need for achievement, power, and affiliation
Assumed all people possess the needs for achievement, power, and affiliation to varying degrees
Need for achievement (n Ach)
Want to take personal responsibilities for solving problems
- Goal-oriented, set moderate, realistic, and attainable goals
- Seek challenge, excellent, take calculated moderate risks
- Desire concrete feedback on their performance
- Willing to work hard
- Perform well in nonroutine, challenging, and competitive situations
- Enjoy sales and entrepreneurial positions (managers tend to have high n Ach)
Motivate nAch by
- Give them nonroutine, challenging tasks with a clear, attainable objective
- Give them fast and frequent feedback on performance
- Continually given them increased responsibility for doing new things.
Need for Power (n Pow)
Want to control the situation, to influence or control others
- Enjoy competition in which they can win (not like to lose)
- Willing to confront others
- Seek positions of authority and status (managers tend to have a high n Pow)
- Have a low need for affiliation.
Motivate n Pow by
- Let them plan and control their jobs as much as possible.
- Try to include them in decision making, especially if the decision affects them
- Perform best alone rather than as team members
- Try to assign them to a whole task rather than just a part of it.
need for affiliation (n Aff)
- Seek close relationships with others
- Want to be liked by others
- Enjoy social activities and belonging
- Like to join groups and organizations
- Think about friends and relationships
- Enjoy developing, helping, and teaching others (make great mentors)
- Avoid management roles)
- Derive satisfaction from the people they work with more than the task itself.
n Aff motivate by
Let them work as a part of a team
- Give them praise and recognition
- Delegate them the responsibility for orienting and training employees.
Process motivation theories
Attempt to explain why employees have different needs, why their needs change, how and why their needs change, how and why they choose to try to satisfy needs in different ways
Equity theory
proposes that employees will be motivated when their perceived inputs (performance) equal outputs (rewards received)
o If employees believe there is inequity, they will change their behavior to create equity by increasing output or decreasing input.
Three situations- under-rewarded, over-rewarded, equitable
Goal-setting theory
proposes that achievable but difficult goals motivate employees
o One of the most valid approaches to work motivation
o SMART goals
Expectancy theory
proposes that employees are motivated when they believe they can accomplish the task and the rewards for doing so are worth the effort.
o Based on the concept: Motivation= expectancy x valence
Expectancy
persons perception of his/her ability (probability) to accomplish an objective. The higher one’s expectancy for a positive outcome or reward, the better the chance for motivation.
Valence
refers to the value a person places on the outcomes or reward. The higher the value (importance) of the outcomes or reward, the better the chance of motivation.
Reinforcement theory
proposed that the probability that a behavior will recur is affected by the delivery of reinforcement or punishment as a consequence of the behavior.
o No need for mangers to understand and identify needs (content motivation theories) or understand how employees choose behaviors to fulfill them (process motivation theories)
o Need to understand the relationship between behavior and their consequence and then reinforce desirable behaviors and discourage undesirable behaviors.
