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Pharmacy Service Improvement at CVS

Cvs pharmacy case study operations management

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Operations Management

Text of Cvs pharmacy case study operations management

  • 1. Pharmacy ServiceImprovement atCVS
  • 2. Background What is CVS? Founded in 1963 (Lowell, Massachusetts) One of Americas largest retail drugstores 4,000 stores $24.2 Billion in revenue Pharmacy Service Initiative (PSI) Over two-thirds of revenue generated by pharmacies Pharmacies currently have 29.5M customers each year High customer turnover in spite of increasing revenue Loss of potential profit/revenue through customer retention (loss of 7.2M customers and a gainof 8.5M customers in 2000) Customers that switch take with them $2.5 Billion in revenue Customers are not receiving a pleasant experience
  • 3. The Current Pharmacy Process Drop-Off (Tech) Customer drops off prescription to tech Tech puts script into slot corresponding to the hour beforedesired pick up time. Busiest drop-off times: before work, lunchtime, after work
  • 4. The Current Pharmacy Process Data Entry (Tech) Each hour, tech takes that hours scripts from the box Required data entered into pharmacy information system DUR checks current script against all previous scripts, patientsage, gender, and other demographics for potential problems Hard stops MUST be reviewed by pharmacist before fulfillment (PH) Insurance Check 90% of customers use insurance Errors: Drug not on formulary or refill too soon Process continues even if rule is violated
  • 5. The Current Pharmacy Process Production (Tech) Drugs to fill script are counted and verified Quality Assurance (Pharmacist) Pharmacist reviews script for quantity and other details Five minute process from data entry to QA Pickup (Tech) Prescriptions sealed and stored in alphabetical order Tech at pick up window finds script, verifies identity, and takespayment
  • 6. Customer Complaints Why the hell is this four hundred dollars? Im not moving from this spot until we get this cleared up! You lost my prescription! Where are my other scripts?! Im not sure how many scripts I have. What do you mean you cant find my order?! I talked to someone four days ago to make sure my order wouldbe ready!
  • 7. Problems Drop-Off (Tech) Nobody available/extended wait before initial greeting Tech fails to retrieve proper information from customer Failure to properly prioritize scripts
  • 8. Problems Data Entry (Tech) DUR and Insurance Check Customer not notified of third-party issues No refills allowed Cannot read handwriting Drug not on formulary or refill too soon No standard form for faxing providers Process continues even if rule is violated One hour time frame
  • 9. Problems Production (Tech) Partial or complete stock shortages Quality Assurance (Pharmacist) Prescriptions filled incorrectly Pharmacist falls behind at QA Pickup (Tech) Script/groups of scripts cannot be found Tech at pick-up window not qualified to answer questions
  • 10. The New Pharmacy Process Drop-Off (Tech) First time customers have information downloaded onto a CVS card Create a kiosk for return customers Customer scans card with personal information Customer enters desired pickup time Customer is asked if insurance information has changed Customer selects preferred contact method Displays information for confirmation Kiosk prints receipt with pick-up time New prescription prioritizing software
  • 11. The New Pharmacy Process Data Entry (Tech) Software selects next script in line to eliminate one hour time frameproblem Sorting boxes are replaced with on-screen displays of next script Tech enters data from script Legible scripts that pass automated insurance check are verified against existinginventories and go on to production Insurance issues and illegible scripts are printed on a standard form displaying scriptand are faxed to doctor DUR hard stop issues are forwarded to pharmacist Issues not resolved within a certain time frame from data entry arecommunicated to customers via chosen contact method
  • 12. The New Pharmacy Process Issue Resolution (Pharmacist) Legitimate hard stops in the DUR and unresolved insurance issues arecommunicated to customers via telephone by a qualified person Production (Tech) Software keeps track of inventories and is linked to other pharmacies Pharmacists are notified to order additional inventory when thresholdsare reached Customers are notified of new availability date or alternate pick-uplocation for prescriptions not in inventory
  • 13. The New Pharmacy Process Quality Assurance (Pharmacist) Automated processes allow for pharmacists to spend more timeconducting QA Pickup (Tech) Customers card is scanned to display all pending prescriptions Unresolved issues flagged at card scanning are resolved by thepharmacist
  • 14. Conclusion Personnel concerns Technicians will require training for new software Pharmacists will need to be more interactive with customers Process integration concerns Automated system will be the only means of completing duties (destroywooden boxes) Regional managers will follow-up Financial Benefits Customers that switch take with them $2.5 Billion in revenue 13% of light users and 44% of heavy users switch due to service 60% - 90% of these can be retained through our new process $600 $900M in additional revenue (Assumption: 40% of all users switchdue to service)
  • 15. Questions?