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Pharmacy Service Improvement at CVS

Cvs pharmacy case study operations management

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Page 1: Cvs pharmacy case study   operations management

Pharmacy Service Improvement at

CVS

Page 2: Cvs pharmacy case study   operations management

Background• What is CVS?

• Founded in 1963 (Lowell, Massachusetts)• One of America’s 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 gain

of 8.5M customers in 2000)• Customers that switch take with them $2.5 Billion in revenue• Customers are not receiving a pleasant experience

Page 3: Cvs pharmacy case study   operations management

The Current Pharmacy Process

• Drop-Off (Tech)• Customer drops off prescription to tech• Tech puts script into slot corresponding to the hour before

desired pick up time.• Busiest drop-off times: before work, lunchtime, after work

Page 4: Cvs pharmacy case study   operations management

The Current Pharmacy Process

• Data Entry (Tech)• Each hour, tech takes that hour’s scripts from the box• Required data entered into pharmacy information system• DUR checks current script against all previous scripts, patient’s

age, 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

Page 5: Cvs pharmacy case study   operations management

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 takes

payment

Page 6: Cvs pharmacy case study   operations management

Customer Complaints• “Why the hell is this four hundred dollars?”• “I’m not moving from this spot until we get this cleared up!”• “You lost my prescription!”• “Where are my other scripts?!”• “I’m not sure how many scripts I have.”• “What do you mean you can’t find my order?!”• “I talked to someone four days ago to make sure my order would

be ready!”

Page 7: Cvs pharmacy case study   operations management

Problems

• Drop-Off (Tech)• Nobody available/extended wait before initial greeting• Tech fails to retrieve proper information from customer• Failure to properly prioritize scripts

Page 8: Cvs pharmacy case study   operations management

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

Page 9: Cvs pharmacy case study   operations management

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

Page 10: Cvs pharmacy case study   operations management

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

Page 11: Cvs pharmacy case study   operations management

The New Pharmacy Process

• Data Entry (Tech)• Software selects next script in line to eliminate one hour time frame

problem• 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 existing inventories and go on to production

• Insurance issues and illegible scripts are printed on a standard form displaying script and are faxed to doctor

• DUR hard stop issues are forwarded to pharmacist

• Issues not resolved within a certain time frame from data entry are communicated to customers via chosen contact method

Page 12: Cvs pharmacy case study   operations management

The New Pharmacy Process

• Issue Resolution (Pharmacist)• Legitimate hard stops in the DUR and unresolved insurance issues are

communicated 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 thresholds

are reached• Customers are notified of new availability date or alternate pick-up

location for prescriptions not in inventory

Page 13: Cvs pharmacy case study   operations management

The New Pharmacy Process

• Quality Assurance (Pharmacist)• Automated processes allow for pharmacists to spend more time

conducting QA

• Pickup (Tech)• Customer’s card is scanned to display all pending prescriptions• Unresolved issues flagged at card scanning are resolved by the

pharmacist

Page 14: Cvs pharmacy case study   operations management

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 (destroy

wooden 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 switch

due to service)

Page 15: Cvs pharmacy case study   operations management

Questions?