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Pharmacy management test I


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8 major forces driving health expenses :
1. sophisticated and high priced technology

2. increased orientation toward defensive medicine

3. increased malpractice and litigation

4. aging pop.

5. increased govtal regulation

6. fee for service pricing

7. increased specialization

8. pt. insensitivity to price
7 Trends aimed at decreasing costs
1. disease prevention

2. change the role of the pt in disease prevention and mgmt

3. emphasize total disease mgmt

4. use of physician gatekeepers

5. integrated provider networks

6. community hospital conversion

7. home healthcare
Cost :
What the pharmacy pays
what the consumer pays
AWP-types of cost containment
avg wholesale price minus percentage
3 traditional HC payers
1. out of pocket/private pay

2. private indemnity insurance

3. public sector
Increased costs have lead to what?
efforts to increase containment
4 aspects of managed care programs?
1. defined pop of enrollees

2. defined pop. of providers

3. restricted use of providers

4. prospective vs. retrospective reimbursement
4 managed care models? (list from most expensive to least)
1. indemnity insurance (most)

2. IPA model HMO

3. Group Practice HMO

4. Staff model HMO (least)
Main pharmacy dilemma?
ethical decisions vs. economic decisions
Prospective reimbursement?
insured pays certain amount regardless of how much service actually cost

-involves bundling
How many independent pharmacies today?
Independent pharmacies comprise what percentage of the nation's drugstores?
Indep. pharmacies dispense how many Rx's annually?
1.3 billion
How many Rx's per pharmacy dispensed annually?
What is the total sales contributed by independent pharmacies?
67 billion (in annual Rx sales)...90% of their total sales...results in a shrinkage of gross margin from about 39% to about 29% and lower
What is Gross margin?
part of sales left over to run operation and out of which comes net profit
9 things that Independent pharmacies have to offer?
1. individualized personalized svc...know pt.s by name...but lower vol.

2. delivery svc

3. personal charge accounts (kelly's against these, interfere with capital mgmt)

4. compounding (niche mkt)

5. nutrition (broad...TPNs, balanced nutrition, etc)

6. durable medical equipment

7. long term care

8. health screening (now MTM)

9. herbals/ homeopathics
Percentage of customer's completely/ very satisfied with their community pharmacy vs. chains?
85% independents
58% chains
9 aspects of entrepreneurial spirit?
1. make things happen

2. take risks

3. ambition/drive

4. self-motivation

5. vision

6. flexible/adaptable

7. creative

8. not fear change

9. make a difference/rewards
Role of entrepreneur? (6)
1. operations

2. sales

3. finance

4. manager

5. buyer

6. marketing and advertising
Essentially what is capital?
mgmt of dollars
3 general aspects of a business plan?
1. an organized, logical way to look at all of the important aspects of a business

2. define and fix objectives

3. develop strategies and programs to achieve those objectives
Purpose of a business plan. (6)
1. define a new business

2. support a loan application

3. create regular business review and course correction (feedback)

4. evaluate a new product line or expansion

5. define agreements between partners

6. set a value on a business for sale or legal purposes
60% of the Inc. Magazine, 500 CEOs surveyed DID NOT create what? Why?
A formal written business plan before launching their company

Many, if not most, successful businesses get started in fields that are characterized
by high turbulence or change, change that is not being generated by the

very little info available on how to write a business plan

unknown comp., unknown consumers

opportunities are fleeting, and if you do not seize them immediately, they are gone, so in these mkts, the cost of doing analysis or writing a plan exceed the benefits

writing it can be expensive

most of these businesses are started without capital
What distinguishes pharmacy from some other businesses?
Capital intensive (employee salaries most important)

Known competition

Known customers

Dynamic, yet predictable
Top 10 reasons for a business plan.
1. clear, realistic, business projections

2. detailed mkt research

3. detailed competition research

4. mgmt

5. a killer summary

6. proof of vision

7. good formatting and clear writing

8. keep the plan short

9. design for the bottom line

10. make the plan your own
Top 7 mistakes to avoid for drafting a business plan.
1. submitting a rough copy

2. outdated historical financial info on comparisons

3. unsubstantiated assumptions (ex. projections of financial performance)

4. too much blue sky - unrealistic

5. lack of understanding of financial info

6. absence of any consideration of outside influences (environment)

7. no indication that the owner has anything at stake

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