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Pharmacy management

  1. 1. Pharmacy Management Essentials forAll P ractic e Settings
  2. 2. NoticeMedicine is an ever-changing science. As new research and clinical expe-rience broaden our knowledge, changes in treatment and drug therapy arerequired. The authors and the publisher of this work have checked withsources believed to be reliable in their efforts to provide information that iscomplete and generally in accord with the standards accepted at the time ofpublication. However, in view of the possibility of human error or changes inmedical sciences, neither the authors nor the publisher nor any other partywho has been involved in the preparation or publication of this work war-rants that the information contained herein is in every respect accurate orcomplete, and they disclaim all responsibility for any errors or omissions orfor the results obtained from use of the information contained in this work.Readers are encouraged to confirm the information contained herein withother sources. For example and in particular, readers are advised to checkthe product information sheet included in the package of each drug theyplan to administer to be certain that the information contained in this workis accurate and that changes have not been made in the recommended doseor in the contraindications for administration. This recommendation is ofparticular importance in connection with new or infrequently used drugs.
  3. 3. Pharmacy Management Essentials forAll P ractic e Settings S ec ond Ed it ion Shane P. Desselle, PhD, RPh, FAPhA David P. Zgarrick, PhD, RPh Professor and Associate Dean for John R. Ellis Distinguished Chair Tulsa Programs of Pharmacy Practice Chair, Department of Clinical and Professor of Pharmacy Administration Administrative Sciences-Tulsa Drake University University of Oklahoma College of Pharmacy and Health Sciences College of Pharmacy Des Moines, Iowa Tulsa, Oklahoma New York Chicago San Francisco Lisbon London Madrid Mexico City Milan New Delhi San Juan Seoul Singapore Sydney Toronto
  4. 4. Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved. Manufactured in the United States of America. Except as permit-ted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means,or stored in a database or retrieval system, without the prior written permission of the publisher.0-07-164327-3The material in this eBook also appears in the print version of this title: 0-07-149436-7.All trademarks are trademarks of their respective owners. Rather than put a trademark symbol after every occurrence of a trademarked name,we use names in an editorial fashion only, and to the benefit of the trademark owner, with no intention of infringement of the trademark. Wheresuch designations appear in this book, they have been printed with initial caps.McGraw-Hill eBooks are available at special quantity discounts to use as premiums and sales promotions, or for use in corporate training pro-grams. For more information, please contact George Hoare, Special Sales, at or (212) 904-4069.TERMS OF USEThis is a copyrighted work and The McGraw-Hill Companies, Inc. (“McGraw-Hill”) and its licensors reserve all rights in and to the work. Useof this work is subject to these terms. Except as permitted under the Copyright Act of 1976 and the right to store and retrieve one copy of thework, you may not decompile, disassemble, reverse engineer, reproduce, modify, create derivative works based upon, transmit, distribute, dis-seminate, sell, publish or sublicense the work or any part of it without McGraw-Hill’s prior consent. You may use the work for your own non-commercial and personal use; any other use of the work is strictly prohibited. Your right to use the work may be terminated if you fail to com-ply with these terms.THE WORK IS PROVIDED “AS IS.” McGRAW-HILL AND ITS LICENSORS MAKE NO GUARANTEES OR WARRANTIES AS TO THEACCURACY, ADEQUACY OR COMPLETENESS OF OR RESULTS TO BE OBTAINED FROM USING THE WORK, INCLUDING ANYINFORMATION THAT CAN BE ACCESSED THROUGH THE WORK VIA HYPERLINK OR OTHERWISE, AND EXPRESSLYDISCLAIM ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO IMPLIED WARRANTIES OF MER-CHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. McGraw-Hill and its licensors do not warrant or guarantee that thefunctions contained in the work will meet your requirements or that its operation will be uninterrupted or error free. Neither McGraw-Hill norits licensors shall be liable to you or anyone else for any inaccuracy, error or omission, regardless of cause, in the work or for any damagesresulting therefrom. McGraw-Hill has no responsibility for the content of any information accessed through the work. Under no circumstancesshall McGraw-Hill and/or its licensors be liable for any indirect, incidental, special, punitive, consequential or similar damages that result fromthe use of or inability to use the work, even if any of them has been advised of the possibility of such damages. This limitation of liability shallapply to any claim or cause whatsoever whether such claim or cause arises in contract, tort or otherwise.DOI: 10.1036/0071494367
  5. 5. Professional Want to learn more? We hope you enjoy this McGraw-Hill eBook! Ifyou’d like more information about this book,its author, or related books and websites,please click here.
  6. 6. D E D I C AT I O N To Deborah and Brittney (S.P.D.) and To Michelle, Miles, Grace, and Elle (D.P.Z.)Copyright © 2009 by The McGraw-Hill Companies, Inc. Click here for terms of use.
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  8. 8. For more information about this title, click hereCONTENTS Contributors ix Preface xiiiI. W H Y S T U D Y MA NAG E M E NT I N PH A R MAC Y SC HO O L ? 1Chapter 1 Pharmaceutical Care as a Management Movement 3Chapter 2 Management Functions 19II. MA NAG I N G O PE R AT IO N S 29Chapter 3 Strategic Planning in Pharmacy Operations 31Chapter 4 Business Planning for Pharmacy Programs 47Chapter 5 General Operations Management 63Chapter 6 Managing Technology and Pharmacy Information Systems 79Chapter 7 Ensuring Quality in Pharmacy Operations 97III. MA NAG I N G PE O P L E 123Chapter 8 Organizational Structure and Behavior 125Chapter 9 Human Resources Management Functions 149Chapter 10 Performance Appraisal Systems 165Chapter 11 Customer Service 185Chapter 12 Contemporary Workplace Issues 197Chapter 13 Time Management/Organizational Skills 211Chapter 14 Leadership in Pharmacy 233IV. MA NAG I N G M O N EY 245Chapter 15 Financial Reports 247Chapter 16 Third-Party Payer Considerations 265Chapter 17 Medicare Part D 285Chapter 18 Budgeting 303Chapter 19 Personal Finance 317 vii
  9. 9. viii C O N T E N T SV. MA NAG I N G T R A D I T IO NA L GO O D S A N D S E RV IC E S 333Chapter 20 Marketing Theory 335Chapter 21 Marketing Applications 361Chapter 22 Purchasing and Inventory Management 383Chapter 23 Merchandising 401VI. MA NAG I N G VA LU E - A D D E D S E RV IC E S 415Chapter 24 Appraising the Need for Value-Added Services 417Chapter 25 Implementing Value-Added Pharmacy Services 429Chapter 26 Compensation for Value-Added Pharmacy Services 453Chapter 27 Evaluating the Outcomes of Value-Added Pharmacy Services 467VII. MA NAG I N G R I S K S I N PH A R MAC Y P R AC T IC E 485Chapter 28 Risk Management in Contemporary Pharmacy Practice 487Chapter 29 Compliance with Regulations and Regulatory Bodies 503Chapter 30 Preventing and Managing Medication Errors: The Pharmacist’s Role 519VIII. MA NAG E M E NT A P P L IC AT IO N S I N S PE C I F IC PH A R MAC Y P R AC T IC E S E T T I N G S 539Chapter 31 Entrepreneurship 541Chapter 32 Applications in Independent Community Pharmacy 553Chapter 33 Applications in Chain Community Pharmacy 577Chapter 34 Applications in Hospital Pharmacy Practice 591 Index 611
  10. 10. CONTRIBUTORS Michelle Belsey Vice President for College Relations and Professional Recruitment, Rite-Aid Corporation, Camp Hill, Pennsylvania John Bentley, PhD Associate Professor, Department of Pharmacy Administration, School of Pharmacy, University of Mississippi, University, Mississippi Joseph Bonnarens, PhD Dean of Student Affairs, Associate Professor, Pharmacy Administration, School of Pharmacy, Pacific University, Hillsboro, Oregon Michelle A. Chui, PharmD, PhD Associate Professor of Pharmacy Administration, Midwestern University of Wisconsin, College of Pharmacy, Glendale, Arizona Bartholomew E. Clark, RPh, PhD Associate Professor Pharmacy Sciences Department, School of Pharmacy and Health Professions, Creighton University, Omaha, Nebraska Edward Cohen, PharmD Director, Clinical Services, Clinical Education and Immunization Services, Walgreens Health Services, Deerfield, Illinois Michael R. Cohen, RPh, MS, ScD, FASHP President, Institute for Safe Medication Practices, Horsham, Pennsylvania Shane P. Desselle, PhD, RPh, FAPhA Professor and Associate Dean for Tulsa Programs, Chair: Department of Clinical and Administrative Sciences-Tulsa, University of Oklahoma, College of Pharmacy, Tulsa, Oklahoma William Doucette, PhD Associate Professor, College of Pharmacy, University of Iowa, Iowa City, Iowa Kevin Farmer, PhD Associate Professor, University of Oklahoma College of Pharmacy, Oklahoma City, Oklahoma Karen B. Farris, PBS Pharm, PhD Associate Professor, Division of Clinical and Administrative Pharmacy, College of Pharmacy, University of Iowa, Iowa City, Iowa ixCopyright © 2009 by The McGraw-Hill Companies, Inc. Click here for terms of use.
  11. 11. x CONTRIBUTORSBill G. Felkey, MS, RPhProfessor, Department of Pharmacy Care Systems, Auburn University, Auburn, AlabamaCaroline A. Gaither, BS Pharm, MS, PhD, FAPHAAssociate Professor and Director of Graduate Studies, Department of Clinical, Social and AdministrativeSciences, College of Pharmacy, University of Michigan, Ann Arbor, MichiganDavid A. Gettman, RPh, MBA, PhDAssociate Professor, Pharmaceutical, Administrative, and Social Sciences, University of Appalachia College ofPharmacy, Oakwood, VirginiaVincent J. Giannetti, PhDProfessor, Social and Administrative Sciences in Pharmacy, Mylan School of Pharmacy, Duquesne University,Pittsburgh, PennsylvaniaWilliam A. Gouveia, MS, FASHP, DHLDirector of Pharmacy, Tufts-New England Medical Center; Associate Professor of Medicine, Tufts UniversitySchool of Medicine, Boston, MassachusettsMatthew Grissinger, RPh, FASCPMedication Safety Analyst, Institute for Safe Medication Practices, Huntington Valley, PennsylvaniaDana P. Hammer, RPh, MS, PhDUniversity of Washington School of Pharmacy, Seattle, WashingtonDonald Harrison, BS, MS, PhDAssociate Professor, Department of Clinical and Administrative Sciences, College of Pharmacy, University ofOklahoma, Oklahoma City, OklahomaDavid A. Holdford, RPh, MS, PhDAssociate Professor, Department of Pharmacy, School of Pharmacy, Virginia Commonwealth University,Richmond, VirginiaDavid A. Latif, MBA, PhDProfessor and Chair, Department of Pharmaceutical and Administrative Sciences, University of CharlestonSchool of Pharmacy, Charleston, West VirginiaFrank Massaro, PharmDPharmacy Practice Manager, Tufts-New England Medical Center, Boston, MassachusettsRandal McDonough, MS, PharmD, CGP, BCPSCo-owner and Director of Clinical Services, Towncrest and Medical Plaza Pharmacies, Iowa City, Iowa
  12. 12. Contributors xiRashid Mosavin, RPh, PhD, MBAAssociate Professor, Department of Pharmacotherapy and Outscome Science, School of Pharmacy, Loma LindaUniversity, Loma Linda, CaliforniaGlen T. Schumock, PharmD, MBA, FCCPAssociate Professor, Department of Pharmacy Practice; Director, Center for Pharmacoeconomic Research,University of Illinois at Chicago, Chicago, IllinoisVirginia (Ginger) G. Scott, PhD, MS, RPhProfessor and Director of Continuing Education, Department of Pharmaceutical Systems and Policy, WestUniversity School of Pharmacy, Morgantown, West VirginiaKathleen Snella, PharmD, BCPSAssistant Dean, Vice-Chair and Associate Professor, Division of Pharmacy Practice, University ofMissouri-Kansas City School of Pharmacy, Columbia, MissouriMargaret R. Thrower, PharmDAssistant Professor, Auburn University Harrison School of Pharmacy, Auburn, AlabamaBradley P. Tice, PharmD, RPh, CDM, PMPChief Clinical Officer, PharmMD Solutions, LLC, Brentwood, TennesseeDavid J. Tipton, PhDAssociate Professor, Mylan School of Pharmacy, Duquesne University, Pittsburgh, PennsylvaniaJulie M. Urmie, PhDAssociate Professor, Program in Pharmaceutical Socioeconomics, College of Pharmacy, University of Iowa, IowaCity, IowaTerry L. Warholak, PhD, RPhClinical Assistant Professor, Pharmacy Practice and Science, University of Arizona College of Pharmacy, Tuscon,ArizonaDonna West, RPh, PhDAssociate Professor, Division of Pharmaceutical Evaluation and Policy, University of Arkansas for MedicalSciences College of Pharmacy, Little Rock, ArkansasNoel E. Wilkin, RPh, PhDInterim Vice Provost, Pharmacy Administration; Research Associate and Professor, Research Institute ofPharmaceutical Sciences; Director, Center for Pharmaceutical Marketing and Management, University ofMississippi School of Pharmacy, Oxford, Mississippi
  13. 13. xii C O N T R I B U T O R SGodwin Wong, PhDVisiting Associate Professor, Lester Center for Entrepreneurship and Innovation, University of CaliforniaBerkeley Haas School of Business, Berkeley, CaliforniaDavid P. Zgarrick, PhD, RPhJohn R. Ellis Distinguished Chair of Pharmacy Practice, Professor of Pharmacy Administration, DrakeUniversity College of Pharmacy and Health Sciences, Des Moines, Iowa
  14. 14. P R E FA C E ■ W H AT ’S N EW I N T H I S E D I T IO N ! ! In planning for the second edition, we started by listening to our fellow educators, pharmacists, and students. Through surveys, e-mails, and conversations we learned about what users liked about the first edition, and what they would like to see added or changed in the future. Using what we learned, we worked with the chapter authors not only to improve the ease of use for faculty and students, but also to reflect the changes in pharmacy practice and management that have occurred in the last 4 years. t Every chapter has been updated to reflect the fluid nature of their respective management topic. t New content has been added to reflect major events in our profession, such as the implementation of the Medicare Modernization Act and subsequent addition of an outpatient prescription drug benefit (Medicare Part D). t New trends in the management literature and research studies are reflected in each of the chapters. t Four chapters have been added to the second edition. Since effective managers must also have leadership skills, We have added a chapter on the role of leadership in management. Medicare Part D represents probably both the biggest challenge an opportunity to pharmacy practice in the last 20 years. We have added a chapter dedicated to the management implications of this program, as well as updated other chapters to describe the impact of this program on other areas of practice. Pharmacy practice and health care delivery inherently involves risk. We have added a chapter devoted to describing and managing the risks commonly seen in operating a pharmacy practice. The ability to take advantage of the opportunities in today’s pharmacy practice requires not only management skills but also a mindset that can think strategically about the risks and benefits of new programs. We have added a chapter on entrepreneurship to describe how having an entrepreneurial spirit can improve a pharmacy practice and to describe how entrepreneurship skills can be acquired. ■ W H Y D I D W E C R E AT E T H I S T E XT B O O K ? This is a very exciting time for pharmacists, pharmacy students, educators, and others associated with the profession of pharmacy. A number of factors have come together to provide new opportunities for pharmacists, especially in patient care and expanded professional roles. But with the new opportunities also comes challenges, including the challenge of how to manage the personal and professional resources necessary to succeed in today’s ever-changing environment. Educators must not only keep up with changes in pharmacy practice, but also anticipate and prepare our students for opportunities and contingencies that will arise throughout their professional careers. In our efforts to best prepare students, pharmacy management educators have increasingly had to gather teaching materials from a variety of textbooks, journals and other educational resources. This is due to the fact that many resources only focus on a specific management function (marketing, personnel, accounting and finance) or a specific practice xiiiCopyright © 2009 by The McGraw-Hill Companies, Inc. Click here for terms of use.
  15. 15. xiv P R E F A C Esetting (independent pharmacies, hospital pharmacies). We believed that there would be value in a comprehensivepharmacy management textbook that covered many content areas and gathered a variety of resources into one text.We also wanted to develop a resource that could be applied in a wide variety of practice settings. Our colleaguesthroughout the profession also agreed that a comprehensive management textbook was needed. Our desire tomeet these needs sparked our interest to develop this text.■ W H AT H A S C H A N G E D F RO M T H E F I R S T E D I T IO N ?In planning for the second edition, we started by listening to our fellow educators, pharmacists, and students.Through surveys, e-mails, and conversations we learned about what users liked about the first edition, and whatthey would like to see added or changed in the future. Using what we learned, we worked with the chapter authorsnot only to improve the ease of use for faculty and students, but also to reflect the changes in pharmacy practiceand management that have occurred in the last 4 years. Every chapter has been updated to reflect the fluid nature of their respective management topic. In manycases, new content has been added to reflect major events in our profession, such as the implementation of theMedicare Modernization Act and subsequent addition of an outpatient prescription drug benefit (Medicare PartD). New trends in the management literature and research studies are reflected in each of the chapters. Four chapters have been added to the second edition. Since effective managers must also have leadership skills,we have added a chapter on the role of leadership in management. Medicare Part D represents probably both thebiggest challenge an opportunity to pharmacy practice in the last 20 years. We have added a chapter dedicatedto the management implications of this program, as well as updated other chapters to describe the impact of thisprogram on other areas of practice. Pharmacy practice and health care delivery inherently involves risk. We haveadded a chapter devoted to describing and managing the risks commonly seen in operating a pharmacy practice.The ability to take advantage of the opportunities in today’s pharmacy practice requires not only managementskills but also a mindset that can think strategically about the risks and benefits of new programs. We have addeda chapter on entrepreneurship to describe how having an entrepreneurial spirit can improve a pharmacy practiceand to describe how entrepreneurship skills can be acquired.■ W H AT W I L L T H E R E A D E R F I N D I N T H I S T E XT B O O K ?This textbook is organized to reflect all of the major management functions performed by pharmacists in anypractice setting. The book is divided into sections representing each function, and is further divided into chaptersthat detail the various components of each function. Our experience as educators has taught us that students are the most effective learners when they are “ready”to learn. Many students selected pharmacy as a major in part from the desire to help people, but also due totheir fascination and intrigue with how such small amounts of various medicinal substances have such profoundeffects on the body. Many of these students also believe that they only need to learn about management afterthey graduate, and then only if they take on a managerial or administrative position at their pharmacy. Thefirst section of this book makes the case that management skills are important for all people and pharmacists,regardless of their position or practice setting. After establishing the need for management in both our personaland professional lives, the next four sections describe the management functions and resources that are commonto all pharmacy practice settings (operations, people, money, traditional pharmacy goods and services). Chapterswithin each section focus on important aspects of each function or resource.
  16. 16. Preface xv As pharmacy practice evolves from a product to a patient orientation, there are unique challenges that arisein managing the value-added services that pharmacists are developing to meet patient needs (e.g., cholesterolscreening, diabetes education, drug therapy monitoring, etc.). A section of this book is dedicated to the planning,implementation, reimbursement and evaluation of these new patient care services offered by pharmacists. Several chapters are dedicated to describing the risks inherent in pharmacy practice, and the impact thatlaws, regulations, and medication errors have on pharmacy management. The final section outlines the role ofentrepreneurship, and how management functions are applied in specific pharmacy practice settings (independent,chain, and hospitals).■ HOW E AC H C H A P T E R I S O RG A N I Z E D ?Each chapter is divided into several sections to facilitate the reader’s understanding and application of the material.Chapters begin with a list of learning objectives that outline the major topics to be addressed. A brief scenario isused to describe how a pharmacy student or pharmacist may need or apply the information described this chapterin their daily lives or practice. Questions at the start of each chapter provide direction and assist the reader inunderstanding what they can expect to learn. The text of each chapter provides comprehensive coverage of the content and theory underlying the majorconcepts. References to the management and pharmacy literature are commonly used to provide readers withlinks to additional background information. Explanations and applications are also used to help readers betterunderstand the need to master and apply each concept. Questions at the end of each chapter encourage readersto think about what they have just learned and apply these concepts in new ways.■ W H AT W E HO PE YO U W I L L G A I N F RO M T H I S B O O KIf you are a pharmacy student, we hope that using this book will help you gain an appreciation for the rolesof management in pharmacy practice, regardless of your future position or practice setting. This book will alsoprovide you with a variety of management theories and tools that you can apply in your daily life as well. We realize that many pharmacists have not had much management coursework in their formal education orprofessional training. We hope that this book serves as a valuable guide to pharmacists who may require someassistance dealing with matters they did not anticipate when embarking on their careers. For those pharmacistswith formal management education and experience, we hope that this book serves as a valuable reference or as asource of new ideas that can be applied in daily practice. For educators, this book has been designed as a comprehensive pharmacy management textbook. As a whole,it is meant to be used in survey courses that cover many areas of pharmacy management. The section formatalso allows the book to be used in courses that focus on specific pharmacy management functions or topics. Thesections and content of each chapter are meant not only to provide valuable information that is easy for studentsto understand, but also to stimulate further discussion and motivate students to learn more on their own.■ W E WO U L D L I K E TO H E A R F RO M YO U !Textbooks today have great deal in common with computer software programs. The creators of each have put agreat deal of time and effort into getting their final outputs ready for consumers, but it rarely can be considered a
  17. 17. xvi P R E F A C E“finished product”. Textbooks, like computer software, are “works in progress” that can always be improved. Thebest way to improve these products is to seek input from their users. As you use this book, we would like to learnwhat you like about it, what could be improved, and what topics or features you would like to see to be included inthe future. Please feel free to share your thoughts at any time by reaching us through plan to improve this book over future editions by listening to your feedback and continuing to reflect changesin the management sciences and pharmacy practice.
  18. 18. AC K N OW L E D G M E NT S We would like to thank the pharmacy administration colleagues who have played an important role in our development throughout our undergraduate and graduate studies, as well as at our institutions. Over the years, we have also come to know many other colleagues in our discipline who have shared their knowledge and provided advice. We have learned a great deal about our discipline and about teaching from our colleagues, and feel fortunate that they have been willing to share their knowledge and experience with us. Thanks must also go to all the faculty, staff and administrators at the University of Oklahoma and Drake University who have provided an environment that makes this type of endeavor possible. We would also like to thank all of the students we have taught who have inspired us to continue to strive to become better educators. We would like to thank everyone at McGraw-Hill, and in particular the editor of the first edition, Michael Brown, and of the current edition, Michael Weitz, for working with us to make our idea for a comprehensive pharmacy management textbook a reality. Finally, we would like to acknowledge of efforts of each of our chapter authors. We chose our authors not only because of their expertise, but also because of their dedication to teaching and the professional development of pharmacy students and pharmacists. There is no way in which we could have completed this textbook without their efforts. xviiCopyright © 2009 by The McGraw-Hill Companies, Inc. Click here for terms of use.
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  20. 20. SECTION I Why Study Management in Pharmacy School?Copyright © 2009 by The McGraw-Hill Companies, Inc. Click here for terms of use.
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  22. 22. 1 Pharmaceutical Care as a Management Movement Shane P. Desselle A bout the Author: Dr. Desselle is Professor, Associate Dean for Tulsa Programs, and Chair, Department of Pharmacy: Clinical and Administrative Sciences—Tulsa at the University of Oklahoma College of Pharmacy. Dr. Desselle received a B.S. degree in pharmacy and a Ph.D. in pharmacy administration from the University of Louisiana at Monroe. He has practice experience in both community and hospital pharmacy settings. Dr. Desselle teaches courses in American health care systems, health care economics, social and behavioral aspects of pharmacy practice, and research methods. His research interests include performance appraisal systems in pharmacy, quality of work life among pharmacy technicians, direct-to- consumer prescription drug advertising, Web-based pharmacy services, and pharmacy benefit design. Dr. Desselle won the Duquesne University School of Pharmacy’s President’s Award for Teaching in 2003 and President’s Award for Scholarship in 2004 and was recognized for his contributions to pharmacy by being named a Fellow of the American Pharmacists Association in 2006. ■ LEARNING OBJECTIVES After completing this chapter, students should be able to 1. Identify changes in the roles of pharmacists since the early 1900s. 2. Describe how pharmacy practitioners and educators viewed the need for manage- ment skills as the roles of pharmacists evolved. 3. Identify principal domains of pharmacy care. Describe the practices of pharma- ceutical care and medication therapy management as a series of management functions. 4. Identify myths surrounding the practice of pharmacy and health care as a business. 5. Evaluate the need for a management perspective to better serve patients and im- prove outcomes to drug therapy. 6. List the managerial sciences, and describe their use as tools to assist pharmacists in practice. 3Copyright © 2009 by The McGraw-Hill Companies, Inc. Click here for terms of use.
  23. 23. 4 WHY STUDY MANAGEMENT IN PHARMACY SCHOOL?■ SC E NA R IO few decades? What roles and functions do pharma- cists perform today?Mary Quint has just completed the first 2 years of 2. What is the significance of management within thea doctor of pharmacy curriculum, and despite many context of the pharmaceutical care and medicationlong hours of hard work and a few anxious moments therapy management movements? Why has its sig-preparing for examinations, she has been pleased with nificance typically been overlooked by pharmacistsher educational experience thus far. She also perceives and pharmacy students?that as she continues progressing through the curricu- 3. What are some of the myths surrounding the con-lum, the upcoming courses will be more integrated fluence of business practices and the provision ofand directly applicable to pharmacy practice. She is es- patient care by pharmacists?pecially excited about taking courses in pharmacology 4. What evidence exists that a business perspective isand therapeutics so that she can “really learn about critical to providing effective pharmacy services tohow to be a pharmacist.” She glances down at her patients?schedule and sees that she is enrolled in a required 5. What are the managerial sciences, and how cancourse in pharmacy management, and her enthusiasm pharmacy practitioners use them effectively?becomes somewhat tempered. She immediately con-sults with fellow students on what they have heard ■ I NT RO D U C T IO Nabout the course, and they tell her that the course isabout “finance, accounting, and marketing.” Despite The preceding scenario, though perhaps overly sim-some positive comments provided by students having plistic, properly captures the feelings of many studentsalready completed the course, she is concerned. “What who select pharmacy as a major. They generally are in-do I have to take this course for? I did not come to terested in science, have a desire to help people in need,pharmacy school for this. I’m very good at science. If I and prefer a career offering long-term financial secu-liked this kind of stuff, I would have majored in busi- rity. Given that the pharmacy curriculum consists ofness. How is this going to help me to become a better courses that apply knowledge from physics, chemistry,pharmacist?” she asks herself. anatomy, physiology, and therapeutics, most pharmacy After some thought, she comes to realize that, at students achieved success in science and math coursesworst, taking this course will not be the end of the throughout their prepharmacy studies. Second, stu-world, and even better, it simply might be a moderate dents selecting pharmacy as a major typically are at-intrusion in her Monday-Wednesday-Friday routine. tracted to health care fields and may have contem-She begins to focus on other issues, such as her part- plated nursing, medicine, or other health professions.time job at Middletown South Pharmacy. Lately, she Research has demonstrated that people in health carehas dreaded going to work there. The staff consistently are caring and empathic and seek personal reward andseems rushed and impatient. There always seems to be self-actualization through the helping of others (Bell,conflict among the employees, and as soon as one fire McElnay, and Hughes, 2000; Carmel and Glick, 2001;has been put out, another larger one begins to burn. Fjortoft and Zgarrick, 2003; Kunyk and Olsen, 2001).She regrets her decision to quit her job at Middletown Finally, many pharmacy students have also consideredNorth Pharmacy 3 months ago, even though it took the relatively high salaries of their chosen profession20 minutes longer to get there. Things always seemed prior to making their 6-year educational run smoothly at Middletown North. While few fields guarantee graduates a job, and cer- tainly not one with entry-level salaries approaching■ C H A P T E R QU E S T IO N S a six-digit figure, pharmacy students take comfort in knowing that employment in their profession will pro-1. How have pharmacists’ roles in delivering pharma- vide them with a generous and steady stream of income. ceutical products and services evolved over the past It comes as no surprise that pharmacists and pharmacy
  24. 24. Pharmaceutical Care as a Management Movement 5students have been shown to be risk-averse individuals ting. This chapter and all succeeding chapters use anwho do not deal with uncertainties particularly well evidence-based approach to discuss pharmacy manage-(Curtiss, 1980; Gaither, 1998a; Latif, 2000). This fur- ment, relying on recent literature and research findingsther explains their gravitation toward science-oriented to describe and explain what is happening in practicecourses that offer straightforward solutions to prob- today. Students are encouraged to explore readings oflems. interest among the references cited throughout the text. Unbeknown to many pharmacy students is thatthe actual practice of pharmacy does not present asuccession of problems that can be resolved along ■ A B R I E F H I S TO R IC A Lsuch clear demarcations. While the sequential pro- OV E RV I EW O F PH A R MACYcesses involved in community pharmacy practice have P R AC T IC Eremained the same—patients present with prescrip- Pharmacy Practice Prior to the 1940stions, pharmacy personnel fill them, and the necessarycounseling is offered or provided by the pharmacist—a There have been several noteworthy efforts to describecareful introspection reveals that the profession has un- the evolution of pharmacy practice. Some have de-dergone a rapid, head-turning transformation over just scribed the process within the context of “waves,” orthe past few decades. Pharmacists now are increasingly shifts, in educational and industrial forces (Hepler,involved with providing services in addition to medica- 1987), another through identifying stages of profes-tions and are taking greater responsibility for patients’ sional identity (Hepler and Strand, 1990), and stilloutcomes arising from drug therapy. Pharmacists have another through describing momentous occurrencesbecome more integrated into health care delivery teams in the health care delivery system whose effects rip-that coordinate patient care through the implementa- pled throughout the pharmacy profession (Broesekertion of guidelines and treatment algorithms. Pharma- and Janke, 1998). While these approaches appear quitecists operate as part of a health care delivery system disparate, their descriptions of the principal drivers oflargely driven by reimbursements from third-party pay- change closely mirror one another. The approach takeners who insist on obtaining high-quality patient care at here is simply to describe these changes in the early,the lowest possible cost. middle, and late twentieth century. For pharmacy students to better understand theway that pharmacy is practiced today, time should be Pharmacy in the Early Twentieth Centurydevoted to understanding the major forces that have Pharmacy in the United States began in the twentiethshaped the profession. This chapter begins with a brief century much like it existed in the latter 1800s. Phar-history of the evolution of pharmacy practice in the macy was, at best, a “marginal” profession. Most prac-twentieth century. This history, coupled with a snap- titioners entered the occupation through apprentice-shot of contemporary pharmacy practice, will make ship rather than formal education. The pharmacist’sit clear that the pharmaceutical care and medication principal job function was described as the “dailytherapy management movements are as much about handling and preparing of remedies in common use”management as they are about clinical pharmacy prac- (Sonnedecker, 1963, p. 204). Pharmacists, or “apothe-tice. The chapter proceeds by pointing out some myths caries,” often were engaged in the wholesale manufac-about the exclusivity of the pharmacy business and pa- ture and distribution of medicinal products. Pharma-tient outcomes and by providing evidence that what is cists’ roles during this time were considerably differentbest for the operation of a pharmacy business often is from what they are today. In the early twentieth cen-what is best for the patients that it serves. The chap- tury, pharmacists’ primary roles were to procure rawter concludes with a brief discussion of the managerial ingredients and extemporaneously compound themsciences—tools that every practitioner will find useful into drug products for consumer use. While pharma-at one point or another regardless of the practice set- cists had not yet achieved recognition as health care
  25. 25. 6 WHY STUDY MANAGEMENT IN PHARMACY SCHOOL?professionals, they often had considerable autonomy in Survey and Construction (Hill-Burton) Act of 1946their practice. There was no clear distinction between provided considerable funding for the renovation and“prescription” and “nonprescription” drugs. Although expansion of existing hospitals and the constructionphysicians were engaged in the process of writing pre- of new ones, primarily in underserved inner-city andscriptions, pharmacists were not precluded from dis- rural areas (Torrens, 1993).pensing preparations without a physician’s order. Con- Ironically, pharmacists began to see their roles di-sumers commonly relied on their pharmacists’ advice minish during this era of expansion. Among the factorson minor ailments and often entrusted the nickname responsible for this decline were advances in technologyof “doc” to their neighborhood pharmacist (Hepler, and the pharmaceutical sciences and societal demands1987). that drug products become uniform in their composi- Pharmacists had little choice but to have sharp tion. These brought changes about the mass produc-business acumen to survive. Because few of the tion of prefabricated drug products in tablet, capsule,products they dispensed were prefabricated by man- syrup, and elixir dosage forms, thus significantly reduc-ufacturers, pharmacists had to be adept at managing ing the need for pharmacists to compound prescrip-inventories of bulk chemicals and supplies used in com- tion orders. The passage of the Durham-Humphreypounding the preparations they dispensed. They also Amendment to the Food, Drug, and Cosmetic Act inhad to have a keen sense of how to manage time and 1951 created a prescription, or “legend,” category ofpeople to accomplish a series of complex tasks through- drugs. Pharmacists did not have the ability to dispenseout the workday. these drugs without an order from a licensed prescriber. A series of studies commissioned by the U.S. gov- Finally, pharmacy’s own Code of Ethics, promulgatedernment in the early 1900s produced what became by the American Pharmaceutical Association (APhA),known as the Flexner Reports in 1915. These reports stated that pharmacists were not to discuss the thera-were critical of health care professionals and their edu- peutic effects or composition of a prescription with acation, including pharmacists. The reports questioned patient (Buerki and Vottero, 1994, p. 93). This com-the validity and necessity of pharmacists as health care bination of forces relegated the role of the pharmacistprofessionals. Shortly thereafter, the American Associ- largely to a dispenser of preprepared drug products.ation of Colleges of Pharmacy (AACP) commissioned The response of schools and colleges of pharmacya study directed by W. W. Charters that ultimately to these diminishing roles was the creation of curric-served as the basis for requiring a 4-year baccalaureate ula that were more technical, scientific, and content-degree program for all colleges of pharmacy (Hepler, driven. A fifth year of education was added to the 4-year1987). These and other forces led to dramatic changes baccalaureate degree by colleges and schools of phar-in pharmacy in the coming years. macy during the late 1940s and early 1950s following the AACP Committee on Curriculum report entitled, “The Pharmaceutical Curriculum” (Hepler, 1987). ItPharmacy in the Middle of the was during this time that pharmacology, pharmaceu-Twentieth Century tics, and physical chemistry matured as disciplines andThe 1940s through the 1960s often have been referred became the fabric of pharmacy education. Pharmacyto as the “era of expansion” in health care (Relman, students were required to memorize an abundance of1988). The Flexner Reports paved the way for a information about the physical and chemical naturemore scientifically sound, empirically based allopathic of drug products and dosage forms. Courses in thebranch of medicine to become the basis by which health business aspects of pharmacy took a secondary role,care was practiced and organized. The federal govern- whereas education in patient care (e.g., communica-ment invested significant funds to expand the quan- tions and therapeutics) was for all intents and purposestity and quality of health care services. The Hospital nonexistent.
  26. 26. Pharmaceutical Care as a Management Movement 7 With the Code of Ethics suggesting that phar- tion and dissatisfaction among practitioners was be-macists not discuss drug therapies with their patients, ginning to affect students (Hepler, 1987, p. 371). Thethe profession lost sight of the need for pharmacists to clinical pharmacy movement evolved in the 1970s tocommunicate effectively with patients and other health capture the essence of the drug use control concept for-care professionals. As the number of hospital and chain warded by Brodie (1967) and promoted the pharma-pharmacies expanded, resulting in pharmacists being cist’s role as therapeutic advisor. The clinical pharmacymore likely to be employees rather than business own- movement brought about changes in pharmacy edu-ers, the importance of practice management skills was cation and practice. After being introduced in 1948,not stressed in schools of pharmacy. Ironically, studies the 6-year Doctor of Pharmacy (Pharm.D.) degree be-such as the Dichter Report commissioned by the APhA came the only entry-level degree offered by a smallrevealed that consumers regarded pharmacists more as number of colleges of pharmacy during as early asmerchants than as health care professionals (Maine and the late 1960s and early 1970s. The additional yearPenna, 1996). was devoted mostly to therapeutics or “disease-oriented courses” and experiential education. Eventually, the Doctor of Pharmacy degree become the entry-levelPharmacy in the Latter Part of the degree into the profession, and colleges of pharmacyTwentieth Century eventually began to phase out baccalaureate programsThe era of expansion slowed in the 1970s when soci- (American Association of Colleges of Pharmacy, 1996).ety began experiencing “sticker shock” from the monies The trends begun by leaders and academiciansbeing spent on health care. Congress passed the Health in the field toward a more clinical practice approachMaintenance Act of 1973, which helped to pave the may appear to be an ill-conceived response to recentway for health maintenance organizations (HMOs) to changes in the delivery of health care. These changesbecome an integral player in the delivery of health care emphasize a heightened concern over spiraling costsservices. Governments, rather than the private sector, and have resulted in the deinstitutionalization of pa-took the lead in attempting to curb costs when they im- tients and the standardization of care using such toolsplemented a prospective payment system of reimburse- as protocols, treatment algorithms, and critical path-ment for Medicare hospitalizations based on categories ways. It also may appear to fly in the face of changesof diagnosis-related groups (Pink, 1991). in the organization of the pharmacy workforce and The Millis Commission’s report in 1975, Pharma- current market for pharmaceuticals. With the propor-cists for the Future: The Report of the Study Commission tion of independently owned community pharmacieson Pharmacy (Millis, 1975), suggested that pharma- at an all-time low in the year 2000, chain, supermar-cists were inadequately prepared in systems analysis ket, and mass-merchandiser pharmacies had garneredand management skills and had particular deficien- nearly 64 percent of the outpatient prescription drugcies in communicating with patients, physicians, and market (National Association of Chain Drug Stores,other health care professionals. A subsequent report 2003). Studies have long suggested that pharmacistssuggested including more of the behavioral and social willing and clinically knowledgeable enough to pro-sciences in pharmacy curricula and encouraged more vide pharmaceutical care face significant barriers whenfaculty participation and research in real problems of practicing in a chain environment (Miller and Ort-practice (Millis, 1976). meier, 1995). Additionally, two relatively new venues Prior to these reports, the American Society of for outpatient pharmacy services that virtually excludeHospital Pharmacists had published Mirror to Hospital face-to-face consultation with patients have evolved.Pharmacy, stating that pharmacy had lost its purpose, In the year 2005, mail-order pharmacy operations hadfalling short of producing health care professionals ca- secured 19.1 percent of the market share (in salespable of engendering change and noting that frustra- revenue) for outpatient prescription drugs (National
  27. 27. 8 WHY STUDY MANAGEMENT IN PHARMACY SCHOOL?Association of Chain Drug Stores, 2006). The new of punitive action by state boards of pharmacy, andmillennium also saw the implementation of Internet the loss of social esteem enjoyed by the profession as apharmacy sites, many of which are owned and oper- whole. Risk management suggests that risk cannot beated by traditional “brick and mortar” chain pharmacy avoided entirely but rather that it should be assessed,corporations. measured, and reduced to the extent feasible (Tootelian and Gaedeke, 1993, p. 163). The idea that pharmaceutical care should be■ PH A R MAC E U T IC A L C A R E A S viewed strictly as a clinical movement has been called A MA NAG E M E NT into question (Wilkin, 1999). Evidence that pharma- M OV E M E NT ? ceutical care exists in part as a management movement was provided in a recent study that sought to identifyWith these changes in mind, adopting pharmaceuti- standards of practice for providing pharmaceutical carecal care as a practice philosophy would appear “a day (Desselle and Rappaport, 1996). A nationwide panellate and a dollar short” for both the profession and of experts identified 52 standards of pharmacy prac-the patients it serves. Indeed, this may be the case if tice, only to have a statewide sample of pharmaciststhe concept of pharmaceutical care were entirely clini- judge many of them as infeasible to implement in ev-cal in nature. The originators of the concept fervently eryday practice (Desselle, 1997). Of the practice stan-stressed that pharmaceutical care is not simply a list dards that were judged to be feasible, further researchof clinically oriented activities to perform for each and yielded a system of “factors” or “domains” in whichevery patient but is, in fact, a new mission and way of these standards could be classified (Desselle and Rap-thinking that takes advantage of pharmacists’ accessi- paport, 1995). These practice domains can be foundbility and the frequency to which they are engaged by in Table 1-1. Figuring very prominently into this clas-patients—a way of thinking that engenders the phar- sification was the “risk management” domain, whichmacist to take responsibility for managing a patient’s included activities related to documentation, drug re-pharmacotherapy to resolve current and prevent future view, triage, and dosage calculations. However, the con-problems related to their medications. tributions of the managerial sciences do not stop there. It has been argued that the focus on preventing The remaining four domains connote significant in-and resolving medication-related problems is simply an volvement by pharmacists into managerial processes.extension of risk management (Wiederholt and Wieder- Two of the domains (“services marketing” and “busi-holt, 1997; see also Chapter 28). Risks are an inherent ness management”) are named specifically after man-part of any business activity, including the provision of agerial services. Common risks to business practiceinclude fire, natural disasters, theft, economic down-turns, and employee turnover, as well as the fact that ■ F RO M PH A R MAC E U T IC A Lthere is no guarantee that consumers will accept or C A R E TO M E D IC AT IO Nadopt any good or service that is offered to them. The T H E R A P Y MA NAG E M E NTpractice of pharmacy involves additional risks, specifi-cally the risk that patients will suffer untoward events While the pharmaceutical care movement made an in-as a result of their drug therapy. delible mark on the profession, its terminology is be- These events are significant because they may re- ing replaced with more contemporary language thatsult in significant harm and even death to a patient reflects pharmacists’ growing roles in the provision ofand can also pose serious detriments to pharmacists, public health services. In recognizing the morbiditysuch as feelings of guilt and stress, the potential for and mortality resulting from medication errors as alitigation from patients and their families, the threat public health problem, the profession has begun to
  28. 28. Pharmaceutical Care as a Management Movement 9 Table 1-1. Pharmaceutical Care Practice Domains I. Risk management Devise system of data collection Perform prospective drug utilization review Document therapeutic interventions and activities Obtain over-the-counter medication history Calculate dosages for drugs with a narrow therapeutic index Report adverse drug events to FDA Triage patients’ needs for proper referral Remain abreast of newly uncovered adverse effects and drug–drug interactions II. Patient advocacy Serve as patient advocate with respect to social, economic, and psychological barriers to drug therapy Attempt to change patients’ medication orders when barriers to compliance exist Counsel patients on new and refill medications as necessary Promote patient wellness Maintain caring, friendly relationship with patients Telephone patients to obtain medication orders called in and not picked upIII. Disease management Provide information to patients on how to manage their disease state/condition Monitor patients’ progress resulting from pharmacotherapy Carry inventory of products necessary for patients to execute a therapeutic plan (e.g., inhalers, nebulizers, glucose monitors, etc.) Supply patients with information on support and educational groups (e.g., American Diabetes Association, Multiple Sclerosis Society) IV. Pharmaceutical care services marketing Meet prominent prescribers in the local area of practice Be an active member of professional associations that support the concept of pharmaceutical care Make available an area for private consultation services for patients as necessary Identify software that facilitates pharmacists’ patient care–related activities V. Business management Use technicians and other staff to free up the pharmacist’s timeembrace the concept of medication therapy manage- MTM movement has been especially strengthened byment (MTM). MTM represents a comprehensive and language in the Medicare Prescription Drug, Improve-proactive approach to help patients maximize the ben- ment and Modernization Act (MMA) of 2003 (Pub-efits from drug therapy and includes services aimed to lic Law Number 108-173), which mandates paymentfacilitate or improve patient compliance to drug ther- for MTM services and proffers pharmacists as viableapy, educate entire populations of persons, conduct health professionals who may offer such services. Aswellness programs, and become more intimately in- such, MTM is now considered a key component involved in disease management and monitoring. The the provision of pharmacy care services.
  29. 29. 10 W H Y S T U D Y M A N A G E M E N T I N P H A R M A C Y S C H O O L ?■ MY T H S C O N C E R N I N G T H E nation’s gross national product and cost over $5000 C O N F LU E N C E O F BU S I N E SS per person (Kaiser Family Foundation, 2005), health P R AC T IC E A N D PH A R MACY care consumers have little choice but to become more discerning shoppers of health care services. BecauseDespite evidence that would suggest otherwise, the resources are limited, the number of services andneed for a management perspective in pharmacy is of- products provided to consumers cannot be bound-ten overlooked and even shunned by some pharmacy less. Conscientiousness in the allocation of resourcesstudents and practitioners. Common misconceptions helps to ensure that more of the right people re-about the need for a management perspective have been ceive the right goods and services at the right timedocumented (Tootelian and Gaedeke, 1993, p. 23): and place. Many people do not stop to think that if a company in the health care business is not ablet The practice of pharmacy is ethically inconsistent with to pay its own workforce and cover its other costs good business. The origin of this myth probably of doing business, it will have little choice but to evolved from the unethical business practices of some close its doors, leaving a void in the array of services organizations. Scandals involving abuses by corpo- previously afforded to consumers. Even nonprofit rate executives at large international firms in the entities have to pay the bills because if they can- early 2000s have done little to mitigate these percep- not break even, they too have to shut down opera- tions. The incident involving a pharmacist in Kansas tions. Students may be surprised to learn that most City, Missouri, diluting chemotherapeutic drugs to nonprofit companies in health care compete quite spare inventory costs demonstrated that health care fiercely against companies that are structured on a professions are not without unscrupulous members for-profit basis. (Stafford, 2002). Furthermore, some people believe t The good pharmacist is one who is a “clinical purist.” that companies involved in the sale of health care This is perhaps a manifestation of the other mis- goods and services should be philanthropic in nature conceptions, in addition to a false pretense that the and are upset that companies profit from consumers’ complexities of modern drug therapy do not allow medical needs. Despite occasional examples of mis- time for concern with other matters. On the con- conduct, most companies and persons involved in trary, a lack of knowledge on how to manage re- business operations conduct themselves in an ap- sources and a lack of understanding on how to work propriate manner. within the current system of health care deliveryt Business is not a profession guided by ethical standards. will only impede the pharmacist’s goal to provide Pharmacists and pharmacy students generally are MTM services. Pharmacists who “don’t want to be cognizant of the vast number of rules and regula- bothered with management” face the same logisti- tions that govern pharmacy but are less aware of the cal constraints, such as formularies, generic substi- standards governing practice in advertising, account- tution, prior authorizations, limited networks, em- ing, and interstate commerce. Many of the rules and ployee conflict and lack of productivity, breakdowns regulations governing pharmacy practice were bor- in computer hardware and software, budgetary lim- rowed from legislation existing in sectors other than itations, and changes in policy that all other phar- health care. macists face. The problem with the “don’t want tot In business, quality of care is secondary to generating be bothered with management” pharmacists is that profits. This misconception likely results from the they will be less likely to operate efficiently within efforts by payers of health care and by managers to the system, becoming frustrated and ultimately less control costs. In light of the fact that in 2005 health clinically effective than the pharmacists who accept care accounted for approximately 16 percent of the these challenges as part of their practice.
  30. 30. Pharmaceutical Care as a Management Movement 11 The United States has been facing an acute short- career burnout or impairment through the abuse ofage of pharmacists in the wake of an ever-increasing alcohol and drugs.number of prescription drugs dispensed (Gershon,Cultice, and Knapp, 2000). At the same time, the pro-fession has come under more intense pressure to reduce ■ GO O D MA NAG E M E NTthe incidence of medication errors in both institutional P R AC T IC E A N Dand ambulatory settings (Thompson, 2001; Institute M E D IC AT IO N T H E R A P Yof Medicine, 2006). This is placing a burden on phar- MA NAG E M E NT — A W I N N I N Gmacists to be especially productive, efficient, and error- C O M B I NAT IO Nfree. Productivity is a function of a pharmacist’s abilityto manage workflow, technology, the quality and ef- Evidence of the success of a management perspectiveficiency of support personnel, phone calls, and other in pharmacy practice abounds. A series of studies ex-problems that arise in day-to-day practice. amined the use of strategic planning by pharmacists Moreover, pharmacy administrators reward phar- in both community and hospital settings (Harrisonmacists who can manage a pharmacy practice. New and Bootman, 1994; Harrison and Ortmeier, 1995,graduates often obtain entry-level administrative posi- 1996). These studies showed that among communitytions (e.g., pharmacy department manager, area man- pharmacy owners, those who fully incorporated strate-ager, or clinical coordinator) after just 2 to 3 years in gic planning saw higher sales volume and profitabilitypractice. It is not uncommon to see pharmacy grad- than did those who did not or who did so just partially.uates move up into even higher-level administrative Pharmacies owned by “strategic planners” also were sig-positions (e.g., district or regional manager of a chain nificantly more likely to offer clinical or value-addedor associate director or director of a hospital pharmacy services than pharmacies run by owners who were not.department) within 5 to 10 years of graduation. Phar- Likewise, better administrative, distributive, and clin-macists who can manage a practice successfully (i.e., ical performance among hospital pharmacies also wasincrease volume, reduce errors, engender customer sat- associated with their respective directors’ involvementisfaction, improve profitability, and reduce employee in the strategic planning process.turnover) are in the best position for promotions. Another study pointed out that support from su- A final point to consider is that even if a pharma- pervisors and colleagues had a positive impact on thecist does not ascend to an administrative position, he commitment that pharmacists display toward theiror she inherently “manages” a practice the instant he or respective organizations, thus enhancing the likeli-she takes a position as a pharmacist. Staff pharmacists hood that these pharmacists would not quit their jobsin every practice setting manage technicians and clerks (Gaither, 1998b). Other studies suggest that pharma-every hour of every day. They also manage the flow cists’ perceived ability to adhere to standards of phar-of work through their sites and the use of medications macy practice hinged considerably on the effectivenessby patients. Closely tied to this issue is the issue of of supervisors to provide them with feedback and facil-personal job satisfaction. The pressures on the modern itate their satisfaction on the job (Desselle and Tipton,pharmacist are unmistakable. Satisfaction with one’s 2001). The same study also demonstrated that phar-job and career is important because they are closely re- macists designating themselves as “managers” were lesslated to one’s satisfaction with life (Sumer and Knight, satisfied with their own jobs, likely as a result of their2001). Pharmacists’ ability to manage their work envi- lack of training in such areas.ronment can have a significant impact on their ability Surveys of pharmacists commonly indicate thatto cope with the daily stressors of practice, increas- looking at their practices today, they wish they hading job satisfaction, and diminishing the likelihood of more training in management during their professional
  31. 31. 12 W H Y S T U D Y M A N A G E M E N T I N P H A R M A C Y S C H O O L ?education. One study suggested that a business/work Table 1-2. Factors Affecting the Delivery oforientation was the skill most critical in implement- Pharmacy Products and Servicesing a successful practice (Speedie, Palumbo, and Leav-itt, 1980). It was suggested in another survey that Patient demographicslack of time and poor communication were primary Aging populationobstacles to delivering pharmacy care services (Cian- Females as decision makerscanglini, Waterhouse, and D’Elia, 1994). Still another Ethnic composition of patientsstudy concluded that it would benefit practicing phar- Attitudes and belief systemsmacists to seek continuing education in management, Beliefs about disease, sick role, andhealth care systems and policy, and pharmacotherapeu- medication-takingtics (Desselle and Alafris, 1999). It has been argued that Trust in the health care delivery systemto achieve excellence in the implementation of MTM Direct-to-consumer advertising of prescriptionservices, pharmacists must obtain and properly allocate drugsresources, design efficient distribution systems, select Third-party payers and coverage issuesand train adequate support staff, develop systems for Complexity/differences among payers’ policiesdisseminating knowledge on new drugs and technol- Formulariesogy, and document and evaluate the cost-effectiveness Limited networksof the services provided—all of which are tasks that Limited access for some patientsrequire management skills (Smith, 1988). Lack of knowledge by patients Table 1-2 summarizes many of the principal fac- Competitive marketstors that affect the delivery of pharmacy care services Diminished marginsand is used to further illustrate the existing synergy be- Diversity in the types of providers offeringtween pharmacy care and good business practice. First, products and servicesthe demographic composition of the patient popula- Technologytion has changed dramatically. The mean age of Ameri- Softwarecans continues to increase, as does their life expectancy. Automated dispensing technologyThis results in a greater proportion of patients present-ing with multiple disease states and complex therapeu-tic regimens. Although many of our nation’s seniors is rendered useless if pharmacists lack basic knowledgelead normal, productive lives, their visual acuity, hear- about the patients whom they serve. Even the mosting, mobility, and ability to use and/or obtain viable carefully devised and therapeutically correct pharma-transportation may be comprised. Pharmacists must ceutical care plan will not work if the patient does nottake on additional responsibilities in managing these put faith in the pharmacist’s recommendations. Goodpatients’ care and coordinating their services. Also, the pharmacists are able to relate to patients of all persua-population of patients that pharmacists serve is becom- sions and convince them to put faith in the consulta-ing more ethnically diverse. Good pharmacy managers tion they provide. An additional consideration is thewill benefit from a heightened sensitivity toward the increased marketing of health care products directly toneeds of all patients and efforts to carry products that consumers. This has resulted inevitably in an increaseappeal to specific populations. in the frequency of medication-specific queries from The shift in the demographic composition of pa- patients. Good pharmacists do not bias their answerstients also brings to bear the varying beliefs people have but are able to triage their patients’ requests with ap-about treating their disease states and taking medica- propriate information and recommendations.tions and their trust in the health care delivery system. A management perspective is indispensable whenAll the clinical and scientific knowledge in the world it comes to issues dealing with third-party payers (e.g.,
  32. 32. Pharmaceutical Care as a Management Movement 13private insurers, government-sponsored programs; see tient care and perform other practice and managementChapter 16). Unlike other countries, whose health care are founded on single-payer reimbursement The arrival on the scene of MTM and the com-structures, practitioners in the United States face a plexities of Medicare legislation further underscore themix of payers, including individual patients, private in- need for practice management skills among pharma-surers, employers, and government health plans. Each cists. In addition to knowledge required to help patientspayer differs in its formularies (list of approved drugs), navigate the health care system, pharmacists must berules for reimbursement, and the network of pharma- able to maximize efficiency in human, capital, and tech-cists qualified to accept its coverage. The management- nological resources to serve patients, provide services,minded pharmacist is able to identify payers that and take advantage of the unique opportunities to gainafford the pharmacy the opportunity to provide qual- reimbursement for MTM services.ity patient care while maintaining an appropriate levelof profit. Pharmacists must provide appropriate infor-mation about coverage to patients, who often do not ■ T H E MA NAG E R I A L SC I E N C E Sknow about the intricacies of their plans and the healthcare system (Fronstin, 2000). Additionally, pharma- Although mentioned throughout this chapter, a morecists must coordinate therapeutic plans for cash-paying formal examination of the managerial sciences shouldpatients whose financial situation may preclude them put into perspective their use as tools to implementfrom receiving certain therapies and services. pharmacy services effectively. The managerial sciences An additional challenge facing pharmacies and are summarized in Table 1-3. The reason they are re-pharmacists is that of shrinking profit margins. A phar- ferred to as sciences is because their proper applicationmacy’s profit margin is the excess of revenues after cov- stems from the scientific process of inquiry, much theering expenses that it secures as a percentage of its total same as with other pharmaceutical sciences. The sci-revenues. As the percentage of prescriptions paid for by ence of accounting (see Chapter 15) involves “keepingsources other than patients has increased, profit mar- the books,” or adequately keeping track of the busi-gins have decreased. In addition to selecting the right ness’s transactions, such as sales revenues, wages paid tomix of plans in which to participate, the management- employees, prescription product purchases from sup-minded pharmacist looks for other opportunities to pliers, rent, and utility bills. This must be done tobring in additional revenues and decrease expenses, ensure that the company is meeting its debts andsuch as implementing cognitive services, selling an- achieving its financial goals. Accounting is also used tocillary products, effectively purchasing and maintain- determine the amount of taxes owed, to make reportsing proper levels of inventory, effective marketing, and to external agencies and/or auditors, and to identifyhaving the appropriate amount and type of person- areas where the company’s assets could be managednel needed to do the job. This is especially important more efficiently. While accounting is used to evaluatein light of the fact that consumers have more choices a company’s financial position, finance is more con-than ever in seeking health care solutions, ranging from cerned with the sources and uses of funds (e.g., Wherenontraditional sources (e.g., complementary and al- will the money come from to pay for new and exist-ternative medicine) to more traditional sources (e.g., ing services? Which services are most likely to enhancegrocery stores, convenience stores, gift shops, and the profitability for a pharmacy?).Internet). The other managerial science commonly associ- The management-minded pharmacist also main- ated with managing money is economics. However, thetains software and automated dispensing technologies use of economics transcends financial considerations.that free up time formerly spent in the dispensing pro- Economics is a tool to evaluate the inputs and outcomescess. This gives pharmacists more time to provide pa- of any number of processes. It can be used to determine
  33. 33. 14 W H Y S T U D Y M A N A G E M E N T I N P H A R M A C Y S C H O O L ? Table 1-3. The Managerial Sciences the right mix of personnel and automated dispensing technologies, the optimal number of prescriptions dis- Accounting pensed given current staffing levels, whether or not a Keep the books pharmacy should remain open for additional hours of Record financial transactions business, and how much to invest in theft deterrence. It Prepare financial statements is also used to determine the most appropriate drugs to Manage cash flows place on a formulary or to include in a critical pathway. Analysis of profitability Human resources management (see Chapter 9) is Determine business strengths and weaknesses used to optimize the productivity of any pharmacy’s Compute taxes owed to federal, state, and local most critical asset—its people. It involves determin- governments ing the jobs that need to be done, recruiting people for Finance those jobs, hiring the right persons for those jobs, train- Determine financial needs ing them appropriately, appraising their performance, Identify sources of capital motivating them, and seeing that they are justly re- Develop operating budgets warded for their efforts. It also involves issues such as Invest profits determining the right mix of fringe benefits and retire- Manage assets ment programs, setting vacation and absentee policies, Economics assistance with career planning, ensuring employees’ Determine optimal mix of labor and capital on-the-job safety, and complying with laws and rules Determine optimal output established by regulatory bodies. Determine optimal hours of business operation It may be easy to assume that marketing is simply Determine levels of investment into risk another word for advertising (see Chapters 20 and 21). management However, while promotional activities are a significant Human resources management Conduct job analyses component of marketing, its activities include iden- Hire personnel tifying the company’s strengths over its competitors, Orient and train personnel properly identifying consumer bases to which market- Motivate personnel for performance ing strategies will be directed, carrying the right mix of Appraise personnel performance goods and services, arranging these products for opti- Allocate organizational rewards mal “visual selling,” and establishing the right prices for Terminate employment goods and services. Price setting is critical not only for Marketing products but also especially for services. It is here that Identify competitive advantages pharmacists often make mistakes when trying to estab- Implement competitive advantages lish cognitive or value-added services. Services priced Identify target markets too low are unprofitable, perhaps even a money-losing Evaluate promotional strategies proposition, whereas services priced too high will fail Implement promotional strategies to attract customers. Evaluate promotional strategies Operations management (see Chapter 5) involves Select proper mix of merchandise establishing policy delineating the activities of each Properly arrange and merchandise products employee on a day-to-day basis, what tools they will Price goods and services use to accomplish their tasks, and where those tasks Operations management will be performed (i.e., workflow design). It also en- Design workflow tails maintaining the proper inventory of prescription Control purchasing and inventory and nonprescription products so that, on the one hand, Perform quality assurance initiatives the pharmacy is not consistently running out of drug
  34. 34. Pharmaceutical Care as a Management Movement 15products that patients need and, on the other hand, and external forces that shape the practice of phar-there are not excess amounts of products reaching their macy. The managerial sciences of accounting, finance,expiration date prior to sale or otherwise taking up economics, human resources management, marketing,valuable space that could be used for other purposes. and operations management are indispensable tools for today’s practitioner.■ “ S M O OT H O PE R AT IO N S ” — R EV I S I T I N G T H E SC E NA R IO ■ QU E S T IO N S F O R F U RT H E RThe preceding discussion of the managerial sciences, D I SC U SS IO Nespecially the issue of workflow design in operations 1. Would you be willing to extend your commute ormanagement, brings us back to the scenario involving make other similar sacrifices to work at a place whereMary Quint. Pharmacy students questioning the sig- you enjoyed your job? Why or why not?nificance of management and the importance of hav- 2. How do you feel about the role that managementing a management perspective need not look much plays in the practice of pharmacy?further than this case. Mary is faced with a dilemma 3. Can you identify someone in a managerial positionprobably all too common to pharmacy students and who is very good at what he or she does? What is itpractitioners. Students who have worked in numerous that makes him or her effective?environments probably can recall that in some of these 4. Do you believe that you are going to be an effectiveplaces things just seemed to be “going well.” Both the pharmacist? What makes you think so?customers and the employers were happy, and it was 5. Do you think that you are going to ascend even-not completely unpleasant to have to show up at work. tually to a managerial position? Why or whyAt other places, there always appears to be a crisis. Im- not?mediately on waking up in the morning, one’s firstthoughts are of dread at having to go to work that day.While this may be somewhat of an oversimplification,the latter places are not being managed well, whereas REFERENCESthe former ones probably are. The tremendous vari-ability that exists from one workplace to another is American Association of Colleges of Pharmacy. 1996. Paper from the Commission to Implement Change in Phar-indicative of how critical management is for both the maceutical Education: Maintaining our commitmentemployees working there and the patients they serve. to change. Am J Pharm Educ 60:378.Now ask yourself, Where do you think that you would Bell HM, McElnay JC, Hughes CM. 2000. Societal per-rather work, and where do you think that patients are spectives on the role of the community pharmacist andreceiving the best care, Middletown North Pharmacy community-based pharmaceutical services. J Soc Adminor Middletown South Pharmacy? Pharm 17:119. Belluck P. 2001. Prosecutors say greed drove pharmacist to dilute drugs. New York Times, August 18.■ C O N C LU S IO N Brodie DC. 1967. Drug-use control: Keystone to pharma- ceutical service. Drug Intell 1:63.Contrary to popular belief, good business and good pa- Buerki RA, Vottero LD. 1994. Ethical Responsibility in Phar- macy Practice. Madison, WI: American Institute of thetient care are not mutually exclusive. In fact, they are History of Pharmacy.almost entirely mutually dependent. Superior patient Broeseker A, Janke KK. 1998. The evolution and revolutioncare and the implementation of clinical services are of pharmaceutical care. In McCarthy RL (ed), Introduc-made possible by pharmacists who are skilled in man- tion to Health Care Delivery: A Primer for Pharmacists,agement. Pharmacists must be attuned to the internal p 393. Gaithersburg, MD: Aspen.
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