Pharmacy Management PharP 581 Fall 2003

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Pharmacy ManagementPharP 581 - Fall 2003

• R. Keith Campbell, RPh, MBA, CDE, FASHP, FAPhA
• Associate Dean/Professor of Pharmacotherapy

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Course Description

• Management principles applied to pharmacy
  practice health systems patient care
  strategies.

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Course Objectives

• Provide students with a general knowledge of the
  management process
• Review how professionals can use the controllable
  elements of a retail strategy to achieve
  objectives
• Review financial managerial accounting concepts
  used in health care to evaluate effectiveness and
  patient outcomes
• Integrate the pharmacists professional
  responsibilities with efficient and effective
  management and administrative responsibilities

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Student ObjectivesUpon successful completion of
the course each student will

• Explain the dilemma faced by pharmacists in being
  both a competent, caring professional and a
  profitable, successful manager
• Develop personal professional objectives
  consistent with optimal patient care financial
  security
• Describe each aspect of the managerial
  (decision-making) process
• Describe at least two methods of estate planning
• State at least 3 sources of information to assist
  you in managing your pharmacy/professional life

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Student Objectives contd

• List 4 management functions and their
  inter-relationships to achieve objectives
• State 5 controllable then 5 uncontrollable
  elements of the retail strategy
• Explain how the Dupont return-on-investment
  schematic can be used to analyze a firm
• Prepare an organizational chart
• Define the elements of a balance sheet
  determine your own NET WORTH
• Explain the parts of an income statement and
  determine a firms NET PROFIT

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Student Objectives contd

• Determine the financial position of a business as
  to profitability and liquidity
• Given a balance sheet and income statement do a
  financial ratio analysis of a pharmacy
• Explain in detail the process used to do a CASH
  FLOW analysis
• Calculate the break even point of a business
• List the objectives of the budgeting process
• List at least 3 types of budgets needed to manage
  a business

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Student Objectives contd

• Describe at least 4 models of personnel
  management
• Describe at least 4 methods of inventory control
• List and describe the 5 Ps used in
  marketing/managing a business
• Describe the difference between a physical and
  perpetual inventory
• Determine the selling price of a product
• Explain the principles of placement, promotion,
  pricing and product strategy
• List the 4 major sources and 3 major uses of
  funds

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Time Place of Lectures

• Wegner Hall Room G-1
• Wednesday afternoons from 1- 4 pm

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Required Texts

• Financial Management for Pharmacists. Norman V.
  Carroll, Lea Febiger, 2nd edition
• Selected chapters from text entitled Effective
  Pharmacy Management that is available on the
  course internet site.
• 2002 NCPA Pharmacia digest that is on the
  internet for you to view and download go to
  http//www.pharmacy.wsu.edu/courses/PharP581/
• Pharmacy management lecture notes and slides for
  2003 will be on the internet compliments of RKC
  see the above site to access.
• Pharmacy trade journals have articles on pharmacy
  management there are 2 chapters in Remingtons
  pharmaceutical sciences worth reading learn to
  read these type of articles.

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Grading

• The instructor assumes that you are an adult
  learner who is motivated to
• learn the material and will come
  to class prepared by reading the assigned
• topics. The course content is
  not difficult but will require some weekly time
• and effort on the part of each
  student. Much of the material will be
  self-learned
• through reading chapters or
  looking up topics. Grading will be based on a
  percentage
• of the total possible points or
  on the basis of a percentage of the highest
  points
• achieved by the top student in
  the course.
• Whichever system gives you the highest grade will
  be used to determine your grade.
• If you achieve 90 of the total possible
  points, you will receive an A-,
• 80 a B- and so on.
• 95 of the top students total will give you
  an A-,
• 85 a B- and so on.
• Total points will be given for exams (at least
  two), quizzes (up to three and occasionally
  unannounced), a book report of a book that you
  will select and read,
• assigned papers (at least three) several
  homework assignments.

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Writing Assignment

• BOOK REPORT DUE Nov. 14th
• Book Reports should be a minimum of
  5 type written pages and summarize the main
  topics of the book as well as how the book
  affected you personally. Book Reports will count
  a minimum of 50 points but may earn more points
  if certain books are selected.
• The primary emphasis on exams
  will be placed on material covered in lecture,
  assigned text chapters or handouts on topics of
  interest. If you are unable to attend a class,
  arrange to have a classmate get notes and
  assignments for you.

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Books for Book Reports

• You can choose the book you wish for the report
  topics include Management issues, Personal Growth
  issues, Relationship Topics, Autobiographies of
  famous management people or other topics approved
  by the instructor. Rough drafts will be graded
  and returned for a re-write and the final report
  will be given points depending on the chosen book
  from a possibility of 50 to 70 points. For
  example Dr. Samples The Contrarians Guide to
  Leadership could possibly earn 70 points whereas
  the One Minute Manager could be worth 50 points.
  The 2nd week of class provide the instructor in
  person or in writing with the name of the book
  and you will be told the point value for that
  book.

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Honesty Issues

• Any student enrolled in the class who is caught
  cheating will be given a grade of F for the
  course.
• Unless you have an excused absence, you will not
  be allowed to make-up quizzes or exams.
• In other words, if you are going to miss an exam
  for a legitimate reason, you need to inform the
  instructor prior to the exam.
• Assignments turned in late will have points
  deducted.

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Disability Statement

• Reasonable accommodations are available for
  students who have a documented disability. 
  Please notify the instructor during the first
  week of class of any accommodations needed for
  the course.  Late notification may cause the
  requested accommodations to be unavailable.  All
  accommodations must be approved through the
  Disability Resource Center (DRC) in
  Administration Annex 206, 335-3417.

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Teaching Philosophy

• This course should be a practical, relevant
  positive experience for you.
• It should be a fun learning experience that will
  teach you the language of business and then allow
  you to improve patient care by selling your
  clinical care interventions to administrators
  using business concepts.
• The course should also be a refreshing contrast
  to some of the pharmaceutical science concepts
  that are important for you to master.
• To learn this material, you will need to be
  actively involved in the learning process, keep
  up to date on readings and come to class
  prepared.

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Teaching Philosophy contd

• The course is meant to cover 3 main concepts
• The Management Process
• Managerial Accounting
• The Retail Strategy.
• Focus your attention on these topics and the
  student learning objectives.

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Teaching Philosophy contd

• The barriers for the course are
• 1.) Some students do not like business topics
• 2.) The course is taught too early in the
  curriculum before one can see practical
  application in the real world
• 3.) The lecture is 2 hours long
• 4.) The information learned is not going to be on
  the NABPLEX Exam so why do you have to learn it?

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Teaching Philosophy contd

• Answers to these problems include
• A. Management is a required topic for the
  College of Pharmacys accreditation.
• B. This is a true barrier that will require an
  intellectual effort to overcome on the part of
  the student.
• C. The lectures usually run for only two hours
  and time is given to students to read assigned
  topics and students need to get used to enduring
  3 hours of Continuing Education lectures when
  they are in the real world.
• Learning management helps you better manage
  pharmaceutical care.

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Course Challenge Option

• Students who have a degree in business can be
  waived from taking the course. See Professor
  Campbell and discuss this option.
• Students who are self-motivated can review the
  student objectives for the course, study the
  course materials that are on the internet site
  and make an appointment with Professor Campbell
  to discuss taking a challenge exam to complete
  the requirements for PharP 581.

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Fall 2003 Lecture Outline

• Introduction - Week One
• Management Process - Weeks Two, Three Four
• Understanding Using The Retail Strategy
  Concept - Week Five, Six, Seven, and Eight
• Financial Analysis - Weeks Nine, Ten, Eleven and
  Twelve

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Introduction - Week One

• Pre-test (provides you with types of questions
  topics covered in course)
• Course Requirementsreview of grading policies,
  assignments, book report assignment, required
  texts and course organization, etc.
• AnnouncementsNCPA, WSSHP, Student Organizations,
  Scholarships, Career Day, etc
• Discussion of Learning Process and Instructor
  Expectations
• Introduction of Students in the Class
• Introduction to the Management Process

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Introduction - Specific Assignments

• Read course objectives, outline, and the articles
  on the course web site
• Critical Business Challenges
• A Payment Paradigm for Pharmaceutical Care
• Attitude
• Dealing with Change
• Implementing and Tracking Clinical Quality
  Improvement in a Hospital Setting
• Effective Teams
• Managing Change
• The One Minute Manager Game Plan
• Delegation (2 articles)
• Read Chapters 1,2 in Effective Pharmacy
  Management (See Internet)
• Select a book for the Book Report and report
  your selection to the instructor.
• Prepare for a quiz over the course objectives and
  readings.

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Management Process - Weeks Two, Three Four

• The Pharmacists Dilemma Competent specialist
  vs. incompetent manager
• Elements of the Management Processdetermining
  objectives, planning, organizing, implementing
  and evaluating.
• Management FunctionsFinance, Marketing,
  Production, Retailing, Development,
  Communications, and Personnel
• Developing an Effective Team
• Using the Change Formula
• Personnel Management Theory
• Diversity Lecture for 2nd Year Pharmacy
  Students???

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Management Process Specific Assignments

• Make sure all previous assignments have been
  completed
• Read
• Conclusion to Samples Book
• Effective Communication with Prescribers
• Motivating Pharmacy Employees
• McGregors Theory X and Y
• How to Maximize the Effectiveness of Pharmacy
  Personnel Deming Approach
• Personal Preference Checklist
• Read Chapters 10-15 in Effective Pharmacy
  Management
• Complete written assignments related to
• Determining Objectives
• Making a Friend of a Foe
• Fill out Personal Preference Checklist and TA
  Quotient questionnaire.
• Prepare for an Exam

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Understanding Using The Retail Strategy
Concept - Week Five, Six, Seven, and Eight

• Defining the Retail Strategy Concept
• Controllable Elements of the Retail Strategy
  Product, Pricing, Promotion, Placement and
  Personnel
• Uncontrollable elements of the Retail Strategy
• Achieving Objectives using the Retail Strategy
• PharmacoEconomic Concepts Formulary Development

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Financial Analysis - Weeks Nine, Ten, Eleven and
Twelve

• Financial vs. Managerial Accounting
• The Balance Sheet
• The Profit Loss Statement
• Cash Flow Analysis
• Financial Ratio Analysis
• Break Even Point Analysis
• Budgeting
• Personal Money Management

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Financial Analysis - Specific Assignments

• Read internet handouts
• Financial Ratio Analysis"
• Balance Sheets (3 types)
• Managerial Accounting by RKC
• Get it together A final Worksheet" (fill out
  and turn in)
• How to Analyze and Interpret Financial
  Statements"
• Managing Efficiencies in Pharmacy Cash Flow"
• NCPA Pharmacia Digest"
• "Independents Stay the Course"
• 2002 NCPA-Pharmacia Digest"
• Break even point Type Questions"
• Location Analysis Impact on Starting a
  Pharmacy"
• "How to Determine an Equitable Selling Price."

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Financial Analysis - Specific Assignments contd

• Read Chapters 2, 3, 4, 5-8, 12 and 13 from
  textbook
• Read Chapters 7,8 in Effective Pharmacy
  Management
• Prepare and turn in a personal balance sheet
• Complete and turn in a monthly budget
• Get rough draft of book report done and turned
  in.
• EXAM

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Miscellaneous Topics - Weeks Thirteen and Fourteen

• Guest Speakers
• Investing your money
• Buying a Pharmacy
• OTC Merchandising
• Practice Location
• Insurance Needs
• EXAM
• Specific Assignments
• Read the remaining pages from handouts on the
  internet.
• Read remaining chapters in the textbook.
• Read Chapters 4-6 in Effective Pharmacy
  Management.
• Make sure Book Report is completed and turned in.

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Test and Quiz Schedules

• You can expect a few quizzes that will determine
  your knowledge of the material and see if you are
  keeping up to date with assignments and readings.
• The quizzes should also motivate you to come to
  each class prepared to take a quiz.
• TESTS will occur at appropriate times in the
  course as we finish different sections of the
  course and in consideration of other tests that
  you have in other courses.
• APPROXIMATE TEST DATES ARE WEEKS 6, 11 AND DURING
  FINALS WEEK or the week Before Closed Week.

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LESSONS
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The Language of Business

• It is important that you learn the language of
  business to succeed in selling clinical concepts
  that will improve the care of your patients. Much
  of this language is related to business plans,
  accounting concepts, the marketing mix (retail
  strategy) and cost/benefit analysis.
• The following are humorous Business Lingo that
  should bring a laugh but also makes the point
  that What is said is not always, What is meant.

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Business Lingo

• Competitive Salary we remain competitive by
  paying less than our competitors.
• Join Our Fast-Paced Team we have no time to
  train you.
• Casual Work Atmosphere We dont pay enough to
  expect that youll dress up.
• Must be Deadline Oriented Youll be 6 months
  behind schedule on your 1st day
• Some Overtime Required Some time each night and
  some time each weekend.

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Continued Business Lingo

• Duties will vary anyone in the office can boss
  you around.
• Must have an eye for detail we have no quality
  control.
• Career minded female applicants must be
  childless and remain that way.
• Apply in person if you are old, fat or ugly
  youll be told that the position has been filled.
• Seeking candidates with a wide variety of
  experience youll need it to replace 3 people
  who just left.
• Good communication skills management
  communicates, you listen, figure out what they
  want and do it.

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Pharmacists Dilemma

• Is it possible to be a competent professional and
  a successful and profitable business manager?
• YES, if you always put the patients best
  interests first but effectively manage products,
  price, placement, promotion and people.
• Manage your professional and business activities
  instead of running the business.
• Read articles on internet site about Critical
  Business Challenges Quality Improvement A
  Payment Paradigm for Pharmaceutical Care
  Attitudes Dealing with Change.

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We judge others by what they say and do we judge
ourselves by our thoughts and intentions
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PEOPLE WHO NEVER MAKE MISTAKES, ARE THOSE WHO
NEVER DO ANYTHING
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HEALTHCARE TRENDS

• Deregulation of the Industry
• Larger Medical Practices
• An Excess of Physicians
• Medical Services are being Packaged Joint
  Ventured Sleep, Wt.Loss, etc.
• Increasing Demands for for Equipment,
  Marketing, Salaries Expenses are Increasing
• Price Competition in Health Care is Increasing
• Increasing Promotional Efforts
• Pharmacy Pricing Controls are emerging

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IF THE ONLY TOOL YOU HAVE IS A HAMMER, YOU TEND
TO SEE EVERY PROBLEM AS A NAIL
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LEVEL OF SUCCESS IN AN ORGANIZATION IS BASED UPON
THE LEVEL OF SUCCESS OF EACH INDIVIDUAL
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THE SYNERGY OF TEAMWORK IS A BOUNDLESS RESOURCE
IN AN ORGANIZATION
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AN EFFECTIVE TEAM

• TRUST - Repeated patterns of expected behavior
• RESPECT - Regard for your knowledge skill
• COMMITMENT to a common goal (clearly defined
  expectations)
• Read article on this topic

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INDICATORS OF THE SPIRAL OF DISINTEGRATION

• DISTRUST
• HOSTILITY
• POLARIZATION
• RUMORS
• BLAMING
• POWER STRUGGLE
• SABOTAGE
• WITHDRAWAL

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The Change Equation

• Change Sum (ABC) gt D
• where A Dissatisfaction with Status Quo
• B A Shared Vision
• C Knowledge of 1st Practical Steps
• D The Psychological Financial Cost of
  Change
• Read article on this subject on internet site

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THE GOAL OF MOST LEADERS IS TO CAUSE PEOPLE TO
FEEL REVERENCE FOR THE LEADER
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THE GOAL OF AND EXCEPTIONAL LEADER IS TO CAUSE
PEOPLE TO FEEL REVERENCE FOR THEMSELVES
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The BEST leader is one WHO GIVES OTHERS A
SENSE OF HOPE
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A GOOD LEADER HAS

• KNOWLEDGE
• CHARISMA
• ORGANIZATIONAL CLOUT

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The Contrarians Guide to Leadership by Stephen
Sample

• Never make a decision today that can be put off
  to tomorrow
• Dont form opinions if you dont have to think
  gray.
• Shoot your own horse. Dont force others to do
  your dirty work.
• The best leaders do not keep up with the popular
  media and the trade journals.
• Machiavellis book, The Prince, can help make you
  a more moral leader.
• Know which hill you are willing to die on and
  keep its exact location to yourself.
• Know the all-important difference between being
  leader and doing leader.
• You cant copy your way to the top.
• See the Conclusion of his book on the Internet
  site.

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Characteristics of Exceptional Leaders

• Has a high frustration index doesnt get
  frustrated easily.
• Uses and respects the opinions of others.
• Continually questions ones self. Know thyself
  your motives motivation to perform. Know your
  intellect, values and own personality.
• Compete cleanly. Business is not a war Your
  objectives should be to service a customer and
  make a friend.
• Control impulses to get even Forgetting is a
  noble virtue.
• Win without exulting. Lose without moping
  (remember that Edison failed 9999 times before he
  successfully developed the light bulb.
• Honesty is always the best policy. Set realistic
  goals.
• Be conscious of group loyalties.

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Managers do things right, Leaders do the right
thing.
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DELEGATION

• Responsibility
• Authority
• Accountability
• Read article on this topic

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Management Functions

• Marketing
• Finance
• Production
• Sales
• Research Development
• Retailing
• Communication/Human Resources

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• MANAGEMENT
• THE ACCOMPLISHMENT OF
• PREDETERMINED OBJECTIVES
• THROUGH THE EFFORTS OF OTHER
• PEOPLE.

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MANAGEMENT PROCESS
DETERMINING OBJECTIVES PLANNING (End
stage and Means to an End) ORGANIZING (
Breaking work into workers, work place and work
units) ACTUATING (Staffing Leading) CONTROLLING
(Evaluating)
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MANAGEMENT AS PROBLEM SOLVING

• Define the Problem
• Define Objective(s)
• Generate Alternatives
• Develop Action Plan
• Troubleshoot (anticipate potential problems)
• Communicate
• Implement
• Evaluate if objective achieved

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HEALTH CARE PROCESS

• ASSESS THE PATIENTS NEEDS
• DIAGNOSE THE PROBLEMS
• DETERMINE ALTRN. TREATMENT PLNS.
• SELECT THE BEST TREATMENT ALTRN.
• IMPLEMENT THE PLAN (Treat the patient)
• EVALUATE IMPACT OF TREATMENT PLAN (Outcome
  Studies)

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Steps for Provision of Pharmaceutical Care

• Establish the RPh-Patient Relationship
• Collect, synthesize and interpret relevant
  information
• List and rank the patients drug problems
• Establish a desired pharmacotherapeutic outcome
  for each drug related problem
• Determine feasible therapeutic alternatives
• Choose the best pharmacotherapeutic solution and
  individualize regimen
• Design a therapeutic monitoring plan
• Implement the regimen and monitor plan

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MAJOR CAUSE OF MANAGERIALBUSINESS
FAILURE IMCOMPETENCE
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System Model of the Management Process
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The Organization as a Servosystem
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TO ASSIST YOU IN DETERMINING YOUR PROFESSIONAL
PERSONAL OBJECTIVES, LIST THE TEN THINGS THAT ARE
MOST IMPORTANT TO YOU (PERSONALLY VS. AT
WORK)Assignment Write at least 10 personal or
professional objectives and be sure to state them
in a manner that includes a measurable outcome
and a time line. TURN IN next week at beginning
of class.
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A WANT OR OBJECTIVE SATISFIED IS NO LONGER A
WANT
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In Effective COMMUNICATION

• One MUST
• Be Excited
• Ask Questions
• Listen Carefully
• Observe
• Stress Benefits

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• Major Barrier to LISTENING is INABILITY TO KEEP
  QUIET.
• Remember you have two ears only one mouth

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• EVERY HEALTH CARE PROVIDER WHO COMPETES JUST ON
  PRICE, WILL BE LOSERS TO THOSE WHO PROVIDE
  QUALITY HEALTH CARE..

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COMMUNICATION SKILLS

• INTIMATE - HONEST
• ROGERIAN METHOD OF COMMUNICATION
• NON-VERBAL
• PROBLEMS IN ACHIEVING EFFECTIVE
  COMMUNICATION

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TO IMPROVE COMMUNICATION INTIMACY

• INCREASE CONCENTRATION ON DETAILS
• BE A MUCH BETTER LISTENER
• COMPLIMENT
• CRITICIZE CONSTRUCTIVELY
• USE ROGERIAN METHOD

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CONSTRUCTIVE CRITICISM

• Stay Calm
• Gather the Facts
• Communicate in Private
• Commend BEFORE you Condemn Develop a
  mutual plan

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Coveys 7 Habits of Successful People

• Be Pro-Active you are responsible for your life
  decide what to do and get on with it.
• Begin with the end in mind how do you want to be
  remembered at your funeral?
• Put first things first Devote more time to
  whats important but not necessarily urgent.
• Think win-win Seek solutions that benefit all
  parties.
• Seek first to understand, then to be understood
  (listen carefully)
• SynergizeCooperate with everyone value the
  differences in people.
• Sharpen the Saw exercise renew 4 elements of
  your self including physical, mental, emotional
  spiritual.

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ANALYZING RELATIONSHIPS

• Emotional
• Intellectual
• Physical

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Personality Normalcy

• 1 are Psychotic
• 8 are Highly Neurotic and like to star in their
  own soap operas.
• ( Be cautious when dealing with these kind of
  people)
• 91 are Normal Well Adjusted Individuals

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600 Happy Couples List of Characteristics of a
Good Relationship

• 1. Communication
• 3. Acceptance
• 5. Vulnerability
• 7. Romance / Sex
• 9. Patience

• 2. Affection
• 4. Honesty
• 6. Sense of Humor
• 8. Sharing
• 10. Freedom

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In Real Love, You Want the Other Persons
Good. In Romantic Love, You want the Other
Person.
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THEORY OF LEAST INTEREST --PERSON WHO
CARES THE LEAST, CONTROLS THE RELATIONSHIP
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Relationship Concepts

• Lesson of life it can be boring
• No theory works unless you do
• Dumpor vs. Dumpee
• Cinderella Syndrome
• Thing that is most attractive initially is often
  the biggest annoyance later in relationships
• Ok to evaluate relationships before marriage via
  tests that look at physical, emotional,
  intellectual, timing, parental relationships,
  communication skills and types and miscellaneous
  factors
• Intimacy Quotient Test
• Extrovert vs. Introvert test
• It is your attitude, not your aptitude that
  determines your altitude
• Highest motivation is praise when earned
• COMPLETE THE INTIMACY QUOTIENT TEST Extrovert
  survey on internet for class discussion

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CRISIS CREATES BOTH ANXIETY OPPORTUNITY
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DISTRESS STRESS WITHOUT A SENSE OF HOPE
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A Famous Jewish ProverbA woman is a young
mans mistress,A middle aged mans companion,
And an old mans nurse !
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• TO ASSIST YOU IN IMPROVING YOUR INTERPERSONAL
  RELATIONSHIPS, LIST TWO PEOPLE THAT YOU INTENSELY
  DISLIKE THEN STATE A PLAN TO MAKE THEM YOUR
  FRIEND
• Assignment due at beginning of next class.

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MOTIVATING EMPLOYEES

• Self-fulfilling Stereotypes
• Maslows Hierarchy of Needs
• Herzbergs Hygiene Theory
• Masseys Value System
• McGregors Theory X vs. Y
• Quality Circles
• 
  Demings Approach
• Read Articles on Personnel Management from
  Internet

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RETAIL STRATEGY -

• A Comprehensive Plan of Action
• Movement and counter movement in the pursuit of
  goals and objectives..

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CONTROLLABLE ELEMENTS OF RETAIL STRATEGY

• PRODUCTS/SERVICES- Inventory assortment
  Services
• PRICE Strategy and Image
• PROMOTION Mass Advertising Personal Selling
• PLACEMENT Store Location, Layout
  Merchandising
• PERSONNEL - Hiring, Training Supervision

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UNCONTROLABLE ELEMENTS OF A RETAIL STRATEGY

• Competition
• Overall Demand for the Industry
• Governmental Factors
• Economic Factors
• Consumer Tastes
• Legal Framework Environment

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EXAMPLES OF UNCONTROLLABLE ELEMENTS

• LIMITED ACCESS TO HEALTH CARE (HMOs Closed
  Groups, Group Practices)
• Margin Cutting -- Decreasing Price of Services
• Legal Issues -- Joint ventures, anti-trust,
  contracting, government regulations
• Competition

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TO DEVELOP A MARKET PLAN, For A Diabetes
Education Program,YOU MUST

• Know the Physical Characteristics of your
  patients ---
• Age, Education, Disease states, Complications,
  Health Insurance and Referral Physicians
• Psychographics the patients expectations of
  care
• Quality Needs How are services provided rather
  than what services?
• Development a Business Plan
• Development a formal Budget a Marketing Budget
• Place a specific person in charge of Marketing

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ASSESSING THE MARKETING PLACE

• Determine the Potential Number of Patients in
  your Trading Area 1 in 19 have Diabetes,
  Increasing at a rate of 6 per year, if older or
  minority, s increases greatly
• 17 of Nursing Home patients have Diabetes
• 6-9 of Hospital Patients have Diabetes
• 25 of the US population is affected by diabetes
  daily
• A condition with high visibility
• Patients not only needs to be educated, but
  periodically re-educated.

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ASSESSMENT OF COMPETITION

• Who else is providing services to patients with
  diabetes?
• What percent of the market does the competition
  have?
• What are their services?
• How do they compare to your services?
• What is their location? Is it convenient?
• How do they market their program?
• What is their charge for services? What is their
  price image?
• What can you do to increase your share of the
  market?
• Are their personnel as competent, friendly as
  yours?

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QUALITY OF MEDICAL SERVICES

• What are you doing for the patient?
• What should the patient do after receiving your
  service??
• Is the type of care meeting the patients needs?
• Is time and availability of care sensitive to
  patients
• Physical Environment does it enhance learning
  and a sense of being cared for?
• Does it project a HIGH QUALITY / Low Cost Image?
• 65 of Patients leave their physician due to not
  feeling appreciated or cared for.

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TO MAKE THE PATIENT FEEL CARED FOR.

• If they leave, determine why.?!
• Follow-up phone calls
• For referrals, send acknowledgements
• Reward staff when they provide good Customer
  Relations
• Send Reminder Systems i.e. a Birthday Card
• Do not Apologize for the fees you need to charge
• Computerize, gather data, evaluate it

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PRODUCT (SERVICES) STRATEGY

• Assess your present educational program
• What is your present system of assessing patients
  needs?
• How many programs do you now offer? When? Where?
• Is your program designed to respond to an
  individuals needs?
• What is being overlooked?
• Adequacy of audio-visual program?
• In-patient Vs. Out-patient?
• Computer assistant instruction and User database?
• System of follow-up?
• Consider taking your educational program to other
  hospitals with in your trading area.
• Eliminate some of the non-cost effective programs
• Contract HMOs and contract the private
  Educational programs
• Provide in-service Education Patient Education
  to diabetic Nursing Homes

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PRODUCT (SERVICES) STRATEGY

• Develop a Family Home Environment Education
  Program
• Provide Short Specific Education Programs for a
  fee on subjects such as TRAVEL, Drug use, Wt.
  Loss, New Products
• Develop a Hotel approach to bringing patients
  into your in-patient unit for evaluation and
  education
• Coordinate your Diabetes Programs with Stop
  Smoking Clinics, Weight Loss Clinics, and
  Stress Management Programs
• Develop programs for Health Care professionals
• Develop a pregnancy, prepregnancy, and
  gestational counseling service if it is needed in
  you reading area
• Develop a Peer Education Program
• Develop annual Course for Babysitters of Diabetic
  Kids
• Develop a Diabetes Information service for
  Patients Health Care Providers, Develop an
  internet site

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PRODUCT (SERVICES) STRATEGY

• CREATE A PATIENT FOLLOW-UP PROGRAM THAT REMINDS
  THE PATIENT TO KEEP IN CLOSE CONTACT WITH THE
  PHYSICIAN. TO CONTROL BLOOD PRESSURE, MONITOR
  CONTROL BLOOD GLUCOSE, HAVE HEMOGLOBIN Alc DONE,
  AND TO COME BACK AT LEAST YEARLY FOR MORE
  EDUCATION AND ASSESSMENT
• NOTE THAT PRODUCT STRATEGY RELATES TO WHAT TO
  BUY, HOW MUCH TO BUY AND FROM WHOM TO BUY
  MERCHANDISE
• INVENTORY CONTROL METHODS ARE ESSENTIAL FOR
  PROFITABILITY, HAVING A RELIABLE WHOLESALER FROM
  WHOM TO PURCHASE QUALITY PRODUCTS IS ALSO A
  REQUIREMENT FOR EFFICIENCY AND EFFECTIVENESS.

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Inventory Control

• Most retailers believe that controlling inventory
  is the single most important activity insuring
  profitability.
• It is the major activity of Product Strategy.
• To master inventory control, one must answer 3
  questions..
• What to Buy?
• How Much to Buy?
• Who to Buy From?

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What to Buy?

• As usual, the key is knowing your clients
  characteristics and needs and desires.
• 3 Sources of information
• Inside sources past sales, returned goods,
  credit dept. data, customer inquiries,
  suggestions from sales people and comparison
  shopping.
• Outside sources Assess success of
  competition, review vendor offerings (go to gift
  shows and wholesaler programs), sales reps,
  consultants.
• Combination of the two do not forget to ask
  your customers.

105
Inventory Concepts

• Product Life Cycle
• Inventory methods want book(s), stock card
  system, Open-to-Buy Budget, Computerized
  Perpetual Inventory, Economic Order Quantity.
• Paretos Law
• Importance of Inventory Turnover physical vs.
  perpetual inventory.
• To Increase TO Buy products people want to
  purchase from you Price and price image must
  fit Selling and merchandising and last,
  Inventory control.

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Model for Where to Invest

• Contribution Return on Investment helps to decide
  what lines of merchandise to carry.
• MAX C 100 x (S-W-D)
• I
• Where C Contrib. As a R.O.Inventory
  Investment S Net sales in dept or for product
  W Net invoice C of GS for dept. or product D
  Direct Expenses of dept or product I Avg.
  Investment of inventory (at cost) of product or
  dept. Note Turnover W
• I

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PLACEMENT STRATEGY

• Formally evaluate your location
• Evaluate parking facilities - Would valet
  parking Help???
• How convenient is it for the patient to find you?
• How centrally located are you to patients or
  physicians?
• Is the layout of your education unit effective
  efficient?
• Does your present layout enhance the learning
  process?
• Does it project a warm, caring feeling?
• Is there a waiting, reception area?
• Merchandising consideration - colors, lighting,
  storage, product displays, etc
• Note that Placement strategy relates to Business
  Location, Layout of facilities and Merchandising
  of Products to be Sold

109
PRICE STRATEGY

• Evaluate your total Expenses
• Charge enough to cover Overhead Salary
• Plus make a reasonable PROFIT
• Become Price Image Conscious
• Aggressively Pursue an Increase in Donations from
  Service Clubs, Fraternal Organizations, etc.
• Identify the total impact of your Education
  program on the entire Organization
• Selling Price Cost Mark-up
• Read Pricing articles from Internet site

110
PROMOTIONAL STRATEGY

• Name a Marketing Coordinator
• Remember Promotion includes Advertising, Personal
  Selling, and free Publicity
• Promotion Objective is to Increase Number of
  users of your program and to Project an image
  that is caring and Cost effective
• Patient Satisfaction may be most effective
  promotion
• Promotional planning must reach Patients,
  Patients Families, Health Care Providers and
  Professional Support Organizations
• Develop a Medical Advisory board to give
  credibility to your program
• Make sure your product is effective
• Assist the patient in billing Insurance Co. (92
  of patients with diabetes have insurance coverage)

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PROMOTIONAL STRATEGY cont..

• Recruit Pharmacists to refer patients to you,
  also Sales Reps.
• Inform Dentists, Optometrists, Ophthalmologists,
  Urologists, Podiatrists, RDs Weight Loss
  Clinics about your program
• Recruit patients to help market you program
• Develop close relationships with diabetes
  Associations support groups, Heart Associations,
  etc.
• Ads in local Medical Society Bulletins
• Recruit Service Clubs, Churches, Senior Groups,
  etc. to Identify patients and refer them to you
  for care
• Provide a learning experience that is warm,
  Friendly Meaningful
• Develop distribute a Check-list of products
  that patients should have and use

112
PROMOTIONAL STRATEGY cont

• Utilize paid ads in the newspapers in adjoining
  rural areas
• Organize a free Publicity Media Blitz send info
  about program to newspaper medical editors, TV
  news announcers
• Inform all employees of your hospital or
  organization about your program and encourage
  them to recruit friends, relatives.
• Personally sell your program to Insurance
  Companies, Corporations, Indian Health Services,
  HMOs Council on Aging, Home Health Care Groups
• Personally contact ALL physicians who care for
  patients with Diabetes and detail (Sell) your
  program to increase referrals (85 plus of
  Diabetics see GPs)
• Sell your program to Office Nurses, Receptionists
• Develop a Promotional Brochure that gives info
  about your program

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Promotion Strategy Mass Advertising and Personal
Selling

• Advertising is a system of communication with
  clients that gets people into the store, personal
  selling keeps them coming back.
• Can only advertise effectively if you know the
  characteristics of the people in trading area.
• Know these terms Canalizing, Source effects,
  Media Effect, Two-Step Flow of Communication,
  Push-Pull Concept, Institutional Advertising,
  Free Publicity, Competitive vs Cooperative
  Advertising

114
PERSONNEL STRATEGY

• Determine what needs to be done
• Develop an organizational Chart - assign
  responsibilities
• Place one person in charge of Marketing
  Activities
• Develop job descriptions, a policy procedure
  manual.
• Implement a Formal System of hiring, training and
  evaluating
• Evaluate the Personalities of the Employees from
  the patients perspective. Are the employees
  friendly, empathetic, etc.?
• Develop the Educational Coordinator into a
  Manager who can speak the business language with
  the administrators
• Review Personnel Philosophies from previous
  lectures

115
From the receptionist, to receiving the care to
finally the bill collecting process, the patient
wants and needs to feel cared for, Important and
part of the process
116
IF THE PATIENT FEELS SATISFIED, IT WILL RESULT IN
INCREASED COMPLIANCE WITH TREATMENT PLAN.
117
THE INITIAL PERCEPTION OF YOU IS MADE WITHIN 10
SECONDS OF MEETING YOU
118
RESEARCH HAS SHOWN THAT A CLIENT WHO HAS A
POSITIVE EXPIERENCE WILL TELL 13 PEOPLE OF THAT
POSITIVE EXPIERENCE
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SYMPTOMS OF BUSINESS FAILURE

• Deterioration of Working Capital
• Declining Sales
• Declining Profits
• Increasing Debt Ratio

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BALANCE SHEET
ASSETS LIABILITIES NET WORTHAssignment
Using the Get it Together- A Financial
Worksheet determine your own Net Worth or Net
Loss and turn in next week.
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Financial (Operating) Statement(Profit Loss
statement)

• Sales
• COST OF GOODS SOLD
• Gross Margin
• - EXPENSES
• NET PROFIT

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CASH FLOW CYCLE
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Budgeting

• Budgets coordinate the combined intelligence of
  an entire organization in a plan of action based
  on past performance with the objective of
  predicting the future.
• Combines Planning, Coordination evaluation with
  Control features. (Does Management Process sound
  familiar?)

132
Budgeting Benefits

• Requires management to make an early study of its
  problems.
• Enlists the aid of the entire organization.
• Provides a tool whereby basic policies are
  re-examined, restated and can act as a guide for
  day to day management.
• Aids in directing capital into the most
  profitable channels.
• Acts as a benchmark against which to measure
  actual performance (responsive control).

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Types of Budgets

• Anything can be budgeted.
• Physical budgets unit sales production,
  manpower, inventories, purchases, etc.
• Cost budgets manufacturing, selling, marketing,
  administrative, financial, etc.
• Profit budgets sales, expenses, CofGS
• Finance Budgets cash, capital outlay, financing,
  balance sheet

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Other Budget Types

• Operating Budgets show the plans for operating
  for the next period.
• Cash Budgets show anticipated sources uses of
  funds or cash.
• Capital Budgets show the planned changes in
  fixed assets that represent long-term plans for
  getting new capital including Cost/Benefit
  analysis, pay-back, net-present value and
  internal rate of return methods.
• Budgets can be either imposed or participative.

135
Budget Faults

• Each is presumed to have equal value.
• Fixed periods are covered by fixed amounts.
• Motivation problems result with tight or imposed
  budgets.
• Slack or budget padding can occur.
• Variable budgets place a decreasing emphasis on
  meeting objectives more emphasis on controlling
  costs.

136
Understanding the Concepts of Profit

• As a of Sales
• As a dollar amount
• As a return on investment
• Read appropriate sections of the
• 2001 NCPA/Pharmacia Digest

137
PROFITABLITY RATIOS

• Net Profit / Net Sales
• Net Profit / Net Worth
• Net Profit / Total Assets Capital
• Read the articles on Financial Ratio Analysis and
  become proficient at their calculation

138
Financial Ratios
139
Financial Ratios
140
Financial Ratios
141
Financial Ratios
142
Financial Ratios
143
Financial Ratios
144
Financial Ratios
145
Financial Ratios
146
Financial Ratios
147
Financial Ratios
148
Average Collection Period 360 / Credit Sales /
Accts. Receivable
149
Avg. Remittance Time of Accounts Payable
Purchases / Accts. Pay / 360
150
ACTIVITY RATIOS
Inventory Turnover Costs of Goods Sold
Avg. Inventory at Cost
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Financial Ratios
152
Financial Ratios
100
153
Financial Ratios
100
154
Financial Ratios
100
155
Ball Park BEP
Break Even Point Operating Expenses
Gross Margin as of Sales
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The End...