INSTITUTIONAL PHARMACY

 

SITUATION

  • Since mid-1990’s significant revenue growth through numerous acquisitions
  • Acquisitions were left to run independently without integration for economies of scale
  • Medicare PPS reimbursement issues dramatically reduced revenue per prescription — converting a cost-plus business with limited receivables into a fixed-price business with growing receivables

RESULTS

  • 26.4% increase in net sales
  • 3% increase in total payroll
  • 18.5% reduction in ratio of total payroll to net sales
  • 17% decrease in headcount
  • 70+ pharmaceutical facilities closed/consolidated; 12 new pharmacies opened

ACTION TAKEN

  • Launched a transformation program to achieve low-cost provider position and create a sustainable boost to income in order to counter the impact of PPS and capture the value of past acquisitions
  • Conducted a comparative analysis across all pharmacies to determine “best practices”; quantified improvement potential across the business if all units achieved best practices
  • Developed optimum regional pharmacy organization model designed to drive implementation and results
  • Drove implementation unit by unit to ensure results