Strategic & Business Planning in Pharmacy.pdf – Flashcards

Background • "Money is a terrible master but an excellent servant" • Basic concepts in accoun>ng and finance • Most decisions made in the management of pharmacy involve supervision of money • * Accoun>ng and finance are primary tools for seKng goals, measuring results, making business decisions*

Accounting Foundations Reporting Financial Information • Financial reports provide details about key financial aspects of a business • Statements show resources, what owes to creditors, value of belonging, income, expenses, profitability, uses and source of cash • Financial documents for different purposes and audiences • Financial reports for *external groups* (i.e., government agencies, stockholders, creditors) or for internal groups Financial reports--of the business (resources, creditors, value, income, expenses, profits, cash source

Accounting Periods • *Financial reports cover a month, a quarter, or a year • Federal Securi>es and Exchange Commission (SEC) *requires publicly traded companies to prepare quarterly and annual reports •* Fiscal year *is the business term 1-year periods of >me (January 1st to December 31st) • Some pharmacies start their fiscal year in March and end it in February

Standards for Financial Reports • *Financial Accoun>ng Standards Board (FASB)* • FASB has a set of accoun>ng standards for publicly traded companies • Firms must use the Internal Revenue Service (IRS) • APhA developed a set of accoun>ng standards for pharmacies public companies--IRS, apha

Business Planning for Pharmacy Programs ! What are the activities that pharmacies engage in? ! What is the purpose of strategic planning? ! What are the steps of strategic planning in pharmacy? ! What is a vision statement? ! What are the barriers and limitations of strategic planning?

Provides detailed planning Long term 5-20 yrs

Ensures org. performs immediate tasks Short term 1-5 yrs

Background ! Planning represents the purposeful efforts taken by an organization to *maximize its future success** ! Planning is sometimes referred to management planning as it is typically part of the* manager's responsibilities* ! Business, Financial, Operational, Resource, Organization, and Strategic planning are the most common types of planning activities in pharmacy organization to maximize its success,it consists of a manger planning operations and is responsible for strengting the business through responsiblityietes common types of managing activities are BFOROS

SOBROC SOBROCKS strateyg---spend a long period like at least 5 or 20 yrs planning details and what ur going to do of rth business Operitations----u develop an anopetration which allows to get the most impt things done to operate ur business, and run the business , this takes at least one year When u plan a busisnss, u look at a program and see how befenifial is is to carry it out it terms of its proiftaltiby and succenercwss---at least one yr Resruoces are difficult to get, u make u have all the resources for ur plan to work, this takes a lot of time like most 1-10 When planning make sure ur organization is able to grow it not the future , apply future ideas to it ---same time spends always have sometngin to fall back on----shourrt to long term 20yrs

Determines feasibility of a program Short term 1-5 yrs

Ensures resources necessary to achieve goals Midterm 1-10 yrs

Ensures an organization can meet challenges in the future Midterm 1-10 yrs

Provides a fallback option Short to long term 1-20 yrs

Vision & Mission ! Vision is what a pharmacy organization wants to be at some point in the future ! Vision statement should be short and *motivate individuals* to accomplish higher goals ! Mission is* the purpose of the company* ! Mission statement defines what a pharmacy organization is or* should be*. It creates a sense purpose for employees and patients

Strategic Planning ! Addresses what business the organization is in or ought to be in and determine long term goals ! Has been defined as the process of selecting an organization's goals, determining policies and programs necessary to achieve specific objectives the type of business , th goals u need to achieve and the the rules u need to create those goals. They tripe of business and the programs its going to have

1. Define the planning process to aingular purpose or a desired result (vision/mission) 2. Assess the current situation 3. Establish goals 4. Identify strategies to reach those goals 5. Establish objectives that support progress toward goals 6. Define responsibilities and timelines for each objective 7. Write and communicate the plan 8. Monitor progress toward meeting goals and objectives U want to crete a vission/mission statemetn, assess the situation, create the goals that needs to be accomplished, ans what strategies and thing u have to do to achieve those goals Amplify th e goals within things the further support the achivevemtn of those guars using specific bejctive VAEI

Steps in the Development of a Business Plan ! Define the business program ! Conduct market research and analysis ! Conduct competitor analysis ! Assess clinical and quality requirements ! Define processes and operations ! Develop a market strategy ! Develop financial projections ! Identify an action plan ! Assess critical risks and opportunities ! Establish an exit plan

Process of Strategic Planning (Cont.) ! Planning phase: - Ideas are actively generated (strategizing) - Start with the destination (vision of the organization) in mind - Different paths to get there (needs and resources) - Situation analysis (i.e., where, what, how) - Operationalize: objectives to each goal are identified (short and long term goals) - Budget, schedule, and responsibilities are assigned writing it out

Example Strategic Plan ! Strategy:achieving an organized approach to cost containment and reduction ! Goal: develop an on going workload- monitoring system based on a system of pharmacy service units ! Objectives: - Develop a system to identifies distributive and clinical workload by satellite area - Use statistics to predict staffing needs - Evaluate overuse and underuse of staff bigger pic, one goal to create it, objectives for the goal, to do list

Post planning Phase 1. Communicating the plan 2. Implementation of the plan 3. Monitoring progress once the plan is implemented - Strategic plan is a document that communicates all aspects of the plan effectively - *Implementation requires understanding short-range objectives and long-term goals* lets do it, track everything, use document

Barriers to Planning 1. Failure to commit sufficient time 2. Interpersonal issues (i.e., power, politics, resistance to change) 3. Lack of planning skills 4. Failure to plan far enough into the future 5.*Constantly changing environment* 6. Failure to implement due to lack of time or resources 7. Failure to monitor progress 8. Lack of support of top executive and/or board of directors

I. Define the Business Program ! Define the business or service proposed ! Have a clear idea of the business proposal ! Formulize a definition of the business ! Develop a specific statement of the purpose of the program ! Crystallize the goals of the program ! Have a direction for the planning process

Conduct Market Research and Analysis ! Market refers to the customers of the program ! Customers can be patients, physicians, and other health care (HC) providers ! Market analysis based on: - Geographic location (i.e., number of nursing homes) - Target market (market niche) - Number of patients - Type of patients - Demographics

. Conduct Competitor Analysis ! Identify potential competitors ! Position the business favorably ! Data on price, surveys on patients ! Characteristics of other providers (i.e., yrs in business, number of patients, market share, strengths, and weaknesses) ! Examples: immunization services, consultant pharmacy services)

Assess Clinical and Quality Requirements ! HC market is highly regulated ! Applicable regulations and requirements ! Federal, state, and city/county ordinances ! Voluntary standards, professional organizations, accrediting bodies ! Example: consultant services. Centers for Medicare and Medicaid Services (CMS) ! Compliance on initial and long-term (new staff, technology, work processes)

Develop a Marketing Strategy ! Based on market and competitor analysis ! Target market (means of communication) ! Initial market plan, promotional activities, market goals ! Example: consultants pharmacy services - Size of nursing homes - communication with medical and nursing staff - Obtain contracts (face-to-face)

Develop Financial Projections ! Benefit-to-cost ratio ! Reducing expenditures ! Example: antibiotic dosing service - Reduce expenditures, reduce length of stay ! Financial spread sheet: revenue by category, expenditures by category, net profit/yr

Define Processes and Operations ! Detailed associated with planned operations (i.e., structure, personnel, staffing levels, relationships) ! Number of Full-time equivalents (FTEs), job titles, job descriptions ! Physical structure, equipments, resources (i.e., physical layouts, furniture, information systems ! Work processes (flow chart) ! Example: anticoagulation clinic - Methods of communication between HC providers

Identify an Action Plan ! Start and finish dates ! Responsible individual(s) for each task to accomplish the objectives ! Assessment of performance (clinical, financial) ! Example: Grantt chart

Assess Critical Risks and Opportunities ! Strength, weakness, opportunities, threats ! Example: long-term care consultant pharmacy - Strength, weakness (internal characteristics) - Opportunities, threats (external business environment)

Writing a Business Plan I. Executive summary II. Background and description III. Market analysis and strategy IV. Operational structure and processes V. Financial projections VI. Milestones, schedule, and action plan VII. Critical risks and opportunities VIII. Exit strategy IX. Conclusion X. Supportive documents

Establish and Exit Plan ! Formal protocol for determining the program (when, why) ! Failure to meet goals (financial, clinical) ! New business (18-24 months) ! Definitive becnhmark ! Clear action plan: - When and how to notify patients - How to notify employees - How facilities, equipments, and other capital will be sold