Operations Management

The Effects of Pharmacy on Operations Management

To achieve operational efficiency of a pharmacy, managers must implement four strategies: perpetual inventory, strategic pricing, system integration, and location optimization. Perpetual inventory involves the use of information systems to monitor inventory. Continuous monitoring allows management to oversee each part of the pharmaceutical purchasing process. Analyzing medication use and varying reimbursement levels from payers allows for strategic pricing. Some medications have larger margins compared to others and operations managers must ensure that the department remains profitable. One method to remain profitable is the use of technology: robots, dispensing cabinets, ordering systems, pricing systems, and charging systems. This technology can improve patient care and health care quality. System integration of the different types of technological systems will reduces the risk of manual or human error as well as reduce the risk of inappropriate use or abuse of medications. The fourth strategy involves location optimization. Hospitals employ one of three pharmacy systems: a central system, multiple locations on different floors, and a mixed system (Langabeer, 2008). There are pros and cons to each system. A central system keeps costs low by staffing and stocking only one pharmacy; however it is also less efficient. Multiple locations provide high quality of care but are costly because they have higher staffing and stocking needs. Most hospitals utilize the mixed system involving the high cost and increased staffing needs of multiple pharmacies as well as a central pharmacy that ultimately leading to an excessive cost infrastructure (Langabeer, 2008).

To prevent losses and improve pharmacy operations, managers must decrease cycle time, limit labor costs, decrease the number of medications errors, returns, and waste, and maintain 30 days of inventory on hand. Multiple pharmacies on different floors limits cycle...