INSTITUTION A
Business Plan for a
Mail Order Pharmacy
Prepared <Date>
Developed collaboratively by the ASHP Research and Education Foundation,
the ASHP Section of Pharmacy Practice Managers, and ASHP Advantage.
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TABLE OF CONTENTS
TABLE OF CONTENTS ............................................................................................................. 2
Executive Summary ............................................................................................................... 3
Program Description .............................................................................................................. 4
Market Analysis..................................................................................................................... 4
Competitor Analysis..................................................................................................................... 4
Program Start-Up .................................................................................................................. 5
Capital Requirements .................................................................................................................. 5
Other Start-Up Expenses/Requirements ..................................................................................... 5
Operating Capital ......................................................................................................................... 6
Staffing RequirementS ................................................................................................................. 6
Regulatory and License Requirements ........................................................................................ 6
Contractual Arrangements .......................................................................................................... 7
Project Time Frame ............................................................................................................... 7
Positioning (Niches/Differentiation) ........................................................................................... 8
Pricing .......................................................................................................................................... 9
Management and Organization ............................................................................................. 9
Operations ............................................................................................................................ 9
Equipment and Technology ......................................................................................................... 9
Staff and Training Requirements ................................................................................................. 9
Evaluation ........................................................................................................................... 10
Data Management/Continuous Quality Improvement ............................................................. 10
Developed collaboratively by the ASHP Research and Education Foundation,
the ASHP Section of Pharmacy Practice Managers, and ASHP Advantage.
Visit www.pharmacycsuitetoolkit.org
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Executive Summary
Proposal is made to put a mail order pharmacy, herein called INSTITUION A Mail Order
Pharmacy, in a 2,546 square foot space at the Location A.
A capital investment of approximately $262,200 would be required be for initial tenant
improvement, phone systems, and equipment costs prior to opening. An additional $222,530
in non-capital start-up expenses to cover licensure requirements, initial inventory, mailing
supplies, workstations, communication and minor equipment will be required at opening.
INSTITUTION A Development has agreed to help fund our project at $7 per square foot as part
of tenant improvement. Thus, this will decrease our start-up expenses by $17,822.
INSTITUTION A Mail Order Pharmacy business model is to be a primary “Central Fill” facility for
all INSTITUTION A retail locations. We will transition approximately 35% of current business,
including mailing for INSTITUTION A Specialty Pharmacy business, to this location to alleviate
space constraints and challenging access to our pharmacies. Utilizing INSTITUTION A Mail
Order Pharmacy as a central fill facility will allow retail pharmacy staff to focus service to our
new patients which, in turn, will bring additional refill business to this facility. Management of
the INSTITUTION A Mail Order Pharmacy would be structured and operated as a “closed”
pharmacy. Our goals are to maximize operational efficiency, decrease pharmaceutical
expenses, and increase revenue.
In conjunction with the INSTITUTION A benefits office, the Pharmacy is participating in the
revision of the employee prescription benefit in order to potentially increase the capture of
prescriptions filled for employees from the current 18%. It is anticipated that the pharmacy will
capture 50% of employee prescriptions generated annually. The capture of 50% will represent
a volume of 75,000 prescriptions annually.
We anticipate additional mail order volume from over-the-counter sales and specialty
pharmacy services.
We would like to complete this project by December 20XX to coordinate with the annual
change in employee benefits. This space is being designed with a view to future expansion as
other opportunities present.
Since the plan is to transition refill business to mail order from our current retail locations,
current pharmacy staff will be relocated to the facility to meets its demand. On start up, we will
hire and train 1 FTE for customer service and mailing/delivery services, 1 FTE Computer User
Support Analyst for computer support, and 1 FTE for Pharmacy Operations Manager. We will
increase additional staff as our volume increases.
Developed collaboratively by the ASHP Research and Education Foundation,
the ASHP Section of Pharmacy Practice Managers, and ASHP Advantage.
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Program Description
The INSTITUTION A Mail Order Pharmacy will be located in XXX Building. The 2,546 square foot
pharmacy will reside in space available on the first floor near loading dock area.
For the purposes of this business plan, INSTITUTION A Mail Order Pharmacy would operate
Monday through Friday from 8:00AM to 5:00PM (excluding holidays).
Our current retail locations dispense of 60% new prescriptions and 40% refill prescriptions.
Statistically, new prescriptions tend to require substantially longer turn-around time to process.
In order to provide a highly satisfied “first time” experience with INSTITUTION A retail locations,
transitioning their refill business to a central fill facility will increase patient satisfaction; thus,
increase our refill prescriptions rate.
Provision of prescription services to INSTITUTION A employees are a part of the current medical
insurance benefit. Potential savings to the organization can be derived if INSTITUTION A is
capable of providing most of the all these services from one of its retail locations.
Savings can be maximized by providing these services from a mail order facility where
automation and volume purchasing can be implemented. Mail order facilities are typically
operated as “closed” pharmacies. This eliminates distraction of on demand services and allows
processes to be streamlined and automated more easily. These are typically high volume
operations.
Because the facility will be operated by INSTITUTION S, it will qualify as a 340B ship to site,
allowing us to take advantage of these lower priced contracts. We can use the same
automation resources as are used in our other retail pharmacies, which will minimize the need
for interface build. We can use the INSTITUTION A network as a platform, which will permit
operation as an integrated facility from the patient perspective.
Additionally, the mail order pharmacy would provide inventory of non-prescription items (OTC
drugs) offer at volume-based discounted price savings.
Market Analysis
COMPETITOR ANALYSIS
Developed collaboratively by the ASHP Research and Education Foundation,
the ASHP Section of Pharmacy Practice Managers, and ASHP Advantage.
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Pharmacy Name
XXX Mail Order (INSTITUTION A employees)
Current INSTITUTION A Mail Order Pharmacy
YYY Mail Order Pharmacy (additional employees)
Current INSTITUTION A Outpatient Pharmacy Refill Business
Prescription
Number YTD
(#)
14,088
15,600
270,000
36,612
Program Start-Up
CAPITAL REQUIREMENTS
Start-up Capital Expenses - Mail Order
Shelving
Security
Construction/ Plan design
Refrigerators (2)
Safe
INSTITUTION A Project Management
Project Contingency (20% per INSTITUTION A Facilities)
TOTAL START-UP EXPENSES
$90,000
$30,000
$70,000
$10,000
$3,500
$15,000
$43,700
$262,200
OTHER START-UP EXPENSES/REQUIREMENTS
Stationery/Office Supplies
Centricity Software licensing
XXX and YYY Data Conversion
Licenses
Freezer
Printer
Phones (10)
Chairs/Tables
Workstations (8)
Faxes (2)
Moving
Initial Inventory
Cash register/credit card machine
$2,500
$60,000
$1,500
$2,000
$500
$6,000
$2,000
$1,000
$12,000
$800
$5,000
$100,000
$9,000
Developed collaboratively by the ASHP Research and Education Foundation,
the ASHP Section of Pharmacy Practice Managers, and ASHP Advantage.
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Project Contingency (10% per INSTITUTION A Facilities)
TOTAL OTHER START-UP EXPENSES
$20,230
$222,530
OPERATING CAPITAL
Location A will require financial capital resources in order to convert from a non-healthcare
facility to a healthcare facility to maintain standards and compliance with The Joint
Commission, Board of Pharmacy, Drug Enforcement Agency, and other regulatory agencies.
STAFFING REQUIREMENTS
In order to keep up with the projected volume, we will recruit 1 FTE Administrative Assistant
trained in mail order pharmacy operations. The following staffing model is necessary for
providing INSTITUTION A employees prescriptions and expansion of other services such as
specialty pharmacy, Medication Therapy Management (MTM), DUR Outcome, compounding,
and OTC sales:
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Pharmacy Operations Manager (1) – This manager will be responsible for the
responsible for the overall performance of the operations. This manager will report to
the assistant director.
Pharmacist-In-Charge/Lead Pharmacist (1) – This pharmacist will be responsible for the
overall aspect of pharmacy operations in terms of regulatory standards & compliance,
workflow efficiency, dispensing, script/revenue growth initiatives, scheduling, formulary
management, inventory control, and patient/employee satisfaction.
Technicians (2) – These technicians duties include but not limited to supporting the
pharmacists, data entry, mailings, inventory control, patients/providers
communications, and patient/employee satisfaction.
Administrative Assistant (1) – Duties include but not limited to supporting the
pharmacists, mailings, inventory control, patients/providers communications,
patient/employee satisfaction.
Computer User Support Analyst 3 (1) – The CUSA will be responsible for maintaining the
information systems and computer operations for the mail order facility and also
support the other retail pharmacy operations.
Pharmacists-In-Charge and two technicians are currently INSTITUTION A retail staff who
will be transition over to mail order.
REGULATORY AND LICENSE REQUIREMENTS
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Board of Pharmacy as a Mail Order facility
Licensing in other states that require licensure for mailing
Developed collaboratively by the ASHP Research and Education Foundation,
the ASHP Section of Pharmacy Practice Managers, and ASHP Advantage.
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City licensing for floor plan approval
Drug Enforcement Agency
OPA – Office of Pharmacy Affairs (340b registration)
DME Certification
CONTRACTUAL ARRANGEMENTS
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XXX Licensing
Wholesale Drug Distribution
Shelving
Hardware
Security System Agreement
Third Party Contracts (Medicare, Medicaid, Private Payors)
Pharmacy Benefit Manager
NABP/NPI Enrollment
Office of Pharmacy Affairs for 340B Discounted Drug Pricing
Phone system
Third Party Reconciliation System
Project Time Frame
Phase 1 – Plan approval and Startup (end of July 20XX)
Business Plan Approval
Capital Investment Approval
Tenant Improvement Plan Design
Recruit & Hire Pharmacy Personnel/Pharmacy Operation Manager
Pharmacy Benefit Managers Selection
Phase 2 – Tenant Improvement, Move-In (July - September 2009)
Secure Location
Initiate Tenant Improvement Build-out
Developed collaboratively by the ASHP Research and Education Foundation,
the ASHP Section of Pharmacy Practice Managers, and ASHP Advantage.
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Install Shelving
Install Security System
Complete purchase orders for equipment/technology
Initiate Direct Mailer Marketing campaign
Order inventory and stock Prescription and OTC
Complete and Submit Board of Pharmacy Application
Complete and Submit DEA Application
Complete and Submit NABP Application
Complete and Submit with OPA for 340B Discounted Drug Pricing
Phase 3 – Building Business / Measuring Results (September - December 20XX)
Monitor & evaluate pharmacy financial summary compared to plan
Continue advertising attached to employee check stubs
Continual Business development and expansion of specialty pharmacy business
Patients/Employees Satisfaction Index
Marketing Plan
POSITIONING (NICHES/DIFFERENTIATION)
The major part of our marketing strategy is to ensure that patients will recognize INSTITUTION
A pharmacy as a place of convenience despite challenging access to pharmacy. Current retail
staff will focus on service to new patients while the mail order pharmacy staff will market a mail
order option for prescriptions and the over-the-counter medications for patient convenience.
Pharmacy leadership team is working closely with INSTITUTION A benefit department to
market/introduce INSTITUTION A Mail Order Pharmacy as an option to employees via Open
Enrollment Materials.
Developed collaboratively by the ASHP Research and Education Foundation,
the ASHP Section of Pharmacy Practice Managers, and ASHP Advantage.
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PRICING
Pricing is based on AWP (Average Wholesale Price) not acquisition cost, and will be dependent
on third party contracting arrangements.
Management and Organization
The full-time pharmacist will be registered as Pharmacist-In-Charge (PIC) in compliance with
requirements by State Board of Pharmacy. The PIC shall be responsible for daily management
and all regulatory compliance issues.
The Pharmacist-In-Charge shall report to the INSTITUTION A Pharmacy Operations Manager for
mail order.
Pharmacy Operations Manager, reporting to assistant director will be oversee all aspects of
pharmacy operations and will play a key role in business expansion.
Operations
EQUIPMENT AND TECHNOLOGY
The INSTITUTION A Mail Order Pharmacy will use the same prescription software as is currently
used at the other INSTITUTION A outpatient pharmacies.
Eight INSTITUTION A network computer terminals and towers would be required. Six printers
could meet all printing needs.
Specialized phone system will increase pharmacy workflow by allowing our pharmacy staff to
prioritize their work queue.
STAFF AND TRAINING REQUIREMENTS
Our staff will be trained in current dispensing systems, phone system, customer service,
workflow efficiency, and mailing services.
Developed collaboratively by the ASHP Research and Education Foundation,
the ASHP Section of Pharmacy Practice Managers, and ASHP Advantage.
Visit www.pharmacycsuitetoolkit.org
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Evaluation
DATA MANAGEMENT/CONTINUOUS QUALITY IMPROVEMENT
(e.g. Inventory Control, Quality Assurance, Customer Satisfaction Index, Continuous Profit
Driven Operations)
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Inventory Control – Utilization 80/20 inventory utilization report on a monthly basis to
track and monitor drug purchase history for inventory turns, generic usage, overstock,
and outdate/recall returns for proper credits, and updating/creating pharmacy
formulary system.
Quality Assurance (QA) – Patient and medication safety will be our primary focus to
positively impact patient outcome and quality of life. Measures to be determined.
Customer Satisfaction Index (CSI) – Evaluation of pharmacy monthly CSI survey will
positively impact workflow efficiency, turnaround time (TAT), and medication delivery.
Continuous Profit Driven Operations – Evaluation and interpretation pharmacy monthly
financial summary and data collected from our PBM will drive pharmacy daily
operations in regards to inventory control, quality assurance, and patient/employee
satisfaction.
Developed collaboratively by the ASHP Research and Education Foundation,
the ASHP Section of Pharmacy Practice Managers, and ASHP Advantage.
Visit www.pharmacycsuitetoolkit.org
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