Case answers for Pharmacy Service

Improvement at CVS (A)

Problem Statement:
CVS had grown to become one of the largest retail drugstores with
$24.2B in revenue of which $16.1B was generated by their pharmacies.
Despite the growth in revenue along with 8.5 million new customers,
CVS lost 7.2M customers during the same year. Growth potential was
being held back by unhappy customers leaving CVS for another
pharmacy. Compounding the issue was the fact that switching
pharmacy services were relatively easy, but most customers did not
realize this yet. This only added to the urgency of addressing the
problem as soon as possible.

Executives at CVS formed the Pharmacy Services Initiative (PSI)

which uncovered 67 different process-related issues and observed that
staff would encounter issues with 40% of all customers they worked
with during their shifts. Service-related issues affected 44% of heavy
users who left while also affecting 13% of light users. Most of the
customer’s complaints revolved around wait time, which was often a
result of various issues that occurred before they reached the pick-up
window. The PSI team looked at each of the 5-steps in the fulfillment
process and uncovered many inconsistencies and inefficiencies at the
drop-off window, the data-entry process, and the pick-up window.

During fulfillment, 27% of all prescriptions encountered a “substantial

problem” either with Doctor approval, drug interaction safety checks,
or third-party payment verification. Most of these issues were resolved
by the technician or pharmacist during the fulfillment process, but
this didn’t mean that the customer would be satisfied when they came
to pick-up their order. 16% of the customers at observed locations did
not get what they expected when they arrived at the pick-up counter.

Problems ranged from uninsured prescriptions at unreasonable prices

to unfilled orders along with long wait times at the pick-up window
line. Customers typically requested pick-up times after work between
the hours of 5-7 PM which made it a stressful time for staff. A
bottleneck formed at the pick-up window which resulted in longer
lines and longer wait times for customers arriving during these hours.
The PSI team was faced with the difficult task of changing the
fulfillment process so staff could provide better service while
maintaining safety precautions and preventing any backsliding into
other issues.

Solution:
The PSI team needs to adjust the fulfillment process to take away the
bottleneck at the pick-up window and resolve issues earlier in the
process. They should also keep in mind that a new enterprise resource
planning (ERP) system would also improve communications with 3rd
party payers, suppliers, and doctors. The process changes must work
for all 4,000+ franchise locations so careful consideration of
each location must be factored into the decision. Careful monitoring of
the new fulfillment procedures and the ERP system integration will
need to occur to ensure that new issues are not created. The number
of customers who leave CVS is the best metric to measure success.

Short-term: Design a flowchart of the new fulfillment process where

customer information (including contact information) is entered into
the system when they drop off their prescription. Technicians would
be able to communicate any issues about 3rd party payments and
obtain customer approval for another brand immediately. If doctor
approval was required, the customer could be made aware of a
possible delay and a more appropriate pick-up time could be
scheduled. This would avoid many of the hold-ups and delays at the
pick-up window. Add an additional drop-off window and shift staffing
to the drop-off window during the 3 different peak times of the day.
Processing the Rx information into the system earlier in the
process will also allow the system to check for low stock immediately
and the product can be ordered quicker. The new fulfillment process
will be presented to regional representatives at CVS who can provide
input about how the newly proposed fulfillment process would work at
their locations. Any pushback by staff would be addressed by
emphasizing that the goal is to reduce customer issues and to ease the
tension at the pickup window. The immediate goal would not be to
reduce staff or cut anyone’s hours but to add value to the customer
and address issues at the front end of the fulfillment line.

Mid-term: Implement the new procedures starting with pilot

locations throughout each region to test the process and identify any
new issues that might be caused and correcting them. Other stores will
adopt the new fulfillment procedures once the pilot stores are showing
significantly fewer issues at the pick-up window and no (new)
significant issues at the drop-off window. Ensure that training for
supervisors is provided by managers and staff who worked in the
successful pilot locations and training time is given to all staff across
each store.

Begin looking for the new ERP system that would interface with the
new fulfillment process and doctor’s offices, health insurance
companies, and product suppliers. This system would reinforce the
benefits of the new fulfillment process by making customer
information easy for staff to access and input at the drop-off window.
The system will improve stock availability, communication with 3rd
parties, utilize customer data to prevent duplication in the data entry
process. The ERP system would reduce phone calls and faxes by
allowing doctors and insurers to input patient information viewable by
pharmacy techs.

Long-term: The purchase and implementation of the ERP system

will take more time since it involves more than just CVS operations.
Begin by working with the regional CVS representatives and
representatives of various 3rd parties who interface with CVS to be
sure the new system will add value to all parties involved. Once there
is buy-in, purchase the system and begin implementation at pilot
locations building the system out across all 4,000 locations in the
same way that the new fulfillment process was implemented.