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April 2017, Vol 5, No 4 - The First Word
Donald J. Dietz, RPh, MS

Almost all retail pharmacy personnel have experienced dramatic changes in their pharmacy operations in the past few years, including reduced staffing, and implementation of new technology, automation, workflow, and external processes (eg, prior authorization assistance) that help us operate our pharmacies successfully. My view on pharmacy strategy is to accurately dispense prescriptions in a timely manner, provide excellent customer service, and maximize profitability.

I recently read an interesting article in the Harvard Business Review by Michael Mankins, “Great Companies Obsess Over Productivity, Not Efficiency.”1 As the article postulates, most people—myself included—mistakenly think of efficiency and productivity as synonyms, or 2 sides of the same coin.

From a strategic perspective, however, efficiency and productivity are quite different. Labor efficiency is “the number of hours required to accomplish a given task, when compared with the standard in that industry or setting,” Mr Mankins notes.1 A pharmacy example is the number of prescriptions dispensed each week, and the total pharmacist and technician hours required to process the prescriptions. Each chain, or pharmacy, has a desired target they work to achieve that enables them to “hit their goal.” I suspect that in your pharmacy, efficiency is measured over time with a goal to become more “efficient,” or do the same with fewer resources. Reducing pharmacist overlap or cutting technician hours are 2 tactics that improve efficiency by doing the same work with less help.

Two large pharmacy chains in my area recently reduced their operating hours by 1 or 2 hours daily. The chain pharmacies will open 1 hour later and close 1 hour earlier, hoping to dispense the same number of prescriptions in fewer hours, and expecting its customers to adapt their shopping habits. This will result in fewer weekly technician hours, and, possibly, pharmacist hours. This shrinks the denominator in the ratio of prescriptions dispensed and labor hours to improve profitability.

Productivity, by contrast, is about doing more with the same amount of labor. Improvement in productivity is measured by the change in output per labor-hour over a defined period of time. Pharmacy automation, interactive voice response phone systems that manage calls for refills, and pharmacy workflows with discrete work queues to focus labor efforts on a defined task all improve productivity. Central fill or central processing, where uninterrupted staff process prescriptions for dispensing or pickup at the retail location, is another example of improved productivity.

These strategies and tactics expand the numerator, or output, of prescriptions from the same workforce or labor input. My favorite productivity enhancement is medication synchronization, a coordinated, pharmacy-led effort for patients using multiple maintenance medications to have all their monthly refills obtained at one time. In addition to improving medication adherence, studies have shown that medication synchronization saves time in prescription processing, and facilitates pharmacist–patient interaction. Mr Mankins postulates that we have exhausted most of the efficiency opportunities in our businesses in the past 3 decades.1 Most new growth opportunities need to come from productivity improvements “to unleash the productive power…and accelerate profitable growth.”1 Mr Mankins describes the following 3 fundamental tenets of a productivity mind-set.

1. All too often, the organization gets in the way of employees who want to be productive.1 It is estimated that a typical organization loses approximately 20% of its productivity capacity because of “organizational drag.” In an office setting, this often occurs with unnecessary meetings. In the pharmacy setting, this could include time completing management reports and other routine tasks that could be automated. Ongoing training to meet regulatory and compliance requirements aside, pharmacies should seek out opportunities to use technology to free up the pharmacy staff, thereby reducing this “organizational drag” and improving productivity.

2. Companies have a few talented people who can disproportionately affect strategy execution and performance, but these “difference makers” are frequently given roles that limit their effectiveness.1 To improve productivity, it is key to free these “star personnel” from routine tasks. How does this apply to retail pharmacy? Deploying these talented difference makers to creative, innovative roles is one way to improve productivity. I envision using these employees to help expand pharmacy as a cost-effective solution in the broader healthcare arena. Implementing collaborative practice agreements (where state laws permit) to modify or initiate drug therapy under strict protocols, perform strep and virus testing in the pharmacy and treat appropriately based on the test results, and to work with local Accountable Care Organizations to help improve the use of prescription drugs are a few cutting-edge ideas to expand pharmacy’s role in healthcare. Of course, obtaining appropriate reimbursement will be a challenge, but let us save that topic for another article.

3. Although people have much energy that they could devote to their work, many are not adequately inspired to do so.1 Mr Mankins suggests that inspired employees bring more discretionary energy to their work every day, and are 125% more productive than a satisfied employee. An “inspired employee can produce as much as 2.25 satisfied employees.”1 How does this translate to retail pharmacy? Pharmacy managers receive minimal training from a “people management” perspective. In pharmacy school, the focus is mainly on pharmacy laws and employment regulations, not on how to inspire employees to commit their discretionary energy to their work. Corporate management seems to focus on compliance activities that are required but rarely go beyond that in coaching and motivating managers to inspire their employees to be more productive. I believe that making an effort to motivate the pharmacy staff to go beyond the effort of a typical employee, and then rewarding them appropriately, would lead to huge productivity improvements.

The Harvard Business Review article was insightful from a business perspective. By translating it to a retail pharmacy perspective, I was able to see “the forest from the trees”; it is very easy to become accustomed to the routine business management perspectives of running your pharmacy on a daily basis. Perhaps we can use these concepts to think about improving our productivity, instead of cutting hours as a way to drive top-line growth in pharmacy.

Reference

1. Mankins M. Great companies obsess over productivity, not efficiency. Harv Bus Rev. March 1, 2017. https://hbr.org/2017/03/great-companies-obsess-over-productivity-not-efficiency. Accessed April 20, 2017.
Last modified: May 4, 2017
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