TALLINN UNIVERSITY OF TECHNOLOGY

IDY0275: Business Information Systems

CREATING BUSINESS INFORMATION SYSTEM AND E-BUSINESS

FOR CURRENT BUSINESS MODEL FOR

LILLE PHARMACY

Tiina Apart / 132538YVEMMKatrin Noor / 122128YVEMM

Professor Enn Õunapuu

Tallinn 2013

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Table of Contents

1. Introduction..........................................................................................................................................3

2. Business Model....................................................................................................................................5

2.1 Value Proposition...............................................................................................................................5

2.2 Key Activities......................................................................................................................................6

2.3 Key Partners.......................................................................................................................................7

2.4 Key Resources.....................................................................................................................................7

2.5 Market segments................................................................................................................................7

2.6 Revenue generation and margins.......................................................................................................8

2.7 Value chain structure.........................................................................................................................8

2.8 Competitive strategy..........................................................................................................................8

3. Business Process Description..............................................................................................................10

3.1 Old model.........................................................................................................................................10

3.2 New model.......................................................................................................................................12

4. Access Database.....................................................................................................................................14

5. Balanced Scorecard................................................................................................................................15

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1. Introduction

The retail pharmacy Lille Pharmacy locates is Mustamäe district. It was built in 1970s together

with Lille policlinic into a new and expanding residential area in these days and was for decades

one of the biggest retail pharmacies in Tallinn.

Today Lille Pharmacy together with more than 150 retail pharmacies in Estonia belongs to

Curare pharmacy chain. It still locates in the same premises with medical institutions (family

doctors, policlinic of specialist, dental care etc.).

The main task of a general pharmacy is the provision of quality pharmacy service. Pharmacy

service means retail sale or other dispensing of medicinal products together with related

counseling for the appropriate and rational use of medicinal products as well as provision of

information to the user on the correct and safe use and storage of medicinal products; the

preparation of medicinal products as magisterial formulae and officinal formulae and dividing-up

into retail packaging.

In 2010 the digital prescription (e-prescribing) was launched in Estonia. Doctors can prescribe

medications for patients using their computer software and forward an electronic prescription to

the national database. The e-prescription is then immediately accessible in every pharmacy either

by the patient himself (on presentation of ID-card) or by his authorized representative. This e-

service was very quickly adopted by all stakeholders. Today more than 90% of prescriptions are

issued electronically. According to recent survey "Citizens' satisfaction with health and

healthcare" 92% of users of digital prescription are satisfied with the service.

Launch of digital prescription has significantly changed the medicine purchase habits of citizens.

Act of purchase of medicines and health-care products is not directly related to visiting a doctor

in terms of time and location. More and more people visit pharmacies that locate in big food

chain stores and shopping centers because it is convenient and time-saving. Physical location in

the close neighborhood of a medical institution (hospital or policlinic) does not guarantee desired

turnover for a pharmacy any more.

This reflects well in business results of Lille Pharmacy too. In the last two years their turnover

has declined by 8%. 70% of Lille Pharmacy’s turnover comes from direct sales to citizens and

30% to health-care institutions and social care institutions (nursing homes, long-term care

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hospitals, assisted living facilities), children’s homes etc. At the same time Lille Pharmacy faces

difficulties in covering their utility costs (heating, electricity, security) as the premises built

decades ago specifically for a big pharmacy are too big nowadays, primarily due to significantly

lower need for warehousing and in-house production of officinal formulas.

Managers are looking for opportunities for maintaining and growing the business in Lille

Pharmacy. New business model should create added value to existing customers, attract new

customers via building an advanced service based on existing excellent IT systems in use in the

pharmacy chain (sales- and warehousing system) and digital prescription system.

The management decides to invest in purchase of an Automated Tablet Dispensing & Packaging

Machine (ATDPM) with a related Multi-Dose Medication Management System (MMMS).

Preliminary assessment has shown that MMMS is compatible with existing systems used for

ordering, sales and dispensing medicines in the pharmacy.

ATDPM is a medication-dispensing unit, about the size of a large refrigerator which is housed at

the facility in a secure location.

Fig 1 & 2. Automated Tablet Dispensing & Packaing Machine

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Medications, including controlled substances, are delivered in bulk from the wholesaler and

packaged in canisters that are placed inside of the unit. The unit dispenses patients’ medication

into a series of single sachets, where each sachet has various medicines the patient has to take at a

specific time. On each plastic pouch, which is simply torn open by the nurse or by the patient, is

printed the patient name, when the dose should be given, the drug name and description, and a

corresponding bar code.

Fig 2. Patient-specific single-dose sachet

This new service will be piloted in B-2-B setting, i.e. as service to health-care and social care

institutions and the following business model description is applicable to this segment. If

successful, the service will be also offered to citizens.

2. Business Model

The main asset of Lille Pharmacy is the combination of affiliation to the biggest pharmacy chain

providing resources (finances for investment, IT-service) and in-house professional competence,

licenses and suitable premises needed for development of the Multi-dose Packaging &

Dispensing Service (MDPDS).

Below is described in more details the aspects of Lille Pharmacy’s business model.

2.1 Value Proposition

The main task of the pharmacy is to sell medicines, food supplements, herbal products, cosmetics

and nursing devices to citizens, health-care and other institutions.

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The pharmacy’s customers need to consume and use (citizens) or dispense and use (health-care

and other institutions) medicines, food supplements and medicinal devices in a safe, efficient and

cost-effective way.

Lille Pharmacy’s mission is to help and support people in staying healthy and vital via giving

them professional advice on medicines, health products and health, and helping institutional

clients fulfilling their medicine-related tasks efficiently and with high quality.

2.2 Key Activities

Lille Pharmacy employs 6 pharmacists, 2 assistants and 2 managers.

In each shift 3 pharmacists dispense prescription medicines (mostly digital prescriptions), sell

over-the-counter medicines, food supplements, herbal products, cosmetics and medical devices to

customers. Selling and dispensing involves instructions for use and counseling. All activities are

recorded in the united cash register, sales and warehouse management system and digital

prescription system. Orders to the wholesaler are up-dated automatically, but reviewed and

corrected by the managers.

Orders to the main supplier are fulfilled twice daily, from other suppliers 1...3 times a week.

Received goods need to be distributed to drawers and shelves.

Health-care and social care institutions purchase medicines in a variable way. Orders from

medical and other institutions can be assembled according to subscription lists and delivered to

the customers by partnering a transportation company. For citizens contracting with social care

institutions (nursing homes, long-term care hospitals, assisted living facilities) medicines

prescribed by the citizen’s family doctor are mainly purchased physically from the retail

pharmacy by the nurse of the institution.

Lille Pharmacy has a webpage in internet. The following information can be found from there:

Contact details

Monthly offers/discounts

List and description of health services offered

Health information

Information on availability and prices of all medicines

Electronic customer magazine

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Revenue is gathered from retail markups and service fees.

2.3 Key Partners

Key partners and resources acquired from them are:

Main preferred supplier – most of goods.

State Agency of Medicines – Registry of Medicinal Products (list of all medicinal

products allowed to be sold and used in Estonia) and Coding Centre of Medicinal

Products (virtual codes – combination of numbers – for identification of all packages of

pharmaceuticals and medicinal devices allowed to be sold in Estonia that move through

all data sharing process).

Estonian Health Insurance Fund (EHIF) – payment for compensated amount of

pharmaceuticals and medical devices issued to insured citizens, Registry of Insured

Persons (list of persons who are entitled for reimbursement of pharmaceuticals and

medical devices), EHIF Medicinal Products List (list of products reimbursement applies

to), EHIF Medical Devices List (list of medical devices reimbursement applies to).

Health Board (under Ministry of Social Affairs) – Registry of Health Workers (list of

specialists entitled to prescribe pharmaceuticals) and Registry of Pharmacists (list of

specialists entitled to dispense pharmaceuticals).

2.4 Key Resources

Key resources of Lille Pharmacy are the premises, offered goods and specialized workforce with

professional knowledge.

2.5 Market segments

Lille Pharmacy targets two customer segments:

Citizens (primarily from the surrounding area and ones visiting the policlinic) who visit

the pharmacy for purchase of pharmaceuticals, food supplements, herbal products,

cosmetics and medical devices and accompanied advice and recommendations. Sales in

this segment make up 70% of the turnover of the pharmacy.

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Healthcare and other institutions that require pharmaceuticals and medicinal devices for

fulfillment of their tasks, but do not have a license for independent management of

pharmaceuticals. Sales in this segment make up 30% of the turnover of the pharmacy. In

this segment clients with higher volume can be seen as more important.

2.6 Revenue generation and margins

Majority of the revenue is generated from sales - retail markups of sold goods. The maximum

mark-ups allowed to wholesalers and pharmacies are specified by Minister of Social Affairs.

Pricing of food supplements, herbal products and medical devices is free. Also prices for

additional services are free.

Competition between pharmacies is high in Estonia. Often discounts are made for attraction of

customers, but the fee for higher volume is payed by the margin. Due to that customers do not

differentiate much between pharmacies based on only price level of goods.

2.7 Value chain structure

The value of Lille Pharmacy lies in sold products with good price/quality ratio and professional

and dedicated employees. Supportive services offered in addition to sales increase the value and

help to increase customer loyalty.

2.8 Competitive strategy

Lille Pharmacy’s competitive strategy lies in the capability of differentiating its services

compared to other pharmacies.

Till today the prevailing practice is that prescriptions are fulfilled with whole packages for the

use of one treatment course in case of acute illnesses or for period from two months up to six

months in case of chronic illnesses. Many patients, especially elderly and chronically ill, have to

take several medicines with different administration schemes.

Issue that has been risen with the obligation of prescribing medicines with generic name by the

physician and offering the cheapest generic preparation on purchase by the pharmacist is the

confusion around the correct pill to be taken, especially in elderly patients, as the package and the

name of the drug may vary each time despite the same content. This may cause medication errors

and bad compliance in taking medicines.

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The same issue applies in the social care institutions (nursing homes, long-term care hospitals,

assisted living facilities) where much of the nurses’ attention and time is spent on the medication

dispensing process to their clients. Medicines and food supplements for the clients in these

institutions are prescribed by their family doctors. Usually citizens in these institutions contract

for service of purchase of their medicines by the institution which means that nurses physically

go the pharmacy and buy medicines for their clients. Nurses have to keep accountability for each

client and ensure correct and timely administration. This set-up creates a risk for medication

errors. There is also a significant amount of medication waist that can occur. Medicines are

prescribed for a long period, but health condition of the patients is often not stable. Changes in

the treatment schemes come up and often patients come to these facilities during their last life

stage.

Now, however, health information technology (HIT) developments have given new medication

distribution options to long term care and post-acute care patients. Automated Tablet Dispensing

& Packaging Machine (ATDPM) with a related Multi-Dose Medication Management System

(MMMS) can be used to combine various drugs into single servings. It’s down-to-the-dose

accountability for every single pill is a unique feature of the machine. Because the process is

automated, the machine also virtually eliminates medication waste—nothing is distributed unless

it is ordered.

By dispensing medication for the patients in nursing homes, long-term care hospitals, assisted

living facilities with ATDPM for short periods (from one week up to one month) improve work

efficiency and quality care in these facilities. They include:

Saving nurses' time previously spent on purchasing medication from the pharmacy,

maintaining accountability and preparing medication for administration, so the nurses can

spend more time on direct patient care.

Reducing risk of medication errors as the drugs are in ready-to-administer sachets for

specific residents.

Enhanced patient safety as the system simplifies medication charts for each resident.

Easier training of nursing home’s staff to correctly administer medication.

Less medication wastage, thus facilitating cost effective care.

Manpower savings.

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Lower costs for medicines as the pharmacy can use bulk packages for the machine

3. Business Process Description

The nature of current business model of the pharmacy remains the same - selling medicines, food

supplements, herbal products, cosmetics and nursing devices directly from pharmacy to citizens,

health-care and other institutions. Our plan is to offer additional service for health-care

institutions to increase their work efficiency and create more revenue for both parties. Below we

describe business processes with an example of pharmaceutical service to nursing homes.

3.1 Old model

The current business model process servicing nursing homes is very traditional. Customers

(nurses) come to the pharmacy, pharmacists enter and validate each patient’s ID-card one by one

and then all products are bought for the clients. Nurses need to keep records on the medicines for

each client and they distribute the drugs manually to each patient on daily bases. This process is

time-consuming for both stakeholders and related to several serious risks described above.

Only part of the current process that is fully automated is checking stock-level of the pharmacy

after each purchase and creation of orders to wholesaler. Wholesaler has scheduled twice a day

delivery routine.

The current business model processes is the following:

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3.2 New model

The new prescription drug ordering application for health-care institution will be added to the

current pharmacy webpage. All customers using this system will be registered. The new system

enables customers to prepare their order without going to the pharmacy simply by entering and

validating each patient ID-cards and indicating the period (days) for which the supply is needed.

Pharmacy receives the order and checks it with the national digital prescription database where

all the digital prescriptions for listed patients are stored. When the order is correct it is

automatically sent to the Automated Tablet Dispensing & Packaging Machine. The machine

checks automatically if it has enough products to process the order, in case there is need for more

the alert is automatically sent to the pharmacist.

When pharmacist fills in the machine with needed products, the automated process of pharmacy

stock check is in parallel initiated, this process is same as part of and described in old model.

After order is ready for customers, it will be delivered to customer and as all the products are

dispensed according to daily need of patient, additional dispensing work of nurses is not

necessary any more.

New business model process is shown below:

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4. Access Database

The main purpose of the database is to record all the information about the customers, products

and orders in one comprehensive database. It enables to analyze business data, track transactions

and understand trends and inventory.

It is also required to support the creation of online ordering application for health-care

institutions. The automated ordering and dispensing system relies on the data stored in the

database.

The structure of the Microsoft Access database is shown below:

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5. Balanced Scorecard

A balanced scorecard is a tool developed by Kaplan and Norton in 1996. It translates an

organization’s mission and strategy into a comprehensive set of performance measures that

provides the framework for a strategic measurement and management system.

The model distinguishes between four levels:

learning and growth - focuses on how to educate employees, how to gain and capture knowledge, and how to use it to maintain a competitive edge within company’s target markets,

business processes - measures critical-to-customer process requirements and measures,

customers - measures customers' satisfaction and their performance requirements,

finance - tracks financial requirements and performance.

Lille Pharmacy’s plan is to develop an online ordering service and implement dose dispensing

system which would increase revenue and customers satisfaction. For that, they have to integrate

a new process with the old one.

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Objectives Measures Targets InitiativesFinancial

Increased business profit

Increase in sales revenue

Growth in market share

First year +3%Second year +5%

First year +2%Second year +4%

New service process

Customer

More customersConvenient orderingLess work for nursesBetter customer satisfaction

Number of new customers

Customer feedback survey

10% more per year 70% of feedback is

positive

Promotion of new service

Up-date of customer management system

Ask for customer feed-back

Internal

Aquire and integrate new dispensing machineIntegration of new ordering processTrain employees

Proportion of current sales switched to new service

How well the new process has started to work

70% of regular sales is shifted in first year

Process should work well from launch date

Employees training program to use the machine

Launch of new process

Learning Launch online

ordering service and dispensing systemRedesign web-page

Customer feedback survey

Ongoing maintenance

Service improvement

Use of consultants