Pharmacy Podcast – How to Win at Pharmacy Inventory Management

Pharmacy Podcast Network – How to Win at Pharmacy Inventory Management

http://pharmacypodcast.com/podcast/how-to-win-at-pharmacy-inventory-management/

Todd Eury: Welcome to the Pharmacy Podcast show. You’re listening to the first and only podcast dedicated to the business of pharmacy. Hear from independent pharmacy owners, leading entrepreneurs, political strategists, healthcare technology trends, career coaching, interviews about our pharmacy industry, and more. Be sure to subscribe to the show via iTunes, and leave us a voice comment from our contact section on the website. You can find all of our episodes at pharmaypodcast.com.

Bill Holmes: Hi, this is Bill Holmes, CEO of RxSafe in San Diego. You’re listening to the Pharmacy Podcast.

Todd: Hey, and now for the interview portion of the show. You know, I am a tech nerd, love pharmacy, love marketing. Feel like I’m one of the biggest fans for pharmacy on earth. I don’t know if a show can get any better for me than to have a third-generation pharmacy owner, a rockstar, well-known pharmacy software technologist, and a president CEO of a pharmacy automation team all on the show at the same time. My sugar levels are up. I’m all excited, so I’m going to get started.

We have Mr. Jeff Key, who leads the PioneerRx team software services and management technologies. We have Mr. Bill Holmes, the CEO of RxSafe, and we have Steven Boatwright, third generation pharmacy owner in Millington, Tennessee. Welcome to the Pharmacy Podcast.

Steven B.: Thank you.

Jeff Key: Thank you.

Todd: I’m going to start out with Mr. Steven Boatwright. So glad that you could make the show and talk with the four of us. Tell us, tell us about your pharmacy, about kind of how you got into the business. Obviously you have deep roots in it, as a third generation owner. Tell us kind of your pain points back in the day, when you just didn’t have the right combination of pharmacy systems and technology in place.

Steven B.: Well, we’ve been in business since 1957. I literally grew up in a drug store. Been able to see the evolution of pharmacy over the years, the good and the bad, what was here when we didn’t have any technology. I can remember typing on the typewriter. I can remember sending insurance claims by hand and through the mail. We’ve come a long way since then. Come from a family of pharmacies. Two sisters, two brother-in-laws, numerous cousins, so we’re a whole family of pharmacy. We’re a typical independent. We do a pretty good high volume. We pride ourselves on customer service, but at the same time, in this day and age, we try to keep up with technology, whether it’s automation or pharmacy software.

Todd: Yeah, you think about it, your grandfather, in starting the business, he just didn’t have the same setting that of course you do today. You have reimbursement issues, you have payment changes on the fly, you have PBMs who undercut without you even knowing it, and 300 prescriptions a day, 20 years ago, is a lot different than 600 prescriptions a day in today’s environment. Tell us how and what you were thinking when you’re making the evolution from one system, and it doesn’t have to even be technology. It might be workflow. It might be the way you design things. Tell us about that transition of when you came to a decision point where you’re like, “Wow, something has to change so that we can continue to make it.”

Steven B.: Well, I can remember our first pharmacy computer years ago, and we had the same pharmacy software for … We never changed. They weren’t giving us what we needed. They weren’t being very innovative. We couldn’t get anything done that we needed on our end, so that’s when we started looking around at different software companies. Anyway, looked at several of them, narrowed it down, and Pioneer was the way to go for us. We haven’t looked back. It’s been a great transition, an easy transition. A lot less painful than I thought. They’ve been great. I mean, it’s been what we were looking for.

Todd: That’s a good transition. Mr. Jeff Key, I can’t tell you, I’m excited that you’re on this show. Been after you to be on this show for some time anyhow. You’re so well known in the independent pharmacy space because of your passion, I think more than anything, that trickles down through your entire organization. What is it, from your perspective, that … You’ve seen so many pharmacist owners go through the transition from one system to another, or no system to another, in making some decisions about improvements to their business and operations. What is it about today’s landscape that’s so much more important to have the right combination and the right setting than what it was 20, 30 years ago?

Jeff Key: Well, the simple thing is how companies change. Companies, to stay in business, have to be, they’re not going to be doing less tomorrow than they were doing yesterday. Not going to wake up and say, “Hey, let’s cut some of these things out. That’s how we’re going to grow our business.” Companies are going to grow their business by doing more things, doing the things that they do smarter, and by doing the things that they do better for their customers, so their customers want those products. All those things, you know, talk about how a company does those kind of things, they do those through technology.

Todd: Yeah, and we don’t even have to be in pharmacy to understand that. You can see that in so many levels of why certain industries have kind of been either transformed, and went along with that transformation, or have been snuffed out in the community. I hate seeing that happen. I remember in my own days, there was a small hardware store that was really a staple of the community. It went to the wayside because there wasn’t any innovation in how they were procuring product. There wasn’t any innovation in how they were choosing a specific wholesale organization or something. And of course technology, there was no such thing as electronic cash register, but that guy was around for 45 years.

Bill, in running a major corporation focused on pharmacy automation, what is it from your perspective, when you’re trying to run your own company, grow your own company, what are you looking out for to kind of give a heads up to those pharmacy owners? What’s the first indicator, to you, to communicate to the pharmacy owners that, “Hey guys, it’s time for automation”?

Bill Holmes: Well, I think you said it very well, and Jeff amplified it. The world we’re in, in pharmacy, is changing. It’s changing because of reimbursement. It’s changing because of the cost of generics. It’s changing because of the behavior of wholesalers. It’s changing on reimbursement. It’s changing because of Obamacare. This uncertainty can only lead to one thing, and that is that for pharmacies to survive, they have to become more efficient.

If you look at the leaders in this industry, and many of them take advantage of the information and services from organizations like PDS, they’ll tell you that they need to consistently learn more about the industry and those factors that affect their business. But beyond everything else, they have to have a very efficient and very effective host pharmacy management software system, as you described Pioneer. They also have to have automation that does more than just fill vials part of the day.

We looked at this challenge on behalf of the industry, and I took advantage of my experience going back to the early days of Pyxis and Omnicell and other environments where these factors are rapidly changing, and just challenged our organization by saying, “What can we do to provide extraordinary customer service, consultation, guidance, and direction, to help our customers succeed and even excel in a very challenging environment?”

Todd: All right, Steven, there’s so much out there happening from a technology perspective. How do you choose a system? How do you look at the landscape of the availability technology that’s out there and make a decision as to which automation system is right for your organization?

Steven B.: Well, we pretty much had all of them over the years. We started out with the basic counting sales in the early days. We had the first generation robots. We have a vial-filling robot right now. What helped us with the RxSafe, when we did start looking at that, we’ve had some internal theft of some controls, and I was just looking for some way to contain that. Once I saw the RxSafe, I knew that was pretty much a lot of my answers to a lot of my problems. That’s why we elected to go with the RxSafe. It sits right beside the vial-filling robot, and the vial-filling robot still does its job, does a good job, but I would have to say if I had to pick the two, it would be the RxSafe.

Todd: Jeff, it amazes me how Pioneer is keeping up with specific integrations, but what, you know, someone who has to look at so many different facets of running your own business, and then obviously putting your customers first and their needs first in order to stay successful, how are you doing this? How are you managing to make sure that the PioneerRx system is truly communicating, whether that be one directional or bidirectional, with the pharmacy management, pharmacy packaging automation system, and how are you determining what system to work with and what makes it easy to work with them, and what makes it better for the customer environment for implementation? Just share with us, as a technologist, someone who is just soaking in it, how that all works together. Give us some behind the scenes stuff.

Jeff Key: Yeah, I would love to say that, “Hey, we’re awesome at it and we’re perfect at it, and this is our formula of it.” But I can’t say that, Todd. What I can say is that we think that’s a goal, so we put our effort into it. I can say that me as the head of a company, I’m out there 10 nights a month. Not too many months ago I was out with Bill at a location looking at some of the stuff he has. We have a lot of smart customers we’re lucky to have co-run Pioneer who really know the market, know what’s going on, know what’s best for them, and we listen to them. Because of that, we listen to what products they want and what products work for them, and we integrate those things in the system.

Fortunately, we wrote a system from scratch, which has given us some agility in doing that. Because we have a modern technology, it makes it a little easier to connect with some of these equipment and things that are more modern, but it’s something we care about passionately and attack every day the best way we can.

Todd: That’s kind of that consultative approach, and the only way to really execute that, more so than it just being a buzzword, is customizing that approach for that customer, whether that be a one-store or whether that be a 30-store organization.

Also, their care setting. I mean, Steven, you know this better than anybody. To be a community retail pharmacy and only a community retail pharmacy, without having snippets of other layers of business in there, whether that be a little bit of senior care, a little bit of compounding, a little bit of diabetes care, maybe some specialty, if there’s not a mixed opportunity, then what the patient doesn’t understand, what your customer probably doesn’t understand behind the scenes is that there’s facets of what they may need in their healthcare that they’re going to reach out to somebody to get it, and then unfortunately you lose that customer. Having those technology powerhouses behind you so that that’s a piece of the business that you don’t have to worry about.

Steven, just tell me, as a pharmacy owner, what’s that like, to be involved with right technologies versus having to guess?

Steven B.: Well, like you said, technology helps us get away from behind the counter. We’re doing a lot more active patient medication therapy managements, immunizations, lot more clinical services with our patients, so the technology helps get us behind the counter to deal with our patients more, so our staff can do a lot of the actual filling and entering of the prescriptions. That’s the biggest thing.

Jeff Key: One of the things just, and I hang around Bill quite a bit, but really Steve’s saying this solves my control problem, right? This is a really good place for my controls. Controls are one of things that the counts have to be right. That was an aha moment for me. I hadn’t really thought about that. I haven’t really thought about that hey, that the safe is really, really good for somebody who’s having a problem with controls. Now I’ll be thinking about that differently and how that applies to the software, and when somebody says hey, they’re having a problem with controls, you have another avenue to help them out. Already today, just listening to Steve talk on the phone has helped me do a better job at that.

Todd: That’s great.

Bill Holmes: If I could jump in, Todd, carrying on with Jeff’s thought there, the Mayo Clinic approached us just over two years ago, now almost three years ago, with interest in what our customers tell us are the four most important things about RxSafe and how it amplifies and provides better value in the host pharmacy management system like Pioneer.

Those four things are very simple. Speed and accuracy. A single technician can fill over 100 scripts an hour. We know speed doesn’t do any good unless you have accuracy to go with it. Space savings, so Steven talked about those extra services: Senior care, compounding diabetes, MTM services. You need room in your pharmacy to do that, and you need labor to help you manage it, so the RxSafe system, combined with the elegant connectivity to the Pioneer system, allows for higher speed, therefore redeployment of labor and space savings to make room for those other services to take place inside the pharmacy, including if you want a secure private area for immunization.

Then Rx security, Mayo Clinic in particular has a huge problem in their Mary Brigh outpatient pharmacy. They have 30,000 employees in the Rochester, Minnesota area in their main campus. They service all their employee pharmacy needs, as well as the outpatient and community that’s surrounding them, so the volume is huge. It’s a 7/24 pharmacy. They’re doing over 800 prescriptions a day. With all that activity, they were very concerned about making sure narcotics were carefully controlled. We have provided that advantage for Mayo Clinic, and on the basis of that success, we’re now deploying in several other locations, Phoenix and a couple sites, and also a couple additional sites in the Rochester, Minnesota area.

Inventory control is extremely important. Pioneer does a nice job with managing inventory within its parameters, but no inventory system works very well unless you have a good understanding and an accurate on-hand inventory. The benefit of our two systems working together, and I use the word, this is where Jeff and I pioneered this industry by getting that inventory information from the RxSafe, which is accurate to the pill, up front in the pharmacy management system, so that on the basis of knowing what you have, you can make much better decisions about what you should have for on-hand inventory and know what the next day will be.

We very typically see our pharmacy owners, and Steven, I’m not sure about your outcome here, but you might want to chime in on it. But we see pharmacies reducing their on-hand inventory dollars by $100,000 to $200,000 dollars, and your inventory is your most valuable possession.

Todd: Component of running a pharmacy and the C2s of how sensitive that is with reporting, how your wholesaler’s super touchy about it, how they’re wanting double and triple audits in some things. Steven, between that RxSafe system and the PioneerRx system, what kind of supportive reporting are you getting in order to really track and keep your thumb on narcotics and every facet of the business, in the inventory, coming out of inventory, prescribed in follow up? Share with our listeners a little bit about that.

Steven B.: As far as inventory management, when you have a perpetual inventory, I mean, you see everything, what you have, right then. There’s no having to do a physical count. I mean, we have a system where we have our inventory set, but you’re always doing sections to keep your inventory correct at physical counts, but you have that in the computer. I can look on my Pioneer software and tell you exactly how many tablets I have of any drug on the shelf and any brand on the shelf. I can do a report from my RxSafe and tell you exactly my pill count on my controlled drugs. It’s all right there.

You know, inventory management has always been important, but over the last few years, when I’ve really tried to get on a grasp on it’s when the price increases, especially your generic drugs have gone up an incredible amount over the last few years. When you have an abundance of inventory, I think of it as cash sitting on my shelf. At the same time, if you don’t have enough inventory, people get mad when you have outs and you have to owe them pills, so you have to find that sweet spot in the middle, and we’re almost there. I can’t say we’re there. We’re almost there. We’re getting there. But the way we deal with our drugs coming in, especially with the RxSafe, our controls, of course we check them in, we put them in the RxSafe, and there’s accountability.

The key is accountability. Everything is biometrically signed in. You know exactly who handled the bottle of medicine, if there’s a discrepancy, what they did with that discrepancy, so there’s a tracking system there also. When we inventory our medication in the morning when it comes in, we put it in the safe, we actually do a printout so you can tell that everything that came in got put into the safe. That’s another level of accountability that we have.

Todd: Jeff, I know you’re a data guy, obviously. What, when it comes to automation, and you can see obviously what’s happening in the pharmacy today, you can see 30 day fills out, you can say 60 day fills out, 90 day fills out. In that realm of automation at the level of what RxSafe brings to the table, and the intelligence of the pharmacy system PioneerRx, what are you guys doing with big data to give reporting metrics back to pharmacy owners, to really have vision for possibly longer than 90 days out, with regards to what type of inventory they’re going to need, kind of predicting what’s going to be happening to their customers under specific whatever it is, disease states I suppose. But just share with us some of the vision of what big data is going to do to the pharmacy industry.

Jeff Key: Yeah, I mean, there’s all kinds of things that data is going to do. I don’t know, I mean, you’re going to do some to it. As generics get cheaper and cheaper, you’re going to see people buying stuff longer and longer term, not getting stuff overnight, not getting stuff next day, which is going to reduce their costs. Now, one of the biggest effects on inventory is probably going to be in the other direction, though, as patient synchronization, med synchronizations, becomes a bigger and a bigger deal, our push is that 50% of a patient’s scripts are via med sync.

If you can imagine if half of your inventory, half your prescriptions going out, are on synchronization, and you know about them, now if you’re doing perpetual inventory, you can order just in time. You data enter them that night, your stock gets ordered, and the next day you send it to the robot or you print out the labels and fill it. Now, that big, big cost, that thing of missing drugs or whatever like that, all of that’s gone.

Todd: That’s incredible. It’s being proactive. It’s what the pharmacist has to do in foreseeing what the customer’s going to need too, so it rolls right back to the patient. Steven, what advice can you give to a pharmacy owner listening to this show today, kind of out there searching for the right balance of technology, value, cost, and really delivering what a patient needs?

Steven B.: Well, you have to look, like you said, at all of those things. You have to look at your individual setting. Like Jeff said, Rx sync is just, it’s here and it’s going to be here whether a pharmacist wants it or not. We’re increasing our synchronized patients big volumes every week. That’s really going to affect the workflow, so you have to look at that as far as your technology. There are going to be days you’re going to fill your Rx sync patients, you’re going to fill a tremendous amount of prescriptions and you’re going to free your other days up to get out and call on doctors and promote your business and do your patient interactions, the clinical services that we talked about previously. All those things considered, you’ve really got to look at how much that’s going to play in your practice.

Todd: Bill, as for wrapping up the interview, I’ve been very fortunate to run into the RxSafe team at a couple different conferences, and connecting with Brian and yourself, and just feel that there’s a lot that you guys can offer and bring to the table. I’m very interested in learning more. I know we’re having you back for a couple more interviews, which I very much appreciate that you’ve dedicated the time and resources in doing that. But just as a last word to our listeners, what more can you kind of give us about the RxSafe organization, about technology coming, basically a summary today?

Bill Holmes: Todd, that’s a great lead-in here. I know that both Jeff and Steven would agree with me that the reason we’re spending this time with you and trying to get this message out is because we, above all else, believe in the independently-owned retail pharmacy and pharmacist. I think I can speak for all of us by saying that the community is very well served by these entrepreneurs that take the very difficult task of getting up every day, and trying to fill prescriptions accurately, and provide the services that are so desperately needed by patients. Chains just don’t come to that task with the same idea, the same focus, and the same effectiveness. We’re here really pushing and promoting the ideas that you talked about today.

A couple things that I would add is that, with regard to the RxSafe technology, and I have a big sign that we take to trade shows, we’re not a vial-filling robot. Lots of folks walk by our booth and think, “Oh, I don’t need to stop. I’ve already got a vial filler. I’ve already got automation of some kind.” But we’ve really thought this through and taken it as a next-generation approach to providing value and services, and particularly a return on investment. I’m very sensitive in this environment in the cost of acquiring this technology that you get a real value for it. We focus very heavily on consultative customer service. There are no limits that we won’t go to, to have happy customers.

With that in mind, I just want to thank you for providing this vehicle, and we’re looking forward to another one.

Todd: Gentlemen, I thank you so much for being on the Pharmacy Podcast today. Like I said, it was an absolute treat for me to have a pharmacy owner, a leader in the industry from the pharmacy management software sector, and then pharmacy automation leadership. Thank you guys so much for being on the show.

Jeff Key: Yep. Thank you for having us.

Bill Holmes: Very welcome.

Todd: You’re listening to the Pharmacy Podcast. We were on with Mr. Jeff Key, leadership with the PioneerRx team; Mr. Bill Holmes, CEO of RxSafe; and Steven Boatwright, who is with Boatwright Pharmacy in Millington, Tennessee. We thank you for listening to the Pharmacy Podcast.

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