Read the following case study and answer all the questions in question $1.$

Reliable Pharmaceutical Service

This case study should take approximately $10$ min to read.

The Reliable Pharmaceutical Service is a privately held pharmaceuticals company incorporated in

$1975$ in Gauteng, Pretoria. It provides pharmacy services to health$-$care delivery organisations that

are too small to have their own in$-$house pharmacy. Reliable grew rapidly in its first decade and by

the late $1980$s its clients included two dozen nursing homes, three residential rehabilitation

facilities, two small psychiatric hospitals, and four small specialty medical hospitals. In $1990,$

Reliable expanded its Gauteng service area to include Johannesburg and started two new service

areas in Boksburg and Benoni.

Reliable accepts pharmacy orders for patients in client facilities and delivers the orders in locked

cases every $12$ hours in the Gauteng and Johannesburg service area. Reliable employs

approximately $12$ delivery personnel, $20$ pharmacist's assistants $($PAs$),6$ licensed pharmacists, and

$10$ office and clerical staff. Another $15$ employees work in the Boksburg and Benoni service areas.

The management team includes another six people, mainly company owners.

Personnel at each health$-$care facility submit patient prescription orders by telephone. Many

prescriptions are standing orders, which are filled during every delivery cycle until specifically

cancelled. Orders are logged into a computer as they are received. At the start of each $12$ hour shift

the computer generates case manifests for each floor or wing of each client facility. A case manifest

identifies each patient and the drugs he or she has been prescribed, including when and how often

the drugs should be administered. The shift supervisor assigns the case manifests to pharmacists

who, in turn, assign tasks to pharmacy assistants $($PAs$).$ Pharmacists supervise and coordinate the

PAs' work.

All drugs for a single patient are collected in one plastic drawer of a locking case. Each case is marked

with the institution's name, floor number, and wing number $($if applicable$).$ Each drawer is marked

with the patient$$s name and room number. Dividers are inserted within a drawer to separate

multiple prescriptions for the same patient. When all the individual components of an order have

been assembled a pharmacist makes a final check of the contents, signs each page of the manifest,

$16$; $17$; $18,192019$

$$ The Independent Institute of Education $($Pty$)$ Ltd $2019$

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and places two copies of the manifest in the bottom of the case, one copy in a file cabinet in the

assembly area, and the final copy in a mail basket for billing. When all the cases have been

assembled they are loaded onto a truck and delivered to the health$-$care facilities. Occasionally

deliveries are delayed as stock is sorted

Reliable uses a combination of Excel spreadsheets, an Access database, an antiquated customdeveloped billing software running on personal computers. Pharmacy assistants use the customdeveloped billing software to enter orders received by telephone and to produce case manifests.

The system has become increasingly cumbersome as facility contracts, Medicare and Medicaid

reimbursement procedures have become more complex. Some costs are billed to the health$-$ care

facilities, some to insurance companies, some to Medicare and Medicaid, and some directly to

patients. The company that developed and maintained the billing software has gone out of

business, and the office staff has had to work around software shortcomings and limitations with

cumbersome procedures. Inventory management is done manually.

In $2010$ Reliable$$s revenues levelled off at R$40$ million, and profits plateaued at R$5\mathrm{.}5$ million. By $2015$

revenue was declining approximately $4$ percent per year, and profit was declining at over $8$ percent

per year. Several reasons for the decline included the following:

$$ Price controls in both Medicare and Medicaid reimbursements and contracts with facilities

managed by health maintenance organizations $($HMOs$)$ and large national health$-$care

companies

$$ Increasing competition from national retail pharmacy chains such as Happy Pharmacy

Group and in$-$house pharmacies at large local hospitals

$$ Inefficient operating procedures which haven't received a comprehensive review or

overhaul in almost two decades.

Reliable's management team spent most of last year developing a strategic plan. The key element

of which is a major effort to streamline operations to improve service and reduce costs. Managers

see this effort as their only hope of surviving in a future dominated by large health$-$care companies

that can dictate price and outsource pharmaceutical services to whomever they choose. They plan

a significant expansion into neighbouring states after the system is up and running, to recoup its

costs and increase economies of scale.

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