REV: OCTOBER 20, 2006
Pharmacy Service Improvement at CVS (A)
Flum looked at Betses. “You told us it was bad, but this bad?” “I told you there were service issues in our pharmacies. But I have to admit, even I didn’t know the whole story.” “So what do we do about it?”
“Well, we can’t have 67 solutions for the 67 problems we identified,” Roberts said. “Definitely not,” Grossi agreed. “But do you have an idea what we should do? If you erased that whiteboard and grabbed a pen, could you draw the ‘right’ flow chart for pharmacy operations?” “Actually, I think I could come pretty close. And I think my flow chart would look a lot like both of yours. I’m just not sure which parts of it would be easy to implement and which would be
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If they came to us or stuck with us, it was because they didn’t think anyone else would take better care of them, not because we were so fantastic. One of our interviewees said, “I’ve had problems at CVS, but why would I leave? All pharmacies probably have some problems.” Luckily for us, they also thought that it was really difficult to switch from one pharmacy to another. Another interviewee said, “I don’t even know what’s involved in transferring a prescription. Do I have to call my doctor to get a new prescription? It just seems like it would be such a hassle.”
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1 Pharmacies were responsible for a roughly equivalent share of CVS profits.
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To understand the true state of pharmacy customer service and to make any required fixes, CVS launched the PSI and staffed it with operations executives and managers, including Roberts, the senior vice president of store operations; Flum, the director of store technology; and Betses, the director of pharmacy operations. Also on the team were a top pharmacy supervisor, a top pharmacist, and consultants from the Boston Consulting Group, including Grossi.
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As the company grew, managers started to worry that pharmacy operations were not performing well. Anecdotes
CVS Health happens to be one of the largest pharmacies serving people in every community. In fact, there is a CVS across the street from just about every hospital, on every major interception, and are within a 2-mile radius of one another. This is the way it has been since the company was founded “in Lowell, Massachusetts by brothers Stanley and Sidney Goldstein and partner Ralph Hoagland” in 1963, and it’s the way the company plans to keep expanding the company in a proximity to one another. They have even gone as far as expanding the size of the store to fit the community. All in an effort, to be responsive and committed enough to meet the needs of not only the customers, but the clients and the community as well (CVS Health, 1999-2016). Especially, since the company admits that over the past fifty years, they have changed to better service people in their health.
Placed within an industry being pressured by reimbursement rates, plagued by market saturation, and in constant fear of government legislation, Walgreens is trying to pursue new avenues to promote company growth. In order to promote market share growth in New York, Walgreens acquired the drugstore chain Duane Reade in 2010 (WAG to Acquire NY Institution Duane Reade, 2010). Walgreens also recently expanded their online presence in May of 2011 with the acquisition of drugstore.com (Walgreens Co.). While Walgreens also focuses on traditional organic store growth, these actions exemplify their large focus on promoting company growth through new avenues.
The Pharmacy services have a full range of pharmacy benefits manager with more than 65 million plan members that enable people, businesses and communities to afford a healthy life style in an effective way. Pharmacy services segment of CVS offers mail order, specialty pharmacy and infusion services, formulary management, discounted drug purchase scheme, Medicare part D services, retail pharmacy network management services, prescription management services, clinical services and disease management services. CVS also provides health management programs for 17 conditions.
Although business was slow during my time at Walgreens, I enjoyed working with Dr. Guvetis and his team. He was very dedicated, focused and passionate about his job. He showed me how Walgreens was different from other competitors and the workflow of prescriptions. Walgreens receives prescriptions from patients (faxed,
The second significant change for Walgreens in recent history is the purchase of Drugstore.com, a leading online retail pharmacy, in 2011 for the sum of $409 million. In addition, subsidiary companies of Drugstore.com were also purchased (Beauty.com, SkinStore.com, and VisionDirect.com). 4 Analysts have debated whether the recent acquisition should remain as a stand alone business or whether it should be integrated into the Walgreens business. Proponents of the integration argue that a consistent brand experience which extends from physical stores into the digital web will increase consumer loyalty. Proponents of leaving the online venture as a stand alone entity argue that integration of Drugstore.com into Walgreen’s will open up debate on pricing may diminish the consumer loyalty from Drugstore.com, thus negating the potential increase in sales. Walgreens has made it clear that it intends to leave the newly acquired online businesses as stand alone entities. 5
In this essay, I will be explaining about the history of Walgreens and what it has to offer to its customer. This will include the services and merchandise that has made them a successful company for over one hundred years. My mission for writing this essay, is to give the reader some more insight on what they may of not know about this nation wide store. I also want to provide the reader with confidence to rely on Walgreens as their number one trusted pharmacy and drugstore.
The initial intent of this analysis was to identify changes in accounting methods within the financial statements of Walgreens and CVS, as well as to compare and contrast their financial statements, in order to draw conclusions about which company had better earnings. However, in the process of this analysis, with the exception of a minor change to lease accounting by Walgreens, there were no major changes in accounting methods identified. In examining the financial statements for these two drugstore industry leaders, the analysis shows that while each company conducts retail drugstore operations in similar ways, their business models for carrying out these operations greatly vary. These variances in business model
Walgreen’s drugstore was located in Barrett’s Hotel at Cottage Grove and Bowen Ave on Chicago’s Southside. The neighborhood was prospering but Walgreen’s wasn’t. Mr. Walgreen decided to add brighter lights, expand the aisles (since the other pharmacies were dull and cramped), and add variety like pots and pans (unheard of in a drugstore. The quality of Walgreen’s pharmaceutical compounds met the very highest standards of purity and freshness. Efficiency was increased. But the most dramatic change Mr. Walgreen instituted was a lever of service and personal attention unequaled by virtually any other pharmacy in Chicago. And this was exemplified by Walgreen’s famous “Two Minute Drill” (Walgreen, n.d., p. 3).
Queue Management - The pharmacy uses a multi-channel multi-phase system. The first phase is when customers drop off their prescription. Costco has two stations for this phase. The next phase is when customers pick it up and pay for it; this phase also has two stations. Costco has recently added an additional service station to decrease wait times during peak hours.
Current Industry. The retail drug industry’s 2010 combined annual revenue was $277 billion, according to the National Association of Chain Drug Stores (Drug Store Industry…, 2011, par. 4).The big players in this industry are CVS Caremark, Corp. Walgreen Co., and Rite-Aid, Corp with Wal-Mart and Target developing more of a presence in recent years. According to the article, the drug store industry is very concentrated with the 50 largest companies generating about 70 percent of the industries revenue (Drug Store Industry…, 2011, par. 4). The industry had grown substantially in the last 50 years and will continue to innovate and develop well into the near future.
CVS Pharmacy is the retail division of CVS Caremark. It is also one of the largest Pharmacy Retail Chains in the country and operates more than 7,400 stores domestically. Although the retail pharmaceutical division of this corporation accounts for a significant amount of this company’s success, CVS Caremark focuses more on its corporate strategy to compete with other industry rivals such as Walgreens and Rite Aid. Considering CVS Caremark is the result of the 2007 merger of CVS and Caremark Rx, this analysis will begin with a brief history and the merger of these corporations, its current performance, strategic posture, and the strategic managers of this organization.
This preliminary strategic assessment of Walgreens will describe the company’s current corporate strategy and business model. Walgreens’ acquisitions and mergers will be examined as well as the company’s globalization and competitive frame. A brief overview of how the company is performing and its cost-based business strategy will also be examined. This is the first of four reports that make up the strategic assessment for Walgreens.
We would like to thank you so much for all the hard work that you all have been doing. As Walgreens still continue being one of the top largest retail pharmacy in the United States. Our goal and vision has always been; to be America's most loved pharmacy-led health, wellbeing and beauty retailer and to champion everyone’s right to be happy and healthy and that also include our employees. With that being said we really appreciate your loyalty and the excellent work that you continue to do despite our current predicament.
Also, the drug distribution division has been forced to lower its prices by health care providers, patients, insurance companies and HMOs. Moreover, related costs are increasing, reducing profit margins of the company. This division is not as profitable as other three divisions, generating less than 50% of the company’s total profits,
The drop-off stage has a major problem for nobody watching in-store drop-off window. This problem will cause the decrease of customer’s satisfaction because customers cannot drop off their scripts and make the requested pickup time at that time and also waste customer’s valuable time. If no pharmacy staffs serve customers in any service time, the company will lose the trust from customers and will not achieve its organizational goals.