CVS Pharmacy Fulfillment Case Explanation

CVS Pharmacy Fulfillment
Case Explanation
Roberts: senior VP of store operations, Flum: Director of store technology, Betses: Director
of pharmacy operations, Grossi: consultant of BCG.
PSI team uncovered problems around the country and at the prescription pickup counters at
CVS (Exhibit 1 and 2). Changes were required but certain things like safety of consumers and
increase in wait time should be looked into.
Pharmacy operations at CVS:

Started in 1963. By 2002 had 4000 stores and revenue of 24.2 billion, 2/3rd of which was by
pharmacies (Exhibit 3).
The pharmacy service initiative:
The managers started worrying about the pharmacy operations because of some anecdotes
about problems with customer service. Some also interpretated the fast growth of CVS to be a
good customer service. So, to know the true state CVS launched the PSI.
Interviews and Analysis:
Interviews were conducted by PSI and analyzed the historical data and concluded that they
had problems in CVS, they grew fast because of lack of customer knowledge of things like:
• All pharmacies are same and provide same level of consumer service.
• The procedure to transfer a prescription to another pharmacy.
The switching was difficult as considered by consumers but still there were 89.5 million
pharmacy members at the start of 2000 and around 7.2 million of regular consumers
switched. They also attracted around 8.5 million of new regular consumers but those who left
took 2.5 billion of revenue with them which slower growth of CVS.
The consumers were divided into 2 segments: light (5 scripts per year) and heavy (40 scripts
per year). Light left majorly because of location and heavy left because of poor service.
Field Work:
PSI team members also spent some time at pharmacies. There they observed that there were
other problems at pickup counters. Almost 16% of all prescriptions were facing issues which
increased the pickup for other consumers. In a single 8-hour shift about 40% of people raised
a complaint and even verbally abused the employee at the counter. The employee at the
counter of pickup were least paid and least trained. The places where work was being done
properly was because of heroic efforts of counter employees.
The Pharmacy Fulfillment process:

5 step process:
1) Drop off: consumers dropped off their script and the tech asked them the time they
would come to pick it up. Then put the script to a box divided into various time slot
(1-hour prior to the desired time). The most common pickup time by every consumer
was after work.
2) Data Entry: Data was now entered from that hour’s script into PIS, an application
connected to central database of CVS. Information: drug, prescription, customer,
payment, insurance information, patient and doctor contact information, third party
payer, medication, dosage, number of dosages etc.
After data entry a drug utilization review is done to check that if the drug being given to
the consumer should not have a negative drug-drug effect on consumer or the drug being
given is harmless for the consumer seeing his age, gender etc. If the drug is said to be
harmful by the system, then it is sent to pharmacist for the review. This was considered to
be an essential part of good pharmacy operations and customer service.
After DUR, insurance check was done as a large fraction of consumer bills were paid by
third party like employers, insurance companies, and government agencies. The consumer
only paid a small amount of their own money called “copayment”. But insurance
companies and employers also had a set of rules that need to be verified before giving the
drug to the consumer which was done by the system. This was a very complicated task as
doctor and patient did not had formularies on their fingertips and sometimes patient might
not get insurance for a medicine. Not CVS has to deal with the patient, doctor and the
payer. Sometimes a patient might also come for refill of their prescription but payer won’t
allow soon refill and patient might have to wait. These problems are not dealt by the
system but are dealt by the CVS pharmacy employees while the process continued or
when consumer comes for pickup.
3) Production: Drugs are counted and verified by some pharmacy technicians.
4) Quality Assurance: Now the script is reviewed by a pharmacist to check whether
correct medicine in correct amounts is there or not
Steps from Data Entry to Quality Assurance takes minutes if there is no problem
5) Pick-up: Each script is now packed and put in pickup area in alphabetical order and
given to the consumer and any necessary payment is also taken.
Problems during the process:

PSI team estimated that 16% of customers did not get what they expect and face problems
and 27% of scripts encountered a substantial problem at some point during fulfillment
process.
Drop off: the only problem was unmanned drop off window.
Data Entry: it faced issues such as no refill allowed where a consumer might drop off a
script to be refilled but its refilled is not allowed. In this situation the script is put in “Dr. call
bin”. A tech would now call a doctor and if the doctor approved the refill, the script will
move for further processes and if not, it will go in “Dr. denied” box. If the doctor is not
available at the immediate moment the script goes into “Dr. call-back bin” which is an issue
as no refill is allowed and there were 6% of such scripts. DUR Hard stops were generated
for 20% of scripts and over 90% of hard stops were solved by pharmacists. In some cases
where the problem by drug may be dangerous the pharmacist has to call doctor to resolve the
potential problem. 17% of all scripts encountered a problem during insurance check.
Majority of these issues were easy to resolve and were resolved by data-entry tech where as
some needed customers to be called. Some problems were hard to resolve and needed insurer
to be called. Scripts were still filled and customers were asked for a full payment at the time
of pick up.
Production and Quality assurance: the only problem at these steps was lack of stock. 7% of
scripts faced partial or complete shortage. No problem at Quality assurance.
Pickup: Variety of problems involved:
• Unauthorized refills
• Not paid by insurer
• Not ready scripts
Some people return empty handed but with a bad impression of CVS. Those whose issues
can be fixed had to wait. There was a huge line between 5-7pm and employees were not
motivated to deal with customers at this time.
Pickup is where consumers get mad but this does not mean that improvement is required
at pickup but it is required at points which are increasing problems at pickup.

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CVS Pharmacy Fulfillment

Pharmacy operations at CVS:

The Pharmacy Fulfillment process:

Problems during the process:

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