JULY,Edition # 30, 2001

EDITOR'S NOTE:
I met Pat Gallagher when he was presenting a paper at the recent E-Pharma Conference. The import of Pat's paper really struck home when I compared what he was endeavouring to do in Project Electronic Commerce and Communication for Healthcare (PECC), with what was going on with our competitors.
This "new economy" model that is being developed on a global basis under various names and forms, is designed to save up to 30 percent of the costs within the supply chain.
This means that if you stay outside of such a system, you will be unable to compete, because retail prices can be manipulated downwards through cost savings.
Australian pharmacy manufacturers and wholesalers have been working on their segment for some time now (called PEG-The Pharmaceutical Extranet Gateway), and they are already reaping the benefits of this activity.
The federal government is anxious to share in this new found productivity, and has appropriated some of the financial gains, by proposing to reduce wholesaler margins.
The extent of the reduction will depend on quantification of savings to date.
Traditionally, wholesalers have passed on this type of cost increase directly to pharmacists, but in this instance THERE IS NO JUSTIFICATION.
The Pharmacy Guild needs to recognise this fact and step in quickly to protect pharmacists from unjustified and unconscionable price increases.
They should also try and enlist the help of the Australian Competition and Consumer Commission (ACCC).
As pharmacy enters into the PECC model, it will be subjected to margin decreases for Pharmaceutical Benefits.
If you are in it you will probably survive.
If not, then you had better plan for retirement now.
Read Pat's article with intense interest:

Today, more and more pharmacies are being equipped with POS.

Unlike the grocery and general retail operators, the pharmacy push-to-acceptance of Point-Of-Sale (POS) technology came from the dispensary computer example, rather than just front of the shop efficiency.
Made all the more compelling due to the high take up of dispensary PC solutions in Australia - reflecting the relatively very high global performance status of the Australian pharmacy community.
'Why is this so?', to paraphrase a wise old academic.
We hear the sales pitch and advice from all and sundry - 'efficiency, productivity, accuracy', ah accuracy, records, faster, better, higher, swifter … arghh!
And, worse there is the often stated line that there is an 'old' economy and now somehow the Internet has brought us a 'new' economy model.
Actually, we are attracted to technology because it is a 'better' way of capturing and transacting information.
On the other hand, the only 'economy' we need to worry about is when we make a profit, which becomes a good economy process.
When we lose money it is a bad economy process.
All the while, the imperative is to strive for the highest level of customer service with the best control over costs as is possible.
Technology should deliver the benefit of timely, accurate and useful information, from all sources, all the time, and without reworking and duplication.
All too often today these simple things get lost in the hype of the 'dot.com.bombs', blue suit knowledge veneer and other policy trend setters, determined to bend the business to their way, rather than bend reality to the best ways.
Barcodes are terrific technology, and today,are almost universally available on product packaging with the ubiquitous EAN.UCC labels on the carton, shippers and customer pack.
A superb supply chain and shortly an almost mandatory clinical care tool.
Who uses EAN.UCC barcodes or numbers in pharmacy?
Not many retailers, only one wholesaler did, and almost no manufacturers.

If the grocery community tried to survive without the EAN.UCC system they could not - so why does pharmacy not embrace the benefits?

The reasons are historical and involve margins, very little corporate chain pressure, non-retail minded wholesalers, plus the cost of the technology combined with no demand and no critical mass.
These factors are rapidly changing and so they should.
There are some industry experts who still maintain that it is perfectly sensible to apply proprietary labels on each and every package as it enters the pharmacy.
I imagine they see nothing wrong with covering the EAN.UCC label with the private label.
This is utter nonsense!
It is a 'make work' activity for retail staff that decreases productivity while diluting the return on investment from the POs investment.

Look at it this way:

It enforces the concept of isolated islands and silos of information, with nothing exchanged outside the tiny world of that system.

The Internet will not magically create a 'new' economy model to make this 'new world' work.
Nothing will make this work, and it is merely a 'bad economy' practice.

Let's quickly look at two emerging process and practice changes coming to your pharmacy real soon.
The electronic supply chain and electronic prescription processing.
First the supply chain.

To start at the beginning.

Today a customer walks out of the pharmacy, after the proprietary barcode is scanned or the PLU entered with, we hope, no file errors or missing prices.
During the day the staff walk around the floor and enter the proprietary wholesaler's PDE number into a terminal.
The order is transmitted.
Goods are picked and dispatched and received into the pharmacy - the whole process is 'managed' by re-keying and printing paper.
Every six keystrokes out of every 100 will create an error (how many credit notes a month, how many lost sales a week do you endure?).
Meanwhile, the wholesaler will fax an order to the manufacturer, who delivers it. This whole transaction is also controlled by the clipboard and reworking the paper work - more errors.
The pharmacy PDE order is transmitted and it comes back as a reorder because something went wrong between your supplier and the manufacturer.
This is the 'old' economy at work.
Not real flash, but comfortable.
Does this old way deliver maximum convenience, satisfaction and performance? Nope.
Will the magical use of technology, the Internet, introducing the 'new' economy method fix it all?
Nope.
Only boring, tedious, slow hard work by everyone in the chain will make the good economic model work.
The future pharmacy experience should be that a unique number is captured as the happy, satisfied customer leaves the shop. A situation where the entire supply chain uses the same standards from point of sale, all the way back to point of manufacture.
From the POs backend system, the unique number is electronically processed as a suggested order for confirmation to be transmitted to the wholesaler.
The wholesaler. picks, packs and ships by using the same unique number and are used when delivered into the pharmacy.
All steps have minimal human intervention, which results in far less errors, less out of stocks and better customer service.
Meanwhile the wholesaler transmits their order to the manufacturer/distributor using the same unique number - and this number is used to pick, pack and deliver the goods into the warehouse. This results in exactly the same benefits to the manufacturer, the wholesaler and subsequently the pharmacy and ultimately the customer.
This is the old distribution system upgraded to a better way.
A better way that integrates the information loop so that every one, up and down the chain, has the same information, the same numbers and the same ability to manage common data.

The very important fact being that it is not the barcode that is important - it is the unique, common number.

A number that is aligned with every file and carries total data integrity for supply and clinical electronic platforms.
The pharmacy is the end of the supply and clinical chain, and the beginning of the replacement order and the patient information record.
The pharmacy closes the loop and therefore the pharmacy needs to have the best electronic collateral possible.
So what's being done?
Happily quite a bit.
The PeCC Project has been campaigning to raise the awareness levels surrounding these issues by facilitating many collaborative efforts to reach the critical mass use of standards.
A standard for product numbering and standards for b2b-e.commerce Internet transactions.
The wholesalers are implementing a b2b platform called PEG (Pharmaceutical's Electronic Network) that has done terrific things to bring about the critical mass compliance of EAN.UCC on product packaging and to introduce Internet transaction standards.
PEG has become a foundation for a whole raft of healthcare industry activity including hospital pharmacy and other hospital healthcare procurement.
The Health Online Report has created several Standards Australia health sector working groups, known has IT14.10, which is ratifying and building on the early PeCC and PEG demonstration efforts.
During 2000/2001 the entire health community, including pharmacist, doctors, wholesalers, academics, manufacturers, the IT sector, others and the relevant government departments (DHAC, HIC, DVA, TGA) came together collaboratively and created the Medicine Coding Council of Australia (MCCA).
The MCCA is essentially a single central repository database of product information, maintained by MCCA governance and populated only by the manufacturer and the supplier of the product.
This quality assured, aligned, data will then cascade down to the working files used by pharmacy (Amfac, FRED, etc) and systems used by doctors (Medical Director etc) the wholesaler's mainframe files and professional reference services (MIMS).
The wonderful outcome being a single identification 'numberplate' for every product electronically processed by the entire supply chain and clinical community. This will ensure that patient care is maximised and not threatened by many randomly, disparate and uncontrolled databases or files riddled with file maintenance errors. Every error is potentially a medical misadventure in the dispensary and a lost sale in the shop generally.
The MCCA will support the functionality of the Better Medicine Management System (BMMS), the BMMS will become the core national electronic patient record system and is supported by federal legislation and a significant budget.
How to summarise all of this into some simple steps?
Advisers, experts, practitioners and other sundry participants will agree that b2b requires a three dimensional model being in place.
Pharmacy has two already in place.
Firstly technology, POs, dispensary, back room PC, EFTpos, has a high penetration into Australia's efficient pharmacy community.
Secondly the professional and retail staff, the people factor, is equally at world's best levels of change acceptance and performance.

What's missing is the third element - standards.

Without the ability to exchange common, shared information, using harmonised transaction 'envelopes' the entire healthcare system will be electronically flawed. Although the big end of town, government, the IT industry and associations are doing a good job in moving down this path, the drive for change will be less than energetic.
Only the small to medium enterprise (SME), only the entity with most to win or lose, will truly drive change. And in the realm of b2b, e-business, e-prescriptions, e-health, e-anything it is the community pharmacy sector of the national economy, which is the SME, that needs to become the demanding driver.
The last thing that happens, supply chain or clinical procedure, is that the customer/patient is handed a product.
It is in the interests of the customer/patient that this product is 'delivered' and electronically managed using common numbers and standards.
It is community pharmacist who can champion this to become a ubiquitous reality.
Ends
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