Dynamic Capabilities of outpatient pharmacy Blackman 1 Simone Blackman Assignment 4

Dynamic Capabilities of outpatient pharmacy Blackman 1 Simone Blackman Assignment 4

Dynamic Capabilities of outpatient pharmacy Blackman 1
Simone Blackman
Assignment 4.1 Dynamic capabilities
June 17th, 2018
The Pharmacy profession is one of the backbones in the economic development in the healthcare setting, that contributes an enormous resource for keeping patients healthy, also plays an essential role in maintaining costs down. The pharmacy sector is embedded in a rapidly changing environment, characterized as competitive. The term dynamic capabilities refer to the firm’s ability to integrate (sensing), build (seizing) and reconfigure (transforming) all of the internal and external competencies to address the rapidly changing environment. (Teece, 1997).

The pharmacy environment has become extremely competitive. Therefore, the prescription doses dispensed, drug class dispensed, engaging the patients to achieve reasonable goals, customizing patient’s care plan to fit their live hood and thereby enhancing communication will drive revenue for the pharmacy. Furthermore, by using dynamic capabilities model, I can show that RRH outpatient pharmacy does provide a sustainable competitive advantage.

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During the past decade, Rochester Regional Health (RRH) has transformed itself into one of the leading providers for people in the community. It’s one of the premier healthcare systems in the area, with about close to $1 billion budget and a lot of modernization project in the pipeline. On the other hand, the pharmacy department budget is $30 million per year. At RRH, the pharmacy director senses the need to expand and open an additional outpatient pharmacy based on patient satisfaction report. The report senses the need or opportunity for another pharmacy to provide for the volume of prescriptions’ at patient discharge. About the same time, the pharmacy department at RRH had conducted research; it was noted that with the significant modernization project happening at the hospital. There would be an increased need for an additional outpatient pharmacy to process more prescriptions.
Acting on the customer’s insight has allowed RRH, to understand and meet its customers’ needs by opening another outpatient pharmacy to prevent competitors’ from acquiring a market share of their patient population. The annual revenue that RRH will acquire from opening the additional pharmacy location will be $4 million. Moreover, RRH plans on marketing and advertisement the opening of the new outpatient pharmacy and educating the community about the business. This will help to differentiate RRH from competition, by learning how to serve the customers better and integrating RRH around the customer’s needs.
Moreover, the concept of seizing is building on that strong external relationship; which in RRH case is the customers. As a result of RRH, seizing on the opportunity, they will open the new outpatient pharmacy along with other clinics. This new campus that will also house the new pharmacy will cost a massive $26 million and will improve patient satisfaction, therefore allowing RRH to remain competitive. According to Eric Bieber President and CEO, “my hope is, as we continue to get better and better at what we do and help our community live better and healthier lives.”(RBJ, 2018). How will RRH defend their profitability against competitor responses? This new pharmacy will decrease the waiting time for filling prescriptions for discharged patients or customers from 2 hours to 30 minutes per order; which typically consists of several prescriptions. Also, the new pharmacy will facilitate with filling medications for the patient at the various clinics such as dialysis. Moreover, the decrease prescription filling time and the delivery to the multiple clinics will help RRH to provide high-quality service consistently and, therefore, contribute to maximizing reimbursement for the institution. Also, RRH administers their health plan, and all employees are required to have the prescriptions filled at the outpatient pharmacy, and this is added revenue for the hospital.
With the new RRH outpatient pharmacy is set to open in August, the hospital will continue to consider patient satisfaction score to regular improve patients service. The pharmacy manager at the new outpatient pharmacy will be responsible for ensuring that customers’ prescriptions are filled and/ or delivered in the time allocated. As with this project, we will continue to monitor the reimbursement and revenues that is brought into the hospital. As the new outpatient pharmacy is set to open soon, this will be a major change for RRH, and also the hospital is thinking ahead of adding a compounding pharmacy strictly at another location. This will enable RRH, to large manufacturer amount of different drugs at the compounding pharmacy and resell them to other hospitals and retail pharmacies. This will allow RRH to be like a “mini manufacturer.” As a result of RRH looking at all of their internal and external competencies, they can make this change to retain a sustainable competitive advantage in the rapidly changing pharmacy environment.

RRH is the only institution in the area that took patient satisfaction score and realized that there is a need for improvement in the services given to customers and as a result, opened a new outpatient pharmacy. This will enable RRH to capture approximately $4 million in additional revenues. Also with the implementation of a compounding pharmacy later will allow RRH a sustainable competitive advantage and even of these new pharmacies has dynamic capabilities.

1. Teece, DJ., Pisano G., Shuen, A. 1997. Dynamic Capabilities and Strategic Management. Strategic Management Journal 18 (7): 509-533.

2 . How big can the Healthcare Industry in Rochester get? Rochester Business Journal 2018/4/23.


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