1. Pharmacy 6 June, 2012

2. Introduction Why Pharmacy Whats the problem What should we do about it FOR OFFICIAL USE ONLY 2

3. Why Pharmacy

4. FOR OFFICIAL USE ONLY PopulationIllnessEpisodeIntermediate Products ResourcesOperating Costs Why Pharmacy Lee and Jones Model

5. FOR OFFICIAL USE ONLY PopulationIllnessEpisodeIntermediate Products ResourcesOperating Costs Reduce the rate at which the population becomes ill Select best treatment model and location Implement best practice treatment protocols Engineer the delivery of intermediate products Alloct Make resources, Supplemental, Contract buy Why Pharmacy Lee and Jones Model

6. Whats the problem Critical Resource: Pharmacist Manual Variance Low volume/Geo isolation FOR OFFICIAL USE ONLY 6 PrescribeFillCompliance

7. What should we do about it Leverage technology Automation (robots) Tele-Pharmacy Maximize Pharmacist Value-added activity Provider prescribing Patient compliance FOR OFFICIAL USE ONLY 7

8. Appendix FOR OFFICIAL USE ONLY 8

9. Patient compliance FOR OFFICIAL USE ONLY 9 Patients have been shown to abandon their treatment. Pharmacists actively communicate with patients regarding refills and prescription issues to increase patient adherence

10. Patient compliance FOR OFFICIAL USE ONLY 10 Reduction in total patient costs can be achieved with proactive pharmacists monitoring

11. 11 Current Pharmacy Operations Cost Retail Prescriptions*Retail Cost* Current State Statistics Navy follows same general trend as DoD Retail Rx volumes increasing w/ Direct Care decreasing Retail drug costs Increasing Avg. ~$40 extra cost/Rx in Retail vs. Direct Additional Costs Capital Investment: Automation replacement Inventory: $82 M with 60-day stock Rx replacement, Loss to Retail Patient Abandonment *M2/PDTS Data: DoD Pharmacy Operations Center (Note: Mail Order Total Cost misleading due to dispensing fee being dropped and some ingredient cost issues after TPharm activated on 4 Nov 2009) +27% -2% +33% -5% FOR OFFICIAL USE ONLY 11

12. 12 Bank TellerPharmacy Queuing Models Bank Teller: Patient waits until called to window and then served (left) In-and-out: Patient submits Rx, sits down, and waits to be called again for Rx dispense and consult (below) Pharmacy Standardization NO patient queuing standardization NO prescription fill process standardization Limited centrally driven decision making In-and-out Patient Arrives Prescription Filled Prescription Dispensed Patient Arrives Prescription Dispensed Prescription Filled Patient Queuing and Prescription Processing Models FOR OFFICIAL USE ONLY

13. Wait Time and Abandonment FOR OFFICIAL USE ONLY 13

14. Pharmacy Automation Guiding Principles Single Piece Flow High Level of Automation Minimal Interruptions/Distractions Division of Labor Standardization FOR OFFICIAL USE ONLY 14

15. New System Objectives Quality Errors: Fill errors are reduced by 2/3 Value-added Pharmacist time: 10% more time is dedicated to high valued-added tasks Access Overall processing time: 30 minute processing time From 1000 to 1400 for the 90 th percentile patient Ticket abandonment: Ticket abandonment is reduced by 1/3 Cost Staffing: 10% reduction in tech staffing 10% increase in Pharmacist value-added time FOR OFFICIAL USE ONLY 15

16. In/ Out process patient queuing Automated labeling and capping Single piece flow tote system Conveyor transport Re-engineered workstations Medication storage optimization Automation System Elements Layout FOR OFFICIAL USE ONLY 16

17. Top 250-275 high demand items within arms reach of technician Computer, pill counter, barcode scanner, and labeler Dimensions: 10 ft length, 7 ft height, 2 ft depth Automation system elements Fast mover workstation FOR OFFICIAL USE ONLY 17

18. Fast movers in front / Slow movers behind ~ 760 additional items per work station ~ 1,520 items total in two stations This is bulk storage for all items with < 4 fills per week Automation system elements Fast and slow mover workstation FOR OFFICIAL USE ONLY 18

19. Two automation robots for oral tablets 150 - 200 cells in each robot Highest mover items in both machines Automation controls tote movement along conveyor systems Perpetual inventory Automation system elements Robot automation FOR OFFICIAL USE ONLY 19

20. Designed to minimize disruptions Reinforces single piece flow C2s and refrigerated items in close proximity Dispensing windows in close proximity Automation system elements Pharmacist verification workstations FOR OFFICIAL USE ONLY 20

21. Dashboards Examples Today Past 14 days FOR OFFICIAL USE ONLY 21

22. Conveyor Concept In Use Around the Navy Scott Center Naval Hospital San Diego FOR OFFICIAL USE ONLY 22

23. Patient ExperienceFast Mover Work Stations Patient Experience Maximum wait decreased from 2 hrs to 45 min Improved flexibility (not holding patients in the waiting room) Error rates decreased by a factor of 50 (0.5% to 0.01% error rate) Pharmacist Verification Conveyor Concept in Military Environment FOR OFFICIAL USE ONLY 23