DRIVING DATA
Data is the new Oil
Forbes Magazine published an article in April 2012 where they posed the question; “Is data the new oil?” and quoted Ann Winblad the legendary investor who responded “Data is the new Oil. Data is just like crude. It’s valuable, but if unrefined it cannot really be used. It has to be changed into gas, plastic, chemicals, etc., to create a valuable entity that drives profitable activity; so must data be broken down, analyzed for it to have value.”
P
harmacists have become increasingly aware of the value of their data. For a number of
years pharmacy owners and managers have been approached by data companies who trade their data for either pharmacy sales benchmarks or for a small annual payment which they sell on to third parties such as Pharmaceutical manufacturers.
The Value of Pharmacy Data to third parties Dispensing data is worth much more than front of shop data to third parties. The OTC, Health & Beauty etc suppliers to pharmacy retail already know their market shares and gain insights from their other channels of distribution. Your dispensing data is much more valuable to them. You are the only source of how these are dispensed and there are insights over
and above sales data which are valuable to them.
The value of your data to the pharmacy business itself A largely untapped resource is the value of the data to the pharmacy owner themselves. With crude oil, the refining process produces different end results. It is just the same with your pharmacy data. Your transactional systems such as your dispensing system or your Electronic Point of Sale (EPOS) system in the front of shop collects large amounts of data – the crude oil. The simplest form of refining done on these is the reporting that your dispensing and EPOS systems produce. These help you manage your business but many pharmacy managers find it doesn’t address all their needs and find themselves using spreadsheets to
Figure 1 – Real World Retail Shrinkage View
further understand what is going on to aid decision making.
The best tools to get better insights from raw data are data analytics (DA) or business intelligence (BI) technology. The sort of questions that can be answered with these insights are; • Am I losing money from claims that are not paid? • Am I losing money from dispensed items that are not claimed? • Am I losing money from shops ordering from the wrong supplier (which can be my own warehouse or a buying group)? • Am I losing money from items that go out of date and have to be disposed? • Am I getting the best deals from my suppliers? • Am I making money from my Care Homes? • Am I focusing on the right patients from a return on investment perspective? ( a bit crass some may think, but patient care improves with this approach too)
The value to be captured with this information is in the region of £10,000 to £20,000 of profit to the bottom line per annum per pharmacy depending on a number of factors.
The power of visualisation over tabular reports A picture is worth a 1,000 words. Where possible you should always look for visualisations of the insights provided from data analytics. People have a low tolerance to tabular reports, and they end up not been used properly, or not used at all. A visualisation can get to the answer much quicker; in Figure 1 below you answers the question “which till operators are most likely stealing from me?” – you can see this in seconds. However, a typical EPOS system will print out a report of Refunds by Cashier but you would need to trawl
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down through each employee to find the potential culprits.
In a well-designed Data Analytics solution when you hover your mouse over the name in Figure 1 should bring up an option to show the full refund history, discount history and voids history.
So why all the fuss about internal data analytics? Gartner a leading information communications and technology survey company found that analytics is now the first or second in IT spending categories since 2006. Proctor and Gamble’s (P&G) Filippo Passerini articulates the difference between the two types of analytics. Industry data analytics give the “what” answers, whereas a well thought out internal data analytics solution give the “why” answers or “how” to fix the problem which in turn leads to better decision making. InformationWeek in February 2012 reported that P&G cut $900M out of costs in the previous 9 years but quadrupled their spend in 2012 on data analytics to aid more timely and accurate decision making.
How can this be applied to pharmacy? The most obvious place to look in NI Pharmacy is in Claims. Do you think you are getting paid for all the items you dispense? If you answer yes to this question, you are either lucky or you spend too much time generating and pouring over spreadsheets. If you just analyse high value items, you are only picking up on about a quarter of the short payments.
This is not an accusation that the BSO is deliberately short paying you, they have a huge challenge in transacting so many claims with very tight deadlines. In Real World Retail we analyse the payment information from 100s of pharmacies in different jurisdictions and we have learned >
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