TALLINN UNIVERSITY OF TECHNOLOGY
IDY0275: Business Information Systems
CREATING BUSINESS INFORMATION SYSTEM AND E-BUSINESS
FOR CURRENT BUSINESS MODEL FOR
LILLE PHARMACY
Tiina Apart / 132538YVEMM
Katrin Noor / 122128YVEMM
Professor Enn Õunapuu
Tallinn 2013
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Table of Contents
1.
Introduction ........................................................................................................................................... 3
2.
Business Model...................................................................................................................................... 5
2.1 Value Proposition ................................................................................................................................ 5
2.2 Key Activities ....................................................................................................................................... 6
2.3 Key Partners ........................................................................................................................................ 7
2.4 Key Resources...................................................................................................................................... 7
2.5 Market segments................................................................................................................................. 7
2.6 Revenue generation and margins ....................................................................................................... 8
2.7 Value chain structure .......................................................................................................................... 8
2.8 Competitive strategy ........................................................................................................................... 8
3.
Business Process Description .............................................................................................................. 10
3.1 Old model .......................................................................................................................................... 10
3.2 New model ........................................................................................................................................ 12
4. Access Database ...................................................................................................................................... 14
5. Balanced Scorecard ............................................................................................................................... 155
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1. Introduction
The retail pharmacy Lille Pharmacy locates is Mustamäe district. It was built in 1970s together
with Lille policlinic into a new and expanding residential area in these days and was for decades
one of the biggest retail pharmacies in Tallinn.
Today Lille Pharmacy together with more than 150 retail pharmacies in Estonia belongs to
Curare pharmacy chain. It still locates in the same premises with medical institutions (family
doctors, policlinic of specialist, dental care etc.).
The main task of a general pharmacy is the provision of quality pharmacy service. Pharmacy
service means retail sale or other dispensing of medicinal products together with related
counseling for the appropriate and rational use of medicinal products as well as provision of
information to the user on the correct and safe use and storage of medicinal products; the
preparation of medicinal products as magisterial formulae and officinal formulae and dividing-up
into retail packaging.
In 2010 the digital prescription (e-prescribing) was launched in Estonia. Doctors can prescribe
medications for patients using their computer software and forward an electronic prescription to
the national database. The e-prescription is then immediately accessible in every pharmacy either
by the patient himself (on presentation of ID-card) or by his authorized representative. This eservice was very quickly adopted by all stakeholders. Today more than 90% of prescriptions are
issued electronically. According to recent survey "Citizens' satisfaction with health and
healthcare" 92% of users of digital prescription are satisfied with the service.
Launch of digital prescription has significantly changed the medicine purchase habits of citizens.
Act of purchase of medicines and health-care products is not directly related to visiting a doctor
in terms of time and location. More and more people visit pharmacies that locate in big food
chain stores and shopping centers because it is convenient and time-saving. Physical location in
the close neighborhood of a medical institution (hospital or policlinic) does not guarantee desired
turnover for a pharmacy any more.
This reflects well in business results of Lille Pharmacy too. In the last two years their turnover
has declined by 8%. 70% of Lille Pharmacy’s turnover comes from direct sales to citizens and
30% to health-care institutions and social care institutions (nursing homes, long-term care
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hospitals, assisted living facilities), children’s homes etc. At the same time Lille Pharmacy faces
difficulties in covering their utility costs (heating, electricity, security) as the premises built
decades ago specifically for a big pharmacy are too big nowadays, primarily due to significantly
lower need for warehousing and in-house production of officinal formulas.
Managers are looking for opportunities for maintaining and growing the business in Lille
Pharmacy. New business model should create added value to existing customers, attract new
customers via building an advanced service based on existing excellent IT systems in use in the
pharmacy chain (sales- and warehousing system) and digital prescription system.
The management decides to invest in purchase of an Automated Tablet Dispensing & Packaging
Machine (ATDPM) with a related Multi-Dose Medication Management System (MMMS).
Preliminary assessment has shown that MMMS is compatible with existing systems used for
ordering, sales and dispensing medicines in the pharmacy.
ATDPM is a medication-dispensing unit, about the size of a large refrigerator which is housed at
the facility in a secure location.
Fig 1 & 2. Automated Tablet Dispensing & Packaing Machine
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Medications, including controlled substances, are delivered in bulk from the wholesaler and
packaged in canisters that are placed inside of the unit. The unit dispenses patients’ medication
into a series of single sachets, where each sachet has various medicines the patient has to take at a
specific time. On each plastic pouch, which is simply torn open by the nurse or by the patient, is
printed the patient name, when the dose should be given, the drug name and description, and a
corresponding bar code.
Fig 2. Patient-specific single-dose sachet
This new service will be piloted in B-2-B setting, i.e. as service to health-care and social care
institutions and the following business model description is applicable to this segment. If
successful, the service will be also offered to citizens.
2. Business Model
The main asset of Lille Pharmacy is the combination of affiliation to the biggest pharmacy chain
providing resources (finances for investment, IT-service) and in-house professional competence,
licenses and suitable premises needed for development of the Multi-dose Packaging &
Dispensing Service (MDPDS).
Below is described in more details the aspects of Lille Pharmacy’s business model.
2.1 Value Proposition
The main task of the pharmacy is to sell medicines, food supplements, herbal products, cosmetics
and nursing devices to citizens, health-care and other institutions.
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The pharmacy’s customers need to consume and use (citizens) or dispense and use (health-care
and other institutions) medicines, food supplements and medicinal devices in a safe, efficient and
cost-effective way.
Lille Pharmacy’s mission is to help and support people in staying healthy and vital via giving
them professional advice on medicines, health products and health, and helping institutional
clients fulfilling their medicine-related tasks efficiently and with high quality.
2.2 Key Activities
Lille Pharmacy employs 6 pharmacists, 2 assistants and 2 managers.
In each shift 3 pharmacists dispense prescription medicines (mostly digital prescriptions), sell
over-the-counter medicines, food supplements, herbal products, cosmetics and medical devices to
customers. Selling and dispensing involves instructions for use and counseling. All activities are
recorded in the united cash register, sales and warehouse management system and digital
prescription system. Orders to the wholesaler are up-dated automatically, but reviewed and
corrected by the managers.
Orders to the main supplier are fulfilled twice daily, from other suppliers 1...3 times a week.
Received goods need to be distributed to drawers and shelves.
Health-care and social care institutions purchase medicines in a variable way. Orders from
medical and other institutions can be assembled according to subscription lists and delivered to
the customers by partnering a transportation company. For citizens contracting with social care
institutions (nursing homes, long-term care hospitals, assisted living facilities) medicines
prescribed by the citizen’s family doctor are mainly purchased physically from the retail
pharmacy by the nurse of the institution.
Lille Pharmacy has a webpage in internet. The following information can be found from there:

Contact details

Monthly offers/discounts

List and description of health services offered

Health information

Information on availability and prices of all medicines

Electronic customer magazine
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Revenue is gathered from retail markups and service fees.
2.3 Key Partners
Key partners and resources acquired from them are:

Main preferred supplier – most of goods.

State Agency of Medicines – Registry of Medicinal Products (list of all medicinal
products allowed to be sold and used in Estonia) and Coding Centre of Medicinal
Products (virtual codes – combination of numbers – for identification of all packages of
pharmaceuticals and medicinal devices allowed to be sold in Estonia that move through
all data sharing process).

Estonian Health Insurance Fund (EHIF) – payment for compensated amount of
pharmaceuticals and medical devices issued to insured citizens, Registry of Insured
Persons (list of persons who are entitled for reimbursement of pharmaceuticals and
medical devices), EHIF Medicinal Products List (list of products reimbursement applies
to), EHIF Medical Devices List (list of medical devices reimbursement applies to).

Health Board (under Ministry of Social Affairs) – Registry of Health Workers (list of
specialists entitled to prescribe pharmaceuticals) and Registry of Pharmacists (list of
specialists entitled to dispense pharmaceuticals).
2.4 Key Resources
Key resources of Lille Pharmacy are the premises, offered goods and specialized workforce with
professional knowledge.
2.5 Market segments
Lille Pharmacy targets two customer segments:

Citizens (primarily from the surrounding area and ones visiting the policlinic) who visit
the pharmacy for purchase of pharmaceuticals, food supplements, herbal products,
cosmetics and medical devices and accompanied advice and recommendations. Sales in
this segment make up 70% of the turnover of the pharmacy.
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
Healthcare and other institutions that require pharmaceuticals and medicinal devices for
fulfillment of their tasks, but do not have a license for independent management of
pharmaceuticals. Sales in this segment make up 30% of the turnover of the pharmacy. In
this segment clients with higher volume can be seen as more important.
2.6 Revenue generation and margins
Majority of the revenue is generated from sales - retail markups of sold goods. The maximum
mark-ups allowed to wholesalers and pharmacies are specified by Minister of Social Affairs.
Pricing of food supplements, herbal products and medical devices is free. Also prices for
additional services are free.
Competition between pharmacies is high in Estonia. Often discounts are made for attraction of
customers, but the fee for higher volume is payed by the margin. Due to that customers do not
differentiate much between pharmacies based on only price level of goods.
2.7 Value chain structure
The value of Lille Pharmacy lies in sold products with good price/quality ratio and professional
and dedicated employees. Supportive services offered in addition to sales increase the value and
help to increase customer loyalty.
2.8 Competitive strategy
Lille Pharmacy’s competitive strategy lies in the capability of differentiating its services
compared to other pharmacies.
Till today the prevailing practice is that prescriptions are fulfilled with whole packages for the
use of one treatment course in case of acute illnesses or for period from two months up to six
months in case of chronic illnesses. Many patients, especially elderly and chronically ill, have to
take several medicines with different administration schemes.
Issue that has been risen with the obligation of prescribing medicines with generic name by the
physician and offering the cheapest generic preparation on purchase by the pharmacist is the
confusion around the correct pill to be taken, especially in elderly patients, as the package and the
name of the drug may vary each time despite the same content. This may cause medication errors
and bad compliance in taking medicines.
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The same issue applies in the social care institutions (nursing homes, long-term care hospitals,
assisted living facilities) where much of the nurses’ attention and time is spent on the medication
dispensing process to their clients. Medicines and food supplements for the clients in these
institutions are prescribed by their family doctors. Usually citizens in these institutions contract
for service of purchase of their medicines by the institution which means that nurses physically
go the pharmacy and buy medicines for their clients. Nurses have to keep accountability for each
client and ensure correct and timely administration. This set-up creates a risk for medication
errors. There is also a significant amount of medication waist that can occur. Medicines are
prescribed for a long period, but health condition of the patients is often not stable. Changes in
the treatment schemes come up and often patients come to these facilities during their last life
stage.
Now, however, health information technology (HIT) developments have given new medication
distribution options to long term care and post-acute care patients. Automated Tablet Dispensing
& Packaging Machine (ATDPM) with a related Multi-Dose Medication Management System
(MMMS) can be used to combine various drugs into single servings. It’s down-to-the-dose
accountability for every single pill is a unique feature of the machine. Because the process is
automated, the machine also virtually eliminates medication waste—nothing is distributed unless
it is ordered.
By dispensing medication for the patients in nursing homes, long-term care hospitals, assisted
living facilities with ATDPM for short periods (from one week up to one month) improve work
efficiency and quality care in these facilities. They include:

Saving nurses' time previously spent on purchasing medication from the pharmacy,
maintaining accountability and preparing medication for administration, so the nurses can
spend more time on direct patient care.

Reducing risk of medication errors as the drugs are in ready-to-administer sachets for
specific residents.

Enhanced patient safety as the system simplifies medication charts for each resident.

Easier training of nursing home’s staff to correctly administer medication.

Less medication wastage, thus facilitating cost effective care.

Manpower savings.
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
Lower costs for medicines as the pharmacy can use bulk packages for the machine
3. Business Process Description
The nature of current business model of the pharmacy remains the same - selling medicines, food
supplements, herbal products, cosmetics and nursing devices directly from pharmacy to citizens,
health-care and other institutions. Our plan is to offer additional service for health-care
institutions to increase their work efficiency and create more revenue for both parties. Below we
describe business processes with an example of pharmaceutical service to nursing homes.
3.1 Old model
The current business model process servicing nursing homes is very traditional. Customers
(nurses) come to the pharmacy, pharmacists enter and validate each patient’s ID-card one by one
and then all products are bought for the clients. Nurses need to keep records on the medicines for
each client and they distribute the drugs manually to each patient on daily bases. This process is
time-consuming for both stakeholders and related to several serious risks described above.
Only part of the current process that is fully automated is checking stock-level of the pharmacy
after each purchase and creation of orders to wholesaler. Wholesaler has scheduled twice a day
delivery routine.
The current business model processes is the following:
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3.2 New model
The new prescription drug ordering application for health-care institution will be added to the
current pharmacy webpage. All customers using this system will be registered. The new system
enables customers to prepare their order without going to the pharmacy simply by entering and
validating each patient ID-cards and indicating the period (days) for which the supply is needed.
Pharmacy receives the order and checks it with the national digital prescription database where
all the digital prescriptions for listed patients are stored. When the order is correct it is
automatically sent to the Automated Tablet Dispensing & Packaging Machine. The machine
checks automatically if it has enough products to process the order, in case there is need for more
the alert is automatically sent to the pharmacist.
When pharmacist fills in the machine with needed products, the automated process of pharmacy
stock check is in parallel initiated, this process is same as part of and described in old model.
After order is ready for customers, it will be delivered to customer and as all the products are
dispensed according to daily need of patient, additional dispensing work of nurses is not
necessary any more.
New business model process is shown below:
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4. Access Database
The main purpose of the database is to record all the information about the customers, products
and orders in one comprehensive database. It enables to analyze business data, track transactions
and understand trends and inventory.
It is also required to support the creation of online ordering application for health-care
institutions. The automated ordering and dispensing system relies on the data stored in the
database.
The structure of the Microsoft Access database is shown below:
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5. Balanced Scorecard
A balanced scorecard is a tool developed by Kaplan and Norton in 1996. It translates an
organization’s mission and strategy into a comprehensive set of performance measures that
provides the framework for a strategic measurement and management system.
The model distinguishes between four levels:

learning and growth - focuses on how to educate employees, how to gain and capture
knowledge, and how to use it to maintain a competitive edge within company’s target
markets,

business processes - measures critical-to-customer process requirements and measures,

customers - measures customers' satisfaction and their performance requirements,

finance - tracks financial requirements and performance.
Lille Pharmacy’s plan is to develop an online ordering service and implement dose dispensing
system which would increase revenue and customers satisfaction. For that, they have to integrate
a new process with the old one.
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Learning
Internal
Customer
Financial
Objectives
Measures

Increased business
profit


More customers
Convenient ordering
Less work for nurses
Better customer
satisfaction


Targets

Increase in sales
revenue
Growth in market
share

Number of new
customers
Customer
feedback survey



Initiatives
First year +3%
Second year +5%
First year +2%
Second year +4%
New service
process
10% more per year
70% of feedback is
positive



Aquire and integrate
new dispensing
machine
Integration of new
ordering process
Train employees
Launch online
ordering service and
dispensing system
Redesign web-page


Proportion of
current sales
switched to new
service
How well the new
process has started
to work
 Customer
feedback
survey




70% of regular
sales is shifted in
first year
Process should
work well from
launch date

Ongoing
maintenance
Service
improvement


Promotion of
new service
Up-date of
customer
management
system
Ask for
customer feedback
Employees
training
program to
use the
machine
Launch of
new process
Use of
consultants