Case study using descriptive analysis to estimate hidden costs in processing third party prescriptions

To identify and quantify additional hidden costs associated with processing third party prescriptions.

Using time and motion techniques, the frequency of rejected third party prescriptions and the time involved to resolve those rejections were measured in one supermarket chain pharmacy and one independent pharmacy. From this information, additional costs attributed to processing third party prescriptions were calculated.

In a market where almost 95% of all prescriptions are third party reimbursed, payers rejected 18.7% and 22.3% of the prescriptions submitted by the supermarket chain and independent pharmacies, respectively. Additional or hidden costs for rejected prescriptions averaged $1.10 at the supermarket chain pharmacy and $1.54 at the independent pharmacy, with the difference attributable to the higher level of pharmacy staff involvement in resolving rejections at the independent pharmacy. When additional costs for all third party prescriptions were calculated, the average additional cost per third party prescription dropped to $0.44 for the supermarket chain pharmacy and $0.61 for the independent pharmacy.

Increasing pharmacist availability for pharmaceutical care requires decreasing time spent in the dispensing process, especially resolving third party problems. Systems analysis and time and motion techniques were effectively used to more accurately measure the time and costs associated with processing third party prescriptions. Actual costs found in this study were considerable, but significantly less than those reported previously in studies using estimates and surveys.