FOCUSING ON RELIABLE PHARMACEUTICAL SERVICE
The Reliable Pharmaceutical Service is a privately held company incorporated in 1975 in
Hangzhou, Zhejiang Province. It provides pharmacy services to health-care delivery organizations
that are too small to have their own in-house pharmacy. Reliable grew rapidly in its first decade,
and by the late 1980s its clients included two dozen nursing homes, three residential rehabilitation
facilities, two small psychiatric hospitals, and four small specialty medical hospitals. In 1990,
Reliable expanded its Hangzhou service area to include Ningbo and started two new service areas
in Yiwu and Jinhua.
Reliable accepts pharmacy orders for patients in client facilities and delivers the orders in
locked cases every 12 hours. In the Hangzhou and Ningbo service area, Reliable employs
approximately 12 delivery personnel, 20 pharmacist's assistants (PAs), 6 licensed pharmacists, and
10 office and clerical staff. Another 15 employees work in the Yiwu and Jinhua service areas. The
management team includes another six people, mainly company owners.
Personnel at each health-care facility submit patient prescription orders by telephone. Many
prescriptions are standing orders, which are filled during every delivery cycle until specifically
canceled. Orders are logged into a computer as they are received. At the start of each 12-hour shift,
the computer generates case manifests for each floor or wing of each client facility. A case manifest
identifies each patient and the drugs he or she has been prescribed, including when and how often
the drugs should be administered. The shift supervisor assigns the case manifests to pharmacists,
who in turn assign tasks to PAs. Pharmacists supervise and coordinate the PAs' work.
All drugs for a single patient are collected in one plastic drawer of a locking case. Each case is
marked with the institution's name, floor number, and wing number (if applicable). Each drawer is
marked with the patient's name and room number. Dividers are inserted within a drawer to
separate multiple prescriptions for the same patient. When all of the individual components of an
order have been assembled, a pharmacist makes a final check of the contents, signs each page of
the manifest, and places two copies of the manifest in the bottom of the case, one copy in a file
cabinet in the assembly area, and the final copy in a mail basket for billing. When all of the cases
have been assembled, they are loaded onto a truck and delivered to the health-care facilities.
Order entry, billing, and inventory management procedures are a hodgepodge of manual and
computer-assisted methods. Reliable uses a combination of Excel spreadsheets, an Access
database, and antiquated custom-developed billing software running on personal computers.
Pharmacy assistants use the custom-developed billing software to enter orders received by
telephone and to produce case manifests. The system has become increasingly unwieldy as facility
contracts and Medicare and Medicaid reimbursement procedures have become more complex.
Some costs are billed to the healthcare facilities, some to insurance companies, some to Medicare
and Medicaid, and some directly to patients. The company that developed and maintained the
billing software has gone out of business, and the office staff has had to work around software
shortcomings and limitations with cumbersome procedures. Inventory management is done
manually.
In 2004, Reliable's revenues leveled off at $40 million and profits plateaued at $5.5 million. By
2008, revenue was declining approximately 4 percent per year, and profit was declining at over 8
percent per year. Several reasons for the decline included the following:
Price controls in both Medicare and Medicaid reimbursements and contracts with facilities