Case Article—A Prescription for Budget Woes at Gracious University Hospital

This case study focuses on pharmacy operations from the standpoint of the chief financial officer for Gracious University Hospital. Her charge was to reduce operational expenses on top of pre-established budget cuts. Her first order of business was to handle inventory of the automated dispensing cabinets (ADCs) located on each floor of the hospital which contains a limited supply of medication supplied by the central pharmacy. In order to develop an effective inventory plan, a tiger team was developed consisting of physicians, patients, nurses, and pharmacists who developed a physical simulation competition between hospital unit floors which focused on the medication delivery process from prescription entry to medication administration. While observing the process, data would be captured and teams would attempt to derive better inventory policies for the medications kept in the ADCs. This case introduces students to healthcare operations by providing background on pharmacy medication delivery systems. The learning objectives of the case and accompanying simulation activity are to (1) explore the challenges of inventory management in healthcare (2) develop and analyze inventory policies based on data collection and observation (3) understand the impact of variability and perishability on inventory management.