Business planning is an essential component of strategic planning focusing on a particular program or facet of the business. Its purpose it to provide data and proposed actions necessary to answer a business question, such as whether to proceed with investing in a new service or an expansion in the sale of existing goods and services. Steps in business planning include: conduct market research and analysis, identify the target market, conduct competitor analysis, assess clinical and quality requirements, define processes and operations, develop a marketing strategy, develop financial projections, identify an action plan, assess critical risk and opportunities, and establish an exit plan.
Business plan competitions are now fairly common in U.S. colleges/schools of pharmacy. These competitions are held in schools sometimes as part of a required or elective management course. The winners at each school may be invited to participate in a national competition with teams from other schools, with that competition involving both a written component and oral presentation. Researchers from the University of Tennessee compared two approaches to their business plan completion, a more “traditional” one in which students were required to develop a unique, pharmacy-related business plan, versus an “experimental” concept partnered with a real pharmacy-focused firm.1 Students in the experimental group were more likely to report seeing the connection between pharmacy and business practice and demonstrated a better understanding of pharmacy management. The firms with which they were paired indicated a high likelihood of implementing at least some of the plan proposals.
Business planning is challenging for those not well versed in management principles. A separate study demonstrated that pharmacists involved in an advanced service were averse to a new remuneration policy even if that policy resulted in the possibility of higher remuneration rates and subsidizing the pharmacy’s gains in actual performance.2 Among the most highly reported reasons for these attitudes were that the pharmacists, who already found business planning to be challenging enough in the traditional fee-for-service model, indicated that it was even more difficult to conduct business planning in the context of the new pay-for-performance model.
Pharmacy managers should become familiar with the process and delve into different software tools and speak with other managers and business leaders experiences in doing so. Since business planning is challenging, pharmacy managers should also enroll the help of staff and expose them to the practice and help them make connections to real-world processes and see the connection of business management to the practice of pharmacy. Doing so could result in a pharmacy seizing opportunities for better reimbursement levels and participation in advanced services that it might otherwise have to forgo.
Additional information about Business Planning in Pharmacy Operations can be found in Pharmacy Management: Essentials for All Practice Settings, 4e. If you or your institution subscribes to AccessPharmacy, use or create your MyAccess Profile to sign-in to Pharmacy Management: Essentials for All Practice Settings, 4e. If your institution does not provide access, ask your medical librarian about subscribing.
1Gatwood J, Hohmeier K, Farr G, Eckel S. A comparison of approaches to student pharmacist business planning in pharmacy practice management. Am J Pharm Educ. 2018;82: doi: 10.5688/ajpe6279,
2Rosenthal MM, Desai N, Houle SKD. Pharmacists’ perceptions of pay for performance versus fee-for-service remuneration for the management of hypertension through pharmacist prescribing. Int J Pharm Pract. 2017;25:383-393.