Costs acquisition

Computers to Prepare, Track, and Verify Orders and Shipments 

Larger eompanies today are moving toward requiring a bar eode on raw materials that is scanned when the material arrives. This is automatically matched with the purchase order and the material is marked in the system as reeeived, and in the more sophisticated systems an eleetronic payment is issued for the goods received. As you can see, there ean be a large investment required to make all of these processes happen. Radio frequency 

This is a process of tracking an order to try to find out where it is and when it can be expected to arrive at your facility. In order to reduce some of the costs at FedEx and UPS, tracking systems have been developed and made available to their customers so they are able to track their own packages when they need to and not rely on the customer service department at the shipping comparer. This has improved service and helped satisfy their customers much faster and better. I have observed companies that have entire departments whose responsibility is to follow shipments and expedite them as necessary so everything runs as platmed. This is a potentially expensive area that can be handled more effectively with proper supply chain management. 

Office space can be rented or owned but there are costs involved in both Buildings are rented by the square foot and can be charged to the various departments in the same way whether rented or owned. Office space and building space are assets but can be very expensive to have. A balance between size and the ability to get the jobs accomplished needs to be developed when building sizes are determined. 

Labor to Prepare and Process Multiple Bids on Low-Value Items 

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The consistent finding across different systems for delivering health care is that the costs for patients beginning treatment with an SSRI are equal to or lower than costs for patients who begin therapy with a TCA (Rosenbaum and Hylan, 1999). The higher acquisition costs of SSRIs tend to be offset by reduced consumption of other resources, including lower expenditures for hospitalizations and physician consultations. 

Institutionalization has been identified as one of the main cost drivers in the care of people with dementia (Holmes et al, 1998 Souetre et al, 1999), and the savings achieved by delaying the onset of institutionalization for these patients are expected to offset the additional dmg acquisition costs. 

Albuterol (also known as salbutamol outside the United States), the most commonly used inhaled short-acting 132-agonist, is a racemic mixture (50 50) of albuterol enantiomers. The R-enantiomer is the active component whereas the S-enantiomer is inactive or may be associated with unwanted effects. Levalbuterol, the pure R-enantiomer of albuterol, is available as a solution for nebulization and as an MDI dosage form. Comparative studies show similar efficacy and safety between levalbuterol and albuterol, but the acquisition cost of levalbuterol is substantially higher. 

If the system is modest and stand-alone (perhaps based on a small minicomputer or super microcomputer), only the acquisition cost may be significant. If the system needed is a large and expensive one (such as would be based on a mainframe or super minicomputer) and if it requires specially prepared and/or air conditioned facilities, much cable installation and/or on-going service contracts, then all cost factors may require consideration. 

As previously mentioned, the actual acquisition cost of a drug or service should not be used in isolation to determine the value of a drug. Value should be assessed in an analysis that takes into account all consequences (both positive and negative) that result from use of the therapy. For example, if a therapy eliminates the need for surgery, the cost of the surgery would be eliminated from the overall treatment pathway. However, if the same therapy results in an adverse event that requires specific laboratory monitoring, the cost of the laboratory tests would be added into the treatment pathway. The accurate identification and valuation of resource items that result from the use of that therapy are extremely important components of economic analysis. 

The easiest case involves the use of drugs obtained from another country. Here the relevant measure is the net acquisition cost. If that cost is negotiated... 

Business valuation literature provides various other methods for estimating terminal values (for an overview see Koller et al. 2005, pp. 271-290). Unfortunately, as cash flows cannot be allocated to individual decisions in a network design model, a cash flow-based estimate is not possible. Instead, book value or liquidation value at the end of the planning horizon could be used. For example, Fong and Srinivasan (1981, p. 790) include a terminal value function in the unit capacity acquisition cost function. However, they do not specify how this function can be quantified in real-world applications. The major disadvantages are that it is difficult to justify the assumptions underling the terminal value estimate and that restructuring expenditures cannot be properly evaluated. 

Acquisition cost of the system itself can be significant, but it represents, in many cases, only a relatively small percent of the total system cost over time. Many factors in addition to the acquisition cost of the system need to be considered, such as the costs of software updates, hardware maintenance, service contracts, and claims processing (Lewis, Albrant, and Hagel, 2002). Table 6-2 provides a checklist of items that a pharmacy should consider when selecting software and software vendors (Felkey and Fox, 2003b). 

Actual acquisition cost (AAC) Average manufacturer price (AMP)... 

Average wholesaler price (AWP) Estimated acquisition cost (EAC) Maximum allowable cost (MAC)... 

To establish EAC, most third parties use a standardized drug cost estimate that often is based on average wholesaler price (AWP) or wholesaler acquisition cost (WAC). Theoretically, AWP is the price that the wholesaler charges to pharmacies, but in reality, AWP is the list price rather than the actual price. Just as the sticker price for a car is an overestimate of the price someone actually pays for the car, AWP is an overestimate of the price pharmacies pay for the drug product. A government study found that pharmacies purchase brand-name drug products from the wholesalers at an average rate of AWP less 21.84 percent (OIG, 2001)... 

Office of the Inspector General (OIG). 2001. Medicaid pharmacy Actual acquisition cost of brand name prescription drug products. Report A-06-00-00023. Washington, DC OIG, August, 2001. 

Once the right product is selected, it is important to acquire it at the right price. Purchasing pharmacy products (especially prescription drugs) is not unlike purchasing a car in that the fist or sticker price is often different from the final price that pharmacies actually pay. For pharmacy products, the fist price and the terms of sale have an impact on the overall acquisition cost. Terms of sale pertain to discounts and dating (Huffman, 1996 West, 2003). 

Inventory refers to the stock of products held to meet future demand. Pharmacies hold inventory to guard against fluctuations in demand, to take advantage of bulk discounts, and to withstand fluctuations in supply (e.g., late deliveries) (West, 2003). There are four costs associated with having inventory acquisition costs, procurement costs, carrying costs, and stock-out costs (Carroll, 1998 Huffman, 1996 Silbiger, 1999 Tootelian and Gaedeke, 1993 West, 2003). 

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