1DeliveringIntegratedServicestoValueRxJohnReinkePatErlandsonChuckBettsMinneapolisBusinessConsultingJohnReinkePatErlandsonChuckBettsMinneapolisBusinessConsultingj:overhead/noncharge/val01oh.ppt2BackgroundPharmacyBenefitManagement—Administersprescriptiondrugpartofhealthplansforcustomer(HealthPlanSponsors)•Retail(throughpharmacynetwork)•Mailorder(ValueRxfacilities)$1.5billionrevenuesPharmacyBenefitManagement—Administersprescriptiondrugpartofhealthplansforcustomer(HealthPlanSponsors)•Retail(throughpharmacynetwork)•Mailorder(ValueRxfacilities)$1.5billionrevenuesPatientsPharmaceuticalWholesalerPlanSponsorValueRxPharmaceuticalManufacturersIndependentPharmacyEnrollsFee-ShareofRebates-DrugutilizationdataPrescriptionvolumesRebatesPrescriptionsDiscountedPrescriptionsHealthPlanEnrolleesDiscounteddispensingfeesLinesofBusiness3History•SubsidiaryofValueHealth,Inc.,NYSElisted,providerofspecialtybenefitmanagementservicestohealthplansponsorsandgovernment•Bornin1987,rapidgrowththroughacquisitions•$50Mto$1.5B•Bigacquisitionin1995,increasedbusinessby60%•1995acquisitionexposedsignificantbusinessrisks,operatingweaknesses•Claimsprocessingsystemproblemsandlimitations•Failuretointegrateacquisitions4History(continued)•Financefunctionparticularlyproblematic•Problemsfromfailuretointegrateacquisitions◆Patchworkofoutdated,non-integratedsystems◆Lackoffinancialdataandfinancialreportingintegrity◆Nostandards•Processes•Policiesandprocedures•Jobdescriptions•Systemsdocumentation5History(continued)•Problemsexacerbatedby•CompleteturnoverofValueRxseniormanagement•MovingofoperationsfrommultiplelocationstonewMinneapolislocation,significantpersonnelturnover•Significantlossesresultingfrom1995acquisition.Earningpressuredrivingsignificantcostreductioneffort•Financeprojectoneoffifteenmajorinitiativesunderway—lackofseniormanagementsponsorshipandfocus•Unsubstantiatedfinancefunctionrecommendations(headcountreductions)deliveredbyotherconsultantspriortoourarrival6ArthurAndersenArrivesontheScene(continued)•Initialscope/clientrequest:helpuspicknewfinancesoftware•Rootcauseanalysis,scopeexpansion•Financeprocessandsystems“asis”reviews•Financeprocessdocumentationtomitigaterisks•Nodocumentationorstandards•Significantturnover•Revisedscope•Toaddressproblems,notsymptoms•Technologyneedsassessment,softwareselection•ComprehensivefinancefunctionBPR•Company-wideprocessarchitecturedevelopment,ABC,ABM•Newtechnologyimplementationconcurrentwithreengineeredprocesses•Speedcritical,existingsystems“meltingdown”7BusinessIntegrationOverviewTECHNOLOGYPROCESSABC—OUTPUTCOSTINGOverview/Diagnosis(2weeks)Overview/Diagnosis(2weeks)FinanceNeedsAssessmentFinanceNeedsAssessmentDetailed“AsIs”ReviewandDocumentationofFinanceProcessesDetailed“AsIs”ReviewandDocumentationofFinanceProcessesConceptualFinanceProcessDesignConceptualFinanceProcessDesignDefineCompanywideProcessFlowBusinessModel/OutputsbyMarketMatrixDefineCompanywideProcessFlowBusinessModel/OutputsbyMarketMatrixProcess/ActivityCostAnalysishigh-leveloutputcostingABCSoftwareSelectionProcess/ActivityCostAnalysishigh-leveloutputcostingABCSoftwareSelectionSoftwareConfigurationSoftwareConfigurationInterfaceandConversionDesignInterfaceandConversionDesignBusinessSimulationBusinessSimulationDetailedDesignandImplementationDetailedDesignandImplementationDetailpro...
