Date Created:    October 19, 2023            Last Updated:   April 24, 2024

Overview: 

Cornell Health Pharmacy offers prescriptions, over-the-counter medicine, and misc. items to faculty, students, employees, and visitors.  Pharmacy utilizes QS1 system to keep track of all inventory items and reconciliation of inventory occurs monthly.  Additional processes and controls for ordering, storage, and access are in place to protect inventory and to prevent opportunities for fraud or theft.

Criticality:   High

Frequency:   Other

Turnaround:   Other

Key Parties / Contacts: 

Pharmacy Director/Supervisor: Places orders for narcotics, tracks invoices in separate spreadsheet as a second point of verification. Logs narcotics separately in a perpetual logbook for all purchases and/or sales.

Pharmacy Staff:  Responsible for ordering product.  Those not ordering do receiving and verify count and product to packing slips.  Follow up with vendors if errors found.  Stock over the counter items on sales floor shelves and store RX items in locked pharmacy pickup location. Conducts random cycle count audits of items and compares to QS1 inventory on hand.

Phyle Inventory Control Specialist (PICS):  Responsible for conducting physical inventory counts on a quarterly basis and provides Cornell Health team with final inventory reports.

Cornell Health Finance Staff: Tracks inventory purchases, product disposals and credits in a reconciliation spreadsheet.  Reconciles inventory counts to the general ledger and research discrepancies.

Shared Service Center Staff: Responsible for processing vendor invoices and credits timely and reviewing, validating and recording inventory adjustment entries.

Key Documents / Sources of Information:

  • KFS GL transactions
  • Invoices and packing slips from vendors
  • Perpetual Log Book

System Access Needed:

Common Problems or Issues Encountered: 

  1. Physical inventory count errors.
  2. Missing invoices or credits in the GL.
  3. Incorrect costing entered.
  4. Expired product and waste not recorded in the GL on a timely basis.
  5. Incorrect payment taken from student (credit card or bursar).

Step by Step Procedures:

  1. The Pharmacy staff places an order(s) for items to replenish what is sold. This includes prescription drugs to over-the-counter medications, food and other healthcare products.
  2. Narcotic orders are placed by the Pharmacy Director or Supervisor.
  3. When orders are delivered, the product is checked against packing slips by Pharmacy staff to ensure accuracy. If counts do not match, Pharmacy staff contacts the vendor to request a credit memo or to verify if the pharmacy will be charged for any product overage received.
  4. When orders are received, items are entered into QS1, and the cost of the item is verified.
  5. Inventory purchases are tracked in a spreadsheet and reviewed weekly. (SOP R154716-1605-Pharmacy and OTC Invoices located here: U:\Business Service Center\zChad\SOPS).
  6. Invoices and credit memos are sent to the Shared Services Center (SSC) to be processed and entered into KFS.
  7. Over-the-counter items are stocked on the sales floor. RX items are stored in the locked pharmacy pickup area which is only accessible to Pharmacy staff.
  8. Narcotic items are logged in the perpetual logbook when received and kept in a dual authentication (password/fingerprint) locked safe that is accessible by the Pharmacy Director and Supervisor. As narcotic prescriptions are filled, the perpetual logbook is updated daily.
  9. Outside of regular business hours the Pharmacy area is locked and alarmed. Access is limited to 3 pharmacists and 3 facility staff during this time.
  10. As prescriptions are filled or over-the-counter items are sold, inventory is automatically relieved.
  11. Inventory is reviewed quarter for expiration dates. Any inventory that expires within 1 year is marked with an orange sticker with the expiration date written on it and is added to an excel spreadsheet created and update by the pharmacy staff.  This sheet is reviewed monthly, and any drugs expired are pulled from the shelf and placed in the outdate box in a paper bag that is stapled closed.  These expired drugs are recorded on the spreadsheet and manually removed from inventory.
  12. Inmar picks up the expired inventory quarterly that Cornell received credit for, provides the pharmacy with a printout of the inventory taken and handles the disposal of any expired drugs.
  13. Any inventory dropped on the floor is noted on a monthly inventory spreadsheet that identifies expired/damage/wasted inventory, manually removed from inventory, and placed in the NYS Drug Disposal box and is sent to the NY DEC quarterly for disposal.
  14. Pharmacy staff conducts random monthly audits of both prescriptions drugs and over-the-counter items and compares this to an on-hand report run in QS1.
  15. Inventory is adjusted in QS1 if the counts are different.  These adjustments are time stamped with a reason code for the adjustment.  No adjustment is made in the general ledger. 
  16. Quarterly, an external inventory control company (PICS – Phyle Inventory Control Specialists) conducts an onsite physical count of RX and OTC inventory.
  17. The Pharmacy Director and Cornell Health finance staff verify PICS’s results and research any large variances. If the count is entered incorrectly by the inventory company, the count is rechecked and is then corrected by PICS, and the information is updated before leaving the pharmacy.
  18. Monthly, Cornell Health finance staff follow the Pharmacy Inventory Reconciliation process to record cost of goods sold for the month and reconcile the inventory on hand count to the general ledger. Reference Pharmacy Inventory COGS Reconciliation SOP located here:  U:\Business Service Center\zChad\SOPS.
  19. A monthly clearing account reconciliation is done to help verify all Cash/Check/CC payments were processed. If any payment is found to not have been processed or received, the Pharmacy Manager is notified, and the customer is contacted to obtain payment.  Any small discrepancies, for example if a credit card was supposed to be processed for $15.59 and it was processed for $15.56, are adjusted by an entry into the general ledger by financial staff.
  20. A monthly bursar reconciliation is also done to verify all bursar payments were sent to the bursar in the previous month. Any variances are researched and corrected in the following month.
  21. If a charge was sent to the bursar but the student was not bursar billable, the Pharmacy is notified and will contact the student for another form of payment.

Key Risks

Key Controls

Inventory could be lost or stolen.

Cameras are installed in Pharmacy.  Any unauthorized entry results in alarms and Cornell Police are automatically notified who then notifies Pharmacy Manager.

Narcotics may not be tracked and recorded as required.

Inventory is recorded in a perpetual logbook and kept in a dual authenticated safe (password/fingerprint).  Access is limited to Pharmacy Director and Supervisor only.  Note, these individuals also do the ordering, it should be very fixed on which can order and which secures the inventory.  Count should be segregated from person ordering or done together maybe.

Risks of filling prescriptions incorrectly.

Workflow had multiple built in checks to make sure correct medications are given.  If an error occurs, student and doctor are contacted along with an occurrence report being completed by the Pharmacy Manager for assessment from Cornell Health Medical Director.

Risks related to non-renewal licensure of pharmacists.

Pharmacists receive mailed notification that license needs to be renewed.  They must complete the forms and give to Cornell Health for Payment.

Invoices/Credit Memos not sent to AP.

Weekly review of invoices on vendor websites to catch any invoices or credit memos not in KFS are then sent to A/P.

Incorrect item cost entered for inventory.

Review of costs during COGS reconciliation is done to catch cost entry errors.

Internal PHI breach.

Annual compliance trainings are required for all staff on the correct handling of PHI and ad hoc internal audit of staff accessing students records.

Metrics:

Cornell Health Pharmacy Inventory Process Flow Chart