Academic journal article American Journal of Pharmaceutical Education

Understanding Business Models in Pharmacy Schools

Academic journal article American Journal of Pharmaceutical Education

Understanding Business Models in Pharmacy Schools

Article excerpt

The objectives of this article are to define business models, contrast the business models in pharmacy schools, and discuss issues that can arise from misunderstandings about whom pharmacy schools serve and how they do so.

Keywords: business model, pharmacy, education, graduate, research


The term "business model" is becoming increasingly common in education literature, although it is often used imprecisely. (1) This loose and sometimes incorrect language can result in gross oversimplifications and confusion among academics about the business of education. Some conclude that education is really a higher calling and that attention to business models will lead educators in the wrong direction. (2) Others take the opposite view, seeing education as a business like any other where the primary goal is to maximize profits. (3) Neither of these opposing viewpoints are useful because they oversimplify and misrepresent the real nature of education and business models.

Explicit discussions about business models in pharmacy education are uncommon. Rupp has discussed the importance of business models in aligning interests of faculty and administrators (4) and branding pharmacy schools. (5) He concluded that misunderstandings about business models can lead to conflict between faculty and administrators relating to maintaining high academic standards and the sustainability of tuition revenues. (5) No other specific discussions occur in the pharmacy literature.

Nevertheless, implicit conversations about business models occur throughout the literature, because they are fundamental to any viable activity in pharmacy education. Business models are implicitly referenced when discussing most major topics in pharmacy education including faculty workforce issues, affordability and quality of graduate and professional training, and the sustainability of pharmacy schools. Business models answer questions like "Who do we want to serve?" and "How can we do so in a profitable way over time?"

Nothing in this article is unique to US pharmacy schools. Anecdotal conversations with colleagues outside of the US indicate that similar discussions are occurring at their institutions about the direction of pharmacy education and research. That is to be expected because the rules of business are universal, and issues related to business models are relevant to pharmacy schools across the globe.

What Is a Business Model?

Before proceeding any further, it is important to define and describe business models. A business model is simply a general description about how a business or institution serves or intends to serve customers over time. (6) It is a large picture view of the institution that contains most of the features of business plans but with less detail and specificity.

Business models are crucial in strategic planning and communicating broad details about enterprises. They vary across businesses, but all contain at least three primary components. (3)

Customer value proposition (CVP): The CVP is a description of how a business creates value for customers--by providing solutions to important problems better than competing options. It is the case made for why a customer should choose one business over another.

Resources and processes: Resources refer to the people, technology, equipment, facilities, location, and other things needed to deliver the CVP, while processes describe operations and management of the business. In pharmacy education, these resources and processes include faculty and staff, administrators, programs, courses, curricula, policies, key performance indicators, and other things associated with academia.

Profit formula: This formula defines how sufficient revenues are generated by the business to cover the costs of providing the CVP over time.

All business models describe how these three interdependent components attempt to achieve the overall mission of organizations. …

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