With a systematic approach grounded in diagnostics, benchmarks and continual assessment, you can increase pharmacy profitability and improve patient outcomes. It takes an open mind and commitment, but the effort will definitely pay off over time.

The best place to start is by honestly evaluating all the factors that go into running your store. Gather your financial records, most importantly your profit-and-loss statement, balance sheet and payroll records. Also tap your information system for operational data such as cost of dispensing, inventory turns and prescription volume. Then compile your staff schedule, chain of command and bonus program, as well as marketing plans for reaching out to patients and prescribers.

You’ll put all this material to use by establishing benchmarks—the basis for gauging business success and growth patterns—and setting goals for pharmacy optimization.

 

Why benchmarks are so important

Benchmarks give you a means of identifying your pharmacy’s strengths, priorities for improvement and key opportunities waiting to be developed into new revenue streams.

In particular, you’ll need to know how your pharmacy is executing on adherence and performance ratings. A great way to get this information is by going to the PrescribeWellness Patient Engagement Center, if you have access to it, and clicking over to the EQuIPP performance information management platform. This will give you trending metrics on performance ratings and help you identify patients who are non-adherent.

Look at your point-of-sale data to get a handle on your front-end performance, including basket counts and dollars per basket, as well as how many sales are OTC-only or combined with prescriptions.

You’ll want to pull up your prescription data too so you have clear visibility into weekly, monthly and yearly fills, including which patients account for most of your prescription revenue. This data will also help you identify potential prescriber marketing opportunities and calculate revenue by payer.

Finally, make a list of all the services your pharmacy offers (e.g., medication synchronization, convenience packaging, home delivery) and how your pharmacy compares to other stores in the community (which you can determine by studying competitors’ websites and social media feeds).

Armed with all this information, you’ll be well-positioned to see where your business stands, set goals and lay the groundwork for better financial management, inventory optimization, increased productivity and employee development.

 

Using benchmarks to change behavior

As you become more self-aware—by reviewing both in-store and externally tracked data, as well as subjective factors—you’ll begin to recognize red flags and opportunities. The next step is to do something about it. Consider these examples drawn from real-world scenarios and think about what you would do if your pharmacy were in the same situation.

• One high-volume store was meeting general performance rating standards for adherence, but it lagged in the bottom 20 percent of pharmacies in measures for a specific plan. As a result, the plan flagged the pharmacy for poor performance—to the tune of thousands of dollars in DIR fees over the course of four months.

• In a single quarter, a pharmacy incurred more than 200 usual and customary claims, meaning the insurance company reimbursed the store its asking price on those claims, but below the insurer’s contracted rate. With medication prices subject to fluctuation, it’s always best to get paid the contract rate.

• Analysis at a different business revealed about 7,000 pharmacy transactions per year with no accompanying front-store sale. That represents a tremendous opportunity, considering that total annual revenue could be increased by tens of thousands of dollars simply by selling at least one over-the-counter item in 25 percent of those transactions.

• Yet another independent pharmacy had a visible excess of inventory. The store’s financials showed inventory at a level between seven and eight turns, compared to the NCPA benchmark of 12 turns. By taking this pharmacy an average of six weeks to sell all the products on their shelves, as opposed to four weeks if they were performing up to the benchmark, their cash flow was suffering as a result.

In each of these cases, the data revealed an area where the pharmacy was underperforming. Some of these required easy fixes, and others warranted considerable effort over a longer period of time. Every situation is different, and it takes an entrepreneur with strong problem-solving skills to get to the bottom of the issue at hand. Whatever your specific scenario, the key is identifying your most significant areas of opportunity and setting a course for improvement, whether that’s by implementing minor changes to how you manage your inventory or by launching a full-scale training program to teach your staff different ways they can improve patient adherence.

Ultimately, you and your team are responsible for the store’s performance, and you have the power to improve it when you put data to good use. Keep your staff on track by making sure the goals you set address the highest priority needs of your business and educating them on what they need to do to contribute to the success of your pharmacy. Together, you can learn from mistakes, uncover new prospects and move your business forward.