Translating business diversification into dollar signs
Building a profitable independent pharmacy practice in today's environment goes well beyond ramping up your prescription volume. Emphasis has shifted to mitigating declining reimbursement, which naturally leads to exploring opportunities in business diversification that will amplify or add revenue streams.
For some pharmacies, the answer may lie in clinical expansion, but there's no one-size-fits-all solution. The challenge becomes identifying which strategies make the most sense on an individual level. When you start thinking about how you want to grow your pharmacy business beyond the traditional fill, the following approaches warrant consideration:
- Focus on patient adherence
Medication adherence ensures that patients fulfill their entire course of therapy. Adherence has been on the independent pharmacy business agenda for years and remains vital to patient health and your store's financial viability. While the threshold for optimal therapeutic efficacy is 80% medication adherence, many patients fall well below that threshold, so continue to reach out and start conversations with those who have fallen off-track with their regimen. Medication synchronization — setting up a cycle to fill all of a patient's scripts at the same time every month — can improve health outcomes while building adherence and capturing previously unrealized profits. Fully address all the prescriptions under your control before investing marketing dollars aimed at attracting new patients.
- Offer point-of-care testing
The COVID-19 pandemic accelerated community pharmacy involvement in point-of-care testing. At the height of the outbreak, essential-employee businesses such as meat-packing plants and school districts relied on pharmacies to become the local outlet for mandatory COVID-19 testing. As the COVID-19 threat slowly recedes, many pharmacies will carry forward their adoption of point-of-care testing. More than 60 percent of respondents in a National Community Pharmacists Association survey said they expect more pharmacies to offer point-of-care testing after the pandemic. You can also consider offering testing for the flu and strep, as well as monitoring hemoglobin A1C levels for patients with diabetes.
- Unleash pet medications and OTC products
It's reasonable to assume that many of your current patients are also pet owners. In fact, more than two-thirds of U.S. households have a pet. These customers have historically obtained pet medications, particularly maintenance drugs, from their veterinarian's office. Your pharmacy can provide a convenient alternative to that routine. Think about human medications in adjusted dosages that can work effectively on animals (e.g., furosemide for fluid retention or diphenhydramine for skin irritation). Why not save patients an extra trip to the vet by including pet meds in your pharmacy's synchronization program? You can also attract pet-lovers with front-end products for grooming, along with toys, treats, and hygiene items.
Diversification can be a difference-maker
Let's look at a real-world scenario from an independent pharmacy located in a remote region of the Upper Midwest. The store's young, progressive owner recently recognized an immediate opportunity with point-of-care COVID-19 testing and put a plan into action. After gearing up, the pharmacy delivered about 200 COVID-19 tests in a fiscal quarter, generating an additional $42,000 in cash revenue. Accounting for start-up costs to cover testing equipment, staff training, and the creation of a semi-sterile environment, the pharmacy boosted its average profit per script by more than $3. Return on investment exceeded 300 percent in this example.
Admittedly, any type of diversification program may seem a bit daunting in the early stages, especially if you've never done it before. However, experience tells us that the first step is often the hardest. To help you get started, a needs-based analysis of the local community can yield information on your competition and identify ways you can help offset testing-capacity issues for physicians in your area. A business coach can assist by helping you model a plan based on actionable opportunities while guiding you through the process.
Whether you take a traditional approach with an adherence program, ride newer waves of opportunity with point-of-care testing, or branch out with pet medications, diversification can guide you toward a more profitable future.
A Good Neighbor Pharmacy business coach can help you identify opportunities to diversify your business and guide you through the process. Find out how.