Improve Pharmacy Profitability
The average independent pharmacy operates on very thin profit margins, forcing owners to reevaluate ways to keep costs low and profits high on a regular basis. Not knowing where to look first can be frustrating and overwhelming. Here are the three methods of improving your pharmacy profitability you should regularly assess in your business.
How to Buy Smarter with Pharmacy Wholesalers
Typically, a single wholesaler will not meet all of your purchasing needs nor provide the best pricing for all prescription purchases. A good way to avoid relying on one wholesaler and putting your already thin profit margins at risk, is to have several secondary suppliers as a point of comparison. Taking advantage of the Pharmacy Development Services (PDS) industry-exclusive message board in PDS Advantage will enable you to get peer recommendations, insights and customer service feedback, before making commitments.
Know Your ‘Top 20’ Prescribers
Not all prescribers are created equal so ramping up your profits should start with identifying your most profitable prescribers. A deep dive into your data will show you which prescribers are moving the profit needle, and which ones keep you busy behind the proverbial bench. Prescribers may land on your list for a number of reasons, but volume should not be one of them. Once you have identified key providers, start implementing ways to stay top of mind by providing value-added services and exceptional customer service to keep the referrals coming in your door.
An often overlooked way to increase your pharmacy’s profitability is to ensure you are recouping the maximum on insurance reimbursement claims. There are three strategies every pharmacy should implement and enforce to remain confident that you are not leaving any profits on the table.
- Regularly update U&C price points — This information is critical to setting an accurate cash price for prescriptions and receiving the maximum on insurance reimbursements. It should be standard operating procedure to examine your switch data to identify claims that paid at U&C.
- Ensure accuracy with DAW claim codes — Incorrect coding can result in the accrual of significant losses. Train your team to be attentive when submitting DAW codes, because not doing so will negatively affect the profitability and efficiency of your pharmacy; the reimbursements will be inaccurate; the pharmacy will lose time over claim resubmissions and misinformation on claims may trigger the most dreaded consequence — a pharmacy audit.
- Consistently update AWP information — Pricing and reimbursements models are still largely based on AWP, and ‘bad data’ leads to inaccuracies that affect profits. Pharmacy owners should make sure their software is updated daily with the latest pricing information. Many third parties lag in their updating of AWP, which will mean a pharmacy will have to invest time to reverse and resubmit claims to capture lost profit.
Independent pharmacy owners often believe they cannot impact their pharmacy profitability. However, the strategies above can result in thousands of dollars in profits each month. Yet, most pharmacies haven’t changed the management of prescriptions and processes in years. If you are waiting for prescriptions to come in the door, dealing with inventory and purchasing headaches and finding little time to implement new initiatives or improve your current processes..you are doing it wrong!
Running a reactive pharmacy is ineffective and killing your bottom line…but there is a better way! SyncRx Plus is a program that incorporates the traditional synchronization adherence model and with an added MTM component. The implementation of this program will improve your pharmacy’s profitability through data mining, improved quality measures, workflow efficiency and by leveraging your third-party contracts.