How to Improve Rx Profit Margins: Turn a $10 Script into $100 Profit
If you ask a room full of independent pharmacy owners if they would prefer to increase the volume of $10 prescriptions or the dollar value of existing scripts, chances are they’d all choose the latter. However, many believe it’s easier to find more customers; and focus on tactics to attract new business instead of optimizing current prescription profit margins.
Yes, increasing the number of patients walking into your pharmacy can make your business, well, busier. Take a moment to ask yourself if you are looking to be busier or more profitable? One of the easiest ways to improve your bottom line is to focus on increasing the profit margins per prescription with your existing patients.
Increase Profit Margins by Investing 1 Hour a Day
PDS Members are spending at least one hour per day analyzing their dispensing and utilizing the PDS Profit Chart to identify new opportunities to grow their profit margins. For example, a doctor-approved switch from one low-profit drug to another in the same drug class, but with a higher margin, can increase your profits every month that patient is on the prescription. A $10 prescription can quickly generate a $100 profit (when filled monthly) almost instantaneously.
For example, Mike, owner of a Utah-based pharmacy and a PDS Member since 2013, credits the Profit Chart as key to having the best few months in the history of his business. Mike and his team tripled their profit margin per prescription in his most recent month of reporting. The difference amounts to a $40,000 boost to his bottom line!
Dispensing Data Analysis & The PDS Profit Chart
One of the most effective ways to increase $10 scripts to $100 profits is by utilizing the Profit Chart to identify key switch opportunities, implement successfully, and then replicating that success across as many prescriptions as possible. To do that, pharmacy business owners should leverage their dispensing data.
What Pharmacy Data Should Owners Review?
- Patient Prescriptions
- High Margin Prescriptions
- Lowest Margin Prescriptions
- High Reimbursement Insurance Plans
- Low Reimbursement Insurance Plans
Once you identify an excellent opportunity, begin looking for other candidates that have been prescribed the first medication to see if they would benefit from suggesting the switch as well.
PDS Member Vic, owner of North Carolina-based pharmacy, did just that by implementing the Pain Protocol. After seeing how well the pain medication switch for several patients fared, $90,000 in one month to be exact, Vic realized that he could increase profit margins and improve the comfort for a huge percentage of his pain patients. Running a profitable independent pharmacy and providing world-class healthcare outcomes are not mutually exclusive.
The Profit Chart Paradigm Shift: Pharmacy Businesses Are Allowed to Make Money!
The “profit-driven” mindset and practice of utilizing data to grow your business can be a bit of a paradigm shift for many independent pharmacy owners.
PDS Members John and Sue, owners of a Kansas-based pharmacy, recall that at first, they felt like they were “gaming the system.” They shared that it felt wrong to be seeking the greatest profit from their patients when they had chosen the pharmacy industry with patient-care and not profits in mind.
Amy, an Oklahoma-based PDS Member, felt very similar but shared that ultimately the PDS Founder, Dan Benamoz, put it best when he explained that leveraging RxAnalytics is one of the best ways to move the needle and keep her in business.
These are stores where communities and patients have built heartfelt relationships. Utilizing the Profit Chart and data analysis doesn’t hurt the patient. In fact, in many cases, the switch either doesn’t impact the patient or improves their standard of care through a higher-quality drug.
Turning Ideas into Action!
If you’re ready to stop focusing on things out of your control – like low-paying insurance providers – download our newest eBook – The Pharmacy Business Blueprint for Massive ROI – now! Or, to see how PDS can help you turn $10 prescriptions into a $100 profit, chat with one of our Account Executives; let us know how we can help you.