What we’re about to show you will likely make your blood boil. It did ours. These are pictures you must see to affirm your sneaking suspicion that yes, you are in fact getting duped by PBMs, such as CVS Caremark.
The images below were provided by a fellow pharmacy owner and were obtained during the process of filing a MAC appeal with the Medicaid HMO, Molina. Like many owners who bill to CVS Caremark, she noticed a consistent pattern of being underpaid on reimbursements. In response to the complaint, she received the following files which show the charges to Molina for the prescription, a stark contrast to what her pharmacy received.
|Prescription||Amount Submitted by Pharmacy||Molina Paid Caremark||Pharmacy Reimbursement||PBM Spread|
|Guanfacine HCL ER 2 MG tablets ER 24H||$320.00||$121.55||$7.60||$113.95|
|Neomycin-Polymixin-Hydrocor 3.5-10K-1 solution||$106.00||$50.32||$5.40||$44.92|
Images one and two show what Molina paid CVS Caremark for two prescriptions while images three and four show what the pharmacy was paid. This highlights the reality that pharmacies are regularly underpaid for prescriptions while the insurance plans are charged far more, and the PBM gets to keep a considerable spread of profits in their pocket.
We’ve also attached the documents for download here.
What This Means
There are approximately 22,000 independent pharmacies in the United States. If we looked at the Guanfacine prescription alone, the yearly payout to PBMs is $29,832,000 if the baseline assumption is that pharmacies nationwide fill this script once a month.
MAC list pricing by PBMs puts independent pharmacy owners at a considerable disadvantage. Adding insult to injury, the majority of the pharmacy owners on the PDSadvantage message board are in agreement that the appeals process is ineffective. A best-case scenario is periodic price adjustments depending on the appeal, which, in the long run, never affect changes in pricing for pharmacy owners as a whole. Overall, this process is designed to force busy owners to choose between below cost reimbursements or an endless cycle of appeals with little change in outcome. Many argue that the effort invested in submitting appeals isn’t worth it because the core of the problem isn’t addressed, and it takes up precious time that should be spent on growing the business, not in the pharmacy.
Fight Smarter, Not Harder
CVS Caremark and other Pharmacy Benefits Managment companies, such as the other 2 of the “Big 3,” OptumRx and Express Scripts, will continue to intentionally narrow the gap between reimbursement and acquisition cost while keeping the appeals process ineffective in the face of repeated price adjustments. This leaves independent pharmacies underwater. We at PDS don’t count ourselves among those who think fighting is futile. The answer is fighting smarter, not harder by making these issues and any other unfair regulations IRRELEVANT to how you operate your pharmacy business. Here and now, we can affect change that will make issues like unfair MAC pricing a blip on the radar. If we come together, our own collective and individual success will be exponentially greater than any threat the PBMs can sling. Filing appeals is a start, but alone it is not the answer. Informed pharmacy owners know that the focus should be on putting effort toward strategies that directly impact your bottom line.
Taking Matters into Our Own Hands, Together
There are over 1,800 pharmacy owners and professionals that know the value of fighting smarter with a proven plan, backed by a community that supports and stands with them. This gathering happens every February in Orlando, Florida.
Independent pharmacy owners just like you gather with the experts and titans of the industry to:
Give owners proven, sustainable strategies that will pay immediate dividends
Light the passion for pharmacy most owners lose in the landscape of this unfair game
Give you the confidence to battle MAC pricing, DIR fees, below-cost reimbursements and any other obstacle in your way – and win
Find your people. Fellow owners that are walking the same path as you. The value of this support and knowledge-sharing is priceless. If you’d like to continue to file appeals and disputes on your own, we commend you. At least you’re doing something and making your voice heard, but that is not your only recourse.
Attend the PDS Super-Conference and see for yourself why we are so confident in our ability to change your life that we have a conference guarantee. If you don’t see the value of after the first day, we’ll reimburse your travel up to $500 and give you an additional $300 — no questions asked.
There is no shortage of options for owners looking to impact pharmacy growth. Successful independent pharmacy owners must maintain a balance between growing profits, investing in the business, and managing operational cash flow. This formula is not new. However, in light of significant industry shifts and stringent regulations; the balance is more challenging to achieve. Success is a matter of surrounding yourself with the right team in an environment that will cultivate pharmacy growth. The PDS Super-Conference and premier sponsor Live Oak Bank are the solution partners you need to establish successful programs and unlock capital for your pharmacy.
In an industry where large competitors have unlimited access to funds, and you need capital to implement essential profit programs; where do you start?
Step 1: Know Your Pharmacy Market
Understanding where your profits are coming from is the first step in taking your business to the next level. Passively waiting for the next prescription to walk through the door does not work anymore. The waiting game will not keep you operating at full potential. Actively targeting the most profitable aspects of your business keeps you on top of market conditions and prepared to adjust course in the face of changes.
Step 2: Managing Pharmacy Cash Flow Effectively
Cash is king, we all know it. Your pharmacy should have enough cash flow to reinvest back into your business and employees from marketing to new equipment, all while maintaining salaries and keeping the lights on. Mismanagement of or inattention to cash flow will limit how far you can take your pharmacy. It affects how banks look at you when applying for loans, and your ability to scale successful initiatives.
These are just a few of the tips that we cover with independent pharmacy owners at the Annual PDS Super Conference. Our goal is to provide owners with the tools and solutions to establish a solid foundation, kickstart pharmacy growth, and provide ongoing support you navigate the industry in the coming year.
Live Oak Bank is one of the largest investors in community pharmacies in the industry and has provided nearly $750 million in loans since 2010. They provide funding and packages to address all of your pharmacy needs.
- Quick loan closes – approximately 47 days
- Favorable terms with low-interest rates
- Low equity requirements
As your dedicated solutions partner, Live Oak Bank can assist your pharmacy with everything from facilitating prescription file purchases and software solutions to streamlining improved inventory management. As a major sponsor of #PDS2017 Live Oak Bank will be in attendance, making it the perfect time to stop by their booth and learn more about their loan capabilities, low-interest rates, and equity requirements.
What kind of results can you expect with this shift in thinking? Great question.
Below is a visual aid showing you precisely what you are leaving at the table if you aren’t a PDS Member. These results are real, from real pharmacy owners across the nation.
Ask yourself, do you want to walk away from these profits?
Save your seat for the most important pharmacy conference we have ever held here, where you’ll have a chance to listen to these same PDS members tell you EXACTLY how they generated millions in profits.
Data Analytics For Pharmacy owners
We have said this countless times before; pharmacy owners play an unfair game. This isn’t just a maxim we tout to tug at your emotions. The unfair game is the core of why we wake up every day to champion pharmacy ownership. If you think you’re doing okay or getting by just fine, check out some of our pharmacy owners who are nailing data analytics among other strategies and winning the game.
Our winning strategy for lasting success is and always has been, an introspective one. The chances are that any deterioration on the outside will indicate a decay within. What is the first thing you look at when you start assessing your pharmacy business opportunities? Your team, customers, pharmacy data, financial statements, even yourself, should all be audited and tested to bat.
This is why our PDS2017 Keynote speaker is so relevant to our cause.
Paul DePodesta Has Made His Name Creating Actionable Strategies
Based on Data Analytics
During the show, he will get attendees to rethink how their system works by asking what Paul calls the naive question, ”If we weren’t already doing it this way, is this the way we would start?” By applying an analytics-driven mindset to common pharmacy issues, Paul will help PDS Super-Conference attendees rethink:
- The idea that prescription volume equals pharmacy profits. Would you rather fill 100 scripts at $5 each or two scripts for $250?
- The tools of the trade. Would you rather keep guessing at who your best customers are or experience tools that will revolutionize the way you visualize your data to target your plan?
- The resolution that pharmacists must accept any customer and prescriptions that walks through the door. Wouldn’t you rather control where you get your profits instead of being at the mercy of the cash register?
For those unaware of why Paul is a results-driven analytics titan, he is the inspiration for the Moneyball Methodology used in the major motion picture “Moneyball,” starring Brad Pitt. Sound familiar?
He served as Assistant General Manager of the Oakland Athletics from 1999 to 2003. At the time of his hire, Oakland was one of the worst teams in the league, coming off of six losing seasons while posting one of the lowest payrolls in baseball. In an industry entrenched in ingrained thinking and outdated systems, the stagnant team needed the unique management and creative approach that A’s GM Billy Beane and Paul DePodesta brought to the table.
By Paul’s final four seasons in Oakland, the A’s won more regular season games than the New York Yankees, who during the same period spent $350 million more on player payroll than did the Athletics. By his unique approach and commitment to leverage data to maintain a level of unimagined success, he and Billy Beane revolutionized the way baseball teams are built. His work has been recognized by various publications, including Fortune, who named him one of the Top 10 innovators under 40.
At PDS Super-Conference, we’re not just going to make you more money. We’re going to revolutionize the way you see your pharmacy to get you fast results you have never dreamed were possible. Pharmacy data analytics is available to the independent industry and PDS is helping owners stay competitive in an increasingly challenging business landscape.
Data-Analysis for Independent Pharmacy Owners
Are you the type of independent pharmacy owner who is content to drift along with the dated model of taking whatever business happens to walk through the door? Don’t settle for “business as usual” and “my pharmacy is doing just fine.” The unfair game PBM’s are playing won’t change until you start to look at your profitability differently. Discover where big money can be made in independent pharmacy–it’s right under your nose, and you don’t even know it.
Pharmacy Development Services (PDS), believes that the success of each independent pharmacy is a win for everyone and we are ready to show you the level of commitment we have to your success.
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.
Pharmacy Resolution: Use Smarter Tax Strategies
Make 2016 the year that you stop giving the government more money than you have to! When facing financial difficulty, we often think about ways to increase our income, but what about saving more of the money we have already worked so hard to earn? There are countless ways to save money on taxes that you don’t even know exist. That’s why “Use Smarter Tax Strategies” is number three on our list of Top New Year’s Resolutions for Pharmacy Owners in 2016.
Most tax accountants and CPAs use fifteen to twenty strategies when preparing a client’s tax return, but that is not even a fraction of what the tax code allows. When properly documented, more than 400 legal deductions are available to you! It is almost guaranteed that you are paying more taxes than you are required to. If you took advantage of all the deductions available, you could be putting more cash back into your business, a rainy day fund or toward your next family vacation.
The majority of a tax professional’s work occurs in the two to three month period culminating on Tax Day. They may have to prepare several hundred returns in a short period of time, so they often “staff up” with temporary employees and work 80-90 hours each week just to stay afloat. Under those circumstances, they can’t possibly provide you with the level of research and analysis you need to maximize your savings.
Additionally, tax professionals have been deputized by the IRS, which severely penalizes them for submitting returns with questionable or undocumented deductions. This forces them to play it safe, because most clients are unable to provide proper documentation for many types of deductions. Therefore, it is your responsibility to become familiar with the tax strategies that will save you thousands of dollars.
Did you know that you can charge your business to hold meetings in your home up to 14 times each year? This creates a deduction on the corporate or business side while creating income that you do not pay taxes on.
Did you know that you can save thousands of dollars and generate tax-free income by hiring your children? According to the law, you can pay them up to $6,300 each year for things like managing your social media or answering the phones.
Wondering why tax-free dollars are important? If you have a $50,000 expense and you’re in the top tax bracket, it actually costs you $83,000 to spend $50,000 with after-tax money. If you use before-tax money, the same $50,000 expense can be paid for with just $50,000. That’s a savings of $33,000!
At the 2015 PDS Conference, Ernest Nesmith of Tax Savings Professionals wowed the audience with winning tax strategies that could save pharmacy business owners anywhere from three to six figures in one year. Click here to watch his Tax Savings Webinar and learn more about how you can generate tax-free income, uncover hidden deductions and keep more of your hard-earned money.
What other game-changing strategies are you missing? Don’t miss the opportunity to hear from more experts like Ernest and pick up techniques for saving money, earning more cash and improving your business. Join us at the 2016 PDS Conference! This year’s lineup of speakers is exceptional.
Like any small business, independent pharmacies are always looking for ways to increase profits. As a pharmacy owner, you may be under the assumption that you must obtain new customers to make more money, but that is not necessarily true. Of course, your pharmacy always needs new customers, but remember that your easiest and most predictable source of revenue is right under your nose. It comes from the loyal customers who already know and love your business.
Upselling current customers is a much more cost effective method of increasing income than working to attract brand new patrons. In fact, some estimates report that acquiring a new customer is five to ten times the cost of retaining an existing one. Before you focus on attracting new customers, use these steps to make sure you are maximizing the profitable opportunities that lie within every one of your current patient relationships.
Do not be nervous about the concept of upselling. It is much more than a sales tactic – it is a component of good customer service that helps build deeper patient relationships by delivering better value. For example, when a customer comes to pick up their monthly vitamins, take the opportunity to offer them another brand with a variety of flavors, even if it is more expensive. They will appreciate the personalized recommendation and consider switching if they believe in the added benefit from the upgraded product.
Work Smarter, Not Harder
Maximizing the potential of your existing patients is a surefire way to work smarter, not harder. In the same way, you can use existing data to decide which patients are appropriate candidates for upselling and which drugs to target. Profitability Pathways is a system developed by that encourages your team to tap into existing niches and anticipate needs based on trends. It also focuses on finding ways to convert low-profit opportunities into high-profit customers. You will begin by running reports that determine which products are most profitable, as well as areas you are losing money.
A great way to stay ahead of competitors and bolster profits is to provide a unique service. In particular, you will help customers and yourself by introducing programs that increase efficiency, such as medication synchronization. These types of programs increase customer satisfaction, build relationships and reduce pharmacy workload. You can use the extra time to mine your pharmacy’s database to increase sales
Do you want to learn how to increase sales?
According to recent sales data, the average repeat customer spends a whopping 67 percent more cash than a new one. Following the steps outlined in this article will certainly provide one method for increasing sales, but there are numerous other opportunities for profit. Utilizing the Profitability Pathways designed by Dan Benamoz will ensure that you do not miss out.
8 out of 10 Businesses Fail- Don’t Let Your Pharmacy Be One of Them!
According to Bloomberg, 8 out of 10 entrepreneurs who start businesses fail within the first 18 months. We know that businesses fail when they run out of money, but there are many reasons why difficult times can result in a business closing its doors. Understanding why 80% of businesses crash and burn will help prevent the possibility that your pharmacy could become part of that statistic.
Here are five different factors that can contribute to a pharmacy business failure:
1. Leadership Breakdown
Some small business owners self-sabotage by not placing enough emphasis on the development of leadership and business planning skills. Your pharmacy depends on you to succeed. If you lack the ability to relate well with other people and motivate your staff, you will need to gain the necessary skills or hire an experienced, talented manager. If pharmacy accounting is not your forte, take a financial leadership course or hire a professional. Recognize areas where you need to invest in your own skills or need to hire someone to fill a role you are not able to, is an indispensable element of successful pharmacy ownership.
2. Ignoring the Customer Voice
Your patients hold the keys to your success, so running a profitable pharmacy begins with listening to their opinions and meeting their needs. When an entrepreneur sees a potential opportunity or dreams up a new idea, they often retreat and stop listening to their customers and staff, but pharmacy marketing needs to be a conversation, not a one-way monolog.
3. Lack of Differentiation in the Local Market
In one sentence, can you verbalize what differentiates your pharmacy from the competition? If you can’t, it’s critical that you figure out why your pharmacy is special and market that value to your community. Whether you offer a service others lack, like a medication synchronization program, or cater to a niche group of patients, make sure your local neighbors know why you are different and better than others.
4. Failure to Communicate Value
Do you know how to communicate your pharmacy’s value to your target audience? Many entrepreneurs work hard to discover a point of differentiation, but fail to communicate their message in a clear, concise and compelling manner. Listen to what your customers are telling you and speak their language.
5. Inability to Generate Dependable Revenue
At the end of the day, your pharmacy needs to be making money. Independent pharmacies need to move quickly while conserving cash to find their piece of the local industry pie. Don’t be afraid to make mistakes and bounce back quickly. The inability to turn a profitable business model into profitable revenue is a recipe for independent pharmacy disaster.
Being aware of the five primary reasons for failure is the first step toward preventing them. Develop your skills as a leader, listen to your customers, know your value and how to market your business, and work hard to locate dependable sources of revenue. There is a plethora of information available to pharmacy owners who want to get started and need guidance. Contact a pharmacy business consultant or begin by watching our On-Demand Webinar “Leadership on Fire”. You will pick up a few tips on pharmacy leadership that can be implemented immediately.
The Green Bay Packers and Vince Lombardi. The Dallas Cowboys and Tom Landry. The New York Knicks and Phil Jackson. Even the best professional athletes in the world have coaches they rely on to keep them at the top of the game. Did you know that independent pharmacy owners need coaches, too?
Working with a team of the nation’s top pharmacy experts and mentors is the best way to improve every area of your business. Pharmacy business coaches possess the expertise that pharmacy school doesn’t teach you – they are experts at running a successful business from managing staff to balancing budgets and finding profit opportunities. They have worked with some of the most successful pharmacy owners in the country, so they know what works for industry leaders and they understand the challenges you face.
Working with a business coach is like adding an ivy-league educated, 6-figure salaried professional to your team. Here are four reasons you need a pharmacy business coach:
1. Access Proven Solutions
An experienced business coach has seen it all – the good, the bad and the truly terrible. The wisdom that comes from years of working in the independent pharmacy industry is indispensable. While you may be new to certain situations, the chances are that your coach already knows a solution to get you through difficult times quickly.
2. Strengthen Your Team
According to coachfederation.org, working with a professional business coach increases time management by 57% and boosts overall work performance by 70%. Those numbers will benefit every area of the pharmacy from the owner to the cashier. Gaining expertise from a business coach specializing in independent pharmacy allows you to leverage outside skills to strengthen your team.
3. Increase Profits
Analyzing financials is often the most challenging part of running any small business. Pharmacy owners are at an increased disadvantage, because financial planning is not typically included in pharmacy school curriculum. One of the many advantages of working with a business coach is that they can help you develop a budget, price new services and find holes that are draining your cash flow. You will be able to ask any financial question with the confidence that you will find support in making the smartest decision for your pharmacy.
4. Create a Positive Team Culture
Your coach will provide tools that will enable you to build a culture of mutual trust and support in your organization. From interpersonal communication to conflict management, the leadership skills and knowledge you gain will allow your pharmacy to run like a well-oiled machine. Building a great team culture is paramount to your pharmacy’s success. In fact, 72% of small businesses that employ a professional business coach report improved communication and leadership skills.
It can be difficult to see all of the different ways to tackle a problem by yourself. Your business coach is a great sounding board and a creative thinker who will help carry your daily efforts through to completion. Working with a business coach puts an advocate in your corner every step of the way along the road to success.
If the best professional athletes in the world need to work with a coach, why shouldn’t you? To learn more about pharmacy business coaches and how they can help you, arrange a meeting with a PDS business advisor today.