Pharmacies, just like any other small or medium sized business, have numerous challenges that make operating in the black difficult at times. Decreasing reimbursements, competition from chains and ever increasing costs of goods are just a few examples of factors that are negatively impacting Independent Pharmacy profits, and while each Pharmacy is unique, there are some common Pharmacy business best practices for increasing front-end profits and helping improve your operations overall. Plus the changes you make to improve non-prescription profits might also help you to better serve your patients.
Here are 10 ideas to help your Pharmacy thrive in 2019:
1. Reduce Overhead Costs
Overhead costs can eat up your Pharmacy’s profits. Every dollar you spend on overhead is one dollar less you get to take home. Look for ways to decrease overhead expenses in your Pharmacy.
Look at your rent, utilities, employee salaries, insurance and any maintenance fees to find areas where you can reduce costs and increase efficiency. Sometimes even a small change like the type of paper products or lightbulbs you use can make a big difference.
2. Focus on High-Profit Services
Some services deliver a higher profit margin than others. Implement those services if needed and then market those services more than the rest.
For example you may offer vaccinations. Ask qualified patients coming in for a flu shot if they’d also like to receive the shingles or pneumonia vaccine as well. This up-sell or co-vaccination is not only good for your profit but great for your patients.
Other Potential High-Profit Services:
- Diabetes Care
- Travel Vaccinations
- Veterinary Prescriptions
3. Increase Your Patients’ Medication Adherence
When patients don’t adhere to their prescription medication regimen, they don’t keep up with their refills.
Every missed refill means lost profit for your Pharmacy business. And most importantly missing doses is bad for a patients’ health.
Implement a medication adherence program to help patients stay adherent to their medications and watch your profits and customer loyalty increase.
4. Drive Sales to Higher-Profit Front-End Products
Just like with services there are some front-end products that will deliver a higher profit margin than others. Strategically design your front end around high-margin opportunities. And, use marketing to drive patients to those high-margin products.
For example, place high-margin products in high-traffic locations, like end caps and the checkout counter.
High-margin front-end products include:
- Compression Stockings
- Alternative Therapies
- Veterinary Products
- Diabetes Supplies
- High-End Vitamins and Supplements
- Wound Care Supplies
5. Know and Keep Track of Your Numbers
You can’t manage your Pharmacy profit well if you don’t measure and monitor the factors that affect it. Track the right metrics so you know where you stand and you’ll discover where you’re succeeding and where you need improvement.
Here are some suggestions of metrics you should be tracking:
- Main Expenses
- Payroll Costs
- Total Costs and Profits
6. Know and Maximize the 80/20 Rule
The 80/20 rule states that 20% of what you do will produce 80% of your results. Keeping this rule in mind, you need to focus most of your time and energy into the most important 20 percent of what you do that generates the most desirable and effective results.
Apply the 80/20 Rule to Every Key Area of Your Pharmacy such as Patient Base, Front-End Merchandising and Services.
7. Increase Your Front-End Sales
Front-end sales can lead to large profits for your Pharmacy business.
The average margins on front-end merchandise can often be more than 15% higher than the margins on prescription sales.
Although prescriptions will always dominate your sales numbers, you need to implement additional strategies to boost non-prescription purchases that increase your Pharmacy’s profit margins.
For example, suggest front-end products that pair with your patients’ prescription medication, such as supplements for nutrient-depleting medications and alternative products that can complement the effects of pain relieving prescription medications.
8. Greet Patients with Helpful, Educated and Friendly Staff
Smiles may seem like a weird and frivolous way to increase profits, but according to J.D. Power’s 2016 U.S. Pharmacy Study on customer satisfaction ratings, friendly and informed staff can help increase a Pharmacy’s profitability.
Make certain outgoing and friendly staff are there to greet patients when they enter your Pharmacy. It will not only foster loyalty and potentially increase purchases but it will ensure your employees are taking an active role in patient care.
9. Foster Patient Loyalty
The average repeat customer spends more money than a new one, and it costs less money to keep a current patient than to work to gain a new one.
Here are a few strategies to help increase and strengthen patient loyalty:
- Create a membership program and offer future-use rewards
- Host members-only special events
- Offer occasional free items and reward loyal patients with special offers and discounts
10. Keep Your Pharmacy’s Employees Happy
Experts estimate that employee turnover can cost up to twice as much as an employee’s salary.
Every dollar you spend on employee turnover costs you profit. Do not let good employees leave because of poor pay or work culture.
When you make your Pharmacy a great place to work, your employees are more likely to stay longer. You’ll keep great employees and reduce turnover costs and hold on to more of your money. Keeping your employees happy is like investing in the future of your business.
Get the independent Pharmacy profit you deserve and better serve your patients when you utilize these tips.
PRS Pharmacy Services is a comprehensive Independent Pharmacy Consulting firm specializing in Pharmacy Compliance, Profitability, Brokerage Services, International Pharmacy Services and PA Pharmacy Staffing. Pharmacist owned and operated for over 36 years, PRS is the name brand in the industry with thousands of satisfied clients around the world.