Most independent pharmacy owners wage a constant battle to keep costs low, with a goal of increased profits. But it’s no secret that those same pharmacy owners routinely operate their businesses with a very tight profit margin.

Our members utilize the buying power of strength in numbers, which puts you ahead of the game because you’re already making smart purchasing decisions. Yet, trying to find additional ways to increase profitability can be challenging and frustrating. We know and we’re here to help.

Here are a few additional suggestions that, when regularly examined, can help your independent pharmacy improve profitability.

Make Your Pharmacy a Valuable Community Resource
and Win on Both Sides

Make your local pharmacy a go-to resource for the community. Community-centered programs will not only solidify your organization as a healthcare authority, but they can also position it as a healthcare destination. Designing these programs to focus on particular conditions can help your organization realize better patient outcomes – which will not only win you the customer’s loyalty, but also help build your reputation as proactive contributors in raising a referrer’s CMS Star Rating, ensuring business continues to be referred! For example, a few programs offered through local pharmacies that have shown great success are:

• Understanding Type 2 Diabetes
• How to Eat Healthy to Better Manage your Diabetes Diagnosis
• Incorporating Better Exercise Habits for Healthier Lifestyles

What do these all have in common? Each program can help a patient with Type 2 diabetes better manage their chronic illness, can help keep patients adherent with their insulin, and can inform and assist patients in making – and sticking with – better lifestyle choices. It’s a valuable service that will see patient benefits, as well as referrer Star Rating stability, while also increasing your pharmacy’s chances of repeat customer business.

The key is to know your market and tailor the programs you offer to that market. Happy customers return, and returning customers are loyal. That loyalty can translate into bigger profit margins.

Know the Hands that Feed You

Who are your most loyal prescribers? Do you know? Can you gather up your data and review which prescribers generate the most profit and which ones tend to weigh down the profit momentum? Try creating a list of your independent pharmacy’s best customers/prescribers and brainstorm ways to provide more value to them (add-on services or impeccable customer service, for example), and boost the chances that their referrals continue flowing into your organization.

Maximize Reimbursements

It comes as no surprise to an independent pharmacy owner that prescription prices continue to increase, while reimbursements continue to decline (1). One way to maximize your organization’s profit margin is to ensure you are adhering to all protocols that ensure a maximum return on insurance reimbursement claims.

• Usual & Customary price points are key to setting accurate prices for prescriptions. By regularly reviewing and updating these price points, your organization can maximize reimbursement on claims.
• Dispense as Written (DAW) codes affect pricing on prescriptions. It is crucial that your pharmacy team is well versed and attentive when submitting these codes. Incorrect coding can result in lost time resubmitting claims, incorrect reimbursements that will affect bottom line profits, and could also trigger a potential audit.
• Average Wholesale Pricing (AWP) still plays a significant role in prescription reimbursement. Be sure to update your software on a regular and consistent basis to head off any potential resubmission of claims which can negatively impact your organization’s profit margin due to increased administrative costs.

There are many pharmacies that haven’t updated the management of their prescription processes in years. The suggestions we have outlined above have the potential to save an independent pharmacy thousands of dollars every month. These are tools that are at your disposal and can be utilized with little disruption to day-to-day operations, and result in an increased profit margin.

So, allocate your outgoing dollars smartly, understand – and appeal to – your best referrers, and make sure your pricing and billing modules are maintained on a regular basis. Running a pharmacy isn’t an easy task, but it is a calling. And right now, it’s calling to you to make the smartest decisions possible and ensure continued success for your company, and your company’s clientele

Be sure to follow this blog for more regulatory and reimbursement intel, tips and bulletins from your partners at alliantRx.

Sources:
1. http://www.asapnet.org/files/January2014/Presentations/ASAPJan14_Presentations10_Dietz1.pdf