Optimising your pharmacy for maximum profitability
Your pharmacy has a wealth of data – in the dispensary you have data about dispensing volumes and values, fee structures, patient visits and practice trends, medicine usage; your Epos system has data concerning sales values, units sold, margins, stockholding, discounts and so on. The question is, how well are you able to see this data and to use it effectively? Time may be money, as the saying goes, but the effective analysis and presentation of data is the pathway to maximising your profitability, saving you time and money by doing away with the need to spend hours creating spreadsheets. The power of data science combined with practical, visual and business-driven reporting will enable you to release dormant potential in your business.
So, what are the key areas you need to be looking at, and why?
Knowing the basics of what is happening in your business is a cornerstone to survival, success and growth. Are item dispensings, patient counts, revenues and margins up or down on last year? Which stores are growing, and which are not performing? This is basic data that you need to keep your business plan on track.
Claim and Cash Management
Managing your claims and keeping a hand on compliance should be a top priority if you are looking to plug the holes through which profits are leaking out of your business. It is all too easy to miss claiming a High Tech patient care fee or to over-dispense a patient’s allowance of test strips. Typically, we find that the average store could be losing anything up to €500 each month on their bottom line across these two areas alone. Are you able to monitor exceptions to conditions laid down by the PCRS on test strip allowances, Prolia, Victoza, NOACs and other drugs with special conditions so that you can minimise payment exceptions on these medicines?
Loans and future-dated dispensings have cash-flow implications for your business – can you see your loans by age to help you get on top of loan management, and do you know how much medication has been dispensed under forward-dated scripts?
Dispensary Products and Stockholding
Identifying your preferred dispensing lines from all the available options and then tracking and managing compliance by store and active ingredient is a powerful tool to add points to your margin.
Those few pharmacies who are running live stock in the dispensary are seeing the advantages – understanding stock values and weeks cover enables you to reduce overstocks, manage your working capital efficiently and replenish stocks correctly.
Dead stock is a dead weight in your business – identifying it is the first step towards solving the problem. Customers who are able to transfer stock in an ethically correct way have reported savings in excess of 50% in write-offs of out-of-date stock, and this can be achieved even without a live stock model. Whatever your stock model, you need to know what you are dispensing and in what quantities so that you can manage your buying process in the most cost and time-effective way.
Patients are the lifeblood of your business – it’s good to know not only whether your patient count is up or down, but which of your patients are the most valuable to you and which ones are overdue according to their normal visit cycle. Sure, you need to look after all of your patients but from a patient care point of view and a business perspective it makes sense to be aware of the ones who are most important to you. The role of pharmacies in delivering patient services is a hot topic and you should be able to not just offer services but also to easily access your history by store, by service and by patient if you are to maximise opportunities on patient retention and loyalty.
There is ongoing market recovery, but the retail landscape is very different now, and the dispensary is under more financial pressure than ever before. Your front of shop can help relieve some of those pressures. You need to be tracking sales, margin and stock levels in each of your stores and departments so that you can maximise your retail opportunities and minimise risks.
Retail Stockholding & Product Mix
Buying decisions need to be data-driven and based on historical sales and margins as well as market trends, so that you are buying into opportunities and identifying and clearing slow-moving and dead stock. Easy-to-understand reporting on space planning will help you to allocate your retail space by department so that get the most out of each metre of retail shelf space. While range analysis tools will allow you to see which products are driving sales and margins and which are the ones you can really do without.
One of the easiest ways to boost your retail turnover is to identify your key year-round turnover drivers and make sure that they are never out of stock but also never overstocked. You also need to be aware of seasonal trends – how many anti-allergy medicines did you sell in the first month of spring last year, and are you set up to do the same this year? November and December should account for about a quarter of your annual retail sales – how are you going to make that happen at the best possible margin and without facing a mountain of unsold stock in January?
Running live stock in your front of shop is an easier proposition than in the dispensary and is often the best place to start if you want to get a handle on stock management. No-one likes markdowns, but they are a necessary part of the process if you are to learn from your mistakes and make space for new product offerings. Replenishing stock to manageable levels using live stock and sales data allows you to optimise your stockholding and prevents over-buying, reducing markdowns in the process.
Sounds overwhelming? Getting there is a process. While it is important in even a small business, it is vital in larger or expanding groups to achieve and maintain central awareness and control of key performance indicators, and the factors that affect them. All of this data is already in your business, but if you can’t see it you can’t use it. If knowledge is power, and properly-analysed and clearly-presented data is knowledge – in today’s business environment it is knowledge that you can’t do without.
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