Independent pharmacies are instrumental to their communities. However, there are many uncontrollable economic pressures that make it difficult for them to be profitable. Below we share four approaches for profitability that we have learned from our pharmacy partners like NCPA:
1. Control Overhead with Affordable Employee Benefits
To be more profitable, you can generate more revenue, or you can incur less expense. One strategy used by our pharmacy partners is to reduce overhead. To do this successfully, you need to know what the most expensive line items are in your budget. One category often overlooked is employee benefits. Consider reevaluating your health insurance plan; for example, a level-funded premium funding solution lets a pharmacist choose a plan similar to the fully insured options they may be more familiar with, but with lower rates and greater financial flexibility. These are plans that are built to help the pharmacist share in the savings that the good health of their employees brings.
2. Offer Clinical Services
Many independent pharmacists find opportunities in niche businesses depending on what their unique community needs are. To do this well, you need to know your own local marketplace and be able to identify a gap that you can step in and fill. For example, vaccine administration, nutrition/supplement/weight-loss counseling, post-exposure prophylaxis and CBD are a few areas of focus where a pharmacist could offer a more holistic approach beyond traditional OTC medicines through better counseling. Clinical services are profitable for two reasons; many of these services are cash pay and they increase your foot traffic. Foot traffic increases front-end sales, and the average margin on front-end merchandise is approximately 50%, which is significantly higher than margins on prescription sales.
3. Increase High-Profit Patients
Some patients are more profitable than others. For example, the unpredictability of DIR fees for dispensing prescriptions under Medicare part D has been particularly challenging for independent pharmacists. It is important to know which medications produce your highest profit. It is likely that many of those medications are specialty drugs, compounded medications, or prescriptions for specific chronic conditions. Customizing your marketing strategy to focus on these particular conditions will increase the likelihood that you attract patients with these conditions, many will have commercial insurance and you will therefore fill higher-margin prescriptions with better reimbursement.
4. Increase Patient Loyalty
The average repeat customer spends 67% more than a new customer. Retail pharmacies are more than familiar with how important it is to retain customers which is why when you check out at a Rite Aid, you receive a receipt with coupons that is longer than you are tall. There are many strategies to cultivate patient loyalty but one that is incredibly easy and involves no additional technology or inventory is hosting member-only special events. You can discuss new supplements or medications, have a guest speaker from the community, or demo a new monitoring device. And offer a discount on same-day purchases for those that attend!
Want to learn more? Please sign up for a webinar here to learn more about these tactics and others that Physician 360 can help you with.