• LATEST PHARMACY NEWS AND EDITORIAL

    LATEST PHARMACY NEWS AND EDITORIAL

Our latest thoughts and inspirations on buying a pharmacy, starting a pharmacy, and ongoing pharmacy operations

Ideal Demographics for an Independent Pharmacy

What are the ideal demographics for a pharmacy?

This is a greatly debated subject within the pharmacy industry. I am not sure anyone can give you the formula for the exact demographics that will drive sustainable pharmacy business. However we can provide you with the demographics for pharmacies we have been involved with and maybe those match what you are looking at. The information below was compiled by examining pharmacies we both own and of pharmacies we have helped start or buy. All the pharmacies examined are profitable and have been for at least 1 year.

Population (based on the city pharmacy located) – we saw an average population of 15,651 with the smallest city having a population of 1,620 and the largest being 48,133.
Percent of population over 65 was 15.62% on average with no pharmacies having a percent below 14%
Percent of population under 18 was 25% on average with no pharmacies having a percent below 20% or over 30%.
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Pharmacy Accounts Receivable - What They Tell You

What is Your Accounts Receivable Balance Telling You?

To effectively manage your pharmacy business, you must understand what your accounts receivable data is telling you. Poor management of your accounts receivable can result in cash flow problems. Successful accounts receivable management includes a process to review your accounts receivable on a weekly or monthly basis.

The first step in reviewing your accounts receivable is to obtain an aging report from your accounts receivable software. This is a report that lists all your accounts receivable and shows the aging of each receivable (current, 30 days, 60 days, 90 days, 120 and over). In reviewing this report, you should be focusing on all accounts 60 days and over. Once accounts age 60 days, it is important to start making calls. You may need to call the customer to ensure the insurance information in your system is correct, or you may need to call the insurance company to ensure the prescription was billed correctly. If phone calls do not produce a result, friendly reminders by letter are the next step. Once all your efforts are exhausted, it is time to turn the account over to collections.

Another quick way to monitor the overall health of your receivables is through ratios. These should be examined monthly.
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Do you Know the Financial Health of Your Pharmacy?

We will be doing a three part series from our friends at SS&G. They are a CPA group representing over 200 independent pharmacies. Please see Annette Hoelzer's information at the bottom of this article for more information. Below you will learn about measuring the financial health of a pharmacy. This is great for current operators and those looking to buy a pharmacy.

Measuring Your Pharmacy’s Financial Health

As Peter Drucker, a well-known business scholar, so aptly stated, “If you can’t measure it, you can’t manage it.” Unfortunately, in today’s environment, it isn’t enough just to be a good pharmacist—you must also be a successful businessperson. The most successful independent pharmacies that we see don’t just run a business, they manage that business.

If you focus on two particular areas—profitability and cash flow-- you will likely experience better financial results. There are a number of key financial indicators that can help you monitor these areas, but to keep it simple, we will provide four statistics to monitor—two for each area. If you have not used statistics to monitor your business in the past, you should find that monitoring these four items faithfully each month and making adjustments based on the results should lead to improvements in your financial outcome.
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Buying a Pharmacy? What licenses and contracts are needed and how do I obtain them?

I am buying a pharmacy how do I obtain the correct licenses?

You found a pharmacy to buy, agreed on a price with the owner and now you just have to get to closing. But to close you need licenses, lot of licenses. It can be overwhelming and even complicated but don’t worry everyone feels that way and it is the number one service requested by our customers.

Unfortunately I cannot provide you with a list or a website to do it all in one place. Each state is going to be different but you will want to start with your state’s board of pharmacy as you will need your state license in order to obtain the other licenses and even sometimes your wholesaler agreement. And I can say with confidence you will, at a minimum, need State Board License, DEA, NPI and NCPDP. You may also need others like local business license, etc.
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Selling your pharmacy – How do you transfer your licenses and 3rd party contracts?

Licenses and contracts when selling a pharmacy.

Congratulations you found a buyer, they have financing and have agreed on a price. That part is hard but now you have to begin paperwork. In an asset sale you will need to transfer your licenses and 3rd party contracts so the new owner can take over.

This is easier said than done. First the laws and regulations vary from federal to state and from state to state. In addition it’s probably been years since you actually looked at all the contracts and licenses you have. There is probably a company like Relay Health, Humana, state Medicaid, business licenses, board licenses and on and on.
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