Part 2: Grow Your Pharmacy Through New Offerings
With Medicare and private insurance reimbursement shrinking, what seems like every month, community pharmacy owners should be looking for other sources of revenue and profit. Below we have listed three options. Some of these may seem obvious, as they are common in the industry, but we wanted to outline how your revenue and profit will increase compared to the start-up cost for each. Hopefully this will give business owners some direction as to what the cost benefit is for these programs. This is part 2 of a 3 part series on Positioning Your Pharmacy For Big Growth. To read part 1 please visit our website at www.independentrxconsulting.com
1. Compounding – the startup costs for a compound pharmacy are significant. The reason for this is you must purchase the inventory, have compounding hoods installed in a current location or open a compounding only location and either hire a compounding trained pharmacist or train a current pharmacist to take over this program. The good news is reimbursement for compound prescriptions is substantial and there is a large cash sale component. We have actually seen gross profits at 85-90% for compounding. You can fill 30-40 prescriptions a day and make $30,000 to $40,000 per month in gross profit which I think all of us would take any day.
2. Long Term Care – This is less expensive to start than compounding but will take a lot more time creating processes and a large sales effort to gain business. Having your processes in place prior to launch is crucial. The reason for is, this is a highly competitive market which allows long term care facilities to demand more than they should from the providers. The good news is if you can establish that you run your business well there are tons of unhappy facilities looking for a new vendor. That leads me to the second important factor; you need someone dedicated to sales as knowing when contracts are up at your target facility is crucial to gaining business. These two items combined cause a significant upfront cost but the payoff lies with huge volumes of prescriptions which can be significantly larger than many retail pharmacy operations.
3. Durable Medical Equipment – This startup will be expensive. It will require a large initial inventory purchase, lease of warehouse space, hiring billers (or at least someone who tracks what your outsourcing company is doing), hiring and training sales personnel to gain business from hospitals and nursing homes, hiring a Respiratory Therapist if you plan to provide oxygen and purchasing a billing system. The problem with this business is reimbursement continues to shrink and next year there will be competitive bidding where by the lowest bidder wins the business. If you want to make any kind of money in the durable medical industry you must have efficient operations and do a very large volume.