• 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

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Poor Accounting Information could be Increasing the Stress in your Life, isn’t being an owner stressful enough. Live longer. Decrease your stress.

Poor Accounting Information could be Increasing the Stress in your Life, isn’t being an owner stressful enough.  Live longer.  Decrease your stress.
Being a pharmacy owner is very stressful. So much causes stress, PBM reimbursement pressure, phone ringing, employee issues, customer complaints, break ins and more. But one of the largest stress causers we hear often is poor accounting. Independent pharmacy owners tell us they don't know how well or poor the business is doing, they do not know what is causing their cash to decrease or if they had too much payroll. Sometimes this is because they have a bookkeeper in house that is recording entries wrong, sometimes it is because their local accountant is slow and provides financials 2 months late and sometimes their accountant simply does not understand pharmacy.

Why are you letting this happen? It is causing you to have sleepless nights, worry and making owning a business tough. Your accountant should get you accurate, detailed and timely financials. These financials should give you insight into revenue, DIR and GER fees, rebates, current cash position, tech vs rph vs clerk payroll dollars, and more. Having all of this allows you to know exactly how your business did and then know what caused your business to have a good or poor month.  All of this allows you to make changes going forward and they should help you decide what to do going forward.

Expect more from your accountant and if they can't deliver make a change.
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3 Things YOU can do this Week to Grow your Pharmacy

3 Things YOU can do this Week to Grow your Pharmacy
I am sure you have heard the saying if you're not growing you're dying. Then why is it that the majority of independent pharmacies are declining in revenue.

We know, PBMs force patients to go to a certain pharmacy, the chains can spend more on advertising, you do not have enough time. These are all the excuses we hear but growth is important, every day patients move, pass away, are forced to other pharmacies and as such everyday you should be doing something to grow.

Below we have outlined 3 things you could do this week to start your journey into creating growth at your community pharmacy.

  1. Have your staff start asking every customer if there is anything else they need. If you want to learn more here is a great article on cross selling https://www.vendhq.com/blog/cross-sell-upsell-retail/
  2. Create a Facebook ad. Facebook ads are very targeted, you can market it to a specific zip code(s), a particular demographic and you can limit your spend. Lastly, it only take 5 minutes to do. Here is a link to Facebook's how to boost an ad https://www.facebook.com/business/help/347839548598012?id=352109282177656
  3. Make 3 Sales Calls - Get out of the store. Go see a doctor you work with and see if you can expand that relationship, visit an assisted living facility or meet with a home health agency. One of these relationships can grow your business by 10% or more but they need to know how you can help them or their patients. The only way for them to know is having a face to face meeting. If you want to learn more about sales we suggest reading Spin Selling by Neil Rackham https://www.amazon.com/SPIN-Selling-Neil-Rackham/dp/0070511136.

Reach out to us if you have questions - we always like to hear from you.
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Does your Accountant know what to do with a DIR fee?

The dreaded DIR Fee.

Every pharmacy owner dislikes them but every pharmacy owner also knows they drastically impact their cash and profitability.
Since DIR fees are so important to every independent pharmacy shouldn't they be one of the key pieces of data you as an owner tracks? Typically these are recorded on your financials. But how is your accountant determining how much these fees are? Do they estimate based on averages, do they just record when you give them an amount? Your accountant should recommend a reconciliation service like www.net-rx.com or www.pioneerrx.com that tracks these fees and tells them how much they are monthly. Once the accountant has the dollars associated with DIR Fees where does he or she record them on your financials? We see them everywhere, as a deduction of sales, as an increase to cost of goods, as an expense. We record them as a reduction of sales.

Lastly how often does your accountant or bookkeeper record these on your financials. We often see them added at the end of the year but they should be recorded monthly so you know what your true profitability is in a timely manner.

If your accountant is not recording DIR fees reach out to us - we are happy to help.
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What is a Buying Group?

What is a Buying Group?
One of the most common questions we receive is, what is a buying group, also know as a group purchasing organizations (GPO). This makes sense for our clients starting or buying their first pharmacy. But we get this question from our accounting clients and from seasoned pharmacy owners too.

As such we decided to write an article. Below we will cover how buying groups came about, what purpose they serve and how they benefit you. I am sure we have not covered every aspect but this should give you an understanding.

Buying groups or GPOs first appeared around 1910 in New York. However the number of buying groups barely grew until the 1970s and 1980s. Growth began because GPOs were excluded from Safe Harbour Laws. In addition, hospitals and independents needed outlets to negotiate better prices. As pressure on reimbursement grew independent pharmacies in particular did not have the time or knowledge to negotiate and the number of GPOs grew.

Today there are over 600 but only a few are a big influence in the independent pharmacy space. Examples would be
The main function of a buying group is to negotiate lower prices on prescription drugs for its members. Essentially they take the collect volume of thousands of independent pharmacies and negotiate with the wholesalers (McKesson - www.mckesson.com, Cardinal Health - https://www.cardinalhealth.com/ and AmerisourceBergen - https://www.amerisourcebergen.com/) for better pricing. But they have also developed other functions over the years. Most GPOs are member owned non-profits and as such they will distribute rebates, hold the wholesaler accountable and provide other services to their members. Some of these services including consulting, software, other vendor discounts and more.

Hopefully this provides you some insight into a buying groups function. We would encourage you to spendsome time getting know the people at your buying group and the services offered.  Doing so will help your business in many ways - I know it has helped ours!
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Why Financial Reports you get from your Accountant are not Enough for Pharmacy Owners

Why Financial Reports you get from your Accountant are not Enough for Pharmacy Owners
Financial reports show how a business has performed financially.   For example a Profit & Loss statement will show how well the business did in a month or quarter financially.  But it does not tell you what is causing the performance of the business, good or bad.  Only combining the financials with reports from your pharmacy system can tell you this.

To have a comprehensive view you need revenue per prescription, margin per prescription, generic vs. brand mix, new vs. refill, payroll per employee type, top payers, top drugs, etc.  All these numbers can impact revenue, margin, and ultimately profit.  Understanding these will allow you to positively impact them for the success of your business.

The second reason you need more than financials is that from month to month pharmacy financials are not comparable.  The pharmacy business is swayed dramatically by the number of business days in a month and the number of Mondays.  More Mondays and more business days will create increased revenue or increased purchases or both.  As such, if you compare August of one year to August of the next year they will not look the same.  Analyzing metrics from your pharmacy system weekly will give you comparable data allowing you to proactively take any necessary actions.
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