Robin Page has been there and done that. Her experience as a retail pharmacist in the Northeast gives her an instant connection with the independent pharmacies she now works with as a regional franchise director for McKesson’s Health Mart affiliate.

In this edition of Pharmacist to Pharmacist, we spoke to Robin about some of the ways your independent pharmacy can create new sources of revenue, improve cash flow, and get a grip on operating expenses.

What are you responsible for in your role?

Page: Ultimately, I’m responsible for making sure our independent pharmacies are here for another 10 years and that they continue to grow and stay independent. I do that by being a consultant for them and explaining what’s happening in their market. I also make recommendations on how they can adjust to the market, and provide ideas on how to increase sales and changes they can make in their stores. I suggest and show them how to use our Health Mart tools and services that will help them sustain their operations. I spend about 80 percent of my time on the road and meet with over 400 Health Mart pharmacies in the Northeast.

What’s the biggest challenge to independent pharmacy sustainability you hear from your customers?

Page: The biggest challenge right now is cash flow. Many independents are having cash flow problems because of a confluence of factors. One factor is reimbursement rates for prescriptions. Health plans are paying pharmacies less per prescription. That means less money is coming in for the same volume of prescription sales. A second factor is direct and indirect remuneration (DIR) fees. Getting hit with a big fee three months out can take a big bite out of your cash flow. A third factor is waiting for payments from health plans, particularly Medicare Part D plans, for services like medication therapy management or comprehensive medication reviews. Plans may not pay you for months. And despite all this, you still have to pay your bills. It’s making a lot of independent pharmacies sweat.

How can being part of a preferred network affect independent pharmacy cash flow?

Page: A lot of what’s happening to independent pharmacies in terms of cash flow is because they’re part of a health plan’s preferred pharmacy network. You agree to a lower rate per prescription and hope to make it up in volume. That doesn’t always work. A health plan incentivizes its members to use the pharmacies in its network. As a result, you should have more people walking through your front door—but it’s up to you to maximize on that increased access.

How should independent pharmacies maximize on having access to more customers?

Page: I tell our stores that what they do with increased patient access is on them. Independent pharmacies need to find new ways to get additional revenue from each customer who comes in for a prescription. You can sell more over-the-counter products to them by running specials or recommend OTC items. You can suggest nutritional supplements to customers, like recommending a calcium supplement to a woman at risk for osteoporosis. You can offer clinical services like flu vaccines. We’re also seeing more pharmacist-initiated interventions. An example is switching a patient to a cheaper therapeutic equivalent because they couldn’t afford the copay for the original drug. Some health plans pay a separate fee for pharmacist-initiated interventions, but knowing which ones is the key.

How can independent pharmacies identify customers who may need additional services?

Page: The best way is through technology. The information should be in your pharmacy management system (PMS). The system should have each customer’s medication history in it, their disease state and other pertinent information. When that customer comes in to pick up a prescription, your system should generate a message that reminds you or your tech to recommend an additional product or service based on their disease state, the types of drugs you are dispensing or their age. You could do that manually with sticky notes, but it’s much easier to do with your PMS.

How can independent pharmacies reduce their operating expenses to improve their cash flow?

Page: The two biggest operational costs that you can control are labor and inventory. What we see at some independents that are having cash flow problems are total labor costs that are too high and/or too much inventory on their shelves. Their labor costs are too high because they may have inefficient workflows or they are not staffing efficiently. Their on-hand inventory may be too high because of overstocks, both Rx and OTC, that sit on their shelves for weeks and months. With next day delivery, you can easily decrease your on-hand inventory.

What can independent pharmacies do to control their labor costs?

Page: Outside the pharmacy, it’s about deliveries. Are you making three or four separate deliveries to the same customer each week? If so, you may want to start a medication synchronization program. You can enroll that customer in med sync and make a delivery once a week or even once a month. You can also zone your deliveries so that you’re making deliveries to the same neighborhoods at the same time. Inside the pharmacy, it’s about matching your staffing levels to your workload. We often see a couple of techs with little to do at certain times during the day and then see one tech backed up with six customers at other times. It’s not about getting rid of staff. It’s about using them wisely. This means having them there when you need them, and not having them there—or having them take on additional duties—when you don’t.

What can independent pharmacies do to control their inventory costs?

Page: That falls into two buckets. The first is the prescription drugs you have on hand. Med sync and automatic refills can help with that. They’ll tell you three to five days in advance how much you’ll need of which drug for each regular customer. You won’t tie up money with drugs that you won’t dispense for weeks. The second is OTC items. You need to pull data from your computer or point of sale system to know how much of each product is actually selling. If it doesn’t sell for 90 days, reduce the amount you stock and put it at the front of the store. If it only sells during one quarter, don’t carry it all year long.

Are there other benefits to controlling labor and inventory costs?

Page: In my experience, the other big benefit is patient safety. Mistakes happen when things get hectic behind the pharmacy counter. When you improve workflow through proper scheduling and training, you reduce the opportunities for medication errors. The same is true with inventory. If you’re doing it right, you’re only keeping the drugs you need on hand in the right doses and right amounts without them going outdated. That reduces the chances that you’ll dispense the wrong drug, or the right drug in the wrong dose, or take losses due to too many outdated products.

What trends should independent pharmacies watch and stay on top of?

Page: The one trend that I think is critical right now is the transition of pharmacists into providers. Many pharmacists are doing more for patients now, but there’s so much more we can do. We need to push for provider status so we can provide additional services and bill health plans for our services. With fewer independent doctors around, we know the need is there.

Related: Learn more about McKesson’s growth and expansion services for independent pharmacies

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McKesson editorial staff is committed to sharing innovative approaches and insights so our customers can get the most out of their business solutions and identify areas for operational improvement and revenue growth.

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