Blog

Blog

Mar 30 2019

Pharmacists Find New Revenue – and Patient Goodwill – through Added Services

Let’s start with the good news.  Pharmacists continue to be among the most trusted professions, with 2018Gallup findings reporting only nurses and medical doctors received higher marks for “honesty and ethical standards.”  And 2017 research by CVS Health found almost two-thirds of patients think of their local pharmacist as part of their health care team. And 2017 research by CVSHealth found almost two-thirds of patients think of their local pharmacist as part of their health care team.

But for pharmacists, here’s some not so good news:  

  • The 2018 National Community Pharmacists Association Digest (NCPA), produced annually by Cardinal Health, found prescription volume decreased by more than 600 prescriptions during 2017.  This is especially significant since, according to an analysis by Drug Channels Institute, a typical independent pharmacy generates 90 percent of its revenue from prescription drug sales.
  • Pharmacy profit margins continue to decline.  Analysis of the NCPA data by Drug Channels Institute found that independent pharmacies’ overall gross margin from prescription and non-prescription products was 21.8 percent during 2017, down from its peak of 24.0 percent during 2010. 
  • Prescription profit margins are also declining.  The Drug Channel Institute analysis found that gross profit per prescription dispensed fell from $12.82 during 2013, to $11.53 in 2017.
  • Direct remuneration fees, cited by NCPA as the top concern of pharmacy managers, continues to take a toll on pharmacies’ bottom lines.  According to the Drug Channel Institute, DIR fees amounted to an astonishing $63,000 per pharmacy during 2017, which is about 8 percent of a pharmacy’s total gross profit.  Not only do DIR fees take a big chunk from a pharmacy’s bottom line, but the uncertainty surrounding DIR fees is a top concern.  The NCPA found almost 80 percent of pharmacists said DIR fees, which are assessed retroactively, reduce the predictability of cash flow, while almost 85 percent said they never know what their final reimbursement will be at the point of sale.

Smart pharmacy managers though are getting ahead of these less-than-positive economic indicators and finding ways to expand offerings, thereby attracting new revenue sources.  And in the process, pharmacists are finding strong demand – and appreciation – among their patients.

A sure way for a pharmacy to improve profitability is, well, to sell more prescriptions.  With an estimated 30-50 percent of patients not taking their medications as prescribed – meaning many prescriptions regularly go unfilled – a pharmacy can help improve patient outcomes and its bottom line through patient adherence initiatives.

This can be as easy as using your pharmacy technology system to identify non-adherent patients and send out text or email reminders to advise when a refill is due, or past due.  Or, for patients that take multiple medications, but have staggered renewal dates, a medication synchronization program can combine all pick-ups into one monthly visit.    

Immunization clinics have become very popular with patients, with pharmacists in all 50 states now authorized to administer vaccinations.  According to AJMC, “more pharmacies than ever” offer vaccination services, with 2017 Centers for Disease Control data reporting that among adults who received flu shots, more than 28 percent were inoculated at a pharmacy.  This marks an uptick from 2016 when 24 percent of vaccinated adults received their flu shot at a pharmacy.   

Pharmacy vaccine services not only provide a great service to patients but drive traffic into the pharmacy, thus improving the likelihood of patients purchasing non-prescription merchandise while in the store.

Chronic Disease Management is another value-added service for patients.  Patients with chronic conditions such as diabetes or asthma often have a minimal understanding of the underlying facts surrounding their condition, and about options to manage or even improve their prognosis.  By working one-on-one with patients to help them understand their condition, pharmacists can identify comprehensive treatment plans that will presumably improve medication adherence.  This, in turn, could lead to sales of additional materials including supplements and medical equipment such as home-monitoring kits.

Prevention and Wellness Education.  A 2017 employee benefits report prepared by the Society for Human Resource Management found a growing number of employers are offering a variety of wellness programs to workers.  Among the most popular initiatives:  Smoking cessation programs, health fairs, weight loss programs, and nutritional counseling. 

Forward-looking pharmacies can support these initiatives with in-store product offerings that might include selections of vitamins and supplements and associated products.  Smoking cessation products, for example, generated $800 million in sales during 2013, according to PBA Health. 

These are just a few of the clinical services increasingly found in pharmacies. In many instances, implementing these services can be a fairly simple process and will require minimal investment of resources.  This is largely because most technology systems allow pharmacists to easily identify patients in need of services, and track progress and outcomes.  In other words, a pharmacy may already have the tools it needs to support its expansion into clinical services.

instagram

SIGN UP FOR NEWSLETTER!