Managing a pharmacy is an important part of almost every pharmacy owner’s responsibilities. The day-to-day management of just the pharmacy’s personnel, inventory, customers, vendors and store maintenance issues always seem to take up a majority of an owner’s day… and the list sometimes seems endless. Then add in such critical functions as ensuring that your pharmacy’s policy and procedure manual is kept up to date, that your drugstore is ready for any compliance or regulatory audits or inspections, that your employees are properly trained, and it sometimes seems that an owner never has the time to spend on what is perhaps the most important thing he or she needs to do: how to make sure that your drugstore is profitable. Plus spending the time on making your business even more profitable!
With the diminishing number of independent local community pharmacies operating throughout the United States, it’s sad to see over a ten percent reduction in the total over the past two decades. According to data supplied by NCPA (National Community Pharmacists Association), nearly 22,000 independent pharmacies are currently in business in the US. This represents a 12% decline since 2001, when the association reported that there were over 25,000 independent pharmacy businesses in operation nationally. Perhaps better management of those pharmacies that have been closed or shut down over the past seventeen years could have resulted in more profitable businesses and less pharmacies closing across the nation.
The Challenge of Managing a Pharmacy
Most independent pharmacy owners that were surveyed recently about the challenges they faced in managing their businesses cited two major areas of concern that they found challenging:
– Lack of time and resources
– Lack of business and management training
As discussed in the opening paragraph, most pharmacy owners simply don’t have the time to spend on what’s perhaps the really most important issues that face any business owner in any type of industry: increasing both efficiency and profitability. Delegating was often times mentioned as one possible solution, but this also had its drawbacks. Delegating was seen as “hiring additional staff” and this additional drain on the pharmacy’s limited resources often times offset any capital gains that resulted. Additionally, many pointed out that there simply was no objectivity from their internal staff. There was a “fear” that no one internally could look at the pharmacy’s operation and evaluate the business with the impartiality and detachment required to properly make unbiased recommendations and adjustments.
The second major area of concern that drugstore owners saw as challenging was the lack of both business and management training that they actually had. Very few had actually taken any courses in business or management since graduating from college. And how many pharmacy students have actually received this type of training while in school? Although many colleges and universities have now added business training into their curriculum, the fact remains that earning your diploma to graduate and pass the Board exam is the primary focus for most students. Most owners agreed that they had to learn the business side of owning and operating a pharmacy “on the fly” and made business mistakes that could have been avoided with more training.
How To Get Business and Management Help
Most large corporations and companies actually have entire departments dedicated to managing, monitoring and evaluating their business operations. Most small and medium sized pharmacy businesses simply cannot afford hiring full-time employees to perform these critical tasks, nor can they afford to train their existing staff to objectively carry out these essential business roles. Many owners are finding that outsourcing to an experienced and qualified pharmacy consulting company best suits their needs for strategic planning and management. They find that outsourcing can be the most practical and economically feasible way to achieve large company effectiveness without the large company price tag.
Suggestions to Make a Pharmacy Profitable
Here are just a few examples of areas that most pharmacy owners tend to overlook, yet can result in increased operating efficiency, cost reductions and enhanced profitability.
Quarterly Business Reviews
Pharmacies should conduct quarterly business reviews to accurately assess their strategic position, direction and practices, and to ensure they continue to align with market shifts, competition, profitability and regulatory compliance. To be objective, perhaps the pharmacy owner should consider including a qualified third party who is able to provide an in-depth analyses and report on the actual state of the business. One who is able to evaluate the operation objectively in regards to the efficiency and opportunities that exist to gain a larger market share. This information can be invaluable in helping managers make the right decisions at exactly the right times to ensure your business always runs as efficiently and effectively as possible.
Cost Containment Strategies
Pharmacy owners can also benefit from an expert consultant on cost containment strategies. When cash flow is an issue, an owner really only has two choices: increase sales and volume, or reduce costs. Increasing sales is obviously an objective that every owner wants, but for immediate results cost containment is the fastest way to increase profits. Yet many managers simply don’t see some of the “hidden” costs that can be addressed immediately. An in-depth analysis of where the money goes can also sometimes reveal “hidden” costs that can be either reduced or eliminated.
Industry Niche Identification
Industry niche identification is also a great way to generate more revenue and be more profitable. Are there certain areas and services that the pharmacy can quickly ramp up and take advantage of? A great example is the sudden explosion of IV infusion therapy pharmacies that we discussed in detail in our previous blog post. The projected increase to approximately $28 billion dollars by 2021, plus the estimate that the market would expand by a compound annual growth rate (CAGR) of over ten percent by 2022, makes IV infusion and compounding a lucrative idea to consider.
Technology evaluation has also become a critical area of pharmacy operations that many need outside help on. After all, keeping up with all the new medications coming onto the market and the ever changing regulatory and compliance requirements keeps every pharmacist pretty busy. Although pharmacists have always been considered “early adapters” when it comes to embracing new technologies, everyone can agree that the pace at which technology changes makes keeping up with the latest software, hardware and systems an almost impossible task. Why not rely on a technology expert to evaluate what you currently have and advise you regarding what’s coming or available? Perhaps new technology exists that offers a cost reduction, increases efficiency and leads to greater profits.
Healthcare Consultants has been the nationally renowned pharmacy consulting firm of choice for over 28 years now. Contact us today to see how our Pharmacy Consulting services can help you improve your business right now, plus be ready for the future. With a full-time staff of in-house Pharmacy Consultants and specialists, HCC can answer any questions that you may have in all areas of your business. Just a few of the services that we offer include:
– Business planning
– Business problem resolution and turnaround
– Cost containment & financial projection analysis
– Management consultation & operations evaluation
– Policy & Procedure review
– Process design and evaluation
– Quality control and improvement
– Regulatory compliance and Gap analysis
– Workflow management
Contact us online or call us today at 800-642-1652 for a free consultation.