Those of us in the pharmacy industry understand all too well the impact of economic pressures on pharmacy profitability. It’s important to understand the economic and demographic factors outside of our control, because only then can we look at other ways to mitigate costs, ensuring long-term viability.
Trends impacting pharmacy profitability include:
- Demand for prescriptions outpacing pharmacy capacity
- Increasing cost of drugs
- Shortages of pharmacy techs and an anticipated shortage of pharmacists
- Constantly changing regulations
- Rising costs and inflation
Dealing with these issues daily can take our focus away from looking at the future strategically, ensuring not only the ability to increase throughput as demand grows, but to ensure ongoing profitability. Now is the time to be creative, building a sustainable operating model while continuing to provide more access to care for your patients. With so many factors seemingly out of our control, how can we identify ways to control costs while preparing for a future that indicates increased patient demand, and a smaller talent pool? The need for a solution that will relieve these pressures requires action now.
Calculating cost of dispensing
According to a study commissioned by Abt associates, “Overall cost of dispensing a prescription for each pharmacy is calculated as a total cost of prescription department divided by total number of prescriptions.” The total cost of prescription department considers many factors including:
- Department payroll costs
- Prescription containers and labels
- Pharmacist liability insurance
- Department licenses, permits, accreditation and fees
- Dues, subscriptions, and continuing education for staff
- Delivery and mailing expenses
- Computer systems
- Pharmacy equipment
- Facility costs, utilities, and overhead
- Store costs such as marketing and advertising
- Office supplies
- Corporate costs if the pharmacy is part of a group or chain
Analyzing this long list of expenses makes it easy to see why the cost of dispensing a prescription is high, and most of these factors are outside of our control. How then can pharmacies work to control costs?
Understanding the impact of inventory management
One of the factors pharmacies have the greatest control over is inventory, making it critical to understand the cost implications of inventory management. Pharmacies need to look strategically at their inventory costs and understand ways to keep both inventory and its associated costs under control. Addressing inventory waste and shrinkage can significantly lower expenses for pharmacies. Embracing technology can be an effective way to maximize both inventory management and available staffing. Automation and centralization can help to leverage staff more effectively, minimizing the number of expensive prescriptions in your inventory at any given time, optimizing profitability.
Adopting a centralized fulfillment solution is a significant investment, but one that could provide a significant return long-term, addressing many of the issues you are likely currently struggling with:
- Labor shortages
- Inventory management
- Flexibility to increase throughput
- Allowing pharmacists time to practice at the top of their license
- The ability to provide care to your community
At iA, customers find that after implementing a fulfillment solution they are better able to lower their cost to fill, balance growing volumes, and manage labor shortages, setting them up for continued success even as demand continues to increase.
The time to prepare for the future of pharmacy is now. Economic and demographic pressures will continue to impact pharmacy, and those who plan to survive well into the future are thinking strategically and innovatively today. With the right fulfillment solutions in place, pharmacies can position themselves to thrive and support patient care, well into the next decade.
Ready to learn more? Contact us today.