Elements Magazine Vol.10 Iss.1 March 2021

E

ELEMENTS FROM RED TO BLACK Where to cut costs when you have no other choice

READY FOR ROLLOUT The Covid-19 vaccine boosts this pharmacy’s patient base and its profits

5 Lucrative Ways to Monetize Your Pharmacy VOL. 10 ISS. 1 | MARCH 2021 | PBAHEALTH.COM/ELEMENTS

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CONTENTS ON THE COVER

18 FEATURE

| 5 Lucrative Ways to Monetize Your Pharmacy

harmacy owners share their most profitable P revenue streams

DEPARTMENTS

06 NEWS

| A Shot for Techs

new training program qualifies technicians to administer A Covid-19 vaccines in a single day

08 TRENDS FEATURE | 5 Lucrative Ways to Monetize Your Pharmacy

22

| What to Expect When You're Inspected

How to pass any surprise pharmacy inspection with flying colors

12 RETAIL

| Supplement Your Sales

he supplement market is thriving. Is your pharmacy T taking advantage?

16 SOLUTIONS

24

26

ap into loyalty for bigger profits, happier employees, and T faster growth

SPOTLIGHT | Ready for Rollout he Covid-19 vaccine boosts this pharmacy’s patient base T and its profits

MONEY | From Red to Black Where to cut costs when you have no other choice

30 OUTLOOK

| From Patient to Promoter

| Flip the Pharmacy

How to transform pharmacies into patient care centers

ELEMENTS | The business magazine for independent pharmacy | MARCH 2021

RETAIL | Supplement Your Sales

3

E

ON THE WEB

ELEMENTS

The business magazine for indpendent pharmacy

VOLUME 10, ISSUE 1

Find more strategies, tips, and expert advice to improve your business.

MARCH 2021 PUBLISHER & EDITORIAL DIRECTOR Matthew Shamet EDITOR Greyson Honaker SR. ART DIRECTOR Brenda Reagan

How to Lose Your Best Employees Keeping employees around for a long time benefits your bottom line and the long-term viability of your pharmacy business.

CONTRIBUTING WRITER Erin E. Rand

INTERESTED IN ADVERTISING? elements@pbahealth.com

Independent Pharmacy Key Performance Indicators These are the most critical formulas to measure the success of your business. Learn how to use them to improve performance and profitability.

Can You Require Employees to Get a Covid-19 Vaccine?

Now that Covid-19 vaccines are rolling out, here’s what you need to know about requiring employee vaccination.

Follow Elements magazine on Facebook, Twitter and Elements magazine is published quarterly by PBA Health.

Copyright© 2021 PBA Health. All rights reserved.

Neither this publication nor any part of it may be reproduced without written permission by PBA Health.

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ELEMENTS | The business magazine for independent pharmacy | MARCH 2021

5

NEWS

A SHOT FOR TECHS A new training program qualifies technicians to administer Covid-19 vaccines in a single day

O

nce the coronavirus pandemic landed in the United States

and forced the country into lockdown, many people stopped

This option allows the pharmacy to train as many technicians as it

going to their physician and neglected routine preventive healthcare

Another unique feature is the option to purchase a ″site license.″

wants within the calendar year. This would be ideal for a pharmacy

like getting immunizations. This gap in preventive care motivated

with a large staff, but would also benefit any pharmacy that expects to

the Department of Health and Human Services (HHS) to authorize

offer the vaccine for the rest of the year. ″In the technician world, you

state-licensed pharmacists and interns to administer childhood and

have some turnover,″ Potter said. ″So the pharmacy is paying to get

Covid-19 vaccines in August and September. A month later, looking

that technician certified and then they leave. Through this site license

at the vast challenge of rapidly inoculating more than 300 million

model, a pharmacy can certify and train all their technicians if they

Americans, the agency released another guidance authorizing

wanted to.″ A site license costs $399 while an individual costs $149.

pharmacy technicians to administer Covid-19 and childhood vaccines.

The authorization came with some requirements, one of them

being a practical ACPE-approved training program. To help technicians

7 TRAINING MODULES

fulfill this requirement, PRS Pharmacy Services, a consulting firm that specializes in helping pharmacy owners, has partnered with the

The National Pharmacy Technician Association’s vaccination training program takes technicians through six online modules, plus a hands-on skills assessment in person. The modules cover the following topics:

National Pharmacy Technician Association (NPTA) to offer a program designed to rapidly train pharmacy technicians to administer these vaccines. This new program was developed by NPTA under the guidance of HHS.

1. Vaccine-preventable diseases

According to the NPTA, the ″Immunization Administration

2. What is a pharmacy-based immunization service?

Training Program is by far the most affordable, accessible and

3. Storage and handling

scalable program of its kind. The program has been designed to train

4. Vaccine administration

hundreds of thousands of technicians within weeks, enabling the

5. Vaccine safety

rapid deployment of vaccines to the public.″

6. Increasing the awareness of the immunization service

ALL IN A DAY’S WORK

7. Hands-on training and skills assessment

With this program, technicians can become qualified to administer vaccines in a single day. The training is online and on-demand, and it takes about seven hours to complete. The program consists of seven modules, culminating in a hands-on training and skills assessment, which is another requirement from HHS. The pharmacist performs the hands-on training right there at the pharmacy, and if they need guidance for that, they’ll receive it from the program. ″One of the things the NPTA is doing is making sure the pharmacists are capable of doing that,″ said Josh Potter, director of compliance for PRS Pharmacy Services. ″They are basically training the pharmacist on how to do this hands-on skills assessment of the pharmacy technicians.″

The on-demand aspect of the training, especially for the

hands-on portion, sets this program apart from others, Potter said.

NPTA’s training can be done entirely at the pace preferred by the technician and pharmacist. With other programs, the technician might have to sign up for a Zoom training on a particular day, and if other technicians need training, they may have to wait until the next scheduled meeting, which could be as much as a month away.

STATE QUALIFICATIONS To be considered a ″qualified pharmacy technician,″ the HHS guidance says: ″Pharmacy technicians working in states with licensure and/ or registration requirements must be licensed and/or registered in accordance with state requirements; pharmacy technicians working in states without licensure and/or registration requirements must have a Certified Pharmacy Technician (CPhT) certification from either the Pharmacy Technician Certification Board or National Healthcareer Association.″ This additional requirement makes things more difficult for technicians in certain states and is something to keep in mind, Potter said.

Although this expansion of the technician’s role will help with

Covid-19 vaccine uptake, Potter sees it as part of the larger trajectory of the pharmacy industry. ″We’ve seen more pharmacies starting to get into the clinical aspect of pharmacy and the administration of drugs and vaccines,″ he said. ″It’s something that’s the logical next step,

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ELEMENTS | The business magazine for independent pharmacy | MARCH 2021

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TRENDS

WHAT TO EXPECT WHEN YOU’RE INSPECTED How to pass any surprise pharmacy inspection with flying colors

W

hen someone walks through your pharmacy door and

disaster recovery plans, and your privacy practices. Based on your

says they are there to conduct an inspection, a hundred

staff’s answers, they may decide they need to stay and assess the

questions might fly through your head. Where are they from? What

pharmacy more thoroughly.

are they going to look for? And where did I put those OIG exclusion

verifications?

verify you’re meeting federal requirements around Medicare Part D

and will verify that you are maintaining OIG exclusion verifications.

Pharmacies have to abide by so many rules from so many

And then there is the notorious PBM auditor. They will check to

different organizations, the thought of getting inspected is enough

They will check your licenses and audit your prescription files.

to make a pharmacist’s palms sweat. Jeff Hedges, president and

Although some PBM audits are done online, other times auditors

CEO of R.J. Hedges & Associates, knows just how hard it is to stay on

will just show up.

top of every regulation and rule from every organization that might

conduct an inspection. ″There was hardly anything going on from

accreditation survey, which will feel similar to inspections. ″The

If your pharmacy is accredited, you will also be subject to an

a regulatory point of view when we started in 2006,″ he said. ″Now

difference is that you are paying the accreditation body for the

everything from the time pharmacies open their door to the time

surveyor to come in, and their primary requirement is to make

they close is regulated by someone.″

sure you are doing everything correctly, and then you can make

corrections to receive your accreditations,″ Hedges said.

But an inspector’s arrival doesn’t mean you should bring your

pharmacy up to DEFCON 1. If you spend a little time preparing, you’ll know exactly what to expect and an inspection will be a non-event.

WHAT TO EXPECT The most challenging part of inspections is the number of different inspecting bodies that are all checking for different things. Among them are the Drug Enforcement Administration (DEA), the Centers for Medicare and Medicaid Services (CMS), the Office of Civil Rights, PBMs, and the state boards of pharmacy.

″The most common inspection is the state board of pharmacy

inspection,″ Hedges said. Every year, the state board of pharmacy inspector will verify that your licenses are current and posted. They will also check security measures to make sure patients can’t access anything behind the counter or see what’s on computer monitors.

The DEA is another common inspector. They typically look

for criminal background checks on staff members who handle controlled substances and check for DEA Form 222s. The challenge with the DEA, Hedges points out, is the requirement for paper copies. ″Pharmacies still have to maintain paper copies and initial each line item, then date them with the quantity received and attach it to the wholesaler receipt,″ he explained.

To make sure you are meeting HIPAA compliance

requirements, the Office of Civil Rights may come to inspect your pharmacy. They will ask your staff about your risk management plans, your risk analysis, your contingency or

8

WHO’S AFRAID OF THE BIG BAD INSPECTOR? Whether it’s a scheduled visit or a surprise pop-in, inspections are nerve-wracking. But if you get to know who the inspectors are and what they expect when they visit, the experience can be a breeze. Here are some of the inspecting bodies that could visit your pharmacy: State boards of pharmacy Centers for Medicare and Medicaid Services Drug Enforcement Administration Office of Civil Rights PBMs

pbahealth.com/elements

Accreditation organizations

BE READY To prepare for a pharmacy inspection, Hedges recommends starting with your policies and procedures. ″You go back 10 or 15 years, and most people had simple standard operating procedures

WHAT POLICIES DO I NEED?

written out on a piece of paper and it was not a big deal,″ he said. ″Now it’s a bigger deal. Especially on the federal side, you don’t get

When PBMs began auditing pharmacies, one item they required was comprehensive documentation of policies and procedures. Now, other regulatory bodies will check for that documentation, too. Below are some items you should include in your pharmacy’s policies and procedures:

dinged because you violated a rule, you get dinged because you didn’t follow your policies and procedures.″

Because following procedures is of the utmost importance,

training your staff so they all know the processes in place is crucial.

Hedges recommends spacing out the training sessions. ″If you do everything at one time, everybody glazes over after about two sessions and it becomes a requirement that you have to suffer through,″ he said. ″If you schedule them throughout the year, you’re constantly being reminded of all these compliance rules.

Plus, your training is a lot shorter and doesn’t disrupt pharmacy operations.″

After that, the biggest challenge is simply knowing what the

• Medication errors

• Inventory

• Recall procedures

• Patient counseling

• Partial refills

• Misfills and expiration

• Return to stock

• Brand and generic pricing

• H IPAA privacy and security

• Patient demographics

• H IPAA business associate agreements

rules are that you need to follow. ″Every day, something changes,″

• Allergies • And more

Hedges said. ″You have to have the time to understand what’s happening and how to comply with it. Sometimes it’s very simple and other times it’s very complicated.″

If that sounds impossible, it is a task that can be outsourced.

For example, R.J. Hedges & Associates writes all the policies and procedures for their clients, provides training to their staff, and stays on top of all current requirements. When an inspector walks in with their checklist, the pharmacy has the exact same checklist and will know exactly what the inspector is going to ask of them.

STAY CALM, CARRY ON

When the inspector shows up at your pharmacy, no matter what

Another critical part of being prepared is staying on top of your

documentation. When the pharmacy gets busy, keeping up with

agency or regulatory body they are from, Hedges gives the same

manual copies and making sure everything is up to date can fall by

advice: don’t panic.

the wayside, but that can come back to bite you. ″A good example

is the OIG exclusion verification,″ Hedges said. ″PBMs will pick a

before you speak. ″Listen to the questions being asked and provide

month and say, ‘I want to see your OIG exclusion verifications for

exactly what is being asked for,″ he said. ″Don’t give the inspector

This goes hand in hand with his second piece of advice: listen

March 2019,’ and you have to produce it!″

too much information, because that can open up Pandora’s box.″

He points out that some agencies use contractors to complete their

One mistake to avoid is relying on other pharmacists to give

you accurate information on what is important. ″I talk to a lot

inspections, and these contractors aren’t necessarily experts in

of pharmacies, and they will be told by another colleague that

how a pharmacy should be run. They rely on a checklist to tell them

you don’t need to do this or you don’t need to worry about that,″

what they should look for, so by talking too much and giving out

Hedges said. ″It’s easy to follow why, but a lot of times people have

too much information, you may raise a red flag that would have

old rules or they interpret them incorrectly.″

otherwise gone unseen.

Hedges added, ″When the inspector is there, you don’t want to

be in the back room calling a colleague and saying, ‘I don’t have this policy thing? Can you fax it over?’ It’s not a good thing to do.″

If you have your documentation ready and your staff members

are well-trained, an inspection doesn’t have to be a painful experience, Hedges said. ″For example, when the Office of Civil Rights comes in for a HIPAA inspection, they ask for four things. If your clerk is able to answer the questions and provide all of that, the inspector is going to look at it, say, ‘Great job, thank you very much,’ and walk out the door.″

On the other hand, if your clerk fumbles and has to ask

the manager about whether the pharmacy has the requested documents, the inspector could decide to spend all day with you, giving them more opportunities to catch errors and violations.

ELEMENTS | The business magazine for independent pharmacy | MARCH 2021

9

CONSEQUENCES OF CITATIONS After an inspection, if things have gone smoothly, you can go

other PBMs—so everybody is coming to pull back their money

back to your usual work. But if you receive a citation or deficiency,

because you’re in violation,″ Hedges said.

Hedges said, ″You have to remedy that action immediately.″ Just

like the inspection itself, the consequences for falling short depend

action quickly, because failing to respond can create even more

on which party is doing the inspection.

consequences. ″If you don’t respond to CMS when they request

If you’re given instructions to correct something, take

″You may get a deficiency letter from an inspector and have X

documentation, they can revoke your PTAN number,″ Hedges

number of days or hours to respond,″ Hedges said. ″For CMS, you

explained. ″Now, that’s for a 10-year period, so the pharmacy

have 48 hours if you miss anything. Depending on the deficiency,

owner can’t open up another pharmacy or DME during that 10-year

state boards may come back in 30 days to verify it’s been corrected.″

revocation period, or read a PTAN. Future PTANs are blocked by

CMS during this period.″

But it’s not always as simple as demonstrating you’ve fixed the

problem. If you miss something on a DEA inspection, you will find

yourself facing a fine of $14,000 per line item. And PBMs have a lot

mistakes. Get your documentation organized so it’s easily

of power to wreak havoc on your pharmacy if you fail to meet their

accessible the next time an inspector pops in. Conduct training with

The most important thing you can do is learn from your

expectations in an audit. One measure they might take is to cancel

your staff to make sure they know where things went wrong. And

your contract, eliminating your access to patients. If they come

set expectations for what they need to know and how they should

in and ask for a certain month’s OIG exclusion verification that

behave during future inspections.

you can’t produce, they can stop all reimbursement for Medicare,

Medicaid, and Tricare. ″Then they notify everybody else—all the

inspections with flying colors, the best defense is a good offense.

10

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RETAIL

SUPPLEMENT YOUR SALES The supplement market is thriving. Is your pharmacy taking advantage?

UNIVERSAL APPEAL So, who is buying supplements? In short, almost everyone.

According to the Council for Responsible Nutrition (CRN) 2019 Consumer Survey on Dietary Supplements, 77 percent of all adults take dietary supplements.

While pharmacy clientele tends to skew older, supplements

provide an opportunity to reach a younger group of patients.

CRN reports 70 percent of adults ages 18 to 34 take dietary supplements, which means promoting your supplement products can bring them into your pharmacy. ″I think there’s a bigger push for health and wellness these days, and millennials care a lot about their health,″ said Leach. ″Everybody uses them, but the younger generations are on a healthier kick than other generations.″ To appeal to this younger crowd, make sure to stock supplements in gummy, powder, liquid, and soft-chew forms, which CRN says the 18-to-34 crowd prefers.

Overall, adults who take supplements cited general health and

wellness as the top reason they include them in their healthcare routine. Other top reasons include energy, immunity, heart health, healthy aging, and filling nutrient gaps. Many patients start taking supplements on a doctor’s recommendation. Because certain drugs deplete certain nutrients in the body, doctors may follow up their prescription with a recommendation for a specific supplement to offset that depletion.

The Covid-19 pandemic has also caused an uptick in

supplement sales as patients become more concerned about their immunity in the face of a deadly virus. ″There was a lot of stockpiling that took place in March 2020, so we saw sales drop in April and May,″ said Leach. ″Since then, it has come back, and sales have been better than they were prior to Covid.″ Supplements such as vitamin C, vitamin D, zinc, and electrolyte powder increased in

I

n the last year, the supplement market netted $9 billion in sales, with a total of 828.8 million units sold, according to data from

Information Resources, Inc (IRI). If your pharmacy doesn’t have a comprehensive supplement section, you’re missing out on a piece

of that $9-billion pie.

″I believe that right now, people are thinking more about their

general health and immune support,″ said Kim Leach, national account manager for Quality Choice, a private label that includes a comprehensive line of supplements. Patients’ new concerns about health and immunity mean that even in an uncertain economy, supplement sales continue to thrive.

12

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demand because of the pandemic.

For those who aren’t yet taking dietary supplements, 49

percent told CRN they would consider adding them to their health routine if they were recommended by a doctor, and 15 percent said they would consider adding them if another healthcare professional—like a pharmacist—recommended them.

WHAT’S HOT Pharmacies have limited shelf space, and the supplement market is vast. To get the most out of a supplement section, pharmacies have to research what kind of supplements consumers want right now.

SUPPLEMENTS STATISTICS This market is the biggest it’s ever been, with a majority of all adults in the United States taking some sort of supplement. Get to know the patients who can’t get enough of supplements.

• 77% of U.S. adults take dietary supplements • 30% say they take supplements for overall health and wellness • 58% take a multivitamin • 54% talked to their doctor about adding supplements

prefer 60-count, 90-count, or 150-count multivitamin bottles— these three sizes account for 30 percent of all dollar sales. For liquid vitamins, powder forms lead the pack, capturing 63 percent of all dollar sales, driven by Emergen-C.

• Patients ages 35 to 54 are most likely to take dietary supplements

WHAT SHOULD YOU STOCK? Kim Leach, national account manager for private label Quality Choice, recommends divvying up your shelf space based on sales ratios for the various supplement categories and by popularity of the various formulations.

Here’s a breakdown of the data based on Information Resources, Inc (IRI).

• S upplement users are more likely to practice healthy habits like exercising, eating a balanced diet, and visiting the doctor

Categories 40% Minerals 25% Multivitamins 25% Letter vitamins 10% Liquid vitamins

Source: CRN 2019 Consumer Survey on Dietary Supplements

Mineral forms 1. Capsules 2. Tablets 3. Liquid soft gels

Mineral supplements are the hottest segment at the moment. ″If you are a pharmacist and you want to set up a supplement section, about 40 percent should be focused on minerals, based on sales

Multivitamin forms 1. Gummies 2. Tablets 3. Liquid soft gels Liquid vitamin forms 1. Powders/packets/sticks 2. Liquid 3. Drops

Letter vitamin forms 1. Tablets 2. Liquid soft gels 3. Gummies

ratios,″ Leach said. This part of the market includes products such as elderberry and zinc supplements for immunity, herbal supplements for brain health, and probiotics. Over the last 5 years, national brands have seen a 5.6 percent uptick in unit sales for mineral supplements, while private label products have seen an 8.6 percent increase.

Other categories on the supplement shelves include

MARKETING MINERALS

multivitamins, with national brand products like Airborne, Olly,

″The most popular way to promote supplements within the store

and those classic Flintstones vitamins. Letter vitamins are exactly

and get the greatest lift in sales are BOGOs, which is a ‘buy one, get

what they sound like: Vitamin B12, Vitamin C, Vitamin D, all the

one free’ or ‘buy one, get one 50 percent off’ promotion,″ Leach

way down the alphabet. Liquid vitamins make up the rest of the

said. And of those two choices, the "buy one, get one free" will

category, which includes products like syrups, drops, and powders

return the best sales results.

you mix into your drink.

make sure they have visibility within the store. ″For example, set

If you’re not sure which supplements to stock, Leach

Another important way to promote your supplements is to

recommends referencing data from IRI, which can show you the

up a ‘Pharmacist Recommended’ table along with point-of-sale

top-selling products in every sub-category. You can also reach out

brochures. Place informational charts and signage indicating the

to your supplier for guidance. Leach provides a category review

SRP for the vitamins being featured,″ Leach said.

to Quality Choice customers, for example. ″I can review your

Setting up your supplements so patients can find what’s needed

SKU assortment and internal sales data if available and provide

on the shelves is important, too. If you aren’t sure how to organize

recommendations regarding any opportunity gaps or suggestions

everything, a planogram can help. Detailed planograms show you

for items to discontinue for underperforming SKUs,″ she said.

how to merchandise products and make the shopping experience

and decision-making easy for the consumer.

In addition to deciding on categories, you also need to consider

which forms to stock. For mineral supplements and letter vitamins,

tablets and caplets are the most popular forms, according to IRI

vitamin department and the private label brand is merchandised

data. For multivitamins, gummies are more popular. Consumers

to the right of the national brand. The set flows into brand blocks.

Typically, national brands are anchored on one end of the

ELEMENTS | The business magazine for independent pharmacy | MARCH 2021

13

Leach points out that supplements provide an avenue to promote

green, vitamin B is blue, vitamin C is orange, and so on. There is

your private label products, as private labels captured nearly 25

also signage that helps patients tell the difference between the

percent of dollar share and around a third of the unit share in

national brands and private label equivalents, so they can choose

the supplement market last year, according to IRI data. ″Within

the right private label alternative. Materials like bag stuffers will

your private label brand block, you could place ‘Satisfaction

also do some heavy lifting to educate patients on their options.

Guaranteed,’ ‘Pharmacist Recommended,’ or ‘Everyday Savings’

″Quality Choice provides all these marketing pieces free of charge,″

signage,″ she suggested.

Leach added.

Proper signage—like shelf-talkers, aisle blades, and even

brochures—is an important part of marketing. Signage can also

In addition to in-store marketing materials, your one-on-

one counseling sessions are a unique opportunity both to build

educate your patients on what they’re looking at. If a patient

relationships with your patients and promote your supplements.

has never taken supplements before, they might walk into your

supplement aisle, find the plethora of options overwhelming, and

allergies, and other conditions may experience nutrient depletion.

leave without buying anything. In-store marketing materials can

When dispensing those medications, you can point out potential

help prevent that.

nutrient deficiencies to patients and educate them on which

For their products, Quality Choice offers a laminated, color-

Many patients on medications for diabetes, high cholesterol,

products can help combat the problem. ″You can say, ‘If you’re

coded chart, which can hang from the shelf within the vitamin

on these drugs, this is what you need to take to replenish your

set to help patients find what they need. Herbal supplements are

system,’″ Leach said.

ARE YOUR PATIENTS NUTRIENT-DEPLETED? Patients on certain medications may be more likely to

supplements they should add to their health regime based

suffer from vitamin and mineral deficiency, providing you

on their medications.

with an opportunity to point more people toward your supplement section.

Use this information to market your supplement section, and keep these recommendations in mind when you chat

Quality Choice provides materials such as a vitamin

with patients about their medications.

depletion chart so patients can find out what vitamins and

Medication Categories

Medication Names

Potential Nutrient Needs

Antibiotics

Augmentin, Keflex, Amoxil, Zithromax, Biaxin, Rocephin

B-Complex, Calcium, Vitamin K

Anti-Inflammatory

Naprosyn, Anaprox, Celebrex, Indocin, Aspirin

Calcium, Folic Acid, Vitamin C, Zinc

Anti-Seizure

Dilantin, Tegretol, Lyrica

Biotin, Folic Acid, Vitamin D, Vitamin K

Hypertension

Accupril, Lysinapril, Norvasc, Cozaar, Hyzaar, Prinivil, Prinzide, Univasc

Co-Enzyme Q10, Magnesium, Vitamin B6, Zinc

Cholesterol

Zocor, Lipitor, Pracachol, Mevacor, Crestor

Co-Enzyme Q10

Diabetes

Glucophage, Humulin, Avandia, Glucovance, Humalog

Co-Enzyme Q10, Folic Acid, Vitamin B12

Antacids & Ulcers

Prilosec, Aciphex, Tagamet, Nexium, Pepcid

Calcium, Potassium, Vitamin B12, Zinc

Oral Contraception

Minastric, Desogen, Depo-Provera, Tri-Sprintec, Ortho Novem, Alesse, Necon

Folic Acid, Magnesium, Vitamin B6, Vitamin B12, Zinc

Allergy

Allegra, Claritin, Zyrtec

Calcium, Folic Acid, Magnesium, Potassium, Selenium

Source: Quality Choice

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SOLUTIONS

FROM PATIENT TO PROMOTER Tap into loyalty for bigger profits, happier employees, and faster growth

M

etrics like net worth, gross profit, and prescriptions per day

signal they are probably doing something right, but you get a lot

are all important to track, but when it comes to fostering

of false positives,″ he explained. ″Especially in retail, if your store is

long-term growth for your independent pharmacy, one factor

the closest, people are going to tend to go there because you have

outweighs them all: customer loyalty.

a little monopoly on that real estate.″

Frederick Reichheld, a Bain Fellow at Bain & Company whose

But how do you know the difference between retention and

recent book on loyalty was the New York Times bestseller The

loyalty? And how do you measure something as abstract as loyalty?

Ultimate Question 2.0, has spent the last 25 years researching why

You could keep track of individuals, noting how frequently they

customer loyalty is so important, and how companies can earn it.

come in, how much they buy, or how many people they refer. But

″I recognized many years ago in my work at Bain that the

companies that earned the loyalty of their customers were growing

collecting information about those trends can be time- and laborintensive. In his time at Bain, Reichheld developed a simple metric

faster, were more profitable, their employees liked working there

to measure customer loyalty: the Net Promoter Score.

more, and in general, they were winning their competitive battles

″Net Promoter has grown to become the predominant system

in ways that would far exceed what you would expect from all the

in business today,″ Reichheld said. ″Fortune had an article earlier

other classic business strategy perspectives,″ Reichheld said.

this year that concluded that two-thirds or more of the Fortune

1000 used Net Promoter as their primary customer success statistic.

Reichheld points out Enterprise Rent-A-Car. ″When I asked

the founder what the magic was, he pointed out there’s only one

And I see this expanding into small and medium businesses and

way you grow a sustainable business: you treat your customers

non-profits.″

so that they come back for more and they bring their friends. It’s that simple,″ he said. That philosophy allowed Enterprise to grow from a small service in St. Louis to one of the largest car rental companies in the world, all without having to turn to public sources for funding.

While most small business owners might agree in principle

that customer loyalty is important, many still fixate on the hard accounting numbers rather than measuring and cultivating loyalty.

But when business owners tap into loyalty, they tap into growth.

WHAT LOYALTY LOOKS LIKE When your patients are loyal, your pharmacy reaps benefits. Loyal patients will come back, and they’ll come back more frequently.

They might increase their basket size during those frequent visits and be willing to pay more for products and services. And they will likely treat employees ″with a little more thoughtfulness, because they feel like they are part of a community and they expect to be a member for a long time,″ Reichheld said.

But the biggest benefit to loyalty, according to Reichheld, is

customer referrals. ″When a customer becomes convinced a supplier, retailer, or pharmacy is special and makes their lives better, they recommend it to their friends. That isn’t just a signal of loyalty, it’s the thing that drives your reputation and your growth,″ he said.

Reichheld warns against mistaking customer retention for

loyalty, which are not the same thing. ″Customer retention is a

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WHAT IS THE NET PROMOTER SCORE? The Net Promoter Score, developed by Reichheld, is a way to quantify your customer loyalty.

Finding out your Net Promoter Score is simple. Just ask your patients how likely they are to recommend your independent pharmacy to a friend on a scale of 0 to 10.

People who give you a 9 or 10 rating are considered promoters. ″They are the people who are the true assets of the business, and they drive your success,″ Reichheld explained.

People who rate your pharmacy with a score of 0 through 6 are considered detractors. Not only will they not share good things about your pharmacy, they could even damage your reputation by spreading negative experiences.

To find your Net Promoter Score, take the results from your survey and plug them into this formula: % of Promoters – % of Detractors = Net Promoter Score

Your Net Promoter Score can be anywhere from -100 to 100, and the higher your score is, the more loyal your patients are.

The best time to ask your patients to give feedback is after

CULTIVATING LOYALTY

they’ve made a key transaction at the pharmacy. Although your

Capturing loyalty may seem like a tall task, but Reichheld said it’s

patients may have an inbox full of survey requests, Reichheld said

actually simple: strive to enrich your customers’ lives more than

businesses can distinguish themselves if they only ask two or three

you diminish them. ″When you treat people in a way that enriches

questions: ″How likely are you to recommend us to a friend on

their lives, you find ways to be thoughtful and kind and surprising,″

a scale of 0 through 10? What’s the primary reason? And is there

he said.

anything else we could have done to make your experience better?″

its customers’ lives even as the company has grown. With its Prime

The first question is a simple rating, and the last two questions

He cites Amazon as a company that has found ways to enrich

are open-ended. The score lets you know if there is a problem,

program, Amazon started with two-day shipping but has continued

but the open-ended questions let you know what that problem

to add value with services like music and TV streaming, grocery

is. Having open-ended questions in addition to the rating can

delivery, and responsive customer service when people run into

also signal to patients that you are eager to listen to them, which

problems. ″Companies with that philosophy—of obsessing over

encourages them to take time to fill out the survey instead of

their customers to make their lives better—come up with really

deleting it from their inbox. ″When people know that you’re going

creative ways to achieve that.″

to take action, I see response rates for those surveys as high as 20,

30, or even 50 percent,″ Reichheld said.

them with respect. ″Don’t make customers feel stupid, or like

USING THE NET PROMOTER SCORE

or transaction, or that you don’t know who they are,″ Reichheld

Once you have your Net Promoter Score, use it to make your

advised. When patients have issues, keep track of those issues and

pharmacy better. The score itself is a good indicator, but Reichheld

work to correct them.

On the flip side, you can lose patients’ loyalty if you don’t treat

they can’t trust you. Don’t make them feel like they are a number

advises paying special attention to those open-ended questions.

The comments have direct advice from your patients about

what you do well and where you can improve, so make sure to read them and act on them when you can. This is especially important when you run into a detractor. ″When a customer tells you that you have diminished their life and failed to live up to their expectations, for heaven’s sake, apologize and try and fix it,″ Reichheld said. ″Otherwise, they’re not going to bother filling out more surveys and you’ve diminished your reputation even further.″

One common mistake is tying the Net Promoter Score to a

bonus or turning it into a key performance indicator. The main point of the score is to gather the feedback and learn from the feedback. If you do, the score will go up. But if you incentivize your employees to focus on improving their score rather than

THE ONLY THREE QUESTIONS YOU NEED TO MEASURE AND BUILD LOYALTY 1. How likely are you to recommend us to a friend on a scale of 0 through 10?

their performance, your pharmacy might start to feel more like

2. What’s the primary reason?

a car dealership. ″If people plead for high scores and game and

3. Is there anything else we could have done to make your experience better?

manipulate, it gets ugly,″ Reichheld said, and you won’t be able to trust the score.

ELEMENTS | The business magazine for independent pharmacy | DECEMBER 2020

15

FEATURE

5 LUCRATIVE WAYS TO MONETIZE YOUR PHARMACY Pharmacy owners share their most profitable revenue streams

I

t’s no secret that the business of pharmacy is not what it once was. Although the average independent pharmacy still makes 94

percent of its profit from prescription sales, those sales aren’t as reliably profitable as they used to be. Last year, gross profit per pharmacy location fell by an average of $10,975, according to the most recent NCPA Digest. Community pharmacies consistently report not only comically low reimbursements but even significant losses when dispensing prescription medications.

As the old fuel of pharmacy business sputters, many

pharmacies have started to look to new sources to energize their business. They’ve embarked on unexpected endeavors to power their profits and help their patients, and now they’re sharing their successes with you. Here are five ways independent pharmacies are making money beyond traditional prescription sales.

1. LONG-TERM CARE Eric Abramowitz, owner of Eric’s Rx Shoppe in Horsham, Pennsylvania, is no stranger to the challenges plaguing the pharmacy industry. ″We’re trying to stay relevant in this super competitive pharmacy space. Decreasing reimbursement, mail order, online pharmacies, DIR fees—all these things are killers,″ he said. ″So it forces us to try to differentiate ourselves and find another avenue for income within filling prescriptions.″

One of these avenues for income has been especially

successful for Abramowitz, even amid the increasing pressures of the industry and the pandemic. A few years ago he started serving long-term care facilities in his area and was immediately astonished by the results. ″Why we didn’t do it years ago?″ he asked himself. ″We were just worried about that whole ‘if it sounds too good to be true it must be too good to be true.’″

What exactly sounds too good to be true? For starters, no DIR

fees. This benefit alone makes long-term care a reliable way to stay competitive. ″When you start seeing those DIR fees go away, it makes it all worthwhile,″ Abramowitz said.

LTC business not only provides great margins but also

increases prescription volume substantially. Between all of his facilities, Abramowitz serves more than a thousand patients. And this volume is reliably consistent, even during difficult times like a pandemic. ″This is business that is always coming in,″ he said. ″So in a time when people aren’t going to doctors, people aren’t taking care of themselves, and we aren’t getting a lot of new business, this is recurring business.″

For a long time Abramowitz was hesitant to get involved

with LTC because he thought he would have to become a closeddoor pharmacy with a separate building. But once he realized he could serve his retail patients and long-term care patients without changing his business structure, he took the plunge, and now he enjoys benefits from both parts of the pharmacy without all the restrictions and red tape of a closed-door. ″Becoming a combo pharmacy gives us the advantage of being classified as a long-term care pharmacy and reaping some of those benefits of increased reimbursements and no DIR fees, while still being able to continue to service the public as an independent pharmacy.″

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BUILDING RELATIONSHIPS Abramowitz has won the business of the local LTC facilities by

PROFITABLE PARTNERSHIPS

consistently getting his name, and face, in front of them. ″This

These are some long-term care facilities pharmacies can partner with to add a profitable revenue stream.

doesn’t happen overnight,″ he said. ″It’s a process, it takes time. We have a relationship with quite a few assisted living facilities, but it took a lot of time and a lot of energy.″

• Assisted living • Skilled nursing • Hospice • Subacute care

Every month he advertises free drug disposal and brings a bin

with him to the facility. He shows up with soft pretzels and caramel creams, which the residents love. While he’s there, he answers any questions they have about their medications, even if they aren’t his

• Independent living • Active adult living • Senior’s home • Adult daycare

patients. ″These people look forward to knowing that I’m coming every first Tuesday of every month with pretzels and candy, and people want to come down and just talk,″ he said. ″They’re in assisted living. This has become a social event. We found that going once a month increases our visibility, and visibility is everything.″

He also offers vaccine clinics, with shingles being in top

demand. He writes an article once a month in the facility’s newsletter called ″Notes from Eric’s Rx Shoppe.″ He does speaking engagements. He brings sample blister packs to demonstrate

2. CPESN® USA

how they work, which typically increases enrollment. All of this engagement results in patients who appreciate Abramowitz’s

When it comes to expanding his pharmacy business, Chris

services and tell other residents about his pharmacy, which keeps

Watts faces a special challenge. His store, Valley Pharmacy in

his business growing. ″Word of mouth is the best and cheapest

Kearney, Nebraska, is only 660 square feet. That means several

form of advertising,″ he said.

potential avenues of revenue aren’t available to him. Like other

entrepreneurial pharmacists, he set out in search of ways to make

One of the other advantages of LTC and the assisted living

environment is less competition. The chains can’t provide the level

money outside of traditional prescription sales, but he needed

of service that an independent can. While the chains are involved

something that didn’t require the use of new space.

within the skilled nursing setting, they are less involved in the assisted

living arena. Blister packing of daily meds and a close relationship

USA—a clinically integrated network of community pharmacies that

with the nursing staff separates independents from any competitor,

provide enhanced services and engage with payers to get paid for

Abramowitz said. ″The chains just cannot compete there.″

Eventually his search led him to a program called CPESN

those services. This program would enable Watt to start counting on revenue from a new type of payment model for several services

ENHANCED SERVICES

he already offered in his practice.

LTC facilities require more from the pharmacy than a typical

retail customer. You have to be able to provide a range of

year and a half as a CPESN member, his group finally secured a

At first, Watts didn’t see any financial gains, but after about a

services and sometimes be available during non-traditional hours.

contract with a payer. ″First it was this pipe dream of, ‘We’re going

Some services include medication synchronization, medication

to get paid for clinical services outside of billing prescriptions,’″ he

reconciliation, blister packaging, and medication reviews. Perhaps

said. ″But now, we’re starting to see all that work come to fruition.″

the biggest strain on pharmacy operations is deliveries. Abramowitz

will sometimes make his final delivery on his way home, often

Enhanced Services Pharmacies (NESP), Watts is now in group

Through both CPESN USA and regional affiliate Nebraska

late in the evening. ″You can’t put a price tag on how valuable

contracts with three different payers. With these contracts, Watts’s

somebody will think of you when you go out of your way to get

revenue from services has increased sevenfold in just two years.

them their antibiotic at seven or eight at night,″ he said.

The pharmacy already provides these personal touches and

enhanced services, so offering them to the assisted living facilities is just an extension of its community retail business. Abramowitz said, ″We pride ourselves on giving good service and taking care of them. We answer the phone when you call. We do the little things you don’t always get at our competitors.″

ELEMENTS | The business magazine for independent pharmacy | MARCH 2021

19

With these contracts, Watts’s revenue from services has increased sevenfold in just two years.

ride on their coattails,″ he said. ″They get the contracts lined up and we just have to perform.″

For Watts, CPESN has been the perfect solution for his small

pharmacy. He’s able to perform all of his tasks for payers without having to make any major additions. ″For people with limited space, this is something great they can do because you don’t have to add this product line or something else,″ he said. ″It’s just doing their job in a different way.″

The first pays him to conduct medication therapy management with its patients. He meets with each patient twice per year and receives a flat rate for each meeting—at a significantly higher rate than he receives for MTM with his traditional patients.

The second payer pays a flat rate per member every month.

Rather than requiring a specific service for all patients, the payer

PAYMENT METHODS

will request different tasks for different patients throughout the year. For instance, they might want a pharmacist to speak with a

CPESN pharmacies get paid from the medical side

patient who has started a new medication to answer any questions

of healthcare, directly from the payers. Payment

and make sure they are aware of side effects. Or they may request

methods vary for each agreement and can take

an immunization screening or medication reconciliation. There

these different forms:

isn’t a routine or recurring requirement, so the amount of work

• • • • •

varies from month to month. The amount paid depends on how many tasks the pharmacy completes. With 65 patients, the fee-permember model provides a steady and lucrative stream of income for the pharmacy.

The third contract is also based on fee-per-member

but requires some specific services, such as medication

Fee-for-service Fee-per-member Tiered fee-per-member based on patient risk Rebates Pay-for-performance

synchronization, adherence packaging, and delivery services. This contract is relatively new, so Watts is waiting to see what is entailed and how many patients will be included. For all the contracts, the payers send their patients to the pharmacy, so Watts doesn’t have to do any legwork to recruit them.

INSTANT RETURNS Although Watts participated in CPESN and NESP for almost two years before seeing any money, pharmacies that join the network

3. ANTIPSYCHOTIC INJECTABLES

now may not have to endure the wait. For CPESN pharmacies in his state, contracts have already been established through NESP, and

Alex Berce, president of Good Value Pharmacy with four locations

national contracts are available with Humana. ″I guarantee you it

in Wisconsin, has been routinely gaining new patients since he

will give you a return on investment,″ he said. ″People have already

began offering a rare pharmacy service: long-acting injectable

spent the time, now the contracts are here. If you join now, your

medications. Most of the drugs in this class are antipsychotics,

return on investment is almost immediate.″

such as Invega, Abilify, Aristada, and Risperdal, and patients must

And the payout comes with hardly any investment. CPESN

receive them at a healthcare provider.

charges a small monthly fee and requires pharmacies to provide

A few years ago, Wisconsin authorized pharmacists to

a certain number of services, most of which pharmacies already

administer injectables, which opened the door for new business.

offer. And many of the services, like medication synchronization,

Prescribers, who are typically psychiatrists, were relieved to get the

provide benefits to the business even if they don’t earn payment.

injections off their plates, and Berce was eager to take them on. Now

the pharmacy administers more than 20 injections every month.

The pharmacy also doesn’t have to do anything to find

and negotiate the contracts with payers. CPESN has dedicated

″luminaries″—pharmacist owners and leaders of the regional

first thing he did was track down all the psychiatry offices in the

affiliates—who put in the work to get the contracts. ″We kind of

area and give each of them a ring. After that, word spread on its

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Berce didn’t have to do much to start generating interest. The

own, and since then referrals have continued to provide a steady stream of new clients without the need for additional marketing.

He is one of the only providers of injectables in his area, so patients naturally funnel to his pharmacy. And his reports to the prescribers serve as free advertising, keeping his pharmacy top of mind.

″Word spreads pretty quick, especially when you’re routinely

sending doctors the confirmation of the injection,″ Berce said. ″After giving the injection every month it’s a reminder that Good Value just did this again for this patient.″ THE PAYOFF In terms of revenue, some manufacturers will pay a fee for administering the injection, but generally the injections are not a great source of income on their own. Most of the drugs are brand name, and payment runs through third parties, so they suffer from low reimbursement and DIR fees just like any other prescription.

The payoff of the service is the substantial boost in prescription

volume. Berce hooks patients with the antipsychotics but nets their entire medication profile for the long term. Most prescribers don’t want to administer these drugs, so Good Value has almost total exclusivity on these patients. They don’t have to worry about competing with a chain pharmacy or big box store, either.

And these patients, Berce said, are typically on several other medications, which they often end up transferring to his pharmacy.

To get those prescription transfers, Berce said it’s important to

start building the relationship with the patient right away. ″I think part of the solution to making it work from an overall financial standpoint is talking to the patients after you’ve given the shot, developing a rapport,″ he said. And by the second or third injection, go ahead and ask them directly if they’d like to transfer the rest of their prescriptions.

In addition to antipsychotic injectables, Good Value offers

Vivitrol, a drug that prevents relapse in patients recovering from opioid addiction. The general upshot for this drug is the same as the antipsychotics except that it takes a bit more work—patients need to submit a urine sample before they get the shot to prove they’ve been opioid-free.

Not every state allows pharmacists to administer injectables.

At least 11 states do not, and 7 require a collaborative practice agreement. Pharmacists interested in offering injections should check with their state board of pharmacy.

4. IMMUNIZATIONS The landscape of immunizations has shifted considerably over the last decade. When Bill Drilling, owner of Drilling Pharmacy in Sioux City, Iowa, started offering Zostavax, there was still a stigma associated with pharmacy-based immunizations. The greatest challenge was convincing patients that he was more than qualified to administer the vaccine. Since then, a lot has changed. Now it has become as normal to get a shot at a drug store as it is to pick up a prescription—about one-third of immunizations in the United States are administered by pharmacists, and this has provided another reliable avenue for revenue.

Drilling has approached immunizations gradually, adding

them one at a time as opportunity allows. After Zostavax, he added the flu, then shingles (this time Shingrix), then pneumonia. Next up are TDaP and HPV. That is one of the attractive aspects of an immunization program—you can go at your own pace, and the growth opportunity is massive. For example, Katterman’s Sand Point Pharmacy, in Seattle, Washington, started with only the flu vaccine but now offers 28 vaccines year-round. Vaccines account for nearly 20 percent of its business and 30 percent of its profit.

But even with a modest offering of vaccines, the money starts

to add up quickly. The pharmacy gets paid twice for immunizations: a dispensing fee and an administration fee. Among all the vaccines, Drilling estimates he earns an average of $20 per immunization.

Multiply that by the 700 patients he immunized for shingles and flu last year, and from those two alone he was looking at an estimated $14,000 in additional revenue.

What you can offer depends on the laws of your state.

Although every state allows pharmacists to administer vaccines, the scope of authority varies widely. You may not have any options to administer certain vaccines, you may need a standing protocol, or you may need a collaborative practice agreement.

MAKING THE MOST OF IT Drilling Pharmacy uses the administration of one vaccine as an opportunity to offer other vaccinations to improve the overall health of the patient. Whenever patients get a flu shot, for example, he suggests a shingles or pneumonia vaccine if they need one.

And studies support this approach: According to a 2018 study in Psychological Science in the Public Interest, patients who get the flu shot have already shown an openness to vaccinations, which means they’ll be much more inclined to accept further vaccines.

Another tactic that has worked well is advertising

immunizations on prescription bags. During flu season, every bag gets a sticker telling patients they can get their shot at the pharmacy. He also does various in-store marketing like flyers and signage. And he makes sure to market the immunizations on social media. ″Getting the word out to the public about what the local

ELEMENTS | The business magazine for independent pharmacy | MARCH 2021

21

pharmacist can offer to the individual is just a start in improving the health of each individual,″ Drilling said.

VACCINES GALORE

When patients come in for their prescriptions, the pharmacy

software system will alert staff if they are eligible candidates. The

Here are some vaccines pharmacies can offer, depending

staff will let the patient know they qualify for the vaccine and ask if

on state laws:

they’re interested in getting it.

• Shingles • Whooping cough (TDaP) • MMR • HPV • Meningitis • Tetanus-Diphtheria • Chicken pox • Hepatitis B

Although immunizations have been good for business, for

Drilling they are ultimately about his patients, not the profit. ″Our real motivation is to take care of people,″ he said. ″It’s about helping people improve their health in a convenient manner.″ He recalled an encounter with a patient a few years ago that has stuck with him. The patient couldn’t afford to get the flu vaccine at his physician’s office, but at Drilling Pharmacy he didn’t have a copay. ″He thanked me and said, ‘If it wasn’t for you, I wouldn’t be able to

• hiB • Yellow fever • Typhoid • Hepatitis A • Polio • Rabies • Japanese encephalitis

get a flu shot,’″ Drilling said. ″That made it all worthwhile.″

5. CBD (Cannabidiol) When the local Skippack Pharmacy in Pennsylvania was bought by mega-chain CVS, Mayank Amin decided to take matters into his own hands. The community pharmacy had been around for more than 50 years in a ″mom-and-pop town″ where Amin was born and raised. When he got word of the sale, Amin decided to purchase the pharmacy himself to keep it independent even though he had never intended to be an owner. ″I didn’t know anything about the independent pharmacy world,″ he said, ″but I decided that we’re bringing this place back to life and we’re going to give people an experience they've never had in their entire life at a pharmacy.″

And he did just that. But it wasn’t long until the harsh realities

of the independent pharmacy world became apparent. As a former pharmacist for Walgreens, what shocked Amin most about independent pharmacy was the fact that he could get reimbursed less than what he paid for a product. ″I never knew that a pharmacy could lose money filling a prescription,″ he said. ″In what world is that okay or does that make sense?″

This reality stifled his profit, and if he hadn’t found alternative

ways to make money he may not have been able to keep Skippack afloat. One addition that rescued him was an over-thecounter product that is cash only, comes with a nice margin, and genuinely helps patients with their health: cannabidiol, commonly known as CBD.

″I can say that our pharmacy stayed alive in these last few

years because of CBD,″ Amin said. ″It's been a gateway for us to just stay open.″

Amin sells hundreds of CBD products every month, ranging from

$20 to $140. Each product comes with a 30 percent markup—all cash sales. And his sales have been high even though Amin will never pressure a patient into a sale, and sometimes will even discourage them if the product isn’t helping. ″I don’t want to sell a product that could have no benefit to the patient and just make money off them,″ he said. ″We’re healthcare professionals, not salespeople.″

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On top of the profit it provides, CBD also creates opportunities

to attract more patients. Amin has found that taking time to

ask them about their pain or about why they are taking a certain

When patients are in the pharmacy, Amin and his staff will

work with patients on a CBD regimen—getting to know their

medication, which opens the door for CBD. He has found that

whole health profile, educating them, and then following up with

many patients don’t know the damage Motrin wreaks on their

them—cultivates a trust that cannot be matched anywhere else.

kidneys or Tylenol on their liver, for example. ″And now there you

″When they have that kind of trust, even if they don't look at the

go, we have a counseling point,″ Amin said. ″By the way, did you

product now, they just walked out thinking, ‘This pharmacy genuinely

know that if you’re using this for pain, there are other alternatives?

cares about me as a person. I've never had that experience before

Natural therapies. If you’re interested, I’d be happy to talk to you

at another pharmacy.’″ Next, they are asking if Amin accepts their

about how CBD works in your body, and you don’t have to buy a

insurance plan and if they can get their prescriptions transferred from

bottle, you can take a free sample.″

CVS. ″Now you have that trust from the patient, and they'll switch their

prescription medications. They not only come in to get counseling on

and facilities. He will stick around afterward to talk, share success

CBD, but they purchase over-the-counter items as well.″

Amin makes CBD presentations at various community events

stories from his patients on CBD, and hand out some samples.

After a single speaking engagement at a senior living center last year,

MAKING CBD A SUCCESS

50 residents showed up at Skippack Pharmacy within a week.

For Amin, educating yourself on CBD and investing time with the

patient are the most important factors to make a CBD offering a

the product fits exactly the type of practice Amin wants to offer

success. Everything else flows from that. Patients trust you, they

to patients in his hometown. ″I like a customized approach to

The sales have been good for business, and more importantly,

discover that the products work, and then they spread the word.

medication,″ he said. ″I grew up in that kind of background where a lot

This is how his offering took off so quickly. ″Word just spread as

of natural therapies were used in our own household, and I wanted to

they realized the knowledge we have about the product. And

be able to incorporate some of that into my own pharmacy.″

once they saw how well it worked for them, they would tell their neighbors and their friends, and they would come to us,″ he said. ″Now, we have people as far as a half-hour away driving here to get a consultation with us.″

At Skippack, selling CBD always starts with counseling

and always continues with follow up. While building trust, the feedback also helps the pharmacy learn more about CBD and its effectiveness, which they can then use to educate more patients.

Amin said, ″The whole aspect of us following up with the patient, having them give us a call and let us know how it’s going, has really helped us continue our CBD sales.″ ELEMENTS | The business magazine for independent pharmacy | MARCH 2021

23

SPOTLIGHT

READY FOR ROLLOUT

The Covid-19 vaccine boosts this pharmacy’s patient base and its profits

A

year into the coronavirus pandemic, and there is finally a

was available, there were still hoops to jump through before

light at the end of the tunnel: Covid-19 vaccines have been

Sunflower Rx was approved by the Texas Department of State

approved by the FDA and are being distributed across the country,

Health Services to become one of the first providers. The total

with priority groups like healthcare workers, older patients, and

approval process took about a month.

high-risk patients being first in line.

before they were ready to receive the vaccine, including a freezer

As vaccines get distributed, retail pharmacies are presented with

On top of that, the pharmacy had to make some purchases

an opportunity not only to make their communities healthier and

and digital data loggers, which are required to ensure vaccines are

safer but also to market their brand and make a profit. Brian Meyer,

always kept at appropriate temperatures.

pharmacist and owner of Sunflower Rx in Odessa, Texas, became

one of the first-round providers of the vaccine in his community,

requires storage in special, super-cold freezers kept between -76

which turned into a chance to connect with new patients.

and -112 degrees Fahrenheit. Sunflower Rx didn’t have access to

Of the two vaccines currently in distribution, Pfizer-BioNTech’s

that kind of specialty equipment, and instead bought a standard chest freezer to store 100 doses of Moderna’s vaccine, which only

I’ve had customers from other pharmacies who didn’t realize we were here and were happy to find us.

needs to be stored between 5 and -13 degrees Fahrenheit.

LOGISTICS Initially, Meyer thought the pharmacy would have to advertise the vaccine and convince people to come in to get the shot. ″But word spread really quickly,″ he said. Within a single day, the pharmacy had administered every one of the Moderna shots it had received.

The message got out to community members via doctor’s

GETTING THE VACCINE

offices and hospitals, which sent qualified patients over to get the

Since every provider is eager to distribute the Covid-19 vaccine,

vaccine. Meyer followed the Texas Department of State Health

getting hands on doses early in the game is a challenge for

Services guidelines for who to prioritize, which at that time included

independent pharmacies. Sunflower Rx is partnered with Health

healthcare workers, people 65 and older, and people who have

Mart, which let Meyer know they would have a first round of

other health conditions that predispose them to complications

vaccines available to their pharmacies. But even though the vaccine

from Covid-19—including cancer, kidney disease, heart disease, obesity, and more.

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The vaccinations came with a screening form that asks patients

said. ″I’ve had customers from other pharmacies who didn’t realize

about things like allergic reactions, but when it came to verifying

we were here and were happy to find us.″

that people had health conditions, Meyer decided to take their

word for it, as the Texas Department of State Health Services

Covid vaccine. It has also created an immediate opportunity to

Getting new patients isn’t the only added benefit of the

doesn’t currently require documentation. ″I think if you require

boost retail sales because patients have to stay at the pharmacy

documentation like some people have from the doctor’s office, it

for a while after they get the vaccine. Meyer explained, ″With

would probably hinder a lot of people from getting it,″ he said.

other vaccines, it’s something like 10 minutes, but with these

″Eventually, everyone does need to have it, so we’re just trying to

Covid vaccines, the minimum is 15 minutes, unless they have a

get it out as quickly as possible.″

history of allergic reactions, and then we might have them wait 30

minutes.″ While they’re waiting, patients have nothing to do except

With such a high demand for the vaccine, Meyer and Sunflower

Rx were faced with the challenge of vaccinating 100 people in one

browse the pharmacy, picking up front-end items they might have

day, all while keeping them safe and socially distanced. ″We found

otherwise left without.

it a lot more efficient to schedule people to come in a few at a

time, every 10 or 15 minutes,″ Meyer said. ″That allowed people to

been welcome perks, Meyer emphasizes that the true benefit of

social distance, and we were able to get people in all day long.″ This

administering the Covid-19 vaccine is getting people immunized

system was also more efficient for patients. Instead of spending

so they can return to participating in the community. He urges any

Although the additional revenue and increased attention have

their day waiting in line, they could come in, get the shot, then get

pharmacies that have the opportunity to distribute the Covid-19

back to their day.

vaccine to jump on it. ″There are a lot more shots out there that

people are just sitting on in pharmacies and hospitals and clinics,″

Sunflower Rx only opened its doors at the beginning of January

and is still building up its prescription volume. This gave them an

he said. ″They do have the vaccine and need to get it out as quickly

advantage in keeping people socially distanced while they were

as possible.″

getting their shots, as the pharmacy wasn’t overrun with patients coming in for regular pharmacy business. Meyer acknowledged, ″This might be harder for bigger pharmacies with larger script volume, so it’s all the more important to have good scheduling services. They will need to have some kind of centralized scheduling form for people to sign up.″

The Moderna vaccine requires two shots, which means the

people who received the first shot from the pharmacy need to return in a few weeks to get a booster. The vaccination kit they received came with cards to give to all vaccine recipients, which have the date they received their first vaccine along with a spot for the date of the second shot.

Meyer is also taking advantage of his pharmacy management

software, which normally reminds patients about refills, to keep track of the patients who got their first shot and need to return. ″Our computer software will remind people by text message to come in, and we will schedule them for an appointment,″ he said.

FINANCIAL RETURNS As a brand new pharmacy, being an early provider of the Covid-19 vaccine has been a boon. The financial return so far has been about the same as flu shots, around $18 a dose. Accounting for uninsured patients, Meyer estimates the true return for the Covid-19 vaccine will come out to around $16 a dose. ″For people who have insurance or Medicare Part B, we are able to bill those for an administration fee much like the flu shot,″ Meyer said. ″As far as copays or charges, there’s no charge for anybody.″

But in addition to those fees per dose, being one of the first

places in town to offer the vaccine has brought welcome attention to the pharmacy. ″It’s really giving us a lot more attention than we first expected, and we have gotten quite a few transfers,″ Meyer

WHO GETS VACCINES WHEN? While each state is allocating vaccines depending on the specific needs of their population, the Advisory Committee on Immunization Practices has issued recommendations on how vaccines should be distributed in the early months when demand is much greater than the supply.

Most state rollouts will look something like this: Phase 1a • Healthcare workers • Long-term care residents Phase 1b • People age 75 and older • Non-healthcare frontline essential workers Phase 1c • People age 65 to 74 years • People age 16 to 64 with high-risk medical conditions • Other essential workers Phase 2 • General population age 16 and older

23

MONEY

FROM RED TO BLACK Where to cut costs when you have no other choice

T

here’s no doubt about it—the independent pharmacy industry

is shrinking. Average annual sales per location are down from

performance indicators: the current ratio and the quick ratio. The

Keep tabs on your cash flow by referencing two important key

$4 million in 2010 to $3.4 million in 2019, according to the 2020

current ratio looks at the assets of your pharmacy and measures

NCPA Digest.

how well they can cover your current liabilities. If your current ratio

is less than two, it’s a signal that you have a cash flow problem. It’s

These troubling trends mean many independent pharmacies

may face the difficult decision of whether or not to start cutting costs.

calculated using this formula:

At what point has the financial situation become so dire that an

Current Ratio = Current Assets / Current Liabilities

owner’s best option is to let staff go or sell off the robotics system?

And once cuts are required, what can you part with that won’t doom your business?

Nishank Khanna, an entrepreneur who has founded and run

six small businesses and currently serves as the chief marketing

The quick ratio reflects how well-equipped your pharmacy is to immediately cover all current liabilities without liquidating your current inventory. A healthy pharmacy will have a quick ratio of more than one. Here’s how you calculate it:

officer for Clarify Capital, provides some crucial cost-cutting tips to

Quick Ratio = (Cash) + (Accounts Receivable) / Current Liabilities

help you make tough financial decisions without damaging your

By frequently checking in with these ratios, you won’t be blindsided

chances at growth.

WHEN TO CUT COSTS The best indicator for whether your pharmacy needs to cut costs, according to Khanna, is cash flow. ″If you see a down-trend, that’s a clear sign that something is not working,″ he said. ″Either your revenue has gone down and your expenses are still the same, or your expenses have gone up, but your revenue hasn’t gone up at the same rate.″

Khanna advises that businesses take a look at their cash

reserves at the end of each month. ″If you’re not looking at your cash flow every month, it’s really hard to see where the leak is coming from,″ he said. ″A lot of times, smaller businesses will wait until the end of the year or every six months to look at their finances. And then you miss out on all these red flags that show up.″

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by a cash flow squeeze and be forced to make sudden, unexpected cuts to your business.

WHAT COSTS CAN YOU CUT? How to cut costs—and where—is not a cut-and-dried business. ″You have to be smart,″ said Khanna. ″You don’t want to cut things that are one, essential, and two, are part of your larger growth plans.″

Whether businesses should make incremental cuts over time or

big cuts upfront depends on how dire the cash flow situation is. ″If you’re burning cash at a higher rate each month, it’s a sign that you need to make big sweeping changes,″ said Khanna. ″However, if you see that your revenue is growing but your cash flow is slowing down, that’s a situation where you can make smaller cuts and work to match your cash flow with your revenue growth.″

COST CUT #1: INVENTORY

For example, Khanna said, ″The days of just spending marketing

Inventory is a prime target when you decide to make cuts. ″If you

dollars just to get the brand-name recognition are over. It’s more

order too much, you end up with money sitting on the shelves. If you

about if you’re putting in a marketing dollar now, are you able to get

order too little, you lose out on sales,″ Khanna said. To get a handle

a dollar-plus out on the other end.″

on your inventory, he recommends carefully looking at how you’re

meeting the demands of your patients, and if you’re making the right

calculate your return on investment using this formula:

decisions when it comes to supply. ″After looking over purchase

Marketing ROI = (Sales Growth - Marketing Cost) / Marketing Cost

and sales history, it may become clear that there are some misprojections with inventory management.″

Taking a look at your pharmacy’s inventory turnover can clue

you in. If you have a high inventory turnover rate, that means your supply is meeting your patients’ demand, but if it’s low, that’s a sign

To measure whether your marketing dollars are well spent,

If you’re investing money in marketing campaigns and it’s

not leading to sales growth, it’s a sign that you should redirect your marketing expenses into other, more essential parts of your pharmacy business.

you are over-supplying your inventory and need to reassess. Here’s how you calculate inventory turnover rate, which demonstrates how often you turn over your inventory in a single year: Inventory Turnover = Annualized Inventory Cost of Goods / Total Inventory

MARKETING COST-CUTTING TIP

Your inventory turnover rate should be more than 10. If it’s lower than that, it’s a signal to reassess your inventory management

Reassess which marketing channels you are currently

to cut costs. In this case, Khanna recommends doing what you

using to find places to reduce expenses. Avenues like

can to automate your inventory management. ″While it might

print ads, television spots, and direct mail can be costly.

seem counterintuitive, buying software to automate inventory

If you need to slim down your marketing budget, pivot

management can free up cash flow and reduce waste,″ he said. ″The

to free or low-cost options.

upfront costs are offset by savings down the line when you consider reduced inefficiencies and operational improvements. Long term,

Bolstering your Facebook or Twitter presence doesn’t

pharmacists who outsource inventory management can benefit by

cost anything but time, and you can reach new eyes

avoiding unnecessary profit loss and increasing working capital.″

organically if you post regularly and interact with your followers. Another free marketing opportunity is encouraging your patients to leave reviews online.

Good reviews on sites like Google or Yelp are essentially free advertising for your unique services and top-notch

INVENTORY COST-CUTTING TIP

customer care, and they can be the deciding factor in convincing a new patient to visit your pharmacy.

Reduce your overall inventory costs by joining a pharmacy buying group like ProfitGuard . ProfitGuard ®

groups independent pharmacies together to get the best possible deals from wholesalers, lowering your overall inventory costs.

You’ll also have access to ProfitGuard’s proprietary data analytics tools that can automate purchasing decisions, ensuring you maximize your wholesaler rebates and meet your contract terms so there’s more money in your pocket at the end of every month.

COST CUT #3: PERSONNEL If you’ve reassessed your inventory management and slashed your marketing budget but are still struggling with cash flow, you may have to make one of the hardest decisions: letting some of your

COST CUT #2: MARKETING After you’ve leaned up your inventory, the next place to look for cuts is your marketing budget. ″A lot of the time, people spend money on marketing without looking if those marketing dollars are actually bringing in more revenue,″ said Khanna. ″It’s easy, lowhanging fruit.″

employees go. ″You have to see if you can scale down the entire operation in order to remain cash flow positive,″ Khanna said.

Deciding who has to go is tough, but Khanna recommends

looking at your staff in terms of who you absolutely need to keep the business running. ″The way to go about that is asking what is essential in terms of the manpower you need to achieve your

ELEMENTS | The business magazine for independent pharmacy | MARCH 2021

27

primary function,″ he said. ″There are always ancillary employees you have on the payroll who might not be essential in the immediate short term.″

In addition, look for situations where you can outsource

tasks instead of having people do the work in-house. If you have employees handling your marketing or accounting, for example, you may be able to find an agency or freelancer who can do the same work for less money. ″When you hire people in-house, a lot of overhead goes along with that,″ Khanna said.

OUTSOURCING OPTIONS Outsourcing non-pharmacy tasks is an easy way to lower personnel costs and gives you more time to cultivate more profitable services. These are some management and administrative tasks primed

PERSONNEL COST-CUTTING TIP Before you lay employees off, look at your scheduling. Is your pharmacy full of staff members during off-hours?

Try to match your scheduling with pharmacy traffic so you have enough employees on duty to serve patients during peak hours but not so many milling about during the daily lulls.

Overscheduling means bloated payroll, and scheduling more efficiently is one way to trim costs before you eliminate employees.

for outsourcing.

HUMAN RESOURCES HR functions like compensation, benefits administration, records management, and hiring can be easily outsourced to a third party.

INFORMATION TECHNOLOGY Hiring an outside IT professional to deal with tech problems, data storage, and protecting the pharmacy from cyberattacks can save you in the long run.

MARKETING Marketing professionals can efficiently develop the right messaging for your marketing while identifying which efforts give you the best ROI.

GROWTH MINDSET One mistake that businesses make, according to Khanna, is making cuts that end up hampering growth. ″If you cut out marketing spend that’s not generating revenue, that’s one thing,″ he said. ″But parts of the marketing might be the reason why your pharmacy is even in business—it actually brings in customers.″ In those cases, cutting your marketing also cuts your revenue.

On the personnel side, cutting down too much staff can

damage your productivity. ″You’re over-extending the existing people with the amount of work they have, and then you run into a situation where you overload staff, and they might just quit because your work environment has gotten very hard to deal with,″ Khanna said.

When making cuts, Khanna emphasized that businesses

should think first about what is truly essential, and second about what the larger growth plan is for the business. He explained, ″You have to look at where you’re spending money and what amount is essential and what amount is unessential, then move the nonessential funds into areas that support the long-term growth that you’re hoping to achieve.″

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FINANCE & ACCOUNTING A professional accountant will know the latest rules and reporting methods to keep your pharmacy finances organized.

ADMINISTRATIVE SUPPORT You can cut down on the administrative workload by using an interactive voice response system for phone calls and using a virtual assistant to manage email or set up patient appointments.

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OUTLOOK

FLIP THE PHARMACY How to transform pharmacies into patient care centers

I

n June 2019, two community pharmacy organizations created a program designed to transform pharmacies from providers

of medication into providers of care. Board members of the

• Domain 5: Establishing working relationships with other care team members

• Domain 6: Developing the business model and expressing value

Community Pharmacy Foundation (CPF) and the Community Pharmacy Enhanced Services Network (CPESN® USA), who are

HOW IT WORKS

pharmacists themselves, recognized that the daily grind and a lack

Flip the Pharmacy is designed to introduce small process changes

of resources restricted many pharmacies from stepping out and

gradually, step by step. ″This is a journey. It’s a marathon, not a

taking the risks needed to change their practice. So they came up

sprint. So we’re not doing everything all at once,″ said Cody Clifton,

with a standardized, practical way for pharmacies to implement

FtP director of implementation and strategic initiatives.

real changes, with the support of one another and coaches, called

Flip the Pharmacy.

packages,″ which serve as a kind of workbook for each clinical

area and domain. Modeled after government change programs by

″It’s meant to be applied across all pharmacies at the same

The instructions or methods of change are detailed in ″change

time, sharing information, having webinars, adjusting so they all

CMS, these documents include ″tools and links and examples from

learn together and everybody is advancing at the same time,″ said

pharmacies who have made changes in their workflow. Instead of

Anne Marie Kondic, executive director of the Community Pharmacy

it being a really big document, there’s some structure and some

Foundation, a grant-making organization that advances the practice

examples, which are posted on the website so everyone has access

of pharmacy in a community setting.

to a tool,″ Clifton explained.

Equipped with the technical assistance and practical steps

One month in the program looks something like this: During

needed to become a pharmacy centered on patient care, members

domain one, pharmacies will identify 10 patients each week that

of Flip the Pharmacy can begin to change their practice even amid

should be enrolled in med sync. By the end of the month, they will

the pressures of their everyday business. The program focuses on

submit 25 eCare plans for patients on med sync and discuss the

four clinical areas in six-month modules over the course of two

results with their FtP coach. They will take a self-assessment quiz,

years. The clinical topics are hypertension, opioid use disorder,

consider suggestions for optimizing the new time freed up through

immunizations/Covid-19, and diabetes/social determinants of

med sync, and then list three changes they will be implementing.

health. Each clinical area is taken through six operational areas of

They will also receive detailed guidance for identifying the

change, referred to as ″domains:″

right patients, getting them enrolled, making the most of the

• Domain 1: Leveraging the appointment-based model • Domain 2: Improving patient follow up and monitoring • Domain 3: Developing new roles for non-pharmacist support staff • Domain 4: Optimizing the utilization of technology and

appointments, and documenting the results, among other

electronic care plans

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recommendations. In other words, the change packages address big picture issues as well as the small details of the processes and tasks—all applied gradually over the course of one month.

The anchor of this program is the first domain, the

appointment-based model (ABM), which itself centers around

medication synchronization. ″That’s the core and crux of it.

Everything begins and everything else builds on that,″ Clifton said.

Once ABM is adopted, the rest of the domains are much easier to implement. Workflow hums. You have a better grip on patient traffic and can allocate staffing and tasks to more efficiently meet the needs of the pharmacy. The consistency and reliability

FOUR CLINICAL AREAS OF FOCUS 1. Hypertension 2. Opioid use disorder 3. Immunizations/Covid-19 4. Diabetes/social determinants of health

of ABM increases the flexibility of pharmacists, allowing them to engage with patients, providers, and other business tasks with less disruption and with more efficiency.

Documentation through the Pharmacist eCare Plan (PeCP)

is one requirement for all pharmacies involved in Flip the Pharmacy. It is an interoperable standard so all pharmacy technology providers exchange the same information related to care delivery—including goals, health concerns, active medication lists, medication-related problems, laboratory results, vitals, care coordination notes, payer information, and more. All pharmacies

FLIP THE PHARMACY DOMAINS

are expected to use an eCare plan from one of the 18 technology

Reprinted from FlipthePharmacy.com

solutions partners listed on the FtP website.

By the end of the two years, the pharmacy will not only have

transformed its practice model but will have positioned itself to transform its payment model. ″Ultimately you wrap all that together and you’ve got data to show how the business model is expressing value and then comes the payment return,″ Clifton said.

Domain 1: Leveraging the Appointment-Based Model – Medication Synchronization is at the core of the ABM model, yet what are the patient evaluation, care coordination, and medication use support services that may be efficiency layered alongside the mechanical

″You may not enter a value-based contract within six months, but

medication synchronization process.

you’re building up slowly to make some of those connections.″

Domain 2: Improving Patient Follow Up and Monitoring – Community-Based Pharmacies have great opportunity

GETTING INVOLVED

to lead the health care system in effective patient

So far, there are two Flip the Pharmacy cohorts. A cohort

follow up and monitoring utilizing system-leading

is composed of teams, usually at the state level, who select

number of patient touch points.

pharmacies and coaches to participate. The coaches serve as mentors, walking the pharmacies through the packages to help them implement the changes in their practice. The first two cohorts have 34 unique teams supporting more than 800 pharmacies. Every fall, a new cohort is formed. Although the program is technically open to anyone, to get involved with a cohort at this time you need to be a part of CPESN's clinically integrated network or enter into a data-sharing agreement. However, Kondic emphasized that the program is meant for any and every pharmacy. Anyone can access the change packages and follow along on their own. All the material is online and free to the public.

No matter what the program does for the business of

pharmacy, for pharmacists and non-pharmacist staff the return on investment transcends the bottom line. ″We have heard that the program has brought back their joy for practice,″ Kondic said.

Domain 3: Developing New Roles for Non-Pharmacist Support Staff – Gone should be the days of limiting pharmacies to two types of roles: Pharmacist and Pharmacy Technicians. Roles that address common challenges to the healthcare system such as patient engagement and activation, care team communications, social determinants of health, and analysis of data are essential to successful population health management and accountable care.

Domain 4: Optimizing the Utilization of Technology and electronic Care Plans – The eCarePlan is fundamental to the successful operationalization of Domains 1-3 and 6. Working hand in hand with software companies, pharmacies should develop best practices

″That they feel reenergized, that they feel purposeful. It’s brought

documentation processes.

back that patient engagement piece, which was the driver for

Domain 5: Establishing Working Relationships with

going into pharmacy.″

other Care Team Members – Results from CCNC’s CMMI innovation project showed that pharmacies who built and maintained meaningful working relationships with other care team members.

Domain 6: Developing the Business Model and Expressing Value – What is the return on investment to the pharmacy for moving towards longitudinal, patient

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level health care services delivery.

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