Maximize your deductions in 2014 with these expert tips
PHARMACY DRIVE-THRU: PRO OR CON?
Community pharmacy owners share their opinions on the drive-thru window
WINNING THE $4 GENERIC GAME How one pharmacist found a discount card program with pricing that works for her patients––and her profitability VOL. 3 ISS. 1 | MAR 2014 | PBAHEALTH.COM
Smash-and-Grab Tips to secure your pharmacy and prevent burglaries before they happen
The Magazine of PBA Health
STAFF & CONTACTS EDITORIAL Matthew Shamet - Publisher and Editorial Director Kellie Paxton - Graphic Designer Kirsten Hudson - Writer & Editor Kim Van Becelaere - Writer & Editor INTERESTED IN ADVERTISING? firstname.lastname@example.org
Contents Departments 22 MONEY:
Envision Mark your calendar! The 27th annual PBA Health Conference & Business Seminar is June 27-29, 2014. 8 TRENDS:
The Problem of Rising Prescription Drug Costs See how a lack of public understanding about the true prices of prescription drugs affects everyone.
It Pays to Know Expert tips to help you maximize deductions and put your pharmacy ahead of the tax game in 2014. 26 SPOTLIGHT:
A Few Minutes with a Community Pharmacist We sit down with Scott Miller, R.Ph. president of Minnich’s Pharmacy in York, PA, to talk business.
Pharmacy Drive-Thru: Pro or Con? Community pharmacy owners share their opinions on the drive-thru window. 12 SOLUTIONS:
Improving Workflow Streamline the prescription filling process and increase productivity with these tips.
ON THE WEB //
Winning the Low-cost Game Tina Harris-Torres, Pharm.D., found a discount program that works for her patients and her profitability. 34 NOTES:
How to secure your pharmacy and prevent burglaries before they happen.
Taking Part in Take-Back Day The DEA’s National Drug TakeBack Day is April 26. Here’s how you can help.
Explore exclusive online content to improve your business at www.pbahealth.com.
How to Create a Pharmacy Promotions Calendar
Plan front-end promotions at your pharmacy for the whole year with our tips and a free downloadable promotions calendar. Find the calendar on the Marketing section of www.pbahealth.com.
ELEMENTS is published quarterly by PBA Health. Copyright© 2014 PBA Health. All rights reserved. Neither this publication nor any part of it may be reproduced without written permission by PBA Health.
NEWS developing an action plan for your business Finance and small business expert Tom Shay, founder of Profits Plus, will talk about how it’s not the competition that causes a business to fail, but incorrect actions and lack of actions. This motivating presentation will prepare participants to develop a plan of action for their businesses.
B USINESS + PHARMACY 2014 C O N F ER EN C E
JUNE 27 - 29 2014 Mark your calendar! The 27th annual PBA Health Conference & Business Seminar is approaching fast. PBA Health invites you to Envision a bright future for your pharmacy at this year’s conference. The threeday event, exclusively for community pharmacists, will give you expert insight and tools to strengthen your business, turning what you imagine for your pharmacy into a reality. With expert speakers, a tradeshow filled with innovative exhibitors, and numerous networking opportunities, you don’t want to miss this event!
educating your staff to advance your business Shay will come back for a second session that focuses on pharmacy staff development. An educated staff goes a long way toward separating a business from its competition. This session focuses on proven methods to create an exceptional staff that work to drive your business forward. Update on what’s happening with PBM regulation Antitrust attorney and healthcare competition policy expert David Balto, J.D., will bring pharmacists up to speed on efforts to regulate the anticompetitive practices of PBMs. He will discuss current regulatory challenges, as well as Federal and state issues that affect pharmacies. Balto frequently represents pharmacies, pharmacy associations and other healthcare providers in antitrust matters.
AC T I V I T I ES: While you’re there, you’ll also have ample time to relax and explore all that the Kansas City area has to offer.
Golf tournament at picturesque Falcon Ridge Golf Course, one of the best public courses in the Midwest and recipient of Golf Digest’s 2008/2009 Best Places to Play Award Opening night banquet Tradeshow featuring some of the most innovative vendors in the industry and door prizes A night of great food and live, classic rock ‘n’ roll with Smokey Joe’s Café at the New Theatre Restaurant Opportunities to network with other community pharmacists and pharmacy owners
don’t miss this conference! register today at www.pbahealth.com/conference.
2014 ToPiCS And SPeAkerS Strategies to gain new patients Mitch Goozé, president and founder of Customer Manufacturing Group, is an expert in marketing, strategic business planning and customer relationships. He will discuss the importance of strategy and vision to the long-term success of a pharmacy business, strategic options for competing as a healthcare practitioner, and how to differentiate your business in an ever-changing marketplace.
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Structuring your business and succession planning Attorneys Thomas Greaves, J.D., James Betterman, J.D., and Lisa Hansen, J.D., from regional law firm Lathrop & Gage, LLP, will provide expert insight on structuring a pharmacy business, including tax, ownership and succession planning. The panel will address ways to create a more stable business and avoid potential legal issues that can interrupt operations.
Get daily news updates on issues that matter to your community pharmacy by following us on Facebook at www.facebook.com/pbahealth and on Twitter at www.twitter.com/pba_health.
The Problem of Rising Prescription Drug Costs See how a lack of public understanding about the true prices of prescription drugs affects everyone drUG PriCeS Are rAPidly inFlATinG If commodity prices inflated like prescription drug prices, they’d look like this:
Comparing actual inflation to drug price inflation from 2000 to 2009.
Sources: NYMEX, CME Group, Index Mundi
WHy Aren’T More ConSUMerS ConCerned? Consumers generally don’t know how much prescription drugs actually cost. Unlike with eggs, beef, bread and sugar, many consumers haven’t noticed soaring drug prices because they pay a co-pay instead of retail price.
Sources: U.S. Department of Health and Human Services, the National Institutes of Health
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Medco Health Sol inc 1983
express Scripts inc 1986 AdvancePCS/Caremark inc 1987
Sources: U.S. Department of Health and Human Services, the National Institutes of Health
Total Prescription drug expenditures (millions)
WHAT CHAnGed? In the mid-1980s, pharmacy benefit managers started to take over managing prescription benefits for many companies. Consumers stopped footing their entire prescription bill and instead paid a co-pay, which resulted in consumers losing visibility to the true cost of drugs.
PreSCriPTion drUGS & riSinG HeAlTH CAre CoSTS Many factors have been blamed for rising health care spending, including new technology, specialty drug innovations, hospital costs, chronic disease conditions and an aging population. Drug price increases often get overlooked as a contributing cause. Prescription drug Spending Prescription drug expenses accounted for spending in Prescription drug expenses accounted for healthcare spending in
5% of total healthcare 10% of total
The percentage of healthcare costs related to prescription drugs has in
WHy iTâ€™S A ProBleM: Today, consumers often think of their co-pay as the total cost of their prescriptions. This disparity between what the consumer sees and the actual prices of prescription drugs has created confusion and masked how increasing drug prices have contributed to skyrocketing national health care costs.
The amount the U.S. spends on health care has almost doubled since 2000 and nearly quadrupled since 1990. ELEMENTS | pbahealth.com
Pharmacy Drive-Thru: Pro or Con?
Is the drive-thru window a valuable service or a speed bump in your workday? We asked pharmacists their thoughts. At times drive-thrus may make you feel more like a fast food worker than a pharmacist. But when it comes to business, they have their perks. Customers like the convenience, the easy access and the speedy service. At least that’s what we learned when we asked our pharmacist Facebook fans what they thought about drive-thrus. Whether you’re looking to remodel your pharmacy or buy a new building, see what other pharmacists and owners have to say about drive-thru windows at the pharmacy. “Families love it. When a child is sick or a family member is sick, we would certainly prefer them to use the drive-thru. Also, elderly or disabled persons love it. Cons of the drive-thru…we are NOT McDonalds! Sometimes it can be faster to just come inside. People can get impatient in the drive-thru. (They honk or ask what took so long when they get their turn). It also requires having enough help up front. And, in the winter it gets chilly. All in all, I know our store has customers because of the convenience of a drive-thru. Sometimes we just joke and ask, ‘Would you like fries with that?’” -Bridgett Edgar, Pharmacy Technician/Owner, Pharm A Save Monroe, Monroe, Wash.
“It’s the only way to go. I would never build another pharmacy without a drive-thru. From a service standpoint, which is what retail pharmacy is about, this is one of the best service items a pharmacy could offer for its customer base. It's all about the convenience.” -Marcus Wilson, R.Ph., Co-Owner, Integrity Pharmacy, Springfield, Mo.
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Love them or hate them? Community pharmacists share their opinions on having drive-thru windows at the pharmacy.
“We have a drive-thru. With so many things going ‘drive up,’ we were ahead of the game when we added it in 1990. It does have some disadvantages, but the advantages outweigh them. Pros include: Easy access for customers who do not want to get out of their car. Fewer loud screaming children in the store. Great for head lice treatment customers. (Or is that great for us?) And, we get to see the customers’ pets. Cons include: It’s harder to market OTC items. Customers don't get to see our remodeling improvements or our new indoor signage. It really slows things down when there is an insurance problem or the customer has a lot of questions. Overall, I would not have a store without a drive-up window. -Kevin Teegarden, Owner and Business Manager, Chaffee Medicap Pharmacy, Chaffee, Mo.
What do you think about having a drive-thru at your pharmacy? Share your opinion on our Facebook page at www.facebook.com/pbahealth!
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Improving Workflow productivity with these tips A smooth dispensing process can make everything in the pharmacy run better. Patients are happier because they don’t have to wait a long time to get their prescriptions. Pharmacists have more opportunities to counsel patients and improve care. And, your pharmacy’s operating costs decrease. Filling more scripts in less time isn’t a new business idea. But as industry changes put even more pressure on your business, dispensing efficiently is reemerging as an increasingly important practice. Star Ratings, Medicare Part D preferred networks and the imminent shift to performance-based metrics are creating more demands on your time and your employees’ time. As you work to maintain access to patients, taking measures to improve operational efficiencies can help your business stay competitive. Use these six tips to help your pharmacy get more out of using less.
1. idenTiFy HoW THe Work GeTS done We don’t often think about how the work gets done, we just do it. It becomes second nature. But by measuring everyday processes and reviewing each step, you may find overlooked ways to improve them. Try breaking down each step in the process of filling a prescription and getting it to the patient. It may help to have an outside observer, like a non-pharmacist employee or a friend, document every step it takes from start to finish. By becoming aware of the process, it’s possible to make improvements not only to efficiency, but also to productivity and accuracy.
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2. PinPoinT ineFFiCienCieS And WASTe Take a critical look at each step in your process and consider if you can eliminate it, rearrange it or merge it with another step to improve workflow. A good way to reflect on each step is to decide if the step directly creates value for the patient. This idea is based on Lean Thinking, a philosophy for businesses that optimizes workflow by emphasizing value for the customer. The most efficient processes eliminate steps that don’t add value for the customer. Look out for steps that waste time, such as unnecessary movement, and ones that contribute to delays and errors.
3. STreAMline MoveMenT It may seem silly to think about at first, but how many steps do your pharmacists and technicians take to get their work done? Eliminating unnecessary walking can save time and increase productivity. Map out the typical travel route of a pharmacist or technician filling a prescription. Is there any way to bring the work closer to the worker? Where are bottlenecks happening? How can the workstation be redesigned to help staff members more efficiently fill prescriptions?
4. ConSider AUToMATion While a robot can never replace the care an actual pharmacist provides, that doesn’t mean that pharmacy owners can’t use robotics to their advantage. There are all sorts of technologies out there to enhance the dispensing process. From counting technology to high speed dispensing, you have a wide variety of automation options to fit the size of your business—and your budget. Besides improving productivity, investing in automation also frees up your pharmacists to focus on counseling patients, checking blood pressure, giving vaccinations and providing other profitable clinical services.
5. iMProve invenTory PrACTiCeS In the pharmacy, too much inventory ties up cash flow and crowds shelf space, while too little inventory can mean lost sales. Efficiently managing your inventory can improve workflow and, even better, profitability. Pharmacists and technicians are more productive when they don’t have to deal with patient complaints about out-of-stock items or submit extra orders. Some simple ways to improve your inventory management include getting rid of excess safety stock, outdated products and slow-moving items, placing fewer orders, investing in an automated perpetual inventory system and rarely using ‘just in time’ ordering.
6. revieW ProCeSSeS reGUlArly Creating more efficient operational processes is an ongoing task. Be sure to periodically review and adjust your processes to adapt to changes in the work environment. Collaborate with your employees and see if they have any suggestions for improvements. It’s a great discussion for team meetings.
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Smash-and-Grab How to secure your pharmacy and prevent burglaries before they happen By Kirsten Hudson
Pharmacy burglars aren’t looking for money. They usually want narcotics, and they are willing to go to extreme measures to get them. Burglars will cut a hole in a pharmacy’s roof and drop into the store. They’ll try to bust through glass front doors with baseball bats and break in through drive-thru windows. Armed robbers will even hold up a store full of people. And it can happen to any pharmacy. Anywhere. Prescription drugs are the second most abused category of drugs in the U.S., according to the Office of National Drug Control Policy. The Centers for Disease Control and Prevention have even gone so far as to classify prescription drug abuse as an epidemic. And whether it’s due to a drug addiction or for the high street value of narcotics, burglars continue to target pharmacies for the controlled substances they stock. More than 2,990 pharmacy robberies and more than 1,840 pharmacy break-ins have been reported in the U.S. since RxPatrol, a national database that tracks, analyzes and provides information on pharmacy crime, started keeping track in 2001. But according to the Drug Enforcement Administration (DEA), there were 714 pharmacy robberies reported in 2013 alone. Due to the limited data from voluntary reports, the actual numbers of pharmacy burglaries and robberies are likely much higher. It’s clear that as prescription drug abuse and drug diversion continue to trouble the nation, pharmacy owners must take action to secure and protect their businesses.
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It’s 4:30 a.m. two days before Christmas. In the quiet of the sleepy Monday morning in December 2013, a stolen dually truck reverses at full speed from the far end of Curtin Drug’s parking lot right into the front of the building. The collision buckles the pharmacy’s steel security gate and demolishes its front bay windows. The thief jumps out of the truck, grabs four bottles of Percocet® and runs around the corner to a waiting getaway car. The whole incident took just minutes and was caught on the pharmacy’s security cameras. “The entire truck was in my store,” said Nick Curtin, Pharm.D., co-owner of Curtin Drug, a retail pharmacy in Glenpool, Okla. “It took out the entire window frame, bricks, drywall, everything. It took out displays and waiting chairs. It broke the countertop. We had a photo kiosk. It broke that,” he said. “It was tens of thousands of dollars of damage for literally just a few bottles of medicine.” But Curtin and his wife and co-owner, Amie Curtin, didn’t let the break-in stop them from serving patients. “We cleared the debris, put things back in place as much as we could and, although we had a big hole in the building, we were open at 9 a.m.,” Nick Curtin said. “We didn’t miss a single hour of business.” This incident marked only the third successful breakin to the pharmacy during its six years of business. Until now, the pharmacy hadn’t been burglarized since it was targeted twice in one week back when it first opened in 2008. That was when Curtin decided to install the steel retractable security gate, which proved helpful at keeping out break-in attempts but not, unfortunately, a dually truck. “We’ve had a lot of half attempts along the way but nobody has really broken in until now,” he said. While it may seem like an extreme incident, this burglary isn’t an out-of-the-ordinary occurrence in the U.S. There has been a slow but steady increase in pharmacy break-ins over the past three years, according to Pharmacists Mutual Insurance Company. And it doesn’t matter where the pharmacy is located. “Pharmacy crimes tend to occur most frequently in major metropolitan areas, to a large extent because pharmacies are concentrated there,” said Mike Warren, risk manager for Pharmacists Mutual. “But they can strike areas that have never had problems before—and then stop just as suddenly.”
Pharmacy crime can happen—and has happened— even in small communities. “It’s a pretty quiet community most of the time,” Curtin said of Glenpool, the small suburb of Tulsa his pharmacy serves. “We have one of the lowest crime rates in the state. It really can happen to anyone.” SeCUriTy MeASUreS Family Pharmacy, a regional chain of 28 pharmacies in southwest Missouri, has amped up its security since two of its locations were targeted in a string of break-ins back in 2006 and 2007.
Are any of these areas making your pharmacy an easy target for burglars?
Front door Nearly 50 percent of pharmacy burglaries occur through the front of the store, usually by breaking the glass in the door, according to Pharmacists Mutual Insurance Company. Take steps to secure the glass on your front door, such as using a chemically-bonded film, replacing the glass with other materials like polycarbonate, installing glass break alarms or installing rolling shutters or similar barriers. Front windows Posters and advertisements covering your pharmacy’s front windows make it an enticing target for thieves. This concealment makes it more difficult for police or people walking past the store to see inside. lighting Unlit pharmacies after hours make them a more attractive target for burglars. Keep the entire pharmacy lit, or at least keep the lights in the prescription area on, and make sure to light the exterior of the store as well.
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“We’ve made some significant changes,” said BJ Jones, director of security at Family Pharmacy. “Basically the way our stores are set up now, if you come up and try to tamper with the building after hours, it sets off some kind of alarm. We have motion sensors, vibration sensors, RF (radio-frequency) sensors and heat sensors. We have quite a few little gadgets that we use.” In addition to the multi-faceted alarm system, the pharmacies use a robust camera system, with cameras installed both inside and outside all locations. Curtin Drug also uses a sophisticated camera system. “We installed a camera system with DVR, so it records in full-motion video 24/7,” Curtin said. The camera system features remote access, so Curtin can watch his pharmacy anytime, anywhere. The pharmacy
also recently installed an exterior horn. “While the horn we had was deafening inside the store, the residential area behind the store couldn’t hear anything,” he said. “They didn’t know anything had happened.” On top of installing a camera and alarm system, Jones recommends that pharmacy owners thoroughly inspect the construction of their buildings. “When people break in, they’ll come through the roof; they’ll try to bust through the walls; they’ll come through an empty suite next door,” Jones said. He suggests thinking about all of the possible entry points and, if needed, hiring a contractor who can provide some ideas on how to secure your building better. Contacting local law enforcement to request a security screening of your building is another option.
Pharmacy Security Self-Assessment Use this checklist to quickly assess the security of your pharmacy
Physical Look at the construction of your building. Aluminumframed buildings may be more vulnerable to thieves who pry doors from frames. Locks should be burglary resistant.
Install video surveillance. It may deter a thief and it is especially useful when reporting suspicious persons to the police. Other advanced security options include vibration sensors, time-delay safes, tracking devices, fogging systems and DNA markers.
Make sure every access point is locked.
Procedures Check to see if the glass in your front windows is resistant to breakage or otherwise protected.
Create store opening and closing procedures for employees.
Make sure secluded areas are well lit, such as the rear of the building and side doors.
Make lock and alarm code control practices. Restrict access to the narcotics cabinet.
Technology Install an alarm and cover all areas of the pharmacy, including back offices. A recent trend is for criminals to enter pharmacies through roofs or sidewalls into office areas where security cabinets, cash, alarm boxes and video surveillance equipment are kept.
Create procedures and train employees on what to do in the event of a robbery.
Test your alarm system every six months.
Ask a law enforcement officer to come to your store and give your staff security training.
Have a cell phone backup for your alarm and test the system regularly.
Create burglary policies for identifying suspicious persons and what to do if a burglary occurs.
Download a complete pharmacy security checklist at www.rxpatrol.com. Information courtesy of Pharmacists Mutual Insurance Company
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In December 2013, a thief backed a stolen truck into the front of Curtin Drug in Glenpool, Okla. The burglary caused extensive damage to the store, including demolishing its front bay windows, breaking displays and waiting chairs, and damaging the pharmacy’s counter. GlASS ProTeCTion One of the most important areas pharmacies need to secure is the glass front of their stores. “Glass is a big deal,” Jones said. “It’s very easy to break a piece of glass, run in, do what you want and get out. It’s called a smash-and-grab. They’re usually in and out in about 45 to 60 seconds, way before the cops have time to respond.” Almost 50 percent of the burglaries reported to Pharmacists Mutual occur through the front of the store, typically by breaking the glass. Burglars also commonly enter by prying doors open, particularly wood- and aluminum- framed doors. Pharmacies have multiple methods to secure this common entry point. All Family Pharmacy locations use a type of laminate glass on their storefronts. “It’s basically the same type of glass that’s in the windshield of your car,” Jones said. “It’s made up of multiple layers of glass with laminate between those layers, which makes it pretty much shatter resistant.” “I’ve seen on video people trying to break in with baseball bats, crowbars and hammers, and the glass barely chips,” he said. Curtin opted for a steel retractable security gate instead of securing the glass itself. “Window films and things like that protect the glass, but they don’t deter thieves from trying,” he said. “With the steel gate, when you walk up, you can obviously tell that there’s a barrier to getting inside, so most of the time they just don’t even try.” “Plus, it rolls away during the day, so it doesn’t look imposing. It doesn’t look like we’re working behind bars,” he said. “We wanted to make sure to still maintain the family atmosphere of our pharmacy, while having some good security.” The pharmacy also uses glass break sensors that set off an alarm immediately when any glass breaks. “That way the alarm goes off before someone has even accessed the store,” Curtin said.
STorinG nArCoTiCS In Jones’ experience, if someone breaks into a pharmacy it’s extremely likely that they’re after narcotics. “I’ve always heard stories about people going after Sudafed® for making meth. It was a bad problem in this area for a while,” Jones said. “But in every break-in we’ve ever had, not one person has gone after Sudafed. They always go after the narcotics.” Because so many pharmacy crimes are related to narcotics, the DEA suggests that pharmacies keep controlled substances locked up tight. Regulations state that pharmacies must store controlled substances in a securely locked cabinet of substantial construction. While the type of construction of the cabinet isn’t specified, the DEA does suggest that pharmacies take into consideration the crime rate in the area, the pharmacy’s history of theft, the quantity of controlled substances kept on hand, and the number of employees, customers and patients who have access to the controlled substances. A pharmacy may need more or less security to safely store narcotics depending on these factors. All Family Pharmacy locations store narcotics in a time-delay safe. “It’s tough. It takes time to get into, which gives the police more time to respond,” Jones said. For a pharmacy on a budget, Jones suggests making some simple additions to more tightly secure the narcotics cabinet. One option is to install a hasp, which is a metal fastener with a hinged slotted part that fits over a staple and is secured by a padlock. “Someone would have to have some bolt cutters to cut that off instead of just being able to pry the door open,” Jones said. “If you put four of them on the door, then it will take four times as long to get into the cabinet.” Pharmacists Mutual suggests also using good practices such as locking overstock narcotics in a safe during the day, restricting personnel access to narcotics and keeping bottles with limited quantities on shelves to provide to armed robbers.
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It’s also important to know what you have on hand, to keep accurate inventories and to periodically audit your controlled substance inventory. “This will be invaluable in getting reimbursement for stolen drugs,” said Warren of Pharmacists Mutual.
“Chances are, if you are robbed, the criminal has been in the store before looking for motion detectors, cameras, where drugs are kept and how employees handle visitors.” STAyinG AlerT Advanced security systems aren’t the only way to protect your business. Trained pharmacists and staff who check for suspicious persons—such as people who are not buying anything and just loitering in the store—are one of the most effective deterrents. “All too often we encounter situations where criminals are seen on video crawling across the floor, entering back areas of the pharmacy, or only moving down limited numbers of aisles. This is often due to surveillance the criminal has done before the burglary,” Warren said. “Chances are, if you are robbed, the criminal has been in the store before looking for motion detectors, cameras, where drugs are kept and how employees handle visitors.” For Family Pharmacy, a focus on customer service and security go hand in hand. “Every time our employees are at the front of the store and they greet customers coming in, they’re making eye contact with them,” Jones said. “Somebody who is there for less-than-ideal motives does not want to be contacted. They don’t want to make
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eye contact. They don’t want you to bother them. So, we want to help every single customer, even if they’re there to not really be our customer. We want to help them and basically get them out of the store.” BeCoMinG leSS oF A TArGeT At the end of the day, you want to take enough security measures to make your pharmacy not only difficult to break into, but so tough that thieves don’t even want to try. “Well-lit pharmacies with visible cameras, crime prevention signage, alert employees and store arrangements where the pharmacy counter can be seen from the front are less attractive targets,” Warren said. At Family Pharmacy, Jones said his philosophy behind security is to take up as much of a burglar’s time as possible. “Every second gives the police more time to apprehend them,” he said. “I look at security like an onion. It’s not just one big, bulky security system. It has layers. Every time you peel one back, there’s another one you have to go through and then another one.” Curtin agrees. “You’re never going to stop anybody entirely,” he said. “There’s always a way. You want to make it take too much effort to get into your pharmacy, so that it’s easier for them to just go somewhere else.” That’s what Curtin is working on right now, making his pharmacy just a little bit more difficult to crack, especially for vehicles. He recently installed steel poles in the ground outside his pharmacy, spaced a vehicle’s width apart. “You could take that same truck that hit me—or even an armored car—and hit my store and you’re probably not going to get past those poles,” he said. And he suggests all pharmacies take similar precautions. “To me, it’s not the ‘if,’ it’s the ‘when.’ If you think it’s never going to happen to your pharmacy, you just haven’t waited long enough,” he said. “Preparing for it ahead of time will make life much easier. If you’re thinking ‘Nobody’s looking at my store, nobody’s thinking about breaking in,’ you’re wrong. It’s just a matter of time.”
For an exclusive on how to handle an armed robbery at your pharmacy, visit www.pbahealth.com.
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It Pays to Know Expert tips to help you maximize deductions and put your pharmacy ahead of the tax game in 2014 Were your pharmacy’s taxes a little more painful this year than you would have liked? PBA Health’s Chief Financial Officer and tax expert Don Raby offers some advice on how to maximize your pharmacy’s deductions and make the best tax decisions for your business. WHAT Are SoMe STePS THAT PHArMACy oWnerS CAn TAke noW To oPTiMize THeir TAx dedUCTionS nexT yeAr? It’s too late in the year now to do extensive complex tax minimization strategies, but there are a couple of things that pharmacy owners can do even after the year-end. First, owners may still be able to make contributions to qualified retirement plans, depending on their specific situation. Second, they can still make an election under IRC Section 179 to expense certain qualified equipment purchases or leases made during the tax year. This election is made on Form 4562. WHAT Are SoMe TAx-dedUCTABle exPenSeS THAT PHArMACy oWnerS MAy noT Be AWAre oF? Generally, expenses that are deemed ‘ordinary and necessary’ are deductible. The IRS does not deem meals and entertainment expenses as necessary expenses, so taxpayers are limited to deducting 50 percent of money spent on food and entertainment. However, food and meals that are associated with a meeting, such as a store meeting where pizza is purchased, are arguably 100 percent deductible as a meeting expense. A tax break offered to small businesses by Congress
is what’s known as the Section 179 expense. This is essentially an accelerated depreciation expense that allows small businesses to expense 100 percent of qualifying assets in the year of acquisition, instead of capitalizing them and depreciating them over a number of years. It includes property that is bought, leased or financed. This used to be called the “Hummer Tax Loophole.” (One of the most popular uses of the Section 179 deduction has been for vehicles), but Congress and the IRS effectively plugged that hole a couple of years ago. However, this remains an excellent tax-reducing instrument for things such as computer systems, fixtures, and furniture and is easily elected on Form 4562. Storeowners should always consult their own tax adviser before purchasing any significant assets so they understand the tax options that may be available to them. WHAT AdviCe WoUld yoU Give PHArMACy oWnerS WHo WAnT To TAke BeTTer AdvAnTAGe oF TAx dedUCTionS in 2014? Consult your tax adviser before doing anything major or out of the ordinary. If you don’t have a tax adviser, then get one whose focus is on small business. Having said that, the biggest area where small business owners really need to be proactive is in forward planning for the transition of their business to a new owner and estate planning. Both of these are complex issues that require extensive forward planning, but can save big money when those times arrive. CAn yoU reCoMMend Any reSoUrCeS? The Internet has some good resources to do basic research and to help educate business owners. But I would not
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take anything I read on the Internet as authoritative, and I would certainly not recommend any actions be taken based on what one reads on the Internet. The best resource is always a tax professional whose focus is on small business. Find one who will take the time to understand your business, personal situation, and goals. Then ask questions—lots of questions.
“By far the biggest mistake I see pharmacies and small businesses make is a failure to be proactive and seek sound, competent tax advice prior to entering into a transaction such as an asset acquisition or a buy-sell agreement. These are mistakes that can cost serious dollars.” iF A PHArMACy iS lookinG To BUy TAx-dedUCTiBle eqUiPMenT, WHAT iS THe BeST TiMe oF THe yeAr To BUy? WHAT oTHer TiMe ConSiderATionS SHoUld A PHArMACy keeP in Mind reGArdinG TAx dedUCTionS? For most small businesses, the Section 179 deduction election makes the timing of asset purchases or leases, such as computer systems, robots, or fixtures, a moot point. However, if one does not want to make the Section 179 election, the timing for purchasing assets can make a difference. The rule of thumb is that most assets need to be purchased and placed into service prior to the fourth quarter of the current tax year. The timing of purchases affects the depreciation convention that businesses must use. As always, consult a competent tax adviser for specific details.
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Are THere Any CoMMon MiSTAkeS THAT yoU See PHArMACieS MAke WHen iT CoMeS To TAxeS? By far the biggest mistake I see pharmacies and small businesses make is a failure to be proactive and seek sound, competent tax advice prior to entering into a transaction such as an asset acquisition or a buy-sell agreement. These are mistakes that can cost serious dollars and they are situations that can often arise unexpectedly and unavoidably, at inopportune times. Therefore, it is wise to think and plan for them before they happen. iS THere AnyTHinG yoU WoUld like To Add? The one takeaway I would like to leave small business owners with is the importance of seeking sound, competent financial, legal, and tax advice. This is why we invited Lathrop & Gage, a regional law firm, to speak at the 2014 PBA Health Conference & Business Seminar this year about legal and tax matters important to small business owners. Pharmacy owners work way too hard to see a good chunk of their work go to paying unnecessary taxes. I firmly believe in paying one’s fair share, but too many small business owners end up paying their fair share, plus a kicker to boot. This is avoidable, and good financial advice can alleviate much of this burden.
Want advice from experts in financial, legal and tax matters for small businesses? Register today to attend the 2014 PBA Health Conference & Business Seminar at www.pbahealth.com/conference.
About the Expert Before coming to PBA Health, Don Raby, CPA, worked for more than six years at one of the country’s top accounting firms. While there, he worked primarily in the tax department, with a focus on corporate taxation for small business owners, as well as for Fortune 500 companies. Raby has been with PBA Health for more than 12 years, and has worked extensively with pharmacists and pharmacy owners to improve the financial side of their businesses.
A Few Minutes with a Community Pharmacist In this new segment, we sit down with independent community pharmacists to learn more about their businesses, their perspective on the pharmacy profession and how they are riding the waves of change to keep their pharmacies profitable. For this first installment we talked with Scott Miller, R.Ph., president of Minnich’s Pharmacy in York, Pennsylvania.
put a face with a name. We did a couple of expos and it made a huge difference, especially the networking. We’re starting to get involved with local businesses to deliver prescriptions to their place of business and save patients time. We also offer to help with health fairs. WHAT Are SoMe oF THe CHAllenGeS yoU FACe AS A CoMMUniTy PHArMACy? Being blocked out of preferred networks is a huge one right now. People prefer us. They know us. They’ve had a relationship with us. And their insurer wants them to go somewhere else they’re not familiar with, to someone who may not give them as great of care as the pharmacist they’ve used for years. We’ve reached out to several of the preferred networks saying, ‘Our customers want to stay with us. Can we be in your preferred network?’ And they say, ‘We’re not accepting pharmacies into our preferred network at this time.’ Even if we want to, they won’t let us. That’s frustrating. HoW HAve yoU Been ABle To keeP CUSToMerS HAPPy And loyAl To yoUr PHArMACy? Service, service, service. Going out of our way to make sure patients don’t miss a dose. We take criticism from customers seriously, and try to keep the customer happy and feeling good. We make sure they’re confident that we’ll get them their medication in a timely manner at a reasonable price.
Tell US A liTTle ABoUT yoUr PHArMACy. Minnich’s Pharmacy was founded in 1946. It started with a location in downtown York and then a second store opened in 1955, which is the only location we have currently. We are a community pharmacy and also offer long-term care services, personal care and provide services to group homes and assisted living homes. Besides that, we provide vaccines, MTM, wound care, free delivery, and also do some specialty pharmacy. WHAT Are SoMe AdvAnTAGeS To WorkinG in CoMMUniTy PHArMACy? We get to be involved in our community. We like to sponsor events and go to expos to have some visibility, and to
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WHAT Are SoMe oF THe WAyS yoUr PHArMACy HAS evolved over THe yeArS? After talking with past owners about how they stayed in business, they always advise that you have to keep up with technology. Other competitors in the past didn’t and they’re out of business now. We have to continue to stay current. WHAT ServiCe or ProdUCT HAS Been ProFiTABle For yoUr BUSineSS? Our compliance packaging, which we just started, has been profitable. We’re using the RxMap packaging system. With all of the challenges from the chains, we decided we have to do something different and offer patients something that the chains aren’t doing right now. We can provide a local, accessible program to help patients feel better and get better care.
do yoU SCHedUle PATienTS To CoMe in To PiCk UP THeir PreSCriPTionS, like An AdHerenCeTyPe oF ProGrAM? Yes, everybody’s on a two-week cycle. We either deliver it upon request, or they can come and pick it up—whatever they want. They sign a contract initially on how they want to do it. Then we communicate with the physicians, and let them know that their patients are on this service, so any changes should be run with us. do yoU oFFer BUBBle PACkinG? Yes. We’re starting to look at automation and a strip packaging system. We’re trying to find interest in that first before we make that big investment. Some facilities like it, some do not. So, we’re trying to gauge that before we jump in. We’re also doing compliance packaging for the community. We’re starting to grow that business and work in MTM so our pharmacists and techs can get involved too. They’re contacting the patients and seeing how they are feeling, how things are going, what’s working for them. Tell US A liTTle ABoUT yoUr PHArMACy’S MTM ServiCeS. do yoU CHArGe AnyTHinG For THeM? We’re still trying to figure those out; it’s relatively new to us. It’s definitely not a profit-driven thing. It’s more about service and compliance. Of course, with the Star Ratings coming out, that’s going to be part of it. We’re doing whatever we can to increase our Star Rating. MTM is what’s recommended, so we’re doing it. do yoU HAve Any PlAnS To Add ServiCeS? Down the road, there’s probably more we could do with diabetes care. We have some pharmacists who are interested in that. Also, the need for dementia and Alzheimer’s care is going to continue to increase. If there’s a way we can do more with that, we want to. We’re looking at getting involved with some Alzheimer’s organizations in the area. And our compliance packaging falls right in with that. WHAT iS yoUr APProACH To MArkeTinG yoUr PHArMACy? That’s one thing I would definitely say pharmacies should do. Get with a local marketing firm if you can. That really helped us. We met with a marketing firm, and they suggested that we update our look. It’s made
a huge difference and our script counts are up. They do a great job of getting a professional message across. Leave the pharmacists to their care and take the advice of a trusted marketing company that can really help grow your business. WHAT Are THe MoST eFFeCTive WAyS yoU HAve FoUnd To MArkeT yoUr PHArMACy? Working with (our marketing firm) DOCEO Creative, we’ve done some mailers, some ads in local papers, and offered coupons and discounts that have been effective. One of the most popular was when we offered gas cards to new patients who chose to use our delivery service. That was a way to show them, physically in front of them, what they could save by having us deliver. Also, we have utilized our free delivery service in our marketing by having our delivery vehicles professionally designed and wrapped. Since our drivers are constantly making deliveries around the community, our vehicles act as mobile billboards that reinforce our brand and promote this unique service everywhere they go. HoW lonG HAS yoUr PHArMACy HAd A WeBSiTe And Been on FACeBook? We’ve had a website for two or three years now and Facebook for about a year. We had our marketing team update the design when we launched our new brand, but they still function primarily the same. The website is a good source for information and refilling prescriptions, while our Facebook page gives us a chance to interact with customers and give reminders about vaccinations. I think most customers are on the Internet. They’re shopping online; everything Scott Miller, R.Ph. ELEMENTS | pbahealth.com
is online. That’s a majority of where you will be seen nowadays. And that’s where we wanted to devote more of our time and our marketing money. It’s an investment that has paid off for us. WHAT ConCernS yoU ABoUT PHArMACy riGHT noW? That pharmacies are going to be assessed by these Star Ratings and if the rating system doesn’t take into consideration all the other factors and services that pharmacies provide, or variables that limit patients from filling their prescriptions on outstanding customer service. such as finances, it doesn’t tell the whole story about how pharmacy is caring for their patients. I was just hearing from a patient using mail order that their prescription was just automatically refilled, but they didn’t need it. Another place wouldn’t fill a patient’s prescription unless they got all their prescriptions filled. When the patient said ‘I don’t need those,’ they refused to fill the one that was needed. I’m sure it was driven by the pressure to show insurance that this patient is getting all of their scripts, all the time. That makes sense, but if they don’t need it or if they’re financially limited, it can be difficult. If they’re just analyzing numbers in these Star Ratings, it doesn’t paint a complete picture. And if they’re going to block us out based on that alone, that worries me. WHAT MAkeS yoU oPTiMiSTiC ABoUT PHArMACy TodAy? Typically what I’ve seen is that calmer heads prevail. They see the truth and the correct action that should be taken, and they’ll change. A good example is a new law in Pennsylvania, saying that patients can’t be forced to do mail order. That’s a great law. We’ve had tons of customers come back to us because of that.
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Giving patients choice is important. I think if enough consumers speak up and let those who are making the laws and the rules know what’s actually happening out there, I think eventually they find out what is right and correct it. WHAT CHAnGeS do yoU AnTiCiPATe For THe PHArMACy BUSineSS over THe nexT FeW yeArS? We’re definitely going to be held more accountable for outcomes. How they’re going to have us do that, I don’t know. I can definitely see more compliance packaging and more of a clinical setting in pharmacies. WHAT iS yoUr viSion For yoUr PHArMACy over THe nexT Five yeArS? We always dream of having a second store. We also want to increase our long-term care business. Expand our delivery area. Just be able to provide our great pharmacy care to more patients in the surrounding area. iS THere AnyTHinG yoU WoUld like To Add? We are thankful for all the organizations and associations that support and help independent pharmacies stay strong and viable. Would you like to be the next pharmacist featured in this segment? We want to hear from you! Contact us at email@example.com.
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Winning the Low-Cost Game Tina Harris-Torres, Pharm.D., found a discount card program with pricing she could tailor, creating value for her
By Kimberly Van Becelaere
Tina Harris-Torres, Pharm.D. When Tina Harris-Torres, Pharm.D., purchased Thorpe Lane Pharmacy in San Marcos, Texas, more than eight years ago, many of the patients and contracts from the prior pharmacy stayed with her. “The previous owner had a contract with the county to serve indigent patients,” Harris-Torres said. “That program is set up the same way Texas Medicaid is set up—where they can do up to three medicines per month, for up to a 90-day supply.” While starting out her business with a fixed group of patients was great, finding a pricing structure that wouldn’t mean losing money proved challenging. That challenge is what led Harris-Torres to try ScriptCard Plus, a cash discount card program from PBA Health. “I’ve worked with PBA Health in the past, and I’ve always liked their services,” Harris-Torres said. “ScriptCard Plus has been a great fit for my pharmacy.”
WHAT iS SCriPTCArd? ScriptCard and ScriptCard Plus are cash discount card programs designed to keep community pharmacies from losing money to the hidden fees and arbitrary pricing of
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other discount cards. With ScriptCard, pharmacists can determine a discount that is in line with their competition’s pricing, but is still profitable to their pharmacy. ScriptCard offers multiple options to structure discounts, such as setting a minimum dollar amount, replicating a competitor’s discount or implementing tiered rates dependent on AWP pricing. Pharmacists also have the option to set up their own unique pricing structure. ScriptCard Plus, which Harris-Torres uses, is an extension of the ScriptCard program and offers one low, everyday price on a formulary of prescriptions that cover more than 8,500 NDCs across 400 categories. Pharmacists set the price on “days supply/dose” combinations to ensure fair and acceptable rates. An advantage of ScriptCard Plus is that in the event that a claim doesn’t qualify for ScriptCard Plus pricing, the program will automatically revert to the discounted rate established for the standard ScriptCard program. With both ScriptCard and ScriptCard Plus, no new software is required; you can enroll patients into your existing POS system. And you’ll avoid the sky-high administrative fees of other plans that cut into your profits.
PBA Health can custom design a discount card for your pharmacy. You can also tie your loyalty rewards program into ScriptCard, so one card is all your patients need.
Lessons from a Pro
Tina Harris-Torres, Pharm.d., offers a few tips for creating a successful discount card program. A BeTTer WAy When Harris-Torres set up her pharmacy’s pricing structure with ScriptCard Plus, she looked objectively at her competition in the low-cost market. “Walmart is very big in our area and the H-E-B grocery chain does a $5 plan,” she said. “I couldn’t really compete on the 30-day price, because there is no way I can go down to $4 or $5 and still meet the cost of filling scripts. But I looked at being able to do the 90-day supply at $12.99. It’s maybe a little more than what my competition does, but it still meets the needs of my customers.” Using ScriptCard Plus, Harris-Torres was able to implement fair and consistent pricing for the county program, as well as a voucher program she offered to local churches and groups like the Salvation Army. And with a value-oriented program of her own, she has converted patients who come in with other cash discount cards. “Our county and a lot of other places are constantly sending out discount cards. People will bring them in asking, ‘What is this?’ and I explain that it’s not a discount off of insurance price. There’s a lot of disconnect with that.” “Once I explain it to them, I also tell them that lots of
Use what you know to develop a formula that works. “To determine my pricing, I looked at what our plans in the past offered, what my competition was doing, and what my cost of dispensing was,” Harris-Torres said. “I couldn’t compete with the chains on monthly cost, but by doing the 3-month plan, I could compete. That’s how I chose my 90-day, $12.99 price.” Consider what your patients need, and build around them. “A lot of my (cash) patients were interested in 90-day refills. I also do a lot of vouchers with various entities in the community like the Salvation Army, different churches, and other groups. I was able to build a plan with ScriptCard Plus that met the needs of those particular groups of patients. It came out to be a really good match.” you don’t have to match a competitor to offer value. “You don’t necessarily have to meet the exact price of your competition. If you are within a couple of dollars of what they do, and you have better service, patients will come to you.”
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times there are hidden fees involved for pharmacies to fill on this, but that I have an alternate discount program that I can use. Most people will say, ‘Oh, okay. We’ll go ahead and use yours so you don’t get hidden fees.’” Harris-Torres has found success with her discount card program by taking a balanced approach. Her pharmacy is able to cover costs and see profits, while customers recognize the value. “For some cash customers, for even a dollar’s difference in price, they’ll go to Walmart or H-E-B,” she said. “But for a lot of my loyal customers, offering them a competitive discount program is an added benefit to the personalized service we give them.”
“I think the ScriptCard program gives you another option to help your customers perceive more value in your pharmacy; it shows that you care enough to help them find a solution to the cost of their medications.”
Make It Your Own
PBA Health can custom design a discount card for your pharmacy with your logo and information. Call 800-333-8097 or email firstname.lastname@example.org to start your program today!
Profile of Thorpe Lane Pharmacy’s Discount Card Program discount Card Service ScriptCard Plus through PBA Health. discount Card Patient demographics Cash-only customers; patients with insurance that doesn’t cover their prescription; indigent patients served through the county; patients participating in voucher programs. Pricing Structure $12.99 for a 90-day supply.
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Managing Sign-Up Patients are enrolled using the pharmacy’s existing POS system and assigned a unique cardholder ID. The pharmacist then selects the reimbursement rate or another price the pharmacist wants to apply. number of Patients Participating Approximately 200 to 300 per month.
Taking Part in Take-Back Day In an effort to get unused prescription drugs out of people’s medicine cabinets––and away from those who might abuse them––the Drug Enforcement Administration (DEA) is sponsoring a National Drug Take-Back Day on April 26. Getting involved with your local take-back event is a great way to help fight prescription drug abuse in your community. Here are just a few ways your pharmacy can help. oFFer To HelP WiTH A TAke-BACk evenT Current DEA guidelines specify that the return of controlled substances can only be done with the direct involvement of law enforcement, so be sure to talk to your local DEA office about ways your pharmacy can participate. “You definitely need to contact the local DEA office to register and to sign up,” said Dawn Dearden, a spokesperson for the DEA. “It varies from division to division on where they allow take-back events to be held. Your best bet is to reach out to the local office.” The DEA handles the collection and disposal of all returned drugs.
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Tell yoUr PATienTS HoW To PArTiCiPATe Promoting your local take-back event to patients will help make it more successful. And patients will appreciate the opportunity to get rid of unwanted medications in a safe and responsible way. Dearden noted that the response to past Drug Take-Back Days has been very positive. “We are constantly amazed by how much is turned in each time,” she said. “We’re talking several hundred tons of pills that have been collected.” Let your patients know about an event in your area with announcements on your pharmacy’s website and social media pages. Placing flyers in patients’ prescription bags is another budget-friendly way to spread the word about Take-Back Day. For more information on National Drug Take-Back Day, visit www.deadiversion.usdoj.gov or talk to your local DEA office about how your pharmacy can help on April 26.
Drug take-back, in numbers
1,733 tons – total amount of expired and unwanted medications collected in the previous take-back events.
5,683 – number of collection sites that took part in the most recent event.
2 – number of Drug Take-Back Days per year, one in spring and one in fall.