Elements Magazine Vol. 10 Iss. 2 June 2021

DRIVING UP SALES How to boost OTC sales in an age of drive-thru and delivery

BUDGETING BASICS Principles for an effective pharmacy budget

SPECIALTY PHARMACY Are independent pharmacies missing out on the fastest-growing part of the pharmacy market?

VOL. 10 ISS. 2 | JUNE 2021

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CONTENTS ON THE COVER

18 FEATURE

| Specialty Pharmacy

Are you missing out on the fastest-growing part of the pharmacy market?

DEPARTMENTS

06 NEWS

| Digital Dollars

Consumers ditch their wallets for smartphones

08 TRENDS

| Driving Up Sales

10 RETAIL

| Modus Operandi

FEATURE | Specialty Pharmacy

How to boost OTC sales in an age of drive-thru and delivery

Find out what makes shoppers tick

10

14 SOLUTIONS

| Only Human

The top human resource issues for small businesses

24

26

SPOTLIGHT | Buying Better How one pharmacy network saves big on its cost of goods

MONEY | Budgeting Basics Principles for an effective pharmacy budget

30 OUTLOOK

| Techs at the Ready

How to make the most of your pharmacy technicians

ELEMENTS | The business magazine for independent pharmacy | JUNE 2021

RETAIL | Modus Operandi

3

E

ON THE WEB

ELEMENTS

The business magazine for independent pharmacy

VOLUME 10, ISSUE 2

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

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

How Much Does It Cost to Run a Pharmacy?

Discover how much you should be spending on all facets of your business—and learn how to keep those costs down.

CONTRIBUTING WRITER Erin E. Rand

INTERESTED IN ADVERTISING? elements@pbahealth.com

Pharmacy Financials 101: Financial Statements Here’s what you need to know about these important documents for your pharmacy, along with how you’ll use them.

5 Purchasing Tips That Could Save Pharmacies Thousands Use these five tips for strategic purchasing to save thousands a month and become a more profitable operation.

Follow Elements magazine on Facebook, Twitter and Elements magazine is published quarterly by PBA Health. © 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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Instagram for pharmacy business tips and advice, news announcements, industry information, and exclusive offers.

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ELEMENTS | The business magazine for independent pharmacy | JUNE 2021

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Member FDIC | Equal Housing Lender

NEWS

DIGITAL DOLLARS Consumers ditch their wallets for smartphones

N

ew data from two firms demonstrates that the Covid-19

Small businesses like independent pharmacies may find it difficult

pandemic spurred the growth of contactless mobile

to adopt mobile payments because of technological barriers. Many

payments—and that the technology is here to stay.

mobile payment options require a special point-of-sale terminal,

which means smaller businesses sometimes have to invest in costly

Contactless mobile payments typically work in one of two ways.

The first is by using Near Field Communication, or NFC. NFC uses

upgrades to take advantage of mobile payments.

radio waves to send information between two compatible devices.

Other mobile payment options use QR codes displayed on the phone screen, which are scanned to trigger a bank transfer.

The analyst firm eMarketer notes that the number of

Americans using mobile payments grew by 29 percent in 2020, and now 101.2 million Americans use their smartphones to make contactless payments in-store.

"Many consumers tried mobile wallets at point-of-sale for the

first time last year to avoid using paper currency and debit and credit cards," said Oscar Orozco, a forecasting analyst at eMarketer.

Right now, millennials and Gen Z make up the biggest chunk of new mobile payment users, but eMarketer forecasts that by 2025, more than half of all smartphone users will use some sort of mobile payment. And by 2023, the annual spend per user will reach $3,000.

Apple Pay is currently the biggest player in the mobile payment

game, with 43.9 million users, while competitor Google Pay has 25 million users.

The Italian firm Finaria also reports that mobile payments are

growing globally, with the market predicted to be worth $3.5 trillion worldwide by 2023. It notes that in addition to appeasing worries about germs during the coronavirus pandemic, consumers have adopted the technology because it means they no longer have to carry cash and don't have to worry about their wallets being stolen.

Finaria also recognized that though the pandemic caused

mobile payment adoption to spike, the technology had begun to catch on before coronavirus. In 2017, 298 million people were using mobile payment options. By 2019, that number had more than tripled to 901 million users.

The trend started in China, which still has the highest number

of mobile payment users, but the United States has caught up to become the second-largest market for mobile payments. Finaria predicts the American market will grow by 49 percent to be worth nearly $700 billion in 2023.

One of the biggest barriers to mobile payment adoption,

according to eMarketer, is that older consumers tend to find it difficult to set up their mobile wallet. Even when they do get it set up, they don't use the app consistently.

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CONTACTLESS OPTIONS When it comes to adopting mobile payment methods in your pharmacy, you have a few different options.

Remember, your patients might not know how to use these technologies, so be ready to educate them on the options you offer.

RFID-ENABLED CREDIT CARDS Credit card companies have recently added RFID technology to their cards. If patients have an RFIDenabled card, they simply tap their card against your point-of-sale device.

The biggest perk of RFID payments is that there are no additional fees, aside from the usual credit card fees.

All you need to start accepting them is a point-of-sale terminal that works with RFID. APPLE PAY AND GOOGLE PAY Patients with Apple and Android smartphones can set up contactless payment through Apple Pay or Google Pay, respectively. They just add their credit or debit card information to the app and put their phone near a POS terminal that accepts contactless payments.

These payments are treated like physical card payments, with no additional fees.

PAYPAL PayPal recently introduced a contactless payment service. To use it, patients use the PayPal app to scan a QR code associated with your pharmacy and type in the amount they want to send.

Merchants pay 1.9 percent plus $0.10 for each transaction, but you don't need a POS system that accepts contactless payments.

BESPOKE APP Retailers like Starbucks, Walmart, and Chipotle have turned their mobile apps into custom contactless payment options. If you currently have a patient-facing pharmacy app, you could too. Then encourage patients to use your bespoke app by tying it to your loyalty program.

ELEMENTS | The business magazine for independent pharmacy | JUNE 2021

7

TRENDS

DRIVING UP SALES How to boost OTC sales in an age of drive-thru and delivery

W

hile many pharmacies have opened their doors and resumed

eventually become part of the scenery and lose meaning. Barney

normal operations after the initial outbreak of coronavirus,

said, "Whatever your message may be, frequently changing

many patients who switched over to curbside pickup, drive-thru, or

the artwork or offers enhances the customer experience. Be

home delivery will stick with those services for good.

consistent. It will build brand awareness and hopefully increase

sales opportunities."

Pharmacists used to be able to talk with patients at the counter

about new services or rely on patients to add impulse buys to their baskets. Now, patients' contact with the pharmacy might be limited

DO THE LEGWORK

to a quick greeting through a car window. That means pharmacies

Since many patients may spend less time physically in the store

need to go the extra mile to communicate about their products and

post-pandemic, you’ll likely see a decrease in impulse buys. "It really

services to engage current patients and attract new folks to the store.

is tricky, because impulse buying is definitely a little removed now,"

Elements spoke with Brooke Barney, marketing and creative

Barney said. "I don’t think we’ve found the magic bullet for this yet."

services director at Pharm Fresh Media, about what marketing

However, if you do some of the legwork for them, you can make up

moves independent pharmacies can make to stay connected with

for lost opportunities.

patients in this age of drive-thru and delivery.

"One thing we’ve done for clients is put together pre-packaged

care boxes," Barney said. "If you know someone is coming in for

It’s free real estate for pharmacies TO PUT signage out & reach people.

Covid or flu testing, we put together some boxes that include overthe-counter recommended items like Tylenol or decongestant."

You can create these pre-packaged bundles for any category

in your store—pampering packages of cosmetics and self-care items, grab-and-go birthday baskets for kids in different age ranges, or summer fun baskets with sunscreen and other warmweather essentials.

Keep patients thinking about your front-end items even when

they’re not browsing the shelves by focusing your advertising and promotion efforts on what is in season. Patients know you will always have cold medicine on your shelves, so be sure to highlight products that are new or especially relevant for the season.

On your social media channels, post about seasonally in-demand

products to let patients know what you have in the store, and be SIGNAGE HELPS SELL

sure to mention that they can be easily added to a curbside pickup or

Although many of your patients might skip the trip inside, a number

delivery order. "Use technology like QR codes to drive people back to

of them will still visit the pharmacy for curbside pickup or drive-thru

the website," Barney advised. "Tell them what’s happening and what

services. Use the time they spend on the premises to your fullest

sales you have going on or what merchandise is available. We always

advantage with signage that communicates all you have to offer.

find that if you can get people back to the site or to social media, it’s a

good opportunity to showcase merchandise."

"It’s free real estate for pharmacies to put signage out and

reach people," Barney said. "Posters, banners, window clings, and other signage are a great way to make a quick visual impression

DIRECT MAIL

and draw attention to current offers or in-store specials and

Even though patients are probably spending more time on

services." Treat your drive-thru like a fast-food drive-thru

screens than ever, Barney suggests that a more traditional form of

experience by creating a "menu" of popular OTC items that patients

marketing can still capture their attention. "We've had really great

can order from the comfort of their cars.

luck with the direct mail campaigns we've run," she said.

Change your signage often to keep your message fresh. A sign

that’s been at your drive-thru window for six months to a year will

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If you can't communicate with patients in person at the

pharmacy, direct mail is an excellent way to reach them and stand

out from the crowd. Gallup reports that 4 in 10 Americans look forward to checking their mail every day. By using direct mail in your marketing, you'll reach patients when they are in a good mood and receptive to your message.

You can send mail to your existing patients to inform them

about your current promotions or remind them about your services, but you don't have to know the names and addresses of individuals to take advantage of mailers. The U.S. Postal

TAKE ADVANTAGE OF GOOGLE MY BUSINESS

Service’s Every Door Direct Mail (EDDM) program is a potent tool for reaching people by mail. EDDM helps you reach your whole

When you have a complete Google My Business profile,

neighborhood or whole town via mail, even if you don’t have every

customers are 70 percent more likely to visit, according

address in your pharmacy records.

to a Google study.

The Postal Service even lets businesses target specific

neighborhoods using demographic criteria like age, household

The service is a critical opportunity to connect with new

size, and income, so you can make sure you're reaching the right

and potential patients and make your pharmacy more

potential patients.

SEO-friendly. Once you’ve verified your account and claimed your business with Google, these are some of

MULTICHANNEL MARKETING

the features and insights you’ll have access to:

Although direct mail is a great way to reach new and existing patients, it shouldn’t be the only way you reach out to them. For

• Put your pharmacy on the map

Barney, the trick to successfully advertising your services is using

• Read and respond to patient reviews

multiple channels to get on each patient’s level. "Personalize the

• Find out what search terms people are using to find you

experience as much as you can," she said. "Meet them where they

• Manage multiple location listings

are, whether that’s in print advertising, through the mail, through

• Schedule appointments directly through Google

email, or through paid advertising on social media." Combine your

• Message with patients

direct mail with a QR code, for example, and turn the people you

• Show what you have in stock with a Pointy device

connect with via mail into people you connect with online.

A multichannel marketing effort helps ensure that patients

don’t fall through the cracks. This is especially important when it come to your services—although most products can be delivered or picked up at the curb, you have to do some extra work to get people back into the store for in-person services like immunizations or point-of-care testing.

"It’s about being relevant and being timely and keeping your

Barney recommends cross-posting anything on your social media

brand at the top of mind," Barney explained. "Right now, everyone

to your Google page. This way, you have a better chance of

is wondering if you have the shot. I think both email and social

showing up sooner in searches, giving you an edge over some of

channels would be a great way to communicate that."

the big-box pharmacies in your area.

USABILITY MATTERS With a growing emphasis on digital, the user experience on your website is more important than ever. "You always want to find a way to get people back to your website, and ease of use will help you showcase your products," Barney said.

When it comes to online experiences, simpler is often better.

"We do a lot of WordPress sites that are straightforward: who we are, what we offer, and how you can get in touch with us," Barney said. "Use your own branding, but keep it very simple for a better user experience."

Google My Business is one platform pharmacies often overlook,

Barney said. "It's important that pharmacies house all their current information there. This is a conversation we've been having with

Meet them where they are, whether that’s in print advertising, through the mail, through email, OR or through paid advertising on social media.

many of our clients, making sure that everything is current so you can be found in this ocean of Google."

ELEMENTS | The business magazine for independent pharmacy | JUNE 2021

9

RETAIL

MODUS OPERANDI Leverage consumer behavior to increase front-end sales

W

hat motivates shoppers to patronize an independent pharmacy rather than a big-box store or national chain?

And how can you get them to purchase more from your front end?

Michael Solomon, a professor of marketing at Saint Joseph’s

University and author of The New Chameleons: How to Connect with

attention, they can even become brand ambassadors. Acknowledge them through financial incentives, a loyalty program, or even just a shoutout on your website or social media pages. At no cost to you, you can honor your most loyal patients with a "Patient of the Week" feature on your Facebook page. This not only makes the

Consumers Who Defy Categorization, has spent his career helping

chosen patient feel positive about your pharmacy, but it may also

companies use consumer behavior to make them more customer-

inspire warm feelings from others in the community because it

centric. "Retailers still have the mindset that people go to stores just

demonstrates how strong your ties are. "The important thing is to

to buy things. That's no longer the case," he said.

not take them for granted," Solomon said.

Different people have different approaches to shopping. By

While you work to build relationships with your patients, you can

learning what makes your patients tick, you can provide better

also use what you know about consumer behavior to increase their

products and services, improve loyalty, and encourage them to

basket size when they come into the pharmacy. "They may always

buy more.

come to you to pick up their prescriptions, but they aren't necessarily buying other things. Cross-selling and upselling is really something

THREE TYPES OF SHOPPERS

that you have to focus on," Solomon said. It doesn't have to feel like

Solomon described three primary types of shoppers. There are

a hard sell. Done right, cross-selling and upselling are additional

those who are task-oriented: they know what they want, so they

ways to prove you know your patients well. You have a relationship

go into the store, they find it, and they get out. "They value a clean

with them, so you can recommend products and services that you

layout and clear signage more than the experience of shopping,"

know will actually improve their lives.

Solomon said.

advantage," Solomon said. "Give them a reason to visit other parts of

Then, there are the recreational shoppers. "These are the

people for whom shopping is an activity. It’s a social outlet,"

"The fact that you have them in the store is already a huge

the store that they don't normally visit."

explained Solomon. However, the Covid-19 pandemic has diminished these kinds of shoppers. With masking, plexiglass, and

REACHING TASK-ORIENTED SHOPPERS

floor stickers encouraging six feet of distance, dramatically fewer

Even though task-oriented shoppers are a tougher nut to crack, you

people treat shopping as a fun activity these days.

can still get more out of their visits to your pharmacy. Patients have

plenty of options to get the things they need through an online

The third kind of shopper is the most critical for small

businesses like independent pharmacies: the relationship-oriented

retailer or mail-order pharmacy, so the fact that they still choose to

shoppers. "They tend to value local businesses," Solomon said. "They

shop in person is already a win. "There are additional costs, both

are the ones who want to walk into the store and be recognized by

financial and psychological, to going into a store. Getting there,

name. They tend to be the anti-Walmart shoppers." If you can meet

finding a parking spot, dealing with crowds," Solomon explained.

the needs of relationship-oriented shoppers, you can turn them into

powerful allies for your pharmacy.

instead of ordering online, figure out a way to reward them for it.

When patients choose to do their shopping at the pharmacy Solomon posed the question, "What is the value-add that you

REACHING RELATIONSHIP-ORIENTED SHOPPERS

provide to justify the additional time it takes to go to a physical

When thinking about consumer behavior, your relationship-

store?" Task-oriented shoppers might be at your pharmacy only to

oriented patients should be a priority. "It always surprises me

pick up a prescription or only to buy a certain OTC medicine, but

when stores and retailers focus more on acquiring new customers

once you have them in the store, you have an opportunity to engage

than on nurturing the customers they have," Solomon said. He

them and divert them from their single task.

points out that it's more expensive to gain a new customer than

to maintain a relationship with a current customer, "yet business

them to try out products in the store, whether it's testing a rock-

owners lose sight of that."

climbing harness on a rock wall or trying on a jacket and getting

doused in a rain chamber. Although your independent pharmacy

Foster your relationship with current patients by acknowledging

what they do for your store. If you give them the right sort of

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For example, REI engages its customers by providing ways for

may not take such extreme measures, you can still make sure

patients have the opportunity to experience products beyond

MOTIVATIONS MOVING FORWARD

looking at them on the shelves.

The past year has changed consumer motivations and behavior

You could give your store an educational focus and provide

significantly—including a massive acceleration of online purchasing.

material to help patients learn about health conditions. Or you could

But Solomon sees one trend in consumer behavior that could work

get more out of your cosmetics aisle by providing free samples or

in the favor of independently owned businesses: loyalty.

displaying illustrations that demonstrate how to use them.

years, but we're now seeing consumers value companies that give

"It takes more creativity, but if you're in the mindset that your

store is basically a warehouse that people come to pick up stuff off

"We've seen a big decrease in loyalty for at least the last 10

back," he said. "Companies that are not just talking about it, but

the shelves and then leave, you're eventually going to lose out to

they're really walking the walk."

Amazon. There's no way you can do that as efficiently as they do,"

Solomon said. "You have to compete with that threat by doing things

get involved in your community in a way that is impossible for big

they can't do."

corporate chains. Set yourself apart and cement relationships by

As an independent pharmacy, you have an opportunity to

finding out what causes matter to people in your area and making PERSONALIZING MERCHANDISING

a meaningful contribution. "People are looking for evidence that

Knowing what kind of shoppers frequent your store will help you

when they visit you, it's not just a one-off transaction," Solomon

tailor product displays and selection to the specific demographics of

said. "They want relationships with entities they trust."

your customers. "Understand who your customers are," Solomon said, "and then develop your merchandising plan in accordance with that."

When you know the wants and needs of your patient base, it

affects not only what you stock but how you stock it. "If you’re trying to cram everything into a relatively small retail space and hoping people find it themselves, it’s probably not the best idea," Solomon said. He encourages stores to think about the "atmospherics," paying close attention to how people generally move through the store and which sections get the most traffic.

If you don’t have the resources to do formal research on

your community, Solomon recommends taking advantage of your best patients and empowering them to help you understand your business. That means talking to them while they are in the store to find out what they like about the pharmacy and what they think would make the pharmacy better.

Not only could patients pass along great ideas, but asking them

can also engender loyalty. "When we’re asked for our opinion, we tend to care a lot more about who asked it," Solomon explained. "I think that’s especially true in health-related categories, where people want to be more empowered about their health decisions and see a pharmacist as a credible source."

TELL YOUR STORY Storytelling is a powerful tool to motivate consumers. Solomon explains that as a small business, the story of how you came to be in the community is an important asset.

"People really want to know who they're dealing with, and they want to know your backstory," he said. "If your pharmacy has been family-owned for 30 years or is run by a married couple that are both pharmacists, people want to know that." A large chain retailer may compete on prices, but they can't compete with your history.

Use the story of your pharmacy in your marketing to make and strengthen consumer connections.

Emphasize your history of giving back, if you can.

"One of the biggest factors that determines loyalty

CUSTOMER JOURNEY MAPPING To get a sense of how your patients are engaging with your pharmacy, Solomon recommends creating a customer journey map.

is corporate social responsibility," Solomon said.

"It shows you're connected and you're an integral part of the community. It's one of the strongest arguments you can make."

Customer journey mapping is when you track patients as soon as they walk through the door and note where they go. Do patients typically wander, or do they go straight toward the pharmacy counter?

When you understand how your patients navigate the pharmacy, use that information to maximize traffic to other parts of the store. That could mean creating displays that encourage patients to stop and look or rearranging shelves to funnel them to other parts of the pharmacy.

ELEMENTS | The business magazine for independent pharmacy | JUNE 2021

11

RECREATIONAL SHOPPER

RELATIONAL SHOPPER

WHO THEY ARE Recreational shoppers view shopping as an activity, as a social outlet.

WHO THEY ARE Relational shoppers value local businesses. They want to walk into the store and be recognized by name. Their feelings of connection with the pharmacist and other staff are pivotal to winning loyalty.

HOW TO MARKET • Focus on the store experience as a value-added dimension to procuring medications and other products

HOW TO MARKET

• Show patients how their lives will improve if they participate in wellness education activities that the store may offer

• Talk to these patients, call them by name • Recognize their loyalty with titles, badges, or perhaps special discounts

• Be the "go-to" location for healthy living

• Solicit their advice about your store design and other strategic questions

HOW TO MERCHANDISE • Provide educational and "fun" stimulation in-store

HOW TO MERCHANDISE

• Use principles of gamification to make shopping for mundane products more engaging (like introducing competitions, badges or other rewards that test patients’ knowledge of medical/wellness topics)

• Use signage, patient photos, and other collateral to underscore your store’s ties to the community • Provide opportunities for pharmacy staff to forge relationships with patients, for example by hosting "meet and greets" or "lunchtime learning" sessions where you share information about medications and other health issues

TASK-ORIENTED

SHOPPER

WHO THEY ARE Task-oriented shoppers know what they want.

They go into the store, find it, and get out.

HOW TO MARKET • Focus on convenience and efficiency • C onsider using a CRM (Customer Relationship Management) system to identify their needs in advance to expedite the process of dispensing prescriptions HOW TO MERCHANDISE • Include adequate "wayfinding" signage in the store • Avoid long lines that keep customers waiting to avoid "register rage"

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SOLUTIONS

ONLY HUMAN

The top human resource issues for small businesses

F

rom plumber to president, an independent pharmacy owner

my first clients out of law school had about ten I-9 forms and 500

might play a dozen different roles in any given week. With so

employees, so they were looking at close to $1 million in fines."

many roles to juggle, some can fall by the wayside. One commonly

neglected role is human resources, which can have consequences as

the small business owner simply doesn’t know any better. "In

Huston sees these mistakes occur time after time because

far-ranging as losing a good employee to losing your whole business.

businesses with under 50 employees, almost nobody understands

employment laws," Huston said. "If you have HR at all, it’s generally

"Human resources may not put food on the table, but it can

sure take it off the table," said Brian Huston, an employment law

someone who’s also handling payroll and birthdays, and when

attorney and CEO and founder of OutrightHR, a human resources

harassment claims come up or things like that, that’s probably not

consulting firm. "If you get bound up in compliance or legal

who you want to handle those issues."

disputes it can devastate a company, especially a small- or medium-

sized company."

breaks down several areas of HR where pharmacies should show

due diligence and save themselves from costly problems.

Whether from the government or an upset employee, fines

To help owners fend off the most common errors, Huston

and lawsuits can add up to tens of thousands of dollars. Huston recently witnessed a wrongful termination claim from an employee

1. I-9 FORMS

who was fired after failing to come up with a work-from-home plan

I-9 forms verify that an employee is authorized to work in the

as she was asked—because the employer didn’t use the proper

United States. The forms are simple, but small businesses routinely

protocols, the employee was able to negotiate a settlement of

fail to fill them out correctly. "This is something almost every

$60,000. "I think the company had about 10 employees. That can

company I go into needs to work on," Huston said. "Nine out of ten

just about break a business owner and that's kind of on the smaller

companies I audit make grievous mistakes, and the other one is still

end," Huston said.

making at least a few mistakes."

Another employer failed to pay an employee overtime for

When Huston audits his clients, he consistently comes across

working more than 40 hours between two separate restaurants

errors on form after form, even when the owner is confident that

that the employer owned, a mistake that ultimately led to a

everything is accounted for and correct. They might have forgotten

Department of Labor audit costing the company more than

to put the employee’s name on page two, for instance, or neglected

$300,000 in back pay and penalties.

to check the box that asks whether or not they used a translator.

"The form isn’t that complicated, but it’s really easy to miss things,"

Government fines stack up for various omissions or errors

in certain forms, too. Failing to properly fill out an I-9 form, for

Huston said.

example, can cost nearly $2,000 per form per employee. "One of

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The business receives fines based on mistakes made on the

form, such as forgetting to check a box or failing to fill in the date

next to the signature. Though small, the errors trigger fines that

3. DIFFICULT CONVERSATIONS

accumulate into large sums. "It is actually a revenue generator for

At some point in every manager’s job, there comes a time for a

the government, and fines have been increasing in the last decade,"

crucial conversation with an employee. "Whether it’s performance

Huston said. The fines scale based on how much of the document

reviews or just daily gripes, being upfront and addressing difficult

is filled out incorrectly, from $230 to $1948 for the first offense.

topics early and often will make your life so much easier," Huston said. "It’s hard to tell someone they aren’t doing a good job, but it’s only by having that difficult conversation that you have the ability for change to occur. One of my former clients, an HR manager

I-9 Fines: Penalties for Technical Violations According to ICE’s website, "For I-9 fines, the auditor will divide the number of violations by the number of employees for which a Form I-9 should have been prepared to obtain a violation percentage. This percentage provides a base fine amount depending on whether this is a first offense, second offense, or a third or more offense. The standard fine amount listed in the table relates to each Form I-9 with violations."

See the table for a full look.

for a large company, had a sign above her desk that read ‘Put up with it and you’ll get more of it.’ That was in response to managers who kept coming into her office with complaints about employees.

When she asked if they’d talked with the employee about it, they almost always would say no, so she’d point to the sign."

The best way to handle difficult conversations is to create a

formal policy requiring routine meetings and reviews between managers and their employees. That forces management to have the hard conversations and provides a natural opportunity for those conversations to occur. "I think the more formal and

Standard Fine Amount

Substantive Verification Violations

1st Offense $230–$2,292

2nd Offense $230–$2,292

3rd Offense + $230–$2,292

0%–9%

$230

$1,146

$2,292

10%–19%

$573

$1,375

$2,292

20%–29%

$917

$1,604

$2,292

30%–39%

$1,261

$1,834

$2,292

40%–49%

$1,604

$2,063

$2,292

50% or more

$1,948

$2,292

$2,292

Source: www.ice.gov

routine you can make it the better," Huston said. "I am a big fan of performance reviews and having regular meetings with employees."

Although performance reviews are important, they can backfire

if the evaluations aren’t accurate and honest. Many reviews use a rating scale of 0 to 10, and companies will usually keep their rating within the 7 to 10 range, even for the worst employees whose performance is poor enough to get them fired. "We tend to overinflate because people don't want to have those hard conversations or they don’t want to address the problems," Huston said. When that happens, the plaintiff can point to their rating and make a case for discrimination or some other cause for the firing besides poor performance.

2. ONBOARDING PROCESS Huston routinely encounters a lack of effective onboarding processes in small businesses, which ultimately affects a new employee’s perception, productivity, and retention. "First impressions matter. You put a lot of weight on your first day of the job," Huston said. "A thing called imprinting occurs, it forms your opinion of the business. An uneasy first day is going linger with you,

Being upfront and addressing difficult topics early AND often will make your life so much easier.

especially if you’re not clear on your role."

Huston referred to a well-known internal study in the ’80s by

Texas Instruments comparing two different groups of new hires.

One group had a two-hour onboarding orientation and filled out paperwork; the other group had a full-day orientation that included

4. HANDLING COMPLAINTS

shadowing other employees and getting to know their colleagues

When employees have a complaint or grievance, they should

over lunch. In the second group, turnover fell by 50 percent and

have access to confidential channels within the pharmacy to voice

productivity increased by 40 percent.

their concerns. Giving them an outlet helps you get ahead of the

problem—otherwise, the employee could report it directly to the

Huston recommends hosting a full day of orientation for every

new hire and structuring it so they leave the day with everything

Equal Employment Opportunity Commission (EEOC). By providing

they will need to know for their job. Have them start a little later

a secure, private channel for employees to voice concerns, you

in the day after the other employees’ shifts have started. Be fully

can address the issues internally. The EEOC requires employees

prepared. "It’s not going require a ton of resources and time from

to exhaust all administrative channels within the company before

the organization, but it is going to really help people feel welcomed

filing a claim, unless the complaint is against someone who’s on top

and a part of the team," he said. "It’s going to make them feel

of that grievance channel.

like they made a good choice by coming here. It can be a really powerful tool for minimum effort or investment."

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15

Huston recommends hiring an independent organization to run a 24/7 hotline for these concerns rather than assigning a person in-house. There is always the risk that an employee will be hesitant to report a higher-up for fear of retaliation or will go straight to the EEOC. "That’s the worst case for an employer because we don’t even get a chance to address it internally first," Huston said. Write out a policy explaining what employees should do if they have a complaint. Ideally, employees should start with the supervisor or the HR department, if you have one. If those avenues aren’t safe for the employee, or if the employee feels uncomfortable, then they should be directed to use the hotline.

It’s important to make sure managers know to report all

complaints they receive. If you fail to act on a grievance, that’s going to come back to bite you. Always investigate the issue, sometimes bringing in a third party to ensure impartiality. "Then even in the worst case you can say you did try to address it and had an expert come in," Huston said. "Those are all things that help you versus the worst thing you can do is nothing or dismiss it."

5. TELLING THE RIGHT STORY Employment law ultimately comes down to story, Huston said. "What story does the employer have and what story does the employee have? The stronger your story, the safer your organization will be." If you want to make your case convincing, you need a trail of documentation from start to finish. If you’re telling the story that the employee you fired was not up to snuff, you need performance reviews that support that. If an employee claims you mishandled their harassment complaint, you need to show that you addressed the issue and followed your policies.

OSHA REQUIREMENTS Every year, pharmacies are required to submit OSHA (Occupational Safety and Health Administration) forms 300, 300A, and 301. These documents record the number of work-related injuries and illnesses that occurred in the calendar year. This simple task is frequently forgotten by small business owners. "I routinely find companies unaware that this requirement even exists, or that there’s any obligation to do it," Huston said.

The records must be maintained at the pharmacy for at least five years. Each February through April, employers must post a summary of the injuries and illnesses recorded the previous year. Copies of the records must be provided to employees who request them.

If you had 10 or fewer employees at all times during the last calendar year, you are exempt from these requirements unless OSHA or the Bureau of Labor Statistics informs you in writing that you must keep records. However, you still need to report any work-related incident that results in a fatality, the in-patient hospitalization of one or more employees, an amputation, or a loss of an eye.

To be on the right side of the story, you need to handle issues

correctly in the first place. That means creating consistent policies, providing safe channels for complaints, following through on performance correction, and following federal protocols.

"Some of those issues are compliance related, and it’s as

simple as having processes and following them," Huston said.

"Others are much more complicated. I’d say the best approach is to be upfront and purposeful, and to double check with experts that the way you are doing it won’t get you in trouble."

SHOULD YOU HAVE AN EMPLOYEE HANDBOOK? An employee handbook outlines expectations for your

"Many organizations include far too much in their handbooks,

employees, like dress code, workplace conduct, and job

and sometimes that comes back to hurt them. It is easy for a

performance. It also makes clear what your obligations

plaintiff’s attorney to point out sections of a handbook and ask

are to them, such as health insurance benefits, payment

why company procedures were not followed."

schedules, and paid time off.

Because of this, Huston recommended that handbooks should For small companies, handbooks can be a double-

16

not contain any "absolute procedures." That is, procedures that

edged sword, Huston said. They help ensure consistent

require a company to always act in the same way. Huston almost

treatment of issues and they help inform employees.

always recommends giving yourself the ability to handle instances

But they can also limit your flexibility. Huston said,

on a case-by-case basis given the totality of the circumstances.

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ELEMENTS | The business magazine for independent pharmacy | JUNE 2021

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FEATURE

SPECIALTY PHARMACY Are independent pharmacies missing out on the fastest-growing part of the pharmacy market?

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S

pecialty drugs are the fastest-growing segment of the pharmacy

LOW REIMBURSEMENT, HIGH FEES

market—total US expenditures for specialty medications

In Antypas’s experience, the economics of specialty pharmacy

doubled from $83 billion in 2013 to $157 billion in 2017, according

suffer for several reasons. "Our profit is reliant upon two factors,"

to a report from the IQVIA Institute. Although these meds account

he said. "One is the rate of reimbursement from the third party and

for only 2 percent of the total volume, they represent over half of

the other is the price that we can buy the drug at. Unfortunately

the entire market in spending, surpassing traditional medications

for specialty, both of those factors work against independent

for the first time in 2020.

pharmacies, the first being the third-party payers. They certainly

don't pay better for specialty drugs."

And plenty of new specialty therapies are in the pipeline.

"Specialty pharmacy will continue to grow," said Sheila M. Arquette,

RPh, president and CEO of the National Association of Specialty

expensive specialty medications, much of the profit gets squeezed

Pharmacy (NASP). "Medications continue to be introduced to

by DIR fees, which outmatch even the worst in traditional retail

treat diseases for which we historically didn’t have any treatment

pharmacy. Rather than charging a flat rate, most payers charge a

options. As the focus moves from the development of small

percentage of the drug’s cost—so the higher the cost, the higher

molecule therapies to more personalized and precision medicine

the fees. For specialty medications costing tens of thousands of

therapies, costs will continue to increase due to the associated

dollars, those fees are devastating. "That makes the economics of

research, development, and manufacturing costs of biologics."

the reimbursement very challenging," Antypas said.

Based on AWP alone, pharmacies dispensing these meds

Although pharmacies earn more topline revenue from highly

And in specialty, the criteria that determines those fees is

are looking at a lot of money. A patient on a specialty medication

murky. "We currently don't have performance metrics that are

can spend up to $90,000 a month on treatment. Between the

used to calculate pharmacy DIR fees based on this pharmacy type

market share and the revenue involved—and given the downward

and the drugs dispensed and disease states managed, so it's even

pressures in the traditional retail market—specialty pharmacy may

more egregious because specialty pharmacies don't have the ability

look like a no-brainer for pharmacies to expand their business and

to influence those metrics and mitigate the fees," Arquette said.

add to the bottom line.

But as promising as those numbers sound, the money may

HIGH INVENTORY COSTS

be a mirage. "You're not going make as much as you would

On the buy side, it doesn’t get any better, according to Antypas.

expect," said Chris Antypas, president and COO of Asti’s South Hills

"I can say with certainty that the buy-side economics for specialty

Pharmacy and Valeda Rx specialty pharmacy. "You could be hurt by

drugs are different than standard brand-name drugs," he said.

going into it without really understanding the economics."

"Wholesalers are not getting the same discount on specialty drugs

as they are getting for traditional brands, and therefore they're

Of the mere 2 percent volume that specialty takes up in the

market, nearly three-quarters is cornered by PBMs and health

pricing those drugs differently. So here's a scenario where you're

insurers. As the market has grown, so has vertical integration,

being paid the same or less from the insurance company, and

making it more difficult for independent community pharmacies to

you're paying more for the drug. It takes an already small margin

gain a footing. According to Drug Channels Institute, "Less than half

and makes it even smaller."

of all accredited specialty pharmacy locations are independently

owned businesses ... The remaining locations are owned by

those costs for weeks as you continue to run your business. There

healthcare providers, retail and long-term care chains, PBMs and

are substantial risks of carrying, say, a drug costing $30,000,

health plans, and wholesalers."

because of the length of time between paying for the drug and

receiving payment for it. "There are cash flow considerations,"

Distribution for the majority of specialty medications is highly

You’re not only paying a lot for these upfront—you’re carrying

limited. Manufacturers keep their channels small, and payers keep

Antypas said. "You have to pay for it in two weeks or three weeks.

them even smaller. Seventy percent of the market is funneled to just

You get paid for it maybe in three to six weeks."

four companies, "all of which are fully or partly owned by a PBM," according to Drug Channels. Two out of three commercial plan

INCREASED OVERHEAD

sponsors will limit specialty dispensing to a single pharmacy, which is

Dispensing specialty drugs requires an extra level of patient care

usually the pharmacy owned by the PBM managing the plan.

and increased administrative obligations. Patients on these drugs

require monitoring, education, copay assistance, and more. You’ll

And to gain access to the limited channels that are accessible

to independents, you must have relationships with payers and

need staff that is knowledgeable in the disease states treated by

meet special requirements, which can include accreditation,

the medication, and clinical services must be available 24 hours

certifications, national licensure, unique storage, special

a day, 7 days a week. Manufacturers and payers track adherence

infrastructure, specific technology, data management, and 24/7

rates, which affect your eligibility to be in their network or to

patient care programs.

contract with them. Prior authorizations are required for nearly

every medication. You will also need to invest in specialty-specific

"It’s a big commitment," said Ghada Abukuwaik, owner of

CureMed Specialty Pharmacy. "It requires energy, knowledge,

software to enhance collaboration and coordination among all the

money, network and time."

stakeholders and ensure patient outcomes.

ELEMENTS | The business magazine for independent pharmacy | JUNE 2021

19

THE VERDICT "With such high risks and such thin margins, pharmacies should do their due diligence to make sure specialty pharmacy is right for them," Arquette said. "Pharmacies have to take an individualized approach and determine if it’s going to be profitable. With all that is required, you cannot afford to dispense these prescriptions at

WHAT IS A SPECIALTY DRUG?

a loss. After you factor in the overhead and level of service and support required for specialty medications and patients, you may

There is no consensus on the definition of a specialty

determine that it doesn’t make sense for you."

drug. For CMS, it’s any drug costing more than $670

per month. In the end, it comes down to payer

Antypas said, "I think specialty pharmacy is a relevant area

for community pharmacy, but it is difficult to get traction. The list

formularies. If payers consider something a specialty

goes on and on of the potential risks of getting involved, and all

medication, then they will have special requirements

for $30 reimbursement. We definitely should not give up hope,

for a pharmacy to dispense those meds and they will

but it requires a little bit more strategy so these folks don't go and

reimburse and claw back based on the terms and

throw away money."

conditions in their specialty contracts.

Abukuwaik said that though there are significant challenges,

she’s found it worthwhile for the sake of her patients. Abukuwaik named her pharmacy CureMed to represent the curative quality of specialty medications. Most of the patients suffer from chronic and life-altering diseases and require the meds to function—and some even to continue living. Abukuwaik recognized that many of her patients needed these meds and special care, but they didn’t have many options. "It’s the model of care I believe in, but it’s very hard to find," she said.

She spoke of seeing patients come in seriously ill with hepatitis C,

and within two months of taking the medication they return to a great quality of life. "When you are able to help these patients, it's a different feeling," she said. "This is why we are here. Everyone is looking for better profit, which is important in business, but it's not everything."

Arquette echoed that sentiment. "For retail pharmacies,

not only is it an opportunity for additional revenue, but it's also an opportunity to provide consistent, comprehensive care and support for all of the patient’s prescription needs. The ability to service and manage the whole patient reduces fragmented care."

But even on the business side, if you do your research, make

smart decisions, and build good relationships, you can have a successful specialty offering. "Like with the rest of your business, a lot of it comes down to how much you know and how well you manage your business," Abukuwaik said. "You are able to grow and to be successful if you have a commitment. But it's not something

MOST AGREE THAT SPECIALTY MEDS SHARE A FEW CORE CHARACTERISTICS: • Treat complex chronic and/or life threatening conditions • Have a high cost per unit • Require special storage, handling, and administration • Involve a significant degree of patient education, monitoring, and management HERE’S A LIST OF CHARACTERISTICS OF SPECIALTY DRUGS FROM THE NATIONAL ASSOCIATION OF SPECIALTY PHARMACY: • More complex than most other prescription medications • Treats patients with serious, often life-threatening conditions • May be taken orally, but often injected or infused • Special or complex administration requirements • Management of side effect profile

anyone can do. It’s very hard work."

• May have special access conditions required by manufacturer

GETTING STARTED

• May have payer authorization or benefit requirements

Arquette identified a couple of ways into the market. One is to start with the drugs. "I would encourage those performing their due diligence to first determine what type of medications they are interested in dispensing," she said. "For your patient population, are there specialty medications that you see over and over again that are being sent to a different pharmacy?"

Another path is to start with the payers, who are the true

gatekeepers of the market. Find out which payers cover the majority of your patients and ask them about their requirements for pharmacy network inclusion.

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• May cause patient financial hardship • Require comprehensive patient care, clinical management, and support

Before opening a specialty pharmacy, Abukuwaik started by

carrying only a few specialty medications at her retail location based on her patients’ needs. She recommends going this route until you’re fully equipped with the knowledge, infrastructure, and financials to support a specialty pharmacy. You’ll need to be knowledgeable about insurance and payer requirements, disease states, and administrative responsibilities, and you’ll need to

THE 10 TOP-SELLING SPECIALTY MEDICATIONS

establish relationships and build a network. All of that takes time, Abukuwaik said. "You cannot get this right away. You need to have

These are the top 10 specialty medications by gross spend,

the steps to reach that level."

according to RxBenefits.

She started with hepatitis and barely broke even the first year.

But as she gained knowledge, improved her capabilities, and added

1. Humira

6. Trikafta

new disease states, she gained traction. Now she treats several

2. Enbrel

7. Tecfidera

disease states, including cystic fibrosis, HIV, rheumatoid arthritis,

3. Stelara

8. Otezla

psoriasis, and Crohn’s disease, among others.

4. Cosentyx

9. Revlimid

5. Dupixent

10. Xeljanz/Xeljanz XR

Antypas, on the other hand, went straight to a closed-door

pharmacy. "It became clear in our research that we could not Source: www.rxbenefits.com/blogs/specialty-rx-by-the-numbers

effectively compete in the industry doing specialty on the same counter that we're doing traditional retail pharmacy," he said.

"That's why we made a significant investment to open a 50-statelicensed, dual-accredited specialty pharmacy that is using specialty pharmacy technology, a pharmacy management system, and a clinical management system that was built and designed specifically for specialty pharmacy."

Although Abukuwaik began with a hybrid model, she said

becoming a closed-door specialty was ultimately essential because of payer requirements. "So many insurers will not accept you if you are not a specialty pharmacy. That was a big thing at the beginning

The last part of the trifecta, which is distinct in specialty pharmacy, is

with us when we converted to closed-door specialty."

the manufacturer. "To be successful in specialty pharmacy, you almost certainly need a relationship with the pharmaceutical manufacturer,"

ESSENTIAL RELATIONSHIPS

Antypas said. "If you can have enough volume of a specialty drug, then

To succeed in specialty, you have to be in with the right people.

the manufacturer may be willing to give you additional discounts to

Abukuwaik attributes much of her success to demonstrating

ensure they're getting the value from you. And maybe they're going to

her value to the stakeholders, especially the ones who write the

want to set up a contract with you as the pharmacy to provide them

prescriptions. "It is essential to have a great relationship with your

with additional data."

prescribers, which happens when they see that you have all the

elements." The "elements" include thorough patient care, like

enough value to strike a deal with a manufacturer to get into payer

following up with patients monthly, either virtually or in person;

networks with better reimbursement rates. "A value proposition of

communicating and collaborating efficiently with nurses and

an individual community pharmacy is not that special to a health

doctors; improving the prior authorization process; and using

plan," Antypas said. "But when you aggregate your voice with other

shared software to seamlessly share patient data.

like-minded pharmacies, that value proposition goes up. It goes up

for the payers and also the manufacturers."

Prescribers are one part of the trifecta. Payers almost exclusively

The problem, however, is that a lone pharmacy likely won’t offer

control who ultimately gets to dispense the drugs. And the most

important thing to them is one thing independent pharmacies

pharmacy network to boost your leverage with the combined

are best suited to provide. "Success lies in bringing them value in

value you all provide together. This is where CPESN, a network of

some way, shape, or form, where your clinical management of their

pharmacies providing enhanced services, really helps community

members is meaningful enough for them to ensure that you're not

pharmacies get their foot in the door. "CPESN is a way to be a

getting reimbursed below cost," Antypas explained.

single pharmacy that is a part of a bigger, more unified approach.

I think a future for specialty pharmacy lies within CPESN and as

Arquette said, "A comprehensive management approach­—

The best way to do that, Antypas said, is to join a large

meaning managing the entire patient and providing a holistic

a network of enhanced services," he said. "It’s the pathway for

approach that supports achieving optimal clinical and cost-effective

independent retail community pharmacies to compete in a space

outcomes—is important to payers."

that is otherwise pretty much completely walled off."

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THE 10 MOST EXPENSIVE SPECIALTY DRUGS These are the top 10 specialty medications by list price and average dosing, according to GoodRx. The prices reflect a one-month supply.

1. Zokinvy

$86,040

2. Myalept

$74,159

3. Mavenclad

$60,371

4. Ravicti

$57,998

5. Actimmune

$55,310

6. Oxervate

$48,498

7. Takhzyro

$46,828

8. Juxtapid

$46,502

9. Cinryze

$45,465

10. Chenodal

$42,570

Source: www.goodrx.com/blog/20-most-expensive-drugs-in-the-usa

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ESSENTIALS TO SUCCEED IN SPECIALTY Ghada Abukuwaik, owner of CureMed Specialty Pharmacy, shares some insights on how to succeed with your specialty offering.

KNOWLEDGE

GENERICS

Abukuwaik emphasized the importance of learning about the

Some specialty brand-name medications have generic

specialty business and the industry. You need to know about

alternatives. It’s worth taking the time to contact the

the disease states, insurance, prior authorizations, et cetera.

prescriber to switch to the generic version because the

She attends an annual pharmacy conference and monthly

savings can be significant.

workshops to stay up to date on industry trends, business ideas, and new opportunities. She is also a part of the

TECHNOLOGY

National Association of Specialty Pharmacy, which provides

Payers, manufacturers, and prescribers want to easily access

education in every facet of specialty, including disease states,

the data on your patients. They want to know about their

insurance, reimbursement, medications, marketing, and

outcomes, and they don’t want to jump through hurdles to

prior authorizations.

get there. That’s why it’s important to invest in pharmacy software that integrates easily with that of your partners, so

NETWORKING

you can seamlessly share information. That includes prior

Building relationships with other colleagues in the specialty

authorizations as well as patient records.

business has helped Abukuwaik make her specialty offering successful. In some cases, she has teamed up with others

ACCREDITATION

to secure contracts with payers to dispense certain drugs.

Most payers require at least one accreditation, but it is

Networking with payers at conferences can also help you

becoming more common to require two. The accreditation

establish relationships.

process can be lengthy and difficult, Abukuwaik said. There are three major accrediting organizations in specialty

BUYING GROUP

pharmacy: Utilization Review Accreditation Commission

Because margins are extra thin in specialty, it’s all the more

(URAC); the Joint Commission on Accreditation of Healthcare

important to secure the lowest cost of goods possible. Buying

Organizations (TJC); and Accreditation Commission for

groups pool the business of multiple pharmacies to increase

Health Care (ACHC).

buying power. The larger the volume, the more motivated wholesalers will be to reduce costs to win the business.

Abukuwaik said her buying group has saved her thousands of dollars on inventory costs.

Success lies in bringing them value in some way, shape, OR form.

ELEMENTS | The business magazine for independent pharmacy | JUNE 2021

23

SPOTLIGHT

BUYING BETTER

How one pharmacy network saves big on its cost of goods and what BuyLine stocked and found it would save us quite bit, so we switched over," Allen said.

STABLE AND BROAD NDC SELECTION One of the many advantages of BuyLine is its NDC stability. With other secondaries, Allen found that NDCs change frequently, and even if that may mean a lower price, it also means a lot more work for his staff to constantly change those NDCs in the ordering system.

"BuyLine is a lot more stable on its NDCs than most of the other secondary wholesalers," he said. "You’re not going to see those NDC changes over and over and over like a lot of the other secondaries."

Some secondaries rely on pushing short-dated items, making

not just their NDCs but also their entire inventory selection erratic and unreliable. Other secondaries offer a limited number of options, forcing the pharmacy to go to another source to fulfill its inventory needs.

Along with the stability of the NDCs, BuyLine offers a broad

line of products, including brands, generics, OTCs, refrigerated products, and controlled medications. Allen fulfills his inventory needs with BuyLine, all while knowing he’s getting affordable pricing and reliability. "When there are shortages or hard-to-find items, BuyLine has given us another place where we can rely on getting inventory," he said. "They have been great about having a

I

lot of those items in stock. And the prices don’t go up as quickly as nventory cost is everything at the seven pharmacies in the

our other sources of inventory."

Muscogee (Creek) Nation Department of Health, which primarily

Allen gets about 60 percent of his generic inventory from

serves the Native American and Alaskan Native populations.

BuyLine, and because he saves so much money, he said he would

Contracted with the government, the pharmacies' prices are set for

like to buy even more. To do that, he’ll rely on the electronic

their prescription medications no matter how much they pay

data interface (EDI), which BuyLine is developing for his specific

for inventory.

pharmacy system. BuyLine already integrates EDI with the most

common pharmacy systems, and Allen knows how much time it

"For us, it’s all about costs," said Dusty Allen, director of

pharmacy services at Muscogee (Creek) Nation Department of

can save him.

Health. "Cost savings directly affect our bottom line, just like any business, but even more so to us because that's our main thing. We have a budget and we have to keep within that budget."

As a former owner of an independent pharmacy, Allen knew

that by purchasing only from his primary wholesaler he was missing out on lower-priced alternatives, especially on generics. So he went out to the secondary market to diversify his wholesaler options and discovered he could save a substantial amount by redirecting his generic purchases to BuyLine, a secondary wholesaler with the lowest prices in the secondary market. "We did a comparative analysis between what we were currently purchasing

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BuyLine is a lot more stable on its NDCs than most OF THE other secondary wholesalers.

EASY ORDERING The team at BuyLine is constantly working to improve the user

a salesman calling you saying ‘Hey, do you need this? You need this.

experience to make buying as quick and easy as possible for

You need this.’ And I've got a customer standing in front of me and

busy pharmacists. The simple yet advanced online interface is a

I'm getting frustrated because I can't help my customer."

cut above most other secondary suppliers, Allen has found. "It’s

really easy to search and to find items. That’s probably one of the

gets two emails a week letting him know which hard-to-find and

best things about BuyLine’s system as a secondary wholesaler

popular items are in stock, or he can simply jump on the website

compared to others."

and quickly see updated products and pricing. "That’s really nice, a

BuyLine’s interface also includes numerous other convenient

features that Allen appreciates, like a simple notification button for

Allen doesn’t have to deal with that from BuyLine. Instead, he

quick way saying, ‘Hey, these are hard-to-find items that you may be looking for.’ That's actually helpful," he said.

out-of-stock items, which automatically emails him as soon as the product is back in stock.

It’s really easy to search AND TO to find items. That’s probably one OF THE best things about BuyLine’s system AS A secondary wholesaler compared to others.

NO PESTERING SALES CALLS Every pharmacist has been there: You’re about to counsel a patient and the phone rings. It’s a secondary pitching you on their great deals. Thirty minutes later you’re verifying a prescription, and the phone rings again. The secondary wants you to know about even more great deals. And the phone continues to ring all day as you try to accomplish all the tasks required to run a business and care for patients. "When I hear secondary, I think of 50 phone calls a day with sales pitches," Allen said.

These types of calls are the last thing Allen needs. "If you're

getting those all day, it gets pretty frustrating," he said. "Usually it’s

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MONEY

BUDGETING BASICS Principles for an effective pharmacy budget

I

n a sea of balance sheets and cash flow

To figure out what kind of revenue

statements, a budget may just seem

growth is reasonable, look outside your

like one more spreadsheet to track.

business and examine the industry as a

But Terry Bishop, managing partner of

whole. If your research says the market

Core Financial Outsourcing, a national

for independent pharmacies in your

bookkeeping, accounting, tax, and

region is expected to grow by 2 percent

consulting firm, sees a thoughtful budget

in the next year, but you’ve budgeted for

as an indispensable tool for growth.

sales growth of around 7 percent, that’s

a sign that your budget might be out of

"A business is not going to grow by

simply opening and closing the doors

touch. "My challenge would be to ask,

every day," he said. "This type of planning

‘What is it about your business that you

allows business owners to determine what

think you’re going to outperform your

they want their business to be and allows

peers by as much as two to three times?’"

them to dream in a structured way."

You may think that if you have

for such a prediction, but you need to be

consistent cash flow, creating a budget

thorough to justify that growth. Consider

is overkill. But a well-structured budget

all the costs attached to that revenue,

There may be a realistic justification

can help you achieve your business

like increased cost of goods or additional

goals. "I consider creating a budget to be

personnel, and make sure they are

Best Practice 101 for running a business,"

accounted for in your budget.

said Bishop. "Huge multi-billion-dollar

companies have entire teams of people

spending map or a crystal ball. "It’s not

Remember that a budget isn’t a strict

responsible for budgeting. If businesses

going to be perfect," Bishop said. "It’s

of that size are using a budget to monitor

intended to help business owners

performance, learn about their business,

come up with their best estimate using

and to grow, don’t you think that you

their professional judgment about their

should too?"

business and how they think the future

year or future quarter is going to go."

To help pharmacy owners and

managers develop a successful business budget, Bishop breaks down the top budgeting

ACCOUNT FOR IMPROVEMENTS

practices for any small business.

Consider what potential improvements you want to make to your pharmacy. If you experienced a lot of employee turnover last

PREDICT REVENUE AND EXPENSES

year, what will you do to make working at your pharmacy more

At its core, a budget is simply a prediction of your revenue and

appealing to attract great employees and keep the ones you have?

expenses over a set period—usually a year. "Start with as many of

the expenses you know are fixed," Bishop said, "then move on to

pharmacy offers for the coming budget period. "Pay attention to

the expenses that are variable based on what it’s going to take to

what is actually moving through the store," Bishop said. "What

Look at your product assortment and tweak what your

support sales and revenue targets."

is actually turning over in the inventory, and what other trends

or products do people really want?" Reflecting on what works

Past financial records are a good place to start, but Bishop

points out that your expenses are going to vary based on your

for you and what collects dust on the shelves makes your budget

goals. If you’re planning to open a new location in the coming year,

predictions more accurate and your pharmacy more efficient overall.

you will have to account for a lot of new expenses that weren’t on the books last year.

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DON’T COPY AND PASTE A common mistake is basing the budget off the previous year’s performance without thinking critically about why. For example, a

EVALUATING YOUR BUDGET

business might have grown 2 percent this year, so they’ll budget 2 percent revenue growth next year. "My feedback is that you were doing 2 percent growth without any real planning, so why don’t you go through and determine whether 2 percent is actually the right number," Bishop said. With the right planning, you could potentially grow faster.

That’s why Bishop recommends businesses do zero-based

budgeting where they justify every single line on the budget. "It’s useful because it really makes you think about your business," he said. It’s more work, but it helps you spot opportunities to grow and opportunities to save that you might have otherwise missed.

SET REALISTIC TARGETS A good budget will challenge you, but the targets should still be achievable. "If we set our targets too low and constantly overachieve the budget, we are not going to see the value in it.

We’re not growing and we’re not reaching for something," Bishop said. "On the other side, if we’ve been overly aggressive and the targets are way out of reach, then as human beings, we start to feel frustrated and we quit."

USE THE BUDGET TO GROW A budget isn’t just a spreadsheet—it’s an opportunity to learn.

"The whole goal is to learn why you are or aren’t successful in your business," Bishop said. "Your budget helps you see that.

"If a business is on target or they’ve exceeded their sales target,

what we typically say is, ‘Great! Congratulations! But you’re not done.’ They need to evaluate what they’re doing that is contributing to that success." That involves analyzing sales data to find out which products and services are most successful and figuring out how to use that information to keep improving.

To get the most from your budget, don’t just set it and forget it. Once a month or once a quarter, look at your budgeted expenses and revenue, then compare them to your actual expenses and revenue. If your budget is working the way it’s supposed to, you should see positive effects—increased profit margins, net profit, or retained earnings. To make this monitoring easier, Bishop recommends investing in accounting equipment that makes it easy to compare your actual expenses and revenue to your budget.

What should you do if your budget and actual

don’t match? Some owners might re-do their budget, but Bishop says this isn’t always a good idea. Before you throw out the budget you’ve built, document your initial forecasting assumptions.

"If we said we were going to forecast sales growth

of 5 percent, how are we justifying that? What is our reasoning?" Bishop said. "We need to document those assumptions because three months or six months from now when we see we’re at 3 percent growth, we need to remind ourselves why we thought we were going to be at 5 percent."

And if your assumptions aren’t valid anymore,

determine why. "Last year, everyone’s assumption about 2020 went out the window by March 15," Bishop pointed out. In that case, he advised clients not to revise their budgets because in such an unpredictable environment it wasn’t possible to make new sets of assumptions with any accuracy.

In other cases, when you can pinpoint exactly

why you aren’t meeting a target, it makes sense to reformulate your budget for the rest of the year based on your performance from the first few months of the year. Bishop recommends only doing this if your

A business is not going to grow by simply opening AND andclosing the doors every day.

initial forecast is off by a significant amount. Most businesses won’t meet their exact targets, and that’s okay. "Just because we miss or exceed the budget does not trigger a reassessment," he said. "What triggers it would be some type of significant event or change with the company, good or bad."

Even though you’re dealing with hard numbers,

budget work is nuanced, and most business owners will benefit from a professional opinion. "Owners should not be doing this in a vacuum," Bishop said.

"They should be engaging other people who know more about these things, whether it’s an in-house accountant or someone who’s on the outside. They can draw on a different set of experiences to help

ELEMENTS | The business magazine for independent pharmacy | JUNE 2021

improve the business."

27

SOURCES OF BUDGET INFORMATION INTERNAL INFORMATION Use your profit and loss statement, balance sheet, and cash flow statement to help you make future budget predictions. "Without reliable, accurate historical information, it’s going to be difficult to forecast for the future," said Bishop.

EXTERNAL INFORMATION "Get outside of your own business to understand what’s going on in your market," Bishop said. Use the public library to find out the business trends in your area and talk to other pharmacists in your network, pharmacy association, or buying group to learn their successes and struggles.

EXPERT INFORMATION Lastly, pharmacy owners should seek the counsel of experts who have experience in budgeting and planning.

"You may have to pay for that information, but that’s a cost that allows you to solve a problem," Bishop said.

Look for professionals who will work with small business owners on a fractional or scaling basis.

Creating a budget is Best Practice 101 FOR running a business.

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OUTLOOK

TECHS AT THE READY How to make the most of your pharmacy technicians

"Techs are really the heart and soul of the pharmacy," said Dr. Nicole Ras, a former Walgreens pharmacy manager and a current assistant professor and academic success coordinator at South University School of Pharmacy. In an independent pharmacy where there is often only one pharmacist on duty, taking advantage of techs’ skills is critical to optimizing workflow and running the pharmacy efficiently.

EAGER AND SKILLED "Techs are the first person a patient sees and they are often the ones who have the most contact with our patients," Ras said.

Though many pharmacists would love to do more hands-on patient care, something is always going to pull them away. That’s why it’s so important to have knowledgeable and empowered pharmacy technicians behind the pharmacy counter. "We really have to inspire our technicians and train them on how to have great conversations with patients and on how to become great healthcare professionals."

Time and time again, studies prove that technicians are

skilled and capable, and pharmacists should embrace that in order to use technicians at the top of their license. One study of Iowa community pharmacies found that technicians are just as accurate as pharmacists when performing product verifications, with accuracy rates of over 99 percent. In the nine states where pharmacy technicians are allowed to check fills for other techs, handing off that task can save pharmacists valuable time.

Most pharmacy techs are eager to take on greater

responsibility. In a 2017 survey in the journal Research in Social and Administrative Pharmacy, technicians reported that they had positive attitudes about performing administrative and support tasks that help improve patient outcomes, like transferring prescriptions, providing information about medication issues, administering

L

vaccines, and more. Another study from the Journal of the American ast October, the US Department of Health and Human

Pharmacist Association found that when technician roles are

Services issued guidance that allowed pharmacy technicians

expanded to include more patient support tasks like assisting with

to administer Covid-19 vaccinations and pediatric vaccinations to

the administration of medication therapy management, they are

patients age three and older. Though prompted by the coronavirus

more satisfied with their work.

pandemic, the move is the latest expansion of scope for the

pharmacy technician profession.

expanded roles can build a more productive workplace. "The

profession is changing to be more outcome-driven now instead of

From communicating with prescribers to performing final

Pharmacists who capitalize on their techs’ excitement about

product verifications, technicians have the potential to take on

just being transactional, and how we work with techs should reflect

more responsibility and lighten the workload for pharmacists.

that," Ras said.

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SET TECHS UP FOR SUCCESS The list of tasks technicians can perform keeps getting longer, and

Techs are really the heart AND soul of the pharmacy.

pharmacists can do a few things to help them practice at the top of their skillset. "First, you have to trust them," Ras said. "And second, you have to make sure they are up to date on all their training and that you’re able to supervise them correctly."

But supervision doesn’t mean micromanagement. "They need

to have some autonomy," Ras said. "You don’t need to have a FOCUS ON PATIENTS One way techs can make a difference in your pharmacy is by having them focus on patient relations. "Technicians can be really instrumental in doing things such as setting up MTM services," Ras said. Techs can do the bulk of the prep work for programs like this—identifying patients who are eligible, reaching out to them, explaining what the program is, and scheduling sessions. "The pharmacist has to conduct the session, of course, but they don’t necessarily have to be the one setting it up."

Having pharmacy techs do outreach for pharmacy programs,

like signing patients up for automatic refill programs or talking

line of sight on everyone, but you should be in earshot." Set your pharmacy up so that if a tech runs into trouble with a patient or is asked questions they shouldn’t answer, you can overhear and quickly step in. Check in with techs a few times throughout their shift to gauge their comfort level with their work and let them know you’re available if they have issues or questions.

Enabling techs to operate at a high level also means cross-

training your staff so every employee is able to rotate through different positions, whether that’s manning the cash register or stocking the shelves. "This is the approach that I have always liked to take," Ras said.

to patients about what kind of services they might benefit from, is one way techs can help to improve patient outcomes. She also recommends using technicians to educate patients about the pharmacy’s electronic options, whether helping them download your pharmacy app or walking them through how to refill a prescription online. These non-clinical forms of assistance can lead to positive outcomes like increased medication adherence.

In addition to performing the legwork to connect patients

with pharmacy services, Ras says that friendly, helpful techs at the

SPECIALTY TECHS

pharmacy counter can help to build lasting ties with the community.

If your pharmacy offers specialty services, there is

"Being that smiling person patients see when they come in and

likely an opportunity for your techs to specialize or

building relationships with patients is one of the reasons why

get additional training as well. The ability of techs to

patients come back and fill their prescriptions," she said.

take on some of these roles varies based on individual

state laws, so check your state requirements.

While pharmacy technicians can take on many patient-facing

responsibilities, there are still tasks only pharmacists can perform.

Techs can answer logistical questions about enrolling in a program,

• Sterile compounding

for example, but they can’t offer any counseling or clinical advice.

• Automation

"Any time a patient has a question of a clinical nature, that needs to

• Hazardous drug management

be handed over to the pharmacist," Ras said.

• Revenue cycle management

• Health information systems

Ras also recommends that pharmacists take over any time a

situation with a patient starts to get uncomfortable or touchy, even

• Vaccine administration

if it doesn’t cross that clinical line. "I don’t think that technicians need

• Medication reconciliation

to deal with patients who are difficult to handle," she explained.

• Pharmacotherapy and medication history

"Pharmacists have a lot more training to deal with those issues."

• Tech-check-tech • Prior authorization • Clinical services

Techs are the first person a patient sees AND they are often THE ones who have the most contact with our patients.

Source: American Society of Health-System Pharmacists

ELEMENTS | The business magazine for independent pharmacy | JUNE 2021

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ELEMENTS | The business magazine for independent pharmacy | JUNE 2021

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