ELEMENTS CROSSING THE DIVIDE How CPESN networks break pharmacies into the medical side of healthcare
SURPRISING PAIRINGS This classic retail tactic boosts front-end pharmacy sales
Business Booster How to make immunizations a profit center for your pharmacy
VOL. 8 ISS. 1 | MARCH 2019 | PBAHEALTH.COM/ELEMENTS
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CONTENTS ON THE COVER
FEATURE | Business Booster How to make immunizations a profit center for your pharmacy.
NEWS | A New Way to Lose Independent pharmacies in Oklahoma are reducing obesity-related health problems with a new weight loss program.
TRENDS | Crossing the Divide How CPESN networks break pharmacies into the medical side of healthcare and seek to alter the pharmacy payment model.
RETAIL | Surprising Pairings This classic retail tactic boosts revenue by encouraging add-on sales in the front end.
FEATURE | Business Booster
SOLUTIONS | Staffing Up and Standing Out A small business expert explains the secrets to hiring the best people for your pharmacy.
SPOTLIGHT | Remote Revenues A successful regional chain pharmacy uses telepharmacy to expand its business into new markets.
MONEY | Tax Cuts and Jobs Act The Tax Cuts and Jobs Act of 2017 brought the most significant federal tax overhaul in decades. Do you know how the changes affect your pharmacy business?
OUTLOOK | Expanding Authority Pharmacistsâ€™ prescriptive authority is growing in some states, but is this a trend to expect from the rest of the country?
ELEMENTS | The business magazine for independent pharmacy | MARCH 2019
TRENDS | Crossing the Divide
The business magazine for independent pharmacy
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VOLUME 8, ISSUE 1 MARCH 2019
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A NEW WAY TO LOSE A new weight management program improves outcomes in Oklahoma pharmacies Independent pharmacies in Oklahoma are helping patients reduce obesity-related health problems thanks to a new partnership between Pharmacy Providers of Oklahoma Inc. (PPOk), an
Peek compares the program to a more familiar topic for independent community pharmacists: adherence. “If a patient isn’t adherent when taking their medication, why
organization that negotiates third-party contracts for independent
do we expect them to be adherent to weight management?” he
pharmacies, and Ideal Protein, a weight-loss company. The new
asked. “By partnering the two together, based on Ideal Protein’s
weight management program is in 16 pharmacies in the state.
structure and protocols that have been backed by research and literature, with the pharmacist’s ability to engage with the patient
HOW IT WORKS
and encourage them and see adherence throughout the way, we
Ideal Protein combines a ketogenic diet with weekly counseling and
felt that that was going to be a success. And we’ve seen that so
education to help patients lose weight to reach their health and
far in the pharmacies that have implemented it.”
wellness goals. Patients receive weekly counseling with a trained coach, along with a specific meal plan and ongoing education about
nutrition and healthy lifestyles. Patients can also purchase Ideal
The Ideal Protein program brings in revenue for independent
Protein products from the pharmacy, including branded foods
pharmacies primarily through product sales. The coaching and
that work within the protocol, meal replacement products, and
education is free, but patients pay about $90 per week for the
Ideal Protein products in the first phase of the protocol, which
“The main point to know about Ideal Protein is that it’s really based on education. That is our core value,” said Sara Mulero, Ideal
they purchase from the pharmacy. The weekly patient meetings also bring in more foot traffic,
Protein’s regional developing consultant for Oklahoma. She lost
which pharmacies hope will boost front-end sales. The program
340 pounds on the program. “And that it’s medically supervised,
may also give new patients a reason to patronize pharmacies
which sets us apart from everything else.”
they’ve never visited before and could encourage patients to
The Ideal Protein regional consultant trains pharmacy employees to counsel patients on the program. Patients come
transfer their prescriptions from another pharmacy. The only cost to the pharmacy is the Ideal Protein products,
in once a week to weigh in, meet with coaches, and adjust their
money that is then recouped when patients buy the products
plans as needed.
from the pharmacy. Ideal Protein’s training and educational resources are free.
The program also helps pharmacists position themselves
Mulero said the program has produced tremendous results in
as providers. The partnership is through the RxSelect CPESN, the
clinics in the last several years. It will take some time to see the
Oklahoma organization within CPESN® USA, a clinically integrated
true outcomes within pharmacies since the partnership is in its
network of community pharmacies providing enhanced services.
early stages, but she’s already hearing success stories. “We’ve
RxSelect CPESN focuses on integrating pharmacists into healthcare
had several patients just in the last two months lose 25 pounds
teams in Oklahoma, leading to a greater share of healthcare dollars
and get off some obesity-related healthcare medications,” she
from the medical side and better health outcomes for patients.
said. “So that’s life-changing for them.” J.J. Peek, PharmD, quality assurance facilitator for RxSelect
“I think the biggest benefit is getting out that pharmacists can do more than what is portrayed in the public eye,” Peek said. “This
CPESN, said weight loss programs should “walk beside you,”
whole program is non-dispensing, moving more into the realm
offering ongoing support and accountability. And pharmacists
of pharmacists providing services that impact patient outcomes.
are in a prime position to walk beside their patients. “We know
Not that dispensing is going away, but this is moving into an
that on average the patient sees their pharmacist 33 to 34 times
adjacent space that’s more geared to the medical side, where
per year versus their physician, which is just under four times
pharmacists should be recognized as medical providers and be
per year,” he said.
ELEMENTS | The business magazine for independent pharmacy | MARCH 2019
CROSSING THE DIVIDE How CPESN networks break pharmacies into the medical side of healthcare
In 2013, pharmacy owners Randy McDonough and Mike Deninger
McDonough and Deninger are far from alone. The traditional
thought seriously about how their pharmacy could remain
healthcare divide has long disadvantaged independent pharmacy.
financially viable. The business had been thriving, but suddenly
Ninety percent of healthcare expenditures are spent on products
the PBM of the largest payer in Iowa was absorbed by a larger
and services outside of the drugstore. And the remaining 10
PBM. After that, things drastically changed.
percent gets devoured by PBMs before ever reaching the door
“We saw the floor fall out from under us,” said McDonough,
of an independent pharmacy. On top of that, national chain
co-owner and director of clinical services at Towncrest Pharmacy,
pharmacies box out independents as they continue to consolidate
Solon and Iowa City, Iowa. “We literally saw our effective rate of
reimbursement go down by 50 percent across the board for 40 percent of our patient population.” If McDonough and Deninger hadn’t found a way to step into the
“Payment models are not in community pharmacies’ favor,” said Jay Williams, director of marketing communications at CPESN® USA, a clinically integrated network of community pharmacies.
thriving medical side of healthcare and get paid directly by payers,
“They’re designed for those who fill prescriptions fast, accurate,
their pharmacy may have become a memory.
and cheap. Community-based pharmacies are never going to be
able to compete in that. They’re competing against large, vertically integrated corporations that own PBMs, own payers, and own health insurers.” Those realities are quickly drying up the profit on the prescription benefit side of healthcare. Prescription margins have dropped five years running. The number of independent pharmacies has steadily declined over the last four years. Salaries for pharmacy owners have plummeted four years in a row, falling
“It’s time to get out of the pharmacy silo and focus on the 90 percent of the medical care spend.”
to the same level as employed pharmacists. Meanwhile, on the other side of the fence, a different payment model exists. Medical spending continues to rise year after year. In 2017, nearly $2 trillion went to physicians and hospitals, without middlemen siphoning off reimbursements. “It’s time to get out of the pharmacy silo, the pharmacy spend part of the healthcare benefit,” said Kurt Proctor, senior vice president of strategic initiatives at the National Community Pharmacists Association (NCPA). “It’s time to focus on the 90 percent of the medical care spend.”
CORE SERVICES All pharmacies must offer at least these five services to participate in a CPESN network. 1. Medication reconciliation 2. Clinical medication synchronization
HOW TO CROSS THE DIVIDE
To get to the medical side, pharmacies have to prove they can
4. Comprehensive medication review
help payers’ wallets. More and more, medical payers continue to
5. Personal medication record
prioritize value-driven care because healthier patients cost them less money. Payers want lower total costs, which means fewer emergency room visits, hospitalizations, and physician visits. Independent pharmacies are already achieving those outcomes for their patients and have been for a long time. The problem is that payers still perceive pharmacies as mere dispensaries, Williams
provide a comprehensive and consistent way for independent
said. “Independent community pharmacies in America have been
pharmacies to impact the 90 percent—and to prove it. The networks
commoditized over the years. What community-based pharmacies
combine pharmacies’ capacities to deliver enhanced services with
have to prove to these payers is how we can impact that 90 percent
measurable results for payers.
piece of the pie because of the way we deliver care. And it’s not just pills in a bottle.”
Once these networks start demonstrating results, the whole payment model changes. “It’s a new concept to pharmacy,” Williams
Individual pharmacies on their own won’t be able to cause such
said. “When you become a clinically integrated network and can
a drastic transformation to payers’ perceptions and the entrenched
demonstrate your value, then you have the ability to go and talk
payment model. “One store really doesn’t meet a potential payer’s
to the true payer of those costs and get paid in a different way.”
need,” Proctor said. “So they need to work together. The other thing that an individual store isn’t going to have is the kind of quality
WHAT IS A CPESN NETWORK?
metrics and data and analysis and things that these payers
A CPESN network is a clinically integrated network of community
pharmacies that provide enhanced services and work together to
McDonough came to this realization even after he’d successfully
facilitate coordination of care to improve patient outcomes and
negotiated a pilot, value-based reimbursement program with
decrease overall healthcare costs. The networks engage with payers
a major insurance company on his own and was being paid directly
to receive a share of the dollars they save them in patient costs.
for offering clinical services. “You have to do it by having a high-
“It’s a network of providers that come together and by virtue
performing network of pharmacies,” he said. “This is the way for
of working together are able to bring new improvements, quality
community pharmacy to not only survive in the future but to thrive
improvements, higher quality services to the marketplace,” Proctor
in the future.”
said. “It’s bringing something new to the market.”
Community Pharmacy Enhanced Services Networks (CPESN®)
CPESN networks are solely run by and composed of the local
ELEMENTS | The business magazine for independent pharmacy | MARCH 2019
pharmacies involved. And the individual networks are autonomous and self-sustaining. They negotiate with the payers on their own and they collect 100 percent of the negotiated payments. “This is truly a network by, of, and for community-based pharmacies,” Williams said. “This is their network and it’s as successful as the energy that they put into it.” There are currently 47 local networks in 42 states. The number of pharmacies in each network varies widely, ranging from around 15 pharmacies to 200. To be a part of the network, pharmacies have to agree to offer five core services as well as document their care electronically through the Pharmacist eCare Plan, owned and developed by NCPDP and HL7. All of the local networks across the country are part of a centralized network called CPESN USA. This parent network serves as a resource to help the local networks maximize their potential by helping with scale, replication, and most importantly, quality. With data from all the pharmacies across all the networks, the CPESN USA team can distill what works and what doesn’t into best practices and quality improvements for the individual networks. “How do we help pharmacies get better at what they’re doing? How do we help pharmacies assess what they’re doing and how well it measures across the whole of the network or across the individual network?” Williams said. “That’s where CPESN USA is trying to help all these local networks work out and become
“This is truly a network by, of, and for communitybased pharmacies.”
thriving networks in their respective areas.” DOCUMENT, DOCUMENT, DOCUMENT CPESN USA is also involved in managing the most critical component for the success of these networks: proof. Pharmacies can say all day that they are improving outcomes and saving payers money. Without data to back it up, it’s just shouting into the wind. “‘If you don’t document it, it didn’t happen’ is the mentality of most payers,” Proctor said. And up until now, documentation hasn’t been a strong suit of independent pharmacies. That’s why CPESN USA invests a lot of its efforts ensuring every pharmacy has access to the eCare
PAYMENT METHODS CPESN pharmacies get paid from the medical side of healthcare, directly from the payers. Payment methods vary for each agreement and can take these different forms.
plan, which allows them to document their care plans and clinical activities electronically. “Having a standardized document, we’re able to share that information with the people it needs to be shared with, to sum up for payers what’s been done on their behalf,” Proctor said. In addition to being shared with payers, the information can
also be used across networks to help with quality improvements
and quality assurance, ensuring that patients receive consistent
• Tiered fee-per-member based on patient risk
care no matter who’s working the counter that day, Proctor said.
“It’s the right way for pharmacies to be practicing.”
• Pay-for-performance GETTING PAID Although CPESN networks ultimately earn the pharmacy revenue
“This is the way for community pharmacy to not only survive in the future but to thrive in the future.”
PROVING PHARMACY’S IMPACT In North Carolina, a CPESN network significantly improved care for high-risk Medicaid patients and dramatically decreased overall healthcare costs. These are the numbers.
less likely to have
less likely to have
less likely to have
more likely to
more adherent to
engage their primary
directly from the payer, pharmacies shouldn’t expect to see instant returns. The CPESN goal is broader and bigger than a quick
specific to that local network and that particular payer. McDonough’s primary payment method with a large payer
financial fix. It seeks to alter the whole position of pharmacy and
in the state of Iowa is a per-member per-month fee, which he earns
the current payment model.
if he saves the company a certain amount of money on its total cost
“This is about establishing yourself in a marketplace and
of care and affects patient clinical metrics of interest to the payer.
generating a whole new revenue stream that your pharmacy has
“Between our two pharmacies we have about 800 individuals, so
never experienced and building a future for your pharmacy based
you can see that adds up very, very quickly,” he said.
on the services you can provide,” Williams said. Before the investment starts generating returns, the networks
He also has a fee-for-service contract with a payer for medication therapy management that includes performance
first have to build out and start performing. Getting to the point
incentives for patient satisfaction and physician acceptance
where your pharmacy is reaping consistent and substantial
of recommendations of drug therapy.
revenue may take some time. “You’re not going to get reimbursed for the services you provide patients unless you can build the
NOW’S THE TIME
network and prove yourself,” Williams said. “CPESN networks
Even if the CPESN road is long, pharmacies can’t wait for things
need to build and demonstrate their value, and those payer
to get better. “Too many times I hear pharmacists saying, ‘I’m
engagements are going to continue to happen.”
going to wait until I can get paid.’ Well that’s too late,” McDonough
In addition to meeting certain performance requirements,
said. “Start transforming your practice now. You do have to invest
networks need to reach a certain size to garner interest. Payers
in your practice, but the payout will be much greater for you.
need assurance the network has the capacity to handle all of their
If you think you’re going to make it just dispensing medications,
clients. Williams refers to this as “network adequacy,” a term
CPESN USA borrowed from the insurers. Once payers agree to engage with the network, the pharmacies
“Ultimately I believe you need to belong to the network because patients do better. We realize that when we start working
get paid in various ways, typically through a fee structure. All
as a group, all of us start to improve because we have to. We have
of these payments come from the medical bucket, whether it’s
to demonstrate our value to the payer. Ultimately the patients start
a private health plan, ACO, hospital system, Medicare Advantage,
to benefit from that. And if it’s right for the patient, then it’s right
or some other payer. Every negotiation and payment structure is
for the pharmacy. It’s just the right thing to do.”
ELEMENTS | The business magazine for independent pharmacy | MARCH 2019
RETAIL you’ve already tried cross merchandising. Cross merchandising earns additional sales in two ways. First, it maximizes the number of needed items the patient buys from you, rather than forgetting something and buying it later somewhere else. Second, it provides the opportunity to sell additional items that weren’t on the shopper’s initial list. “It encourages impulse sales,” Boyer said. “Trying to get someone to buy just one more thing.” Good cross merchandising makes life easier for the shopper. It saves a trip to another section of the pharmacy or even an additional store. For the stressed-out parent picking up cough medicine for a fussy toddler, a strategically placed thermometer or mentholated chest rub can really save the day. “Cross merchandising has to start with customer experience,” Boyer said. “You’re really trying to help them while providing an environment that will lead to add-on sales.” CROSS MERCHANDISING BASICS The best items for cross merchandising are products that already move relatively quickly off the shelves. Many good candidates for cross merchandising include products you may already sell as impulse buys: lip balm, hand sanitizer, snacks, and tissues. But your store may have different top sellers based on your unique location, demographics, and clientele.
SURPRISING PAIRINGS This classic retail tactic boosts front-end pharmacy sales
“If a pharmacy hones in on what’s actually selling in their front end and even tap into their own personnel, they’d be surprised how many ideas they could come up with,” Boyer said. Instead of simply assembling grab-and-go top sellers like you would with an impulse-buy section, find logical context to put together two or three types of these items. “There has to be a relationship or a reason to buy this additional product,” said Colleen Volheim, HRG’s category research and analysis manager. “Shoppers are going to purchase based on a need. Find out what that need is before they even know they should pick up an additional product.”
As margins behind the counter continue to decline, independent
It can be tempting to use cross merchandising and other
pharmacies are looking to remedy their profit pains. And pharmacy
display tactics to promote slow-moving products, but resist
retail experts are prescribing a simple front-end treatment:
that urge. While cross merchandising does get more eyes on
a particular product, it also increases the amount of shelf space
“Cross merchandising is a tactic that can increase sales, if pharmacies do it right and are consistent and committed to it,” said
dedicated to a product. “Every bit of shelf space that those products occupy equates
Tom Boyer, director of national accounts for Hamacher Resource
to a dollar value,” Volheim said. “So if it’s not going to turn, if it’s
Group (HRG), a firm that focuses on improving results across the
not going to be a high-selling item or something that sells through
retail supply chain.
quickly, if it’s not going to stimulate that thought, ‘Oh I need this,
Cross merchandising means positioning complementary items from different categories together to encourage add-on sales. Classic examples from grocery stores include ketchup and mustard
I’m just going to buy this one more thing,’ then those are the items you want to really stay away from.” Volheim and Boyer both warn against trying to cross-
next to hamburger buns and salsa next to tortilla chips. If you’ve
merchandise higher-priced items. The sticker shock of a $40 blood
ever moved facial tissue and lip balm to the cold and cough section,
pressure cuff, for example, is likely to make patients consider their
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COMPELLING CROSS-MERCHANDISING COMBOS Try these complementary combinations from Hamacher Resource Group to encourage add-on sales in your front end.
Weight Management and Nutritional Foods
Vitamins & Dietary Supplements
• Diabetes care products
• Weight management tabs and caps
• Vitamins • Fitness and exercise equipment
Feminine Care • Hot and cold packs
Thermometers • Electrolytes
• Women’s incontinence
• Pain relief
• Personal lubricants
• Tongue depressors
• Adult oral rehydration
• Elastic bandages and braces
• Pain relief
• Blood pressure monitors • Motion sickness relief
• Cold sore remedies
• Pill organizers
• Lip care
• Pain relief
• Hot and cold therapy
• SPF skin care
• Tongue depressors
• Burn relief
• Disposable oral swab with dentrifice
• Pain relief
• Finger cots • Oral rehydration products
• Eye vitamins
• Prenatal vitamins
• Diabetic cold medications
• Folic acid
• Dry mouth treatments
• Dressings, cleansers, etc.
• Therapeutic skin care
• Teeth-whitening products
• Elastic bandages
• Chewing gum
• Allergy relief
• Hot and cold packs • Eye wash
purchase carefully rather than tossing it in their basket. Boyer said it’s okay to spy on your competition for
really not out of place.” Boyer’s favorite example of unconventional cross
cross-merchandising ideas. “Nothing wrong with seeing what
merchandising comes from the frozen food aisle. His local high-
other people are doing,” he said. “Take their ideas and see
volume grocer cleverly placed Pepto Bismol in the same section as
how it works in your store.”
the frozen pizza, presumably for junk food fiends with foresight. “The nice thing about independents, you can do what you want
BE CONSISTENT, BUT EXPERIMENT
to do,” Boyer said. “You have a freedom most chain stores don’t.
Cross merchandising isn’t just a one-time thing, a trend, or a fad.
If it doesn’t work, fine. And you may come up with some crazy
To do it successfully, you’ll need to make it a regular part of your
front-end strategy until it becomes second nature. When you’re ready to experiment, the potential for new
Hamacher Resource Group focuses on improving results across the
combinations is practically endless. Volheim described one clever
retail supply chain by addressing dynamic needs such as assortment
cross-merchandising move she saw while shopping the shaving and
planning and placement, retail execution strategy, fixture coordination,
grooming section: bandages alongside the razors and blade refills.
item database management, brand marketing, and analytics.
“I was like, what is that doing there?” she said. “You know, that’s
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STAFFING UP AND STANDING OUT How to hire the best people for your pharmacy They say a business is only as good as its people. If that’s true for
source for information about his medications.
any business, it’s even truer for independent pharmacies. In an
“If I have a question and I catch a cold or something, more
industry where there’s not a lot of room for differentiation, your
so than the nurse, more so than the assistant to the physician—
employees are essential to standing out.
definitely more than the physician, even though he’s a friend
“It is so important if you want to differentiate yourself from
of mine—I go back to her,” Shay said.
somebody else,” said Tom Shay, principal at Profits Plus, a firm
As a resident of St. Petersburg, Florida—a city of 250,000
that specializes in small business management. Before starting
people—Shay has plenty of pharmacy options. But he sticks with
Profits Plus in 1997, Shay ran several family retail businesses
his independent pharmacy because of people like Deborah. “That’s
spanning eight stores in six cities. “Your people can make you
the kind of difference a person in a pharmacy can make,” he
or they can leave you out there with the rest of the world,
said. “If you can have a staff that is able to demonstrate a sincere
common and bland as ever.”
interest in your customers, your patients, it’s a world of difference.”
Take Deborah, the pharm tech at the independent pharmacy Shay uses for his own prescriptions. Like clockwork, Shay says,
ATTRACTING THE BEST
he can count on Deborah calling each month to review his
If you’ve noticed it’s getting harder to find good help over the last
prescriptions, confirm his auto-refills, and ask about any changes
year, you’re not alone. With unemployment hitting record lows,
he’d like to make. Over the years, Deborah has become his go-to
job seekers have more power now than they’ve had at any time in
recent memory. And they’re not afraid to use it. Some businesses report up to half of their candidates don’t even show up for interviews. Others have gone through the whole process of hiring only to have the employee never show up to the job. “There’s just not excellent people hanging around on street corners with nothing to do,” Shay said. “All the people who want to work are working. And if they get ticked at somebody and walk out, they can go across the street and get another job just as easily. It’s an employee’s game right now.” That doesn’t mean you can’t be selective when it comes to hiring your staff, but it does mean you’ll have to stand out as an employer to snag the best people. “When you have a job opening, is your pile of qualified people empty?” Shay asked. “Why is that? Why aren’t people knocking on the door wanting to work for you?” The more Deborahs you have on your team, the more appealing your pharmacy will become to applicants. “Good people want to
CRUCIAL INTERVIEW QUESTIONS Ask these questions to get the most out of your hiring interviews. • Where did you work last? • What did you like most about working there? What did you like least? • If you could define your ideal job, what would it be? • What would your last boss say about you? • What are the last three books you read? • What special talents would you bring to our business? • What would you consider your greatest achievement at your past jobs?
work with good people, when your business gets a reputation as to, ‘Wow, the best people work here. These are really outstanding folks. They really are into their customers,’” he said. Shay says you don’t have to be at the top, but you have to be
competitive. He suggests looking into what your competitors
These signs should make you think twice about hiring a
are offering. According to the 2018 NCPA Digest, community
candidate, according to Tom Shay, principal at Profits Plus.
In the current market, you may also have to up your pay.
pharmacies are paying pharmacists an average of $58.10 per hour, technicians $15.05, and clerks $11.05. BREEDING THE BEST Assembling an elite staff begins with the employees you already have, especially in the current job climate. Bright people with good
• Unprofessionally dressed when they come to apply • Bringing friends, kids, or spouse to the job interview • Applying just to “get a job” • Doesn’t know or care about your business • Showing up to apply unequipped
attitudes can be molded into high achievers with the right training. “Make a commitment that you’re going to teach people how to be better,” Shay said. “I’ve never seen anything else that works better than that.” At Shay’s family businesses, class met every other week for an hour after close. Every employee was required (and paid) to attend, and every employee was required to teach their peers.
identifying promising hires begins with the job application, which Shay only offers to people in person. “There’s so much more you’re going to learn about a person when there is face to face,” he said. And the application itself isn’t a walk in the park. He includes a
They worked on customer service skills, from practicing phone
twenty-minute, twenty-question quiz to see how well the applicant
calls to swapping tips for better interactions with customers.
can think on the spot. For example, if he’s hiring a cashier he
Part of nurturing an excellent employee crop may also mean weeding some people out. Shay says cutting out employees who resist and refuse to grow is crucial to elevating your staff. “It has
includes some basic math questions to ensure they can calculate totals and change. He also stressed the importance of using the application
to demonstrate, this is the level I want my business to be at, and
process to count out applicants who aren’t there for the right
I would rather be without an employee than have a bad employee,”
reasons. Don’t hire people who are simply looking for any job.
Even when you aren’t looking to fill a specific opening on your team, Shay recommends accepting applications continuously. “I’m
FINDING THE BEST
always leaving the door open. I’m always looking for applicants,”
Even when you commit to training an excellent staff from within,
he said. “I’ll take a look at anyone who walks through the door.
you won’t be able to avoid the need to hire new people. And
You could be someone awesome.”
ELEMENTS | The business magazine for independent pharmacy | MARCH 2019
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HOW COMPETITIVE ARE YOUR WAGES? Offering a salary on par with your competition is essential to attracting the best employees, especially in the current job market. How well do you stack up? Here’s the data on how much other independent pharmacies are paying their staff, according the 2018 NCPA Digest. • Pharmacists $58.10 hourly
“Make a commitment that you’re going to teach people how to be better. I’ve never seen anything else that works better than that.”
• Technicians $15.05 hourly • Clerks $11.05 hourly
EVALUATING THE BEST
be more likely to overlook potential negative factors that their
Once you decide to interview a candidate, evaluating them
employees will spot.
effectively is key. And that starts with listening instead of talking.
And first impressions still matter, Shay said. Candidates should
Shay said too many interviews fail because too much time is spent
show up neatly dressed and on time. They shouldn’t come in with
trying to convince the candidate to work for the business. “That’s
their spouse, children, or friends in tow. Their cellphone should be
backwards,” he said. “Ask the person questions. Get them to tell
on vibrate or left in the car. “I think we’ve forgotten those signs of
you about themselves.”
someone who’s trying to make a good impression.”
The right questions can get to the core of the candidate. Shay
Lastly, don’t skimp on following up with references. That sealed
suggests asking candidates what their previous boss would say
the deal for one of Shay’s hires. When he called the previous
about them. Ideally they will tell you to give the boss a call. He also
employer, the boss told Shay if he was smart he would hire that
likes to ask candidates the three most recent books they’ve read.
candidate immediately. Shay did, and he turned out to be an
If he’s hiring a manager, he expects that candidate to be reading
business books. “I want to ask questions where you have to think and you have
COMMITTING TO THE BEST
to tell me about you. I want to understand the thought process
Building the perfect team for your pharmacy may force you
of this person,” he said.
to change your practices and mentality. But if you heed Shay’s
Shay advocates for an unorthodox approach to interviewing
advice, he’ll tell you it’s worth it. “Listen to what I say and quit
candidates: Let your employees conduct the interviews. Instead of
doing it the way we’ve always done it,” he said. “You’ll actually
grilling job candidates yourself, choose two or three top performers
raise the bar in your own business. You’ll have extraordinary
to ask the questions and help you determine if the candidate is a
people working there.”
good fit. That was one of the most successful changes Shay made to his hiring process. “Unfortunately, as a person who owns a
Want to hear more from Tom Shay? Listen to him live at the
business, too often we think that all the answers come from us,”
2019 Unify Conference in Kansas City, Missouri, where he’ll be
Shay said. “Who are the best people you’ve got now? Those are
presenting on Strategies to Win in a Challenging Healthcare
the ones who need to be doing the interviews.”
Environment. Learn more at pbahealthconference.com.
When the best employees conduct the interviews, they’ve shown a strong ability to find candidates who more closely match their own strengths, Shay said. And owners or managers may
ELEMENTS | The business magazine for independent pharmacy | MARCH 2019
BUSINESS BOOSTER How to make immunizations a pharmacy profit center
When Beverly Schaefer became one of the first pharmacists to
A GOLDEN OPPORTUNITY
administer flu shots in 1996, she could never have guessed that
Around 100 million Americans get the flu shot every year, which
twenty years later she’d be administering nearly thirteen thousand
produces around $4 billion to $5 billion in revenue. That’s just
immunizations per year.
influenza. Each year, the national chain pharmacies and big-box
Schaefer says her pharmacy was the first in the U.S. to offer mass immunizations administered by a pharmacist, and the reason she pioneered the idea came down to a business problem. She
stores battle to snatch up patients to their immunization programs with aggressive marketing and significant discounts. Yet the immunization market is still largely untapped. A 2017
had turned down a contract from a major payer and all at once she
report from the Centers for Disease Control and Prevention stated
lost 300 patients. Searching for a way to retain their business even
that vaccination rates have a long way to go to meet the Healthy
while they were getting their prescriptions somewhere else, she
People 2020 goals. And pharmacies can be the prime beneficiaries
ordered the flu vaccine and posted a sign on her door.
of this growing demand. Surveys show that patients find
“We were hoping to do 300 flu shots the first year,” she said.
pharmacies to be more accessible and convenient than physicians’
“We did 1,200. The biggest problem is that we had to go to the bank
offices and health clinics. And the majority of people in the U.S.
twice a day because we had so many tens and twenties in the till.”
now prefer getting vaccinated at the pharmacy, according to
At that time they gave the shots out of a backroom with a table
a survey by PrescribeWellness.
and a couple of chairs. When people came in to get the shots, they
Many independent pharmacies have already caught on to
kept asking what else the pharmacy was going to offer back there.
this trend. The 2018 NCPA Digest shows 70 percent of pharmacies
“It was like a light bulb went off,” Schaefer said. “What people want
offering immunizations. However, that number includes
is access to healthcare.” Now her pharmacy, Katterman’s Sand
pharmacies that only offer the flu shot. Another estimate says
Point Pharmacy, has become a true immunization destination,
less than a quarter of independents offer immunizations beyond
offering 28 vaccines year-round. They account for nearly 20 percent
influenza. And the flu shot is only the tip of the immunization
of her business and 30 percent of her profit.
iceberg. There’s a glacial immunization opportunity beyond
“If you want to add profit to your bottom line, increase the
influenza waiting to be uncovered. For example, flu shots bring
number of immunizations that you’re doing,” Schaefer said. “Every
in roughly $20 of profit a pop. Compare that to meningococcal
single immunization that you do adds to your bottom line. There
group B vaccine at $48, human papillomavirus at $50, and hepatitis
are no exceptions.”
B at $80, according to one estimate. An independent pharmacy in
Marty Feltner, director of immunization services for Kohll’s Pharmacy, also pioneered immunization in his home state of Nebraska. As the first pharmacy in the state to offer immunizations,
Louisiana earned nearly $6,000 in profit from only 70 shots of hep B in the first year of offering the vaccine. Multiple pharmacy experts say pharmacies that offer
Kohll’s has become the immunization leader in the region. “It’s
expanded immunizations can expect a minimum $40K per
another added component to bring in another revenue stream,”
year in additional revenue, but more likely closer to $90K. One
Feltner said. “When you look at pharmacies today, they’re pretty
independent pharmacy in Oklahoma gave 1,800 vaccines in one
much breakeven pharmacies. So in order to be positive, as far
year, earning $40K in pure profit. Another independent pharmacy
as revenue stream, you’ve got to think outside the box.” Among
in Pennsylvania averaged more than 700 immunizations in its
its eight locations, Kohll’s administers 50,000 to 80,000 flu
second year, resulting in more than $16K in profit.
immunizations per year. Both Katterman’s and Kohll’s specialize in travel immunizations,
“You do two or three new consultations a day, your profit on just those consultations could potentially pay for that pharmacist
which in itself has been a boon for business. People travel from
just to be there that day,” Feltner said. “There are times where we’ll
hours away to get travel shots from their pharmacies. Around
get five or seven consultations in one day and have profitability of
half of Schaefer’s total immunization revenue comes from
three or four hundred dollars on just that one-hour appointment
depending on the patient’s travel designation.”
They both believe immunizations have become essential to
Schaefer said the least amount of profit you’ll ever make on
compete in today’s world, especially as a way to differentiate from
a vaccine is $15 to $20. You essentially get paid twice, once for the
online and mail-order pharmacies that are capturing more and
product and once for the service itself. “How many prescriptions
more of the market share. “You know that [Bezos] family that sends
do you make fifteen to twenty dollars on?”
boxes to every house every day across the country?” Schaefer
Immunizations also provide additional business benefits
said, whose pharmacy is in Seattle, the location of Amazon’s
to indirectly increase revenue and profitability. “What we’re
headquarters. “They have to come to my store to get travel
finding is that pharmacies and pharmacists who are engaging
immunizations. Because you can’t do that by mail. So why not offer
in immunizations are being approached for other patient
a service that mail order will never be able to compete with?”
care activities,” said Mitch Rothholz, chief strategy officer for
ELEMENTS | The business magazine for independent pharmacy | MARCH 2019
a product. Pharmacists’ value to patients and the healthcare team
ACIP RECOMMENDATIONS TO INCREASE IMMUNIZATION UPTAKE • Incorporate immunization needs assessment into every clinical encounter • Strongly recommend needed vaccines • Educate patients about vaccine recommendations • Implement systems to incorporate vaccine assessment into routine clinical care • Understand how to access immunization information systems Source: Centers for Disease Control and Prevention
is recognized when patients receive the appropriate medication or healthcare service and achieve the optimal benefit from those services.” The addition of patient-centered services not only sets you up to survive the future of pharmacy, it also helps nurture patient loyalty. It’s one of the few opportunities pharmacists have to meet face-to-face with patients. “You’ll have a patient for life once you start immunizing,” Feltner said. “It’s been a very rewarding experience.” EASY AS 1, 2, 3 Many pharmacies don’t offer immunizations because the thought of an immunization program is overwhelming. After all, it’s a whole new addition that requires you to spend time and money ordering and storing new inventory, marketing new services, and most importantly, fitting it into your already busy workflow. But Feltner and Schaefer said the difficulty of offering
SIX STEPS TO GET YOUR PROGRAM OFF THE GROUND
immunizations is a major misconception that keeps too many pharmacies away. In fact, adding an immunization program is really easy, they said. You simply treat immunizations like prescriptions. When someone asks for an immunization, your process follows just
1. Check laws and regulations
as if they handed you a prescription. You give them a consent form,
2. Get trained and certified
enter their insurance info, ring them up, and when they get to the
3. Talk to other providers to get buy-in, discover needs,
front of the queue, the pharmacist brings them to the consultation
and establish a CPA if necessary 4. Prepare the pharmacy: create a private space, train staff, order supplies, and put a sign on the door 5. Establish workflow 6. Market the service
room and administers the vaccine. “Doing an immunization takes about as much time as filling a new prescription,” Schaefer said. “It’s like entering a new patient.” Vaccines are ordered from your primary wholesaler (or possibly direct from the manufacturer) and stored in your refrigerator with your insulins and other refrigerated medicine, or they’re stored in your freezer. In other words, they fit right in alongside all your other
the American Pharmacists Association (APhA). “Coming in for immunizations is an opportunity to talk about other healthcare services they might need that the pharmacy can provide.” That has been true in Feltner’s experience, especially for the
prescription medicines. But the only way to make the integration seamless is to utilize your employees well. Every part of the process should be conducted by technicians except for reviewing the documentation
shingles vaccine, which is suffering shortages because demand
and administering the vaccine, which doesn’t take more than a
is so high. “You’re going to have lots of patients come into the
couple of minutes of the pharmacist’s time. If you have a pharmacist
pharmacy who may not be a regular customer and by offering
who’s a recent graduate, consider letting them take the reins.
the service you get them in the door,” he said. “If we say we offer
“They’ve been trained in college to do this,” Schaefer said. “Give it to
the shingles vaccine, we may be able to transfer their prescription
the youngest one and let them be in charge of it if you trust them.”
business over to our pharmacy just by having an immunization program. It just opens more doors.” A broad and lasting benefit, immunizations move your
Feltner suggests starting out slow, with the flu, shingles, and pneumonia vaccines, and working your way up from there. “You can get a vaccine program up and running very, very quickly,” he said.
pharmacy in the direction the profession is headed: from
He and Schaefer both grew their immunization programs gradually,
medication-focused to patient-focused care. “It’s a demonstration
adding vaccines to their repertoire as patients requested them. She
of pharmacists as a healthcare provider,” Rothholz said. “Because
suggests trying to expand your program by 10 percent each year,
pharmacists are trying to move and expand their services into
which she promises is achievable. Eventually you may grow your
a more quality patient care delivery activity versus just providing
pharmacy into a complete immunization destination. “It just has
VACCINE STATISTICS: THE MONEY SIDE Use these estimates to help get the most from your immunization program. MOST PROFITABLE
These vaccines provide the highest
These vaccines are in highest demand
These vaccines currently have the lowest
margin on average
uptake rates compared to their goals
• Hep B
• Hep A (for children)
a way of continuing to grow if you’re doing a good job at it,”
level as physicians and other providers under Medicare Part B,
Before you get started, reach out to other health providers
For pharmacies feeling overwhelmed by the thought of starting
and public health staff in your community, Rothholz said. “Identify
a program, there are all kinds of resources to help. Start with the
what are their and their patients’ needs and challenges related
APhA’s certification program, which has trained more than 340,000
to immunizations that your pharmacy could help address.”
pharmacists. “The program is now considered the gold standard for pharmacy-based immunizations. It’s updated, it’s in line with CDC
recommendations, it’s reviewed by immunization experts, and it’s
The biggest obstacle to getting an immunization program off
recognized by individuals outside of the profession for its quality
the ground will likely be the legal aspect. Although every state
and content,” Rothholz said. In addition, APhA provides access to
allows pharmacists to administer vaccines, scope of authority
products and resources to keep up with current recommendations
varies widely. “The variability in what pharmacists can administer
and vaccine information.
is typically dependent upon the age of the patient, the type of
For clinical and logistical resources, visit the Immunization
antigens or vaccine, and some other procedural modifications,”
Action Coalition (IAC) website (www.immunize.org), which provides
protocols, vaccine information statements, consent forms, and
In many states, you have to establish standing protocols or
a host of other free documents as well as complete guidelines
collaborative practice agreements to be able to vaccinate. Most
for offering immunizations at the pharmacy. Further resources
states require pharmacists to complete training on pharmacy-
for everything you need can be found from the APhA, CDC, and
based immunizations. Pharmacies and pharmacists can check with
the Advisory Committee on Immunization Practices (ACIP).
their state pharmacy association or state board of pharmacy to identify the requirements and restrictions related to immunizations
MORE THAN PROFIT
before getting started, Rothholz said.
One of Feltner’s favorite parts of immunizations is the opportunity
If you need an agreement or protocol, Schaefer recommends coming up with a plan to approach a provider. Choose your provider carefully, maybe starting with the health department.
they provide to interact with patients. It’s one of the few things that frees him from behind the counter to get that personal touch. Same goes for Schaefer. “Doing an immunization, it’s a very
And when you go to make your case, make it all about the patient.
intimate and private moment,” she said. “You actually get to know
“Always, always take the high road,” she said. “It’s about giving
these patients in a different way than you do transacting over
patients easy access to preventive care.”
Another potential hurdle you’ll want to be ready for is billing.
Immunizations live in that sweet spot of pharmacy practice
Coverage for vaccines in pharmacies varies from plan to plan,
where healthier patients and a healthier business meet. Research
including some under Medicare Part B and others through
overwhelmingly shows that when pharmacies vaccinate, uptake
Part D. Some plans cover the total cost of the vaccine, others
increases, outcomes improve, and healthcare costs decrease.
require a copay, and others don’t cover it at all. If a vaccine is not
“The more often we vaccinate, the more chances we have
covered under the patient’s pharmacy benefit, Feltner and Schaefer
to decrease disease,” Feltner said. “And that’s the whole goal
have the patient pay out-of-pocket and self-submit the claim
is to vaccinate as many people as we can. And it’s a great feeling
to their medical insurance. However, pharmacies can enroll as
as a pharmacist to immunize someone against a potentially
a mass-immunization provider and be compensated at the same
ELEMENTS | The business magazine for independent pharmacy | MARCH 2019
20 TIPS TO MAKE YOUR IMMUNIZATION PROGRAM A PROFIT CENTER Maximize your profit by increasing immunization sales with smart strategies from pharmacy owners who have been doing it for decades. Independent pharmacy owner Beverly Schaefer and director of immunization services Marty Feltner provide tens of thousands of immunizations every year, and their independent pharmacies have become immunization destinations. Use these tips compiled from their expertise and current research to get most money from your immunization program.
5. TARGET FLU SHOT PATIENTS Patients who get the flu shot have already shown an openness to immunizations, which means they’ll be much more inclined to accept further vaccines, according to a 2018 study published in Psychological Science in the Public Interest (PSPI). When patients come in for flu shots, have them fill out an intake form and ask about the last time they received other recommended vaccines. 6. MAKE STRONG RECOMMENDATIONS The PSPI study also discovered that a strong recommendation from the provider is the single most powerful way to motivate someone to get vaccinated. Instead of asking if they would like the vaccine, tell them they’re eligible and that they can get it before they leave the pharmacy. 7. IDENTIFY ELIGIBLE PATIENTS Most pharmacy systems allow you to create an alert for patients
1. START THE CONVERSATION
when their profile matches a vaccine need, which most often
Starting the conversation is the most important part
is based on age. Feltner relies on his employees to know which
of increasing immunizations, Schaefer said. “There’s lots of
patients to look for and when to recommend vaccines. “The big
topics that you can choose to start a conversation about
key is to delegate and to train your staff on how to recognize
immunization—travel, staying healthy, new vaccines. Even
someone who is eligible,” he said. “Train your staff. Train your
if people don’t do it right then, it plants a seed in their brain.
staff. Train your staff.”
And it gets word-of-mouth going.” 8. UTILIZE ENTIRE STAFF 2. PUT A SIGN ON THE DOOR
After a visit to a national chain, Feltner realized how effective it is to
For Schaefer, a simple sign is the first and most important
have every single staff member, no matter their role, ask patients if
step in marketing your services. This has been her single
they’ve gotten a vaccine. The store’s cashier asked every patient at
most successful strategy for increasing immunizations.
checkout if they had gotten the flu shot. If they said no, she directed
On the sign, list all the immunizations you offer. “When we
them to the pharmacy. “I thought that was eye opening,” he said.
did this, people were totally amazed that we were doing
“That’s part of the whole idea of delegating to your entire staff.”
all these shots,” she said. 9. ZERO COPAY TACTIC 3. EDUCATE PATIENTS
This trick has been wildly successful for Feltner: He keeps track
According to the CDC, education remains the largest barrier to
of which insurance and government plans offer patients a zero
immunization coverage. Simply informing patients about the
copay for a vaccine. Any time his staff sees a patient with one of
preventable diseases and the vaccines that prevent them is an
those plans, they make the recommendation and let the patient
easy way to increase immunization rates. Use in-store signage,
know the vaccine is completely free. At that point, it’s an easy sell.
brochures from manufacturers, bag inserts, or a conversation. 10. CO-ADMINISTRATION
4. MAKE SPECIFIC RECOMMENDATIONS
Co-administering vaccines can also cause an uptick in vaccinations.
Asking the right patients about the right vaccines will give
Patients will be much more likely to receive multiple immunizations
you a higher conversion rate. That involves identifying eligible
if they get them all in one stop rather than returning at another
patients and recommending the specific vaccine to them
time. As long as the vaccines don’t have contraindications, you
directly. For example, if the patient is over 50, simply let them
can safely administer multiple vaccines in one visit. Also consider
know: Nearly 40 percent of people who have had chickenpox
ordering combination vaccines that contain multiple vaccines in
will get shingles. Offer to give them the vaccine right then
one shot, which are even more convenient for patients and reduce
your storage costs.
11. OFFSITE EVENTS
“Pharmacists who are successful in immunizations are not
If you offer a top-notch immunization program, your patients
limiting provision of vaccines to the walls of their practice,”
and physicians will do the advertising for you. Both Schaefer and
said Mitch Rothholz, chief strategy offer at APhA.“They’re
Feltner attributed their most successful marketing to word-of-
going out to businesses and doing immunizations in the
mouth. In fact, Schaefer spends zero dollars on advertising.
community, whether it be an event or in private businesses.” Offsite events not only generate money from vaccines given
18. ANSWERING MACHINE
at the event, they’re also a perfect opportunity to recruit new
Use your answering machine to highlight your immunization
patients to your pharmacy for good. Good offsite opportunities
services. “When you call my store, it’s ‘Hello, you’ve reached
include school systems, health fairs, local businesses, assisted-
Katterman’s pharmacy, your immunization destination,’”
living communities, apartment-complex communities, police
Schaefer said. “That way they’re thinking about immunizations
departments, churches, and colleges.
whether they want to or not.”
12. EMPLOYER PARTNERSHIPS
19. INCENTIVIZE YOUR PHARMACISTS
A huge source of immunization revenue for Feltner’s practice
Schaefer said the high margins on immunizations allow you
site is corporate partnerships. He’s developed relationships with
to pay a bonus to your pharmacists for each immunization
several corporations who send their employees overseas. All of
they administer. For an immunization that earns $20, let your
those employees go to Kohll’s Pharmacy for travel immunizations,
pharmacists take two to five bucks of that to give them extra
which usually involve multiple vaccines.
13. ON-AIR ADVERTISING Go live on the radio or TV and give flu shots. “Just make it fun,” Feltner said. “The big thing I tell pharmacists is make it fun. Then
20. TRAVEL TRICKS
you’re having fun immunizing and preventing disease.”
Travel vaccinations come with their own bag of tricks—all of which genuinely help the health of patients.
14. HELPING WITH COSTS The second biggest barrier to immunizations, according to the CDC, is cost. The agency recommends pharmacies consult with local and state public health vaccination programs to learn about publicly funded programs that could help patients with the cost of vaccines. You can also enroll in the Vaccines for Children Program,
• Hold a consultation with patients to ask where they’re going, review their immunization history, and offer them everything they’ll need. • Use Travax, an online resource, to identify every vaccine a patient will need for the area they’re visiting. • Create a “travel checklist” with OTC items patients
which provides pharmacies federally purchased vaccines to fully
may need for the trip, which they can purchase in your
vaccinate eligible children.
front end. • Compile a section in the front end dedicated solely to
15. OFFER COUPONS
travel products and walk your patient through it after
Take a page from the national chain pharmacies and big-box
each consultation. Schaefer said it’s not uncommon for
stores. Give patients a small voucher or coupon to your front end
patients to spend an extra one to two hundred dollars
when they get an immunization from you. The profit you earn from them will outweigh the gift.
on her OTC travel products. • Put a sign on your front door: “Are you traveling out of the country? Have you had your hep A, yellow fever, and
16. FAX PHYSICIANS After immunizing a patient, Schaefer sends a fax to the provider. The fax includes the entire list of vaccines she offers, with an X next to the vaccine she administered. That way, the physician will know every vaccine she offers and can refer patients to her in the future.
typhoid shots?” • If a patient comes in asking for a specific travel vaccination, ask where they’re traveling. You may be able to offer additional immunizations or travel products. • Get a standing order or collaborative practice agreement to administer prescription travel medicine, like antimalarial drugs.
ELEMENTS | The business magazine for independent pharmacy | MARCH 2019
SPOTLIGHT only a pharmacist is qualified to answer. Once the prescription is verified, the experienced pharmacy techs on site enter the prescription into the system, locate the right medication, and count out the pills. The whole process takes about as long as filling a prescription at a traditional pharmacy. Sav-Mor has been operating telepharmacies since 2015, but the Illinois Board of Pharmacy introduced the practice in 2010 to ease the growing problem of pharmacy deserts. “They recognized that there was a need for pharmacies, but economically, business-wise, to open a pharmacy in a community with 1,000 population—the numbers aren’t there to make it happen,” said Falk. “So with technology enabling pharmacists to verify prescriptions at a remote location, it took that overhead cost of the pharmacist out of the equation.” REDUCING EXPANSION COSTS The 2018 NCPA Digest says non-owner pharmacists in independent
REMOTE REVENUES How Sav-Mor Pharmacy expands into new markets with telepharmacy
pharmacies made an average of $58.10 per hour, or $120,848 per year, in 2017. That’s a lot of overhead to add to the already substantial startup costs like inventory, real estate, equipment, and marketing. “It’s expensive to open a pharmacy,” Falk said. “You’re at several hundred thousand dollars by the time it’s all said and done.” For pharmacies looking to add a new location, telepharmacy is a more affordable approach. “It gives you the ability to grow your business without the massive amount of overhead that it takes to open a pharmacy,” Falk said. “Overhead is the number one expense in a pharmacy, generally. Removing the cost of the pharmacist at
When David Falk opened a Sav-Mor Pharmacy in the village
that location, that right there is a hundred-plus thousand in wages
of Atwood, Illinois, the local paper cheerfully announced, “Atwood
a year. So you’ve already made it economically feasible.”
now has its very own pharmacy—complete with a drive-thru
The suggestion to hire fewer pharmacists may sound
window.” Now the 1,100 residents of Atwood could pick up
counterintuitive, and Falk says the introduction of telepharmacy
prescriptions close to home instead of driving 10 miles each way
initially created concern for pharmacists’ long-term job prospects.
to the nearest pharmacy. But there was one notable difference:
But entering communities that previously had no pharmacist
this Sav-Mor was a telepharmacy.
presence doesn’t eliminate a job. Instead, it brings more volume
“We try to bring the latest in technology and the best pharmaceutical care into rural communities, to offer everything
to the pharmacist. For example, a single host pharmacist in Illinois is allowed to
that the big-box pharmacies will offer but with a better service
verify prescriptions for up to three different telepharmacies. So if
level,” Falk said. “We focus on high-touch customer service.
each telepharmacy fills a thousand prescriptions per month, then
That’s how we’ve come to grow and continue to grow.”
the host pharmacy has essentially added 3,000 prescriptions to its
Of Sav-Mor’s 14 locations, three are telepharmacies. The remote pharmacies have enabled Falk to expand his business into
book of business. “This gives pharmacy owners the ability to expand into these
new areas with rural populations in central and southeast Illinois
rural communities and solidify those pharmacists’ positions instead
with the help of modern communication technologies. Pharmacists
of taking the pharmacists’ position away,” Falk said.
working at a “home base” Sav-Mor location verify prescriptions remotely via high-definition photos and video. They supervise
GETTING ON BOARD
the telepharmacy location remotely and are available any time
At first, Falk had to convince his pharmacy staff that telepharmacy
a pharmacy technician or patient has questions that
was a viable route. His solution was to show the pharmacists
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and pharm techs around the telepharmacy setup and walk them
pharmacies, they provide immunizations by appointment and
through the process.
during scheduled immunization clinics. Just as proximity helps
“Once they saw it in action and saw the safety and
patients with medication adherence, it can increase the likelihood
thoroughness and follow-through, they felt a lot more comfortable
of immunizations, especially among more vulnerable populations
with it,” he said.
who have difficulty traveling to the next town over.
Pharmacists still work closely with telepharmacy patients. Video conferencing allows patients to talk with pharmacists in private
ON THE HORIZON
consultation rooms about minor conditions like rashes or pink eye.
Falk is preparing to open his fifteenth location, in Pana, Illinois.
Think of it like Skype or FaceTime, but with a secure connection that
He says feedback from the community indicates it could likely
protects medical privacy.
support a full pharmacy in the future, but he’s opening the location
“It’s the same as going to the pharmacist and talking to the pharmacist, but you’re just doing it on a television monitor instead of face to face,” Falk said. For the pharmacy techs put in charge of new locations,
as a telepharmacy first to make sure it’s financially viable. For pharmacists interested in following his model, Falk’s advice is to start by checking the regulations in your state. Twenty-three states allow some form of telepharmacy, but the restrictions and
telepharmacy has presented a major professional development
guidelines vary widely. But in some states, especially those with
opportunity. Techs who run telepharmacies are paid more and
expansive rural areas, harnessing technology can help you meet
have more responsibility.
a real need that still makes business sense.
“We have taken our, for lack of a better term, our super techs—
“In the more rural states, it’s a great way to expand your
the ones that can multitask and have a great personality, don’t have
pharmacy without the overhead of opening a full-on pharmacy
a problem speaking to people, can talk to an insurance company
and absorbing those costs until the volume gets there,” Falk said.
and fill prescriptions at the same time, and overall give that high-
“There are a lot of desert areas that don’t have pharmacy care
touch service that we’re wanting to deliver to the patient,” Falk said.
that need pharmacy care. This is a great way to use technology
“They kind of take ownership of it because it’s kind of their store.
to provide healthcare services.”
They take a lot of pride in it.” PATIENT OUTCOMES Falk says his telepharmacies are welcomed with open arms in every new community he builds in. “It’s been quite overwhelming because you look back at some of the communities we’re in, some of them for 10, 15 years they
IS TELEPHARMACY LEGAL IN YOUR STATE?
haven’t had a pharmacy,” he said. “And in thousand-populated
States that allow telepharmacy in some capacity:
towns, over half the town is probably taking some kind of
maintenance medication, blood pressure, cholesterol, whatever.
So they have to travel once a month to go to the nearest pharmacy
to get a prescription filled.”
residents of towns like Atwood, Cerro Gordo, and Louisville, Illinois,
valuable time and energy. But the long-term effects are even
more important. The close proximity helps increase adherence by
In the short term, having a telepharmacy close to home saves
reducing the obstacles between patients and their prescriptions. Inclement weather, car troubles, and busy schedules are now less
States with pilot programs that could lead to
likely to prevent or delay pickup. Better adherence can in turn
reduce healthcare costs. “You don’t take your insulin, you don’t take your blood pressure medicine, you’re going to end up in the hospital. For a rural community that doesn’t have a hospital, that means transportation and hospital costs that are much more expensive than prescriptions,” Falk said. Sav-Mor’s telepharmacies also administer vaccinations. Though they can’t offer the same walk-in service as the home
Connecticut Kansas Michigan New Jersey Virginia Washington
THE TAX CUTS AND JOBS ACT Learn how the monumental tax bill affects your pharmacy’s financials The Tax Cuts and Jobs Act of 2017 brought the most significant
and expenses when they’re earned, even if they have not received or
federal tax overhaul in decades. Do you know how the changes
paid cash yet. “This has now radically changed,” Sykes said. With the
affect your pharmacy business?
Tax Cuts and Jobs Act, pharmacies with revenues under $25 million
“There’s a tremendous amount in this particular act that affects pharmacies—a lot of hidden issues in here that haven’t been discussed,” said Ollin Sykes, CPA, president of Sykes & Company,
can switch to accounting on a cash basis, meaning they would only report revenues and expenses when the cash is received and paid. “In most cases it wipes out a substantially large part, if not all,
P.A., an accounting firm that specializes in independent pharmacy
of the income for the 2018 tax year for most pharmacies,” Sykes said.
taxes. “These items have tremendous relevance to pharmacies.”
“I can tell you, looking at hundreds of pharmacies’ accounting books
After spending a year homing in on the complicated tax bill
and records over the last year, we will be making those adjustments
and working with hundreds of pharmacies, Sykes has uncovered
in most cases.” But he emphasized that pharmacies should check
the most important changes affecting independent pharmacy.
with their CPA because the move won’t make sense for every
“And they’re dramatic,” he says. “If you take advantage of these
tax changes, you’re not going to have much tax liability for the 2018 tax year.”
If pharmacies make the switch, they can also decide to deduct the inventory on their books, which could apply to hundreds of thousands of dollars for a single pharmacy. Under the new law,
pharmacies can treat inventory as non-incidental materials and
The least known, but most impactful, opportunity involves
supplies, which can be expensed if the line item is less than $2,500.
a single adjustment to tax reporting, called a 481(a) adjustment.
In other words, pharmacies can write off every single item of
This adjustment applies if you change your accounting for tax
inventory invoiced under $2,500.
purposes from accrual to cash basis and file an IRS Form 3115.
At least, that’s one interpretation. Scotty Sykes, CPA, who is also
In the past, most pharmacies have been required to report under
with Sykes & Company, P.A., says there’s a lot of gray area in this
the accrual basis of accounting, which means they report revenues
part of the law and tax professionals are still waiting for more clarity
from the IRS. Down the road, the agency could come out and clarify that’s not what they meant, which would require pharmacies to refile. “This is currently a contentious issue because it’s not clear whether the IRS and Congress intended for inventory to be treated this way,” Scotty said. For that reason, some businesses might want to consider applying for an extension to buy themselves some time before they have to make a decision about the inventory write-off. If you decide to expense inventory on your tax returns, you also have to expense it in your books and records. That can come with its own headaches because it makes your accounting numbers less useful for measuring the success and viability of your business. “When pharmacies stop tracking inventory on their books and records, essentially any of the financial information they’re pulling from their accounting system just isn’t going to be accurate,” Scotty said. “They’re not going to have any basis for how the pharmacy is performing because they’re just expensing everything and not getting a true picture of what’s going on in the pharmacy.” This problem could be compounded if you need to report your financial information to a third party, such as a bank. “If our firm makes the decision to write off the inventories, we make sure our clients understand there may be some limitations with respect to that decision,” Sykes said. Writing off inventory is an aggressive approach, and Sykes says
THE MOST COMMON PHARMACY TAX MISTAKE Ollin Sykes says the single most important thing independent pharmacists should do each year is be diligent with their monthly bookkeeping. “Probably the largest mistake we see is that pharmacists don’t really know where they stand,” Sykes said. “In this environment where PBMs are just vicious, DIR fees are increasing, and cash flows in some cases are tighter than ever before, knowing exactly where you stand is more important today than ever before.” To avoid the most common pharmacy tax mistake, make sure you keep track of your monthly numbers in each of these categories: • Cash
it won’t be right for every pharmacy. He and other accountants are making this decision on a case-by-case basis, so it’s important to discuss your options with your own tax professional. on property trade-ins. Any gain is taxed at the higher ordinary SECTION 199A
income tax rates up to the amount of depreciation taken.
A lot of the discussion Sykes has seen about the tax code changes has focused on Section 199A, the qualified business income
deduction. The new provision allows small business owners to
If these changes cause you some confusion, you’re not alone.
deduct up to 20 percent of their qualified business income, which
“What I’ve heard from pharmacists is they don’t understand
is the net of qualified items of income, gain, deduction, and loss
the details of some of these issues,” Sykes said, “which is all
that is effectively connected with the conduct of a business.
the more reason they need to be talking to competent tax
However, Section 199A comes with several limitations and
professionals who do have knowledge about this and understand
uses wording that even experts deem unclear. The IRS released
what’s going on from within the retail independent pharmacy
guidance on this issue in late January, and tax professionals are
industry. It’s a different animal with independent retail pharmacies
still working through it. But Sykes says his initial impression is that
versus a regular retail business.”
the guidance is pharmacy-friendly.
Ultimately, Sykes describes the changes to the tax code as “a gift from Congress to these pharmacies,” even if adjusting to
the new laws causes a bit of a headache. With the right moves,
The Tax Cuts and Jobs Act also affects pharmacy property in
you can dramatically reduce your tax liability for 2018.
a couple of important ways, for better and for worse. For better,
“Pharmacists should contact their tax professionals as quickly
it increases the bonus depreciation from 50 percent to 100 percent
as possible to begin to pull all this data and information together
for qualified property. “Essentially, with limitations, whatever
and begin having these conversations. They don’t need to wait;
equipment, et cetera, purchased for the pharmacy can be
they need to do it now.”
expensed,” Sykes said. For worse, you now have to recognize the gains you receive
ELEMENTS | The business magazine for independent pharmacy | MARCH 2019
EXPANDING AUTHORITY A look at the future prescribing authority for pharmacists
It’s no secret that pharmacists continue to be underutilized.
provider status would open up a whole new world of billing
Research shows that when pharmacists are more involved in
to prop up independent pharmacies’ revenue, which has seen
patient care, health outcomes and healthcare costs improve.
a steep decline.
Expanding prescriptive authority allows pharmacists to increase their direct care, and it increases patients’ access to healthcare.
CURRENT PRESCRIPTIVE REALITIES
“With a possible shortage of primary care prescribers by 2025,
The industry still continues to resist giving pharmacists more
it is vital to note 89 percent of Americans live within five miles
authority. As things stand, prescriptive authority is primarily
of a community pharmacy,” said Melanie Maxwell, senior vice
limited to collaborative practice agreements, in which a partnering
president, pharmacy services at Pharmacy Providers of Oklahoma
physician specifies the authority allowed and the conditions
Inc. (PPOk), an organization that negotiates third-party contracts
required for specific pharmacists.
for independent pharmacies. “Independent pharmacists are an
The other route is through statewide protocols and standing
integral part of the focus to improve patient outcomes and reduce
orders, in which a state specifies the authority and conditions for
all pharmacists in the area. These have generally been prompted
Pharmacists can achieve that without stepping on prescribers’
by public health issues of particularly high need. For example, the
toes. By giving pharmacists authority over minor issues that don’t
opioid crisis motivated every state in the U.S. to allow pharmacists
need a physician’s immediate attention, both sides are happier
to dispense naloxone without a prescription.
and patients are healthier. “Pharmacists thrive on being the
Collaborative practice agreements generally allow greater
middle-men between patients and prescribers on a daily basis,
authority while protocols mostly focus on specific medicines
and adding these services can further streamline patient care
for minor conditions that require no diagnosis, such as cold sores.
on the prescriber’s end,” Maxwell said.
Within each state protocol, scope of authority varies widely. A few
Expanded authority also propels pharmacists closer to provider
states, like New Mexico and California, have a more liberal scope
status by demonstrating to patients and healthcare providers the
for pharmacist prescribing. But in most states, pharmacist authority
kind of clinical contributions pharmacists can make, she said. And
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“Independent pharmacists are an integral part of the focus to improve patient outcomes and reduce healthcare costs.”
COMMON STATEWIDE PROTOCOLS These are the most common drugs and conditions that state protocols allow pharmacists to prescribe and treat, under qualified conditions, throughout the U.S. Check with your state board of pharmacy to find out what’s allowed in your state. Contraceptives: California, Oregon, Colorado, Hawaii, Maryland, and New Mexico Tobacco cessation: Colorado, Idaho, Indiana, New Mexico,
However, the tides may be turning. Two laws enacted in the last two years, one in Idaho and one in Oregon, have expanded prescriptive authority for pharmacists through statewide protocols. In Idaho, pharmacists can now prescribe and dispense drugs for a long list of issues, such as cold sores, seasonal influenza, strep throat, uncomplicated UTIs, and diabetic conditions. In Oregon, pharmacists can now prescribe and dispense drugs that appear on a state-authorized formulary, which will continue to grow upon
Arizona, California, and Maine Vaccination: 18 states Naloxone: Every state Travel medications, tuberculosis testing, and fluoride replacement: Various states
request and approval. Potential items on the formulary include diabetic testing supplies, smoking-cessation aids, epinephrine autoinjectors, albuterol inhalers, rapid strep tests, and spacers for inhalers.
a statewide protocol.”
TRENDING IN THE RIGHT DIRECTION
replicate. The governor signed a bill permitting the Oregon Health
Two states don’t make a trend, but they may start one. What Idaho
Authority to reimburse pharmacists for providing any health service
and Oregon have done could serve as a template for the rest of
within their scope of practice.
Oregon set an example for this in 2015 that other states could
the country, even if each approach looks different. “Expanding prescriptive authority is feasible for all states,” Maxwell said. Although the drugs will depend on the needs of each area,
Another report, from the National Governor’s Association, a bipartisan organization of the nation’s governors, identified three main barriers for expanding the role of pharmacists within the
Maxwell expects future formularies to continue to build on the
healthcare system: limitations within CPAs, provider status, and
management of diseases that pharmacists have already proven
access to health IT systems. “Resolving these issues will enable
an aptitude for, such as hypertension, diabetes, cardiovascular
pharmacists to maximize their efforts within the healthcare system
risk factors, and wellness programs.
and push for expanding prescriptive authority,” Maxwell said.
In 2017, a national workgroup convened by the National
But change won’t happen without pharmacists leading the
Alliance of State Pharmacy Associations and the National
charge. Pharmacists will need to continue to advocate for provider
Association of Boards of Pharmacy said that for prescriptive
status, Maxwell said. And they’ll need to continue to contribute
authority expansion to truly succeed, pharmacists need to get paid.
to patient-centered clinical care.
That piece is “critical for ensuring adequate patient access and
“Achieving this first on the state level to meet each population’s
impact on public health needs,” the report said. “Insurance policies
specific needs will elevate the discussion on the federal level,” she
should allow these products and services provided by pharmacists
said. “Actively participating with their state’s pharmacy association
to be covered in the same manner as they are when provided by
and board of pharmacy and engaging in policy discussions with
other healthcare professionals. Policy makers should consider
legislators is key.”
whether state laws or regulations need to be modified to ensure that payment and insurance coverage are available and equitable
Chelsea Price, PharmD, J.J. Peek, PharmD, and Andrew Llanes, PharmD
for the products and services rendered by a pharmacist under
candidate, contributed research for this article.
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