Pharmacists today are challenged with juggling a myriad of tasks at once, from keeping patients happy and hiring quality technicians to improving profits and keeping the business alive. On top of the ever-evolving pharmacist role, the COVID-19 pandemic has shifted the way profits are viewed by independent pharmacies. With so much responsibility amidst a changing environment, many independent pharmacies are struggling to maintain and increase their profits.
This article highlights common reasons pharmacists struggle with profitability, plus the ways in which pharmacy technology can help address those challenges.
Why Pharmacies Struggle to Increase Profits
Community pharmacists wear many hats. In addition to other daily tasks and responsibilities, they’re under constant pressure to remain profitable and competitive despite the changing pharmacy landscape.
Here are some of the common pitfalls independent pharmacies encounter when it comes to making a profit:
1. Increased Responsibility
Today’s pharmacists do much more than just dispense medications. In fact, they’re quickly becoming trusted health advisors in their communities by offering enhanced clinical care services and building strong relationships with patients.
This is especially true for smaller independent stores in rural areas, because 91 percent of Americans live within five miles of a community pharmacy.
As responsibilities and service offerings increase, pharmacists and technicians are often overworked and tasked with managing a million things at once. Manual workflows associated with the wide array of responsibilities make the job that much harder and take away from proactive patient and community outreach.
Ultimately, this can all boil down to decreased profitability—or at the very least difficulty increasing profits—without the right solutions in place.
2. Declining Reimbursements
Facing shrinking reimbursements and smaller margins, not to mention the onslaught of direct and indirect remuneration (DIR) fees, makes it incredibly difficult for pharmacists to increase pharmacy profits. DIR fees, which include charges for network participation and the occasional reimbursement reconciliations, have increased by 1600 percent in the last five years alone.
The financial impact of DIR fees is so significant that 87 percent of pharmacists reported it affected their ability to provide patient care and stay in business. Then there are the copay clawbacks, or elevated copay amounts recouped from pharmacies. From the same survey, 83 percent of pharmacists reported witnessing clawbacks at least 10 times in the previous month.
To combat these very prevalent issues, pharmacies must expand clinical care services and explore opportunities for medical reimbursement. Of course, it’s difficult to do so without increasing overhead costs and finding creative ways to get time back—and therein lies the problem.
3. Low Patient Satisfaction
Ensuring that customers are satisfied is valuable in more ways than one; profit often follows when patient satisfaction is made a top priority. However, many community pharmacists are simply spread too thin to focus on building customer relationships and making them more profitable.
The truth is, it costs a lot less money to retain patients than to attract new ones. Many pharmacists, especially in small, rural communities, take pride in their high patient satisfaction rates. Investing in building strong community relationships and cultivating patient loyalty is essential in order to increase profits—but with so much happening at any given time, doing so is also much easier said than done.
4. Poor Medication Adherence
Ensuring medication adherence is a top priority for pharmacists. When patients take their medications as prescribed, the result is better outcomes, fewer complications, and in the case of the pharmacies, increased profits. On the other hand, nonadherence accounts for up to 50 percent of treatment failures, 125,000 deaths, and 25 percent of hospitalizations each year. For pharmacies, poor medication adherence also has a direct financial impact. It means missed refills and lost profits. This is obviously less than ideal, especially for smaller stores struggling to increase profits and competing with retail chains.
5. Competition with Retail Chains
With an increasing number of big-box retail stores expanding and merging, independent pharmacists must remain competitive and find ways to differentiate themselves to keep their doors open. Around 35 percent of U.S. pharmacies are independently owned, which means they must compete with the remaining 65 percent for customers and profits.
John Beckner of the National Community Pharmacists Association (NCPA) explained the challenge well: “The competition is pretty intense, and we need to continue to diversify with new services, be nimble, and differentiate ourselves with offerings and customer service.” With that said, it’s often difficult to compete with retail chains due to a lack of the same corporate support and resources. Independent pharmacists in particular have to find ways to gain a competitive edge to stay in business, but making it happen is challenging without the same widespread footprint and support.
6. Slow or Non-Existent Technology
There are many different pharmacy technologies that serve a wide range of purposes, from automating prescription refills to medication synchronization and analytics. One of the biggest barriers to increasing pharmacy profits is having outdated or non-existent technology. A lack of modern pharmacy technology can lead to wasted resources, inventory shortages, inefficient workflows, decreased patient and staff satisfaction, and ultimately a decline in profits.
Plus, any pharmacy operating with slow or non-existent technology is at a huge disadvantage in comparison to the competition. Nearly every pharmacy relies on some form of modern technology, if not multiple forms, to operate more efficiently, reduce overhead costs, minimize errors, and increase profits.
How Technology Benefits Both Pharmacists and Patients
Advanced pharmacy technology and add-on solutions benefit pharmacists and patients alike in a number of ways, from streamlining workflows to increasing patient satisfaction and rapport—and the profit follows. This is true even during tough economic times like those we’re facing now as a result of COVID-19.
Pharmacy technology can help to boost medication adherence, automate manual processes to help staff work more efficiently, improve inventory management, assist with claims reconciliation, identify low-hanging fruit opportunities, and more. Of course, not just any pharmacy technology will do; investing in the right solutions is essential for reaping the full rewards.
Not sure what features are necessary to increase your pharmacy’s profitability? Download our free checklist to learn which features to look for in advanced pharmacy technology.