Elements Magazine - Vol.9 Iss.2 June 2020 by Elements magazine

ELEMENTS THE CONSEQUENCES OF COVID-19 Assessing the impact of the coronavirus on the future of retail pharmacy

PBM AUDITS Minimize financial losses and frustration from unwanted PBM audits

The Top Challenges of Operating Multiple Pharmacies Profitable, proven solutions from successful multi-store owners and operators

VOL. 9 ISS. 2 | JUNE 2020 | PBAHEALTH.COM/ELEMENTS

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CONTENTS ON THE COVER

19 FEATURE | T he Top Challenges

of Operating Multiple Pharmacies

Profitable, proven solutions from successful multi-store owners and operators

DEPARTMENTS

07 NEWS | The Consequences of COVID-19

Assessing the impact of the coronavirus on the future of retail pharmacy

10 TRENDS | PBM Audits

Minimize financial losses and frustration from unwanted PBM audits

12 RETAIL | The Dos and Don’ts of Discounting How to create an effective discounting strategy for your front end

FEATURE | The Top Challenges of Operating Multiple Pharmacies

15 SOLUTIONS | T he Dollars of Diabetes Is diabetes care a good business opportunity for pharmacy?

26 SPOTLIGHT | A Better Will Call PerceptiMed’s scripClip reduces will call process from minutes to seconds for

Wildcat Pharmacy

29 MONEY | Cover Your Bases

What kind of insurance coverage does your pharmacy need?

32 OUTLOOK | All Systems Go How two pharmacies improve operations with their pharmacy management systems

ELEMENTS | The business magazine for independent pharmacy | JUNE 2020

SOLUTIONS | The Dollars of Diabetes

ELEMENTS

The business magazine for independent pharmacy

ON THE WEB Find more strategies, tips, and expert advice to improve your business at pbahealth.com/elements

VOLUME 9, ISSUE 2 JUNE 2020

Here’s How to Overcome Pharmacy DIR Fees and PBM Reimbursements

PUBLISHER & EDITORIAL DIRECTOR Matthew Shamet EDITOR

High DIR fees and low PBM reimbursements

Greyson Honaker

don’t have to mean the end of your pharmacy’s profitability.

ART DIRECTORS Anna Brooks Amy Mendenhall Mansfield CONTRIBUTING WRITER

7 Pharmacy HIPAA Violations That Might Surprise You

Erin E. Rand

Learn seven little-known patient privacy pitfalls to protect your pharmacy from costly fines for

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HIPAA violations.

elements@pbahealth.com

These Are the Most Profitable Pharmacy Services to Offer Independent pharmacies need to earn revenue in new ways. Attract more patients by offering the profitable pharmacy services they want and need.

Follow Elements magazine on Facebook and Twitter for pharmacy business tips and advice, news announcements, industry information, Elements magazine is published quarterly by PBA Health. Copyright© 2020 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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INFLUENZA: PREDICTABLY UNPREDICTABLE Flu Vaccines Have a Major Impact on Helping to Prevent Disease1

In a study of vaccine effectiveness, flu vaccination was demonstrated to help protect against serious illness, hospitalizations and death, even when vaccine effectiveness is low.1,2

vaccine efficacy1

Prevents an estimated…

21M

130,000 62,000

influenza influenza-related influenzainfections1 hospitalizations1 related deaths1

of the population vaccinated1

Each season is different and H3N2 is not always the most predominant strain Over the last 15 years, there have been

3 severe seasons (seasons with more flu-related hospitalizations

Each flu season is different.

and deaths) – 2003-2004, 2014-2015 & 2017-20183,4 All three seasons were A(H3N2) predominant, which is the strain associated with more hospitalizations and deaths.

’03

The annual direct and indirect costs of flu in the United States are estimated to be upwards of $11 billion.

Annual flu vaccination helps prevent and potentially reduces the risk of serious complications, doctor visits, missed work and school and risk of flu-related hospitalizations and death.6

1. Sah P, et al. Optimizing the impact of low-efficacy influenza vaccines. PNAS. 2018; 115 (20) 5151-5156. Accessed July 2019. 2. Alicia M. et al. Modeling the Effect of Different Vaccine Effectiveness Estimates on the Number of Vaccine-Prevented Influenza-Associated Hospitalizations in Older Adults, Clinical Infectious Diseases, Volume 59, Issue 3, 1 August 2014, https://doi.org/10.1093/cid/ciu328. Accessed July 2019. 3. Centers for Disease Control and Prevention (CDC). Transcript for CDC Update on Widespread Flu Activity. https://www.cdc. gov/media/releases/2018/t0112-widespread-flu-activity.html. Accessed July 2019.

’04

’05

’06

’08

’09

’10

’11

’12

’13

’14

’15

’16

’17

’18

’19

U.S. employees miss approximately

17 million workdays

Annual direct costs (hospital and doctor’s office visits, medications, etc.) are an estimated

due to flu, an estimated

$4.6 billion

$7 billion

a year in sick days and lost productivity5

Effectiveness of flu vaccines in preventing influenza illness

CDC recommends

annual vaccination for everyone 6 months of age and older with rare exception 6

4. CDC. Summary of the 2017-2018 Influenza Season. https://www.cdc.gov/flu/about/season/flu-season-2017-2018. htm. Accessed July 2019. 5. CDC. Influenza (Flu) in the Workplace. CDC.gov. https://www. cdc.gov/niosh/topics/flu/activities.html. Accessed July 2019. 6. CDC. Preventive Steps. https://www.cdc.gov/flu/prevent/ prevention.htm. Accessed July 2019. 7. CDC. Vaccine Effectiveness: How Well Do the Flu Vaccines Work? https://www.cdc.gov/flu/vaccines-work/vaccineeffect. htm?CDC_AA_refVal=https%3A%2F%2Fwww.cdc. gov%2Fflu%2Fabout%2Fqa%2Fvaccin eeffect.htm. Accessed July 2019.

40-60 %

among overall population during years in which influenza vaccine strains are well matched to circulating strains 7

It’s time to flip the conversation on COVID-19 from Panic to Prevention!

THE NEW STATS ON COVID-19 • 97% of patients dying in US are obese! • Most have at least 2 underlying health conditions: • Obesity • Type 2 Diabetes • Hypertension • High Cholesterol • Other CVD’s

• Health care system needs someone to step up! TO STEP UP... Call 800-782-3444, Email brent@takechargerx.com, or visit www.takechargerx.com

NEWS

THE CONSEQUENCES OF COVID-19 Assessing the impact of the coronavirus on the future of retail pharmacy

he coronavirus pandemic has upended nearly every industry, leaving essential and nonessential businesses alike wondering what the world will look like in its aftermath. “We are potentially in for the worst economy in any of our lifetimes,” Adam Fein, PhD, CEO of Pembroke’s Drug Channels Institute, a leading management educator for and about the pharmaceutical industry, said in an exclusive webinar on May 1. The Congressional Budget Office (CBO) estimates the growth rate of gross domestic product to be minus 6 percent this year, which would be the worst recession since the Great Depression. Right now, the annualized GDP rate sits at minus 40 percent, five times as bad as the worst part of the Great Recession of 2007. Even pharmacies, who have kept their businesses open, have suffered lost revenue during this downturn. Prescription demand, which skyrocketed by nearly 15 percent in mid-March, has plummeted to negative 9 percent as physician visits and surgeries are canceled across the country and as the initial jump in demand—boosted by 90-day fills, stockpiling, and “refill too soon” flexibility—wanes, Fein explained. What does this all mean for independent retail pharmacies? Is the future as bleak as the present? Here are some highlights of Fein’s analysis of the coronavirus’s impact on retail pharmacies for the short- and long-term. MEDICAID BOOM Among the most significant of Fein’s predictions is a change in payer mix. The government already pays for roughly 40 percent of all prescription drugs, and Medicaid has been the fastest growing part of insurance in the US. CBO predicts 27 million people to lose jobs this year, with 8 million of those never returning to the labor force. With the pandemic precipitating a recession, Health Management Associates predicts Medicaid enrollment to soar by 20 million by the end of 2020. Fein said he wouldn’t be surprised if Medicaid reaches 55 percent of the payer mix, making the government the majority payer of pharmaceuticals. At the same time, the Medicaid payment model is shifting. Right now, roughly 30 percent of states use a fee-for-service model, and the other 70 percent use managed care. But Fein expects that divide to almost even out because the government is starting to realize that a fee-for-service model saves them around $30 million per year, mainly due to cheaper ingredient costs and increased rebates. As more and more states adopt a fee-for-service model in place of managed care, pharmacies will benefit. Under fee-forservice, the agency pays the pharmacy directly rather than through pharmacy benefit managers, and pharmacies take home more

money at the end of the day. The dispensing fee under a fee-forservice model, for instance, is about $10 to $12 compared to $0 to $1 under a managed care model, Fein showed. Additionally, fee-for-service reimbursements are based on actual acquisition costs as opposed to the nebulous “ingredient cost” used by PBMs. As Medicaid shifts toward fee-for-service and enrollment numbers grow, retail pharmacies stand to receive higher payments than they’ve become used to from managed care payers. PRESCRIPTION DEMAND Although prescription demand has suffered a downswing, Fein expects it to stabilize. History shows prescription demand to be relatively resilient to economic changes. The 90-day refills should cycle back in June, and as the economy normalizes, demand will likely follow, although its trajectory will be less steep on either side of the curve. However, Fein does think total script volume will decline this year by about 2 to 4 percent.

“We could be seeing a whole new public health infrastructure. Our lives are going to be very different.” PROVIDER OPPORTUNITIES The coronavirus pandemic presents a unique opportunity for pharmacists to change the narrative in their role as providers, Fein said. As regulations soften and patients across the country need access to COVID-19 testing, pharmacists will be called on to fill that role. “If we’re going to be going into this massive testing and tracing program in this country of 327 million people, we need more than your average hospital lab to do this,” Fein said. “We need these points of care. So that opens up an opportunity to be positioned in that.” The allowance for pharmacies to test for COVID-19 builds on the momentum gained over the last decade in the perception of pharmacists as great sources of care. About one in three people get their flu immunization at retail pharmacies, Fein said, which is more than three times the number ten years ago. This change in

ELEMENTS | The business magazine for independent pharmacy | June 2020

perception can be furthered even more as a vaccine is developed and deployed. And even after a vaccine rolls out, COVID-19 testing will still have a role, and pharmacists will be front and center. “If we do move into the world of testing for serology, that’ll be a big thing,” Fein said. “The post-pandemic world is going to look very different. Airlines are already talking about asking people to prove their COVID response, that they have antibodies. There are only a few places that will be able to do that, and pharmacies are well positioned to stand up.” A WHOLE NEW WORLD The pandemic has disrupted the traditional arrangements of drug benefit plans, especially in Part D. Regulations and restrictions have been relaxed in several important areas: the allowance of 90-day scripts, the expansion of reimbursements to out-of-network pharmacies, and the waiving or relaxation of prior authorizations. “We’re giving people a taste of a new type of freedom in their benefit design,” Fein said. Once patients get used to this, will the changes persist?

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Fein made the analogy of toothpaste—when you squeeze it out, it’s very hard to get back in. “We’ve changed the rules of the game, and I don’t know for how long, but we’re letting people experiment with this, letting people experience this,” Fein said. “These temporary exclusions might start to become more permanent.” Substantial changes might persist not only in the pharmaceutical industry but in healthcare generally. As the government becomes the majority payer, healthcare cost reform could gain some traction, Fein said. That reality paired with the shift in consumer demands might breed something different than we’ve ever experienced before. “We could be seeing a whole new public health infrastructure,” Fein said. “Our lives are going to be very different. What we think about public health is going to change, how we fund public health. That’s going to create some opportunities in the pharmaceutical industry, but it is going to put some pressure on trying to find the money to pay for it. And the government not only as a big payer but a majority payer could come sooner than we ever thought. So it’s a very different world.”

Pharmacy

Insurance Network

A Division of The Selzer Company

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TRENDS

PBM AUDITS Minimize financial losses and frustration from unwanted PBM audits

s vice president of operations and general counsel for Family

that particular prescription,” Enriquez said. “The auditors are not

Pharmacy in Aiken, South Carolina, Stuart Johnson has faced

always aware of what may have caused something to change and any

many on-site and desk audits, and none of them have been quite

information you can provide as to why something came to be will help

the same.

prevent audit recovery.”

“Some of our experiences have been like receiving a root canal

Enriquez emphasized the importance of establishing protocols

without any numbing agents, while others have been as simple as a

for audits, including processes for timely reversal of prescriptions

trip to the grocery store with a well-behaved toddler,” he said.

returned to stock, monthly employee checks with the Office of

Although audits are meant to prevent fraud, waste, and abuse,

Inspector General (OIG) and the System of Award Management

stories proliferate of PBM audit abuse, with pharmacies losing up to

(SAM), and appropriate monitoring and prevention measures to

tens of thousands of dollars in recoupments not for fraud, but for

combat fraud, waste, and abuse (FWA). Formal weekly and monthly

simple errors.

procedures protect you from non-compliance and safeguard you from

In Johnson’s experience, PBMs may even deny claims for no

being blindsided by costly chargebacks. He strongly recommends

reason at all. “Over recent years, we have seen an increase in PBM

dedicating a staff member to audit tasks along with formal policies.

auditors finding things that truly don’t exist as well as ‘losing’ pages,”

“These will ensure it is done timely and correctly, every time,” he said.

he said. “Many of the claims that the auditors initially deny, upon

He also recommends performing regular self-audits for the

review for appeal they find payment was correct even without added

previous week. Start by identifying high-dollar medications, which will

documentation.”

be the most likely targets and typically require additional information.

A pharmacy might receive a PBM audit at any time and for a

A few to look out for include insulin, inhalers, injectables, and any

variety of reasons. According to Jahred Enriquez, lead auditor at

claims that may have been submitted with a DAW. In Johnson’s

Pharmacy Providers of Oklahoma, a PSAO that provides an audit

experience, insulin prescriptions and topicals have generated the

solution service RxProtect, some audit triggers include not properly

most audits. You can run weekly reports through your pharmacy

documenting the hard copy for things such as DAW (dispense as

software, but services like PPOk’s RxProtect relieve you of this burden

written), refilling a prescription early, non-specific directions on a hard

by running routine, proactive reports to identify these claims for you.

copy, waiving copays, and not obtaining a patient signature upon

Days’ supply, typically calculated by the quantity and directions

prescription pickup. Any discrepancies will result in recoupment of

on the prescription, is a common culprit in denials and very important

payments or the withholding of future payments—usually the full

to PBMs, Enriquez said. If there is any ambiguity in the directions,

amount of the claim. Sometimes, in rare cases, they may even result in

contact the prescriber for verification, and make sure to document

network termination.

who you spoke to and when. Ambiguities can include quantities on

With the increase of PBM audits and the variety of tactics they might use to deny claims, proactive strategies and strategic appeals are essential to minimizing denials and recoupments.

medication—whether the prescription was intended as one box or one pen on injectables such as Lovenox, for example. Days’ supply has been one of the most frequent citations in Johnson’s pharmacy, especially when it comes to topicals. PBMs have

PROACTIVE STRATEGIES

now expanded citations to include not just improper days’ supply

When it comes to audits, nothing is more important than

but also incorrect daily amount to apply. “Getting confirmation and

documentation. PBMs require hard copies for adjustments in

documentation from the physician as to what amount to apply and

quantities for plan requirements, patient requests, or clarifications

where is highly important,” Johnson said. “This is what I feel like I

from the prescriber. Every change or override you make in the

spend more time on with appeals than anything.”

pharmacy should be explained with written documentation. If you’re audited, it will “help paint a picture for the auditor on the history of

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Audit laws vary from state to state, so it’s important to become familiar with yours. “Most states have a pharmacy audit integrity act

or language within their pharmacy lawbook or state legislation that

If the appeal fails, there still may be options. “Some audits have

provides rights and requirements for audits and auditing entities,”

phases beyond the appeal phase in which the pharmacy may submit

Enriquez explained. “Researching these laws and having them readily

a final rebuttal to a committee,” Enriquez said. “While the audit may be

available if you find yourself in an audit can be extremely helpful when

final, there are always options to continue to fight the recovery.”

navigating the audit phases and requirements.” Johnson, a lawyer, makes sure to be diligent in this regard,

For pharmacies anxious about audits, Johnson has some encouragement. “We all will make mistakes, overlook simple things,

not only in educating himself on state laws but also on each of the

and will put patient care over a PBM’s desires. Pharmacists care about

PBM’s “nitpicky requirements.” He said, “This is easier said than done

people more than they care about PBMs, so there will always be some

due to PBMs not providing any transparency and changing their

audit recoupments,” he said. “PBM auditors are bullies and will always

requirements as much as many people change their underwear.” At

try to back you in the corner. However, if you show them that you

Family Pharmacy, they conduct regular staff training that includes

will not back down, are doing things properly, and have an inkling of

current audit trends and practices.

organization about you, then they will inquire with your stores much

“My goal in this tough area of business is to try and not make the

less frequently.“

same mistake twice.” Johnson said. “If we do, then we as management have failed to train our staff. We try to remind our pharmacists and technicians, without micromanaging, that it is important to remember the little details are as important as the big details.“ All of these proactive measures will go a long way to minimize losses from PBM audits. But it requires diligence, vigilance, and a lot of time. “Most pharmacies are unaware of the ins and outs of the audit phases, the PBM requirements, and their rights through their state’s pharmacy audit law,” Enriquez said. “RxProtect excels at identifying potential issues with prescriptions and providing remedies to prevent audit recovery.”

Top 10

MAKING AN APPEAL Denials during an audit don’t necessarily spell doom for your pharmacy. There is always the option to appeal, and many pharmacies, like

Audit Discrepancies

Johnson’s, are frequently successful in overturning denials. Before you get to the appeal, you will need to put together an initial audit response, which Johnson says is the most important element to a successful appeal. Make your response as easy to read and navigate as possible. Number the pages and include your NPI and NCPDP on every page, he advised. “If you have a thorough initial audit response, the appeal usually only requires a few extra notes and potentially additional supporting documents.” For the appeal, make sure to thoroughly read through the initial audit findings, as the PBM appeal process can have “a tricky component.” Keep your response in total alignment with the PBM requirements and don’t fax it in if you can avoid it. “Faxing, even in 2020, lends to illegible documents, missing pages, potential nonproof of receipt even though you have a transaction log on your end, and potential for poor scans,” Johnson said. Your appeal should also be formatted for clarity. Johnson’s appeals always include a cover sheet for each claim, which outlines the claim number, drug number, denial reason, and the supporting documentation to show that the claim was properly paid. “Ultimately, thorough but concise explanations as to why the claim is paid, along with supporting documentation, is key to a successful appeal,” he said.

Lack of calculable directions for the prescription

Lack of documentation for DAWs

Miscalculated day supply

4. Early refill due to a miscalculated day supply 5. Missing patient signature for prescription pickup 6. Failing to collect a minimum monthly amount on patient charge accounts 7. Cutting quantities without documentation as to why the quantity was cut 8.

Not documenting rejection override information

Missing information on transfer orders

10. Not providing the requested information before the audit due date

RETAIL

THE DOS AND DON’TS OF DISCOUNTING

How to create an effective discounting strategy for your front end

verywhere you look, there’s a promotion prodding you to make

nice price reduction without giving you anything. On the whole, is

a purchase. An email offering free delivery for one day only. A

your pharmacy better off after that promotion?

postcard promising 20 percent off any item. A receipt riddled with

“You might be successful at bringing new customers in, but

personalized coupons. As every major retailer seems to be playing

you’re actually behind in terms of the money that you take home

the discounting game, should your retail pharmacy, too?

at the end of the day,” said Jackisch. That’s because you have

Discounting can benefit your business in a few significant

to make up in volume what you give away in margin. “If it’s fifty

ways, according to Kirk Jackisch, president of Pricing Solutions Ltd,

percent margin, for example, and you’re taking a five or ten percent

a boutique consulting firm focused exclusively on the pricing space.

discount, you need to make up ten or twenty percent increase in

Discounting can attract new customers, increase visits, and increase

volume just to get the same dollars in profit.”

purchases per visit. At the end of the day, you may lose margin on some items, but overall, you make gains to your bottom line. But discounting is a double-edged sword. If done poorly,

This is how to start thinking with the “logic of a pricer,” Jackisch said. A good pricer always evaluates whether the business will be better off economically after a discount, which means the

Jackisch said, “you’re essentially just giving margin away.” Because

volume gain outweighs the margin loss. Figuring that out requires

it’s such a delicate endeavor, discounting requires planning, along

a calculation called the break-even point, which determines the

with some analytics, which is why many businesses seek outside

volume increase you need from the promotion to get back to even

assistance with their pricing decisions. But for those who do

financially. At break-even, it’s a wash. Above that, it’s a win. As a

pricing and promotions in-house, Jackisch has provided some best

general rule, the higher the margin, the less volume you need. The

practices based on his 25 years of expertise.

lower margin, the more volume you need.

GUIDING PRINCIPLES Before slashing prices or slinging coupons, pharmacies must always ask whether the discount will achieve one of three goals, Jackisch said. Will it bring in someone new? Will it bring in someone more frequently? Will it make someone spend more? These goals should drive the entire discounting strategy, whether it’s deciding

BREAK EVEN FORMULA: -%CHANGE IN PRICE (%CHANGE IN PRICE + %GROSS MARGIN)

%VOLUME INCREASE

TO BREAK EVEN

the specific items to discount, the timing of the discount, or the type of discount. After that, there’s still a key factor to consider. Suppose a discount seduced Sandra into buying a bottle of shampoo on her visit to pick up hair spray. That achieves one of your goals. You got a customer to increase her spend. But during the same promotion, nine other customers who normally buy the shampoo just got a

pbahealth.com/elements

Let’s say you have a product with a margin of 50% and you want to offer a discount of 10%.

- (-10)/(-10 + 50) = +25% In this case, you need a volume increase of at least 25% to break even. If the discount doesn’t achieve that, you have lost money. Anything above that, you’ve gained money.

POTENTIAL PITFALLS Sticking to your goals and break-even points will safeguard you against most discounting pitfalls, but there are still some common mistakes to watch out for. The worst is discounting a product that people are already going to buy. “That is the cardinal sin and it is probably the one that befalls most pricers most frequently,” Jackisch said. “You’re basically just giving margin away and not getting any benefit. I will tell you anecdotally that

BREAK-EVEN QUICK SHEET This table indicates the extent of the tradeoff between a price change and sales volume, given the variable margin of the product or service in question. This can serve as a general guideline and give you an idea of where your sales need to be if you decide to discount a product.

more discount programs fail because of this than succeed.” To avoid this, you need to determine the impact of a discount on your existing base. Ideally, you’ll keep frequent purchases at full price

PRODUCT ONE SALES CHANGE

and instead focus on less popular items that still have high demand in the market. “That would be the nirvana,” Jackisch said. “The trap is

PRODUCT TWO SALES CHANGE

that people will say, ‘Everybody is buying this so there must be more out there, so I’m going to discount it,’ and at best you’re maybe slightly ahead and more likely neutral or actually behind.” Another way to avoid this mistake is to refrain from discounting items that are typically recurring purchases, like daily vitamins or lancet test strips. Customers will simply buy next month’s or week’s amount at the discounted rate and avoid having

VARIABLE MARGIN

30%

80%

10% PRICE DECREASE

+50%

+14.3%

20% PRICE DECREASE

+200%

+33.3%

10% PRICE INCREASE

-25%

-11.1%

20% PRICE INCREASE

-40%

-20.0%

to return to the store at a later time. Customers are simply buying ahead, with no gain to the seller. The other major discounting mistake is sitting on your haunches, so to speak, which Jackisch said is a common problem he sees in many businesses, especially ones without significant resources to invest in pricing. “There’s a certain level of inertia that comes with pricing and promotions,” he said. Owners often default to last year’s calendar, running the same discounts without much scrutiny. Jackisch recommends revisiting your promotion calendar annually and adjusting your strategy based on the success of the previous year’s promotions and your business strategy this year. “This is not something you can do casually,” he said. “You have to recognize that without significant investment in pricing capabilities, it’s trial and error. You have to make sure you’re adjusting it accordingly to make sure it’s successful.” That means digging into your data to measure how each promotion fared. Did your 20-percent-off promotion cause a spike in purchases or new customers? If so, how much? You can evaluate the total volume increase by surveying your point-of-sale records for how many transactions occurred during the promotion relative to a period without the promotion. That will give you the data you need to calculate your break-even point. To find out how many new customers you gained, you can use your loyalty program data. Even if your data isn’t robust, Jackisch said, “It still gives you directional information instead of that inertia of repeating last year’s promotional calendar.”

7 Trade Secrets for Successful Discounts

Kirk Jackisch, president of Pricing Solutions, a consulting firm focused exclusively on the pricing space, offers seven tried-and-true discounting tips he’s learned over his 25

1. In and outs In and outs are items with a temporary shelf duration, typically seasonal or holiday products that come and go quickly. Think egg baskets and hand warmers. Christmas cards and back-to-school supplies. These items increase the spend of existing customers, bring in new customers, or bring in current customers more frequently. You can keep your full margins on the rest of your front end because these items will do the promotional legwork. Consider making the discount contingent on a separate purchase, such as buy one item get another half off.

2. Bundling Bundling more than one item into a deal allows you to increase spend by selling an extra item the customer wouldn’t otherwise

5. Price point endings and thresholds There are price thresholds that consumers are sensitive to. The most common one is the 99-cent threshold. In some spaces, an increase from $9.99 to $10.01 results in a 15 percent reduction in demand. People see ten dollars versus nine dollars. Then there are price point endings. For example, there’s no impact on demand from $0.93 to $0.99. Utilizing some of those key thresholds, especially for products people purchase a lot of and the price is well known, will drive profits. For example, if you have a product that’s at $5.39 and you get it down to $4.99, you’re going to have a much bigger kick than if you take it down to $5.09. And taking it down to $4.79 isn’t going to get you any

have purchased. Put items together that have high associations,

more positive impact than $4.99.

and make at least one of them a high-margin product. Buy a

6. Addition over subtraction

beverage and get 20 percent off a chocolate bar, for example. Target items with high price sensitivity because those are likely to get you enough volume to offset the discount.

3. Fallow times H ave you noticed movie theaters offering BOGO tickets on Tuesdays? The purpose is to get people to show up on those nights when the theaters normally sit empty. A discount

Adding value is always preferable to providing a cash discount. A customer is indifferent to getting two dollars off versus getting something worth two dollars more. But for you, it makes a difference. The cost of the two-dollar discount is two dollars, while the cost of the two-dollar add is likely a dollar—or for a high-margin product, 50 cents. So instead of giving away two dollars, you give away 50 cents and the value to the customer is

carries no loss risk because the theater isn’t earning business

the same.

anyway. Are there times of the day, week, month, or year

7. Value-based pricing

where you suffer a drought of traffic or have drops in demand for specific categories? Consider saving your promotions for those fallow periods to get people flowing through your aisles.

4. Loyalty program Offering exclusive discounts to customers in your loyalty program encourages people to sign up for the program. You get valuable data that in the end helps you bring those customers in more frequently or increase their basket size when they visit in the store. When you can see all of their purchases, including when they are making them, you can better structure your promotions around that person to more effectively persuade them to spend more or visit more frequently.

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Value-based pricing takes into account your pharmacy’s total value proposition to the customer, which includes a host of factors that make up a customer’s experience of your pharmacy: location, parking, product selection, customer service, checkout experience, layout, and so on. To truly know what promotions will make you better off economically, you have to price relative to your value proposition. The more value you offer, compared to your competitors, the less your prices matter. The less value you offer, the more they matter.

SOLUTIONS

THE DOLLARS OF DIABETES Is diabetes care a good business opportunity for pharmacy?

or those in the business of healthcare, Type 2 diabetes

almost nonexistent, and for pharmacies who have managed to get

should perk some ears. More than 30 million people in the

some insurers to cover it, it is a battle requiring significant time and

US suffer from the chronic condition, and another 88 million are on the precipice of getting it. It is the fastest growing disease in

resources to win. “Although I am a certified diabetes educator, we are not

the country. By 2050, one out of three people will have diabetes,

recognized as a provider and cannot bill directly for education

according to an estimate from the CDC.

services,” Motsko said. Private insurers don’t have incentive to

Much has been said about the financial strain this prolific

invest in long-term outcomes of patients because they could switch

disease puts on the healthcare system. Type 2 diabetes causes

to a new plan next year. So pharmacies have to fund their program

a host of complications beyond blood sugar control, and the

almost entirely through Medicare who, because its participants are

costs to the healthcare system are enormous. Pharmacists could

in it for life, will reimburse a certain amount for diabetic education.

be a crucial part of reducing those costs and unburdening the

But relying on those reimbursements, it turns out, is difficult.

healthcare system, as studies abound proving pharmacist’s

“We would get some payment from Medicare, but if we factored

effectiveness in managing the condition. In all, under pharmacists’

in all the hours we were spending with these patients, we were

care, patients keep their A1C levels under better control and have

getting roughly three dollars an hour. And that’s just not worth

fewer comorbidities. When pharmacists get involved in diabetes

it,” Cranford said. Some of their diabetes services included a local

management, patients and the public win.

grocery store tour for patients in the community who had a limited

But does your pharmacy business? “I’m a pharmacist and am very passionate about caring for

ability to travel, as well as one-on-one counseling. Motsko said the same. “From a financial perspective, diabetes

patients,” said Travis Hale, PharmD, president of Remington Drug

education reimbursements do not meet costs of services,” he said.

Co. in Remington, Virginia. “But to me it’s the financial and clinical

“We had hoped to be able to at least break even on expenses and

together in one. We’re always talking about doing these things, but

reimbursement, but so far that has not happened.” His program

how can we get paid for them?”

has been running for seven years. It was mentioned by the pharmacies that under the right

A REAL LOOK AT THE OPPORTUNITY

circumstances, it’s possible that diabetes education programs could

“If an individual wants to become a diabetes educator for the

be profitable. But for that to happen, on the reimbursement front,

purpose of helping patients, that’s great,” said John Motsko, RPh,

you need a lot of people enrolled in each class at the same time.

CDCES, director of Apple Diabetes Center for Apple Discount Drugs

Reimbursement for group settings is about $34 for 60 minutes,

in Salisbury, Maryland. “But if there are any financial expectations,

which isn’t much on its own. But if you take 20 patients through a

be cautious. It’s hard to show any profit with these services.”

10-hour program, that nets $6,800—a high return for ten hours of

“Financially, the program itself is not very much of a money maker,” said Crystal Bartlett, PharmD, CDE, DSME program coordinator at Wynn’s Pharmacy in Griffin, Georgia, whose program has been around since 2001. “After two years, we’re still in the negative,” said Hale. “We have to see some turnaround or we’re not going have a program.” “There isn’t any money in it right now,” said Jennifer Tatum Cranford, PharmD, owner of Payless Family Pharmacy in Sparta, Tennessee. A bleak consensus. For a condition involving such large sums

time. If you only have five patients, though, that drops to $1,700—a negligible return that doesn’t even recoup the costs. But even if you managed to get high enrollment numbers, it still may not add up to break even. The total expenses of a program involve much more than showing up to teach a one-hour class. Costs include salaries for the educators and pharmacists for completing substantial administrative work. Wynn’s program takes around 20 hours of work a month, and Remington’s up to 40. “In terms of the documentation and billing and precertification

of money and such large numbers of patients, this might be a

and follow-ups and denials and insurance calls, it gets pricey to

surprising conclusion. But the root problem won’t surprise anyone

pay for that,” Hale said. “There’s always billing issues, then people

in the pharmacy business.

don’t show up, people don’t pay.” And those costs don’t include

It comes down to reimbursements. All four pharmacies said

any marketing, whether it’s the time spent soliciting physicians or

that patients are very unlikely to pay cash for diabetes education,

cash spent on advertising campaigns. And if you want to pursue

which means pharmacies have to rely on reimbursements from

commercial payer relationships, add that to the tab. “Over these

third-party payers. But coverage from commercial insurance is

last two years we probably easily have fifty grand in it,” Hale said. ELEMENTS | The business magazine for independent pharmacy | June 2020

Another caveat is that the only way to qualify for reimbursements

Working in the office, he can bill under the provider and take

at all is to be accredited, either through the AADE or ADA, and that

home higher reimbursements. They already have a contract with

process takes upfront money and time. And then your program

a provider who bills an E&M code, and 80 percent of that revenue

must meet requirements that all take valuable time to implement,

goes to Remington.

even if you don’t find them worthwhile. A couple of the pharmacies interviewed noted that they might not reapply for accreditation

ENROLLMENT ISSUES

once theirs expires.

All four pharmacies have had a hard time generating interest. At

All four pharmacies mentioned how wonderful the programs

Payless Family, attendance started off hot, with 20 to 25 patients

are in theory, but unfortunately in practice aren’t sustainable on

every month, but over time it dropped to two patients. Wynn’s

their own. “In an ideal environment I think it would have been a

Pharmacy averages between two to four patients per class. Apple’s

phenomenal program,” Cranford said.

classes seldom have more than 10 attendees. “All the programs are having difficulty in attracting patients,” Motsko said. “Last year we

THE OTHER BUSINESS PERSPECTIVE

only had about 50 percent of those referred to us ever return a call

Although the reimbursement road is difficult, there are other ways

or a message to register for an education session.”

to think about the business opportunity of a diabetes program— like capturing new, lucrative patients. “We know diabetes patients spend the majority of money of

Low enrollment is due to a couple of factors that aren’t easy to overcome. As Motsko mentioned, patients simply aren’t motivated enough. “Individuals really are not engaged in their self-health the

any disease state in the pharmacy,” Hale said. “They’re all on other

way they should,” he said. “Very few care and that’s sad to see. As

medications and most likely will be buying supplements, other

my friend and owner says on many occasions, I think we care more

things over the counter—foot issues, eye issues, skin issues—so

about the patient’s health than they do themselves.”

there’s a lot of other product that they’re buying.” Motsko estimates that between the classes and one-onone counseling, Apple Discount gets 300 patients to attend their

Bartlett echoed the sentiment. “Patients just don’t see the importance of it,” she said. “That’s the biggest challenge.” Another issue is that some pharmacies have had pushback

diabetes education per year. Many of those people become loyal

from physicians and hospitals, whether it’s a competitive

patients, though he doesn’t have hard data on that.

resistance, lack of trust, or simply a lack of enthusiasm. Motsko and

Bartlett said, “On the back end it does bring in a lot of patients

Hale encountered offices and hospitals who did not want to share

to us because they see us as the diabetic specialist around. It also

the patients or who wanted to keep referrals within their network.

builds a lot of relationships with physicians because they’re calling

Physicians are the primary gateway to diabetic patients, so getting

us to see how they can better care for their patients, which in turn

them on board is critical. For each of the pharmacies interviewed,

ends up increasing the overall pharmacy business as well. Well over

getting in with local physicians was their most important step in

half of the people who come through the program become patients

getting the program rolling and keeping it sustainable. Without

of ours. The percentage is maybe higher.”

physician buy-in, it’s going to be a very tough road.

But even this approach has its caveats. “What the customer spends and what we are reimbursed is very misleading,” Motsko

THE TRUE PAYOFF

explained. “If we dispense a CGM device or insulin or a GLP-1

Although reimbursements make a diabetes program difficult to

product costing hundreds of dollars, our profit may only be a few

sustain, especially without taking a broad view of the financial

dollars and sometimes we even lose money on a prescription due

benefits, it’s no surprise that independent pharmacists have found

to poor reimbursement.“

a payoff beyond the financial.

Cranford had to stop billing for diabetic test strips altogether

“The interaction with patients has been the professional

because Medicare denied every claim, demanding a host of records

highlight of my 50-year career as a pharmacist,” Motsko said. “I

that were not feasible for any pharmacy, such as every patient’s

truly feel we have impacted the lives of many of our community

logbook. Even the big box stores in her area gave up on billing.

who otherwise would have had a difficult time managing diabetes

Hale takes an even broader view of the benefits, seeing his diabetes program as the way to get his foot in the door of provider offices. Once those relationships are established through his diabetes educators, he hopes to get a share of more services like annual wellness visits, med reconciliation, transitions of care, and more. “Let’s let this be the thing that opens the door because all offices are interested in it. But then we also need to be able to grab other services on top of it to really make this program sustain itself,” he said.

pbahealth.com/elements

on their own.” “We’re doing a wonderful thing,” Hale said. “We are the perfect ones to do this.”

Simple Tips for a More Profitable Diabetes Program Pharmacy owners experienced in offering diabetes programs offer up some solutions

Get a grant

Sweet spot

Payless Family Pharmacy and Remington Drug Co were both able

Payless Family and Remington use Sweet Spot, a resource from

to secure grants for their diabetes programs. Remington received $10,000 from the Virginia Pharmacy Association and $3,400 from the Virginia Diabetes Council. Payless Family was contacted by the Tennessee Department of Health and the Tennessee Pharmacy Association to get accredited and start a pilot program.

OmniSYS that provides all the materials a pharmacy needs to offer a monthly class. “It is a good platform for any pharmacy, especially those who are looking to do community education classes and are hoping to help bring in some patients,” Hale said. Cranford said, “That just made our job a whole lot easier because we had a template to follow for diabetes education either one-onone or group setting.” However, it costs around $400 a month for

Reach out to drug companies Many drug companies offer free resources to pharmacies, whether it’s providing informational handouts, sending people trained in diabetes to do speaking engagements, or even sending a diabetes educator to teach a full class for no charge. All the pharmacy has to do is host, and the drug companies do all the work.

access to the information, according to Cranford.

Think twice about getting certified You do not need a certified diabetes educator (CDCES) for accreditation and reimbursement, and the requirements for the

Start a walking club Cranford started a walking club at the local YMCA. For $5 per month, patients and Cranford would meet three times a week and walk a mile. “When we walked, we would talk about ways to be healthier at home, ways to be more active,” Cranford said. “It didn’t cost them but five dollars a month. That’s something that could be implemented relatively easily and you earn their trust.”

Incorporate a nurse Pharmacists provide unique skills and knowledge to diabetes programs and set pharmacies apart from other diabetes educators. But they also have high salaries. Incorporating a nurse into your diabetes program can help reduce some of the labor costs. If a nurse shouldered part of the program, including billing, some class instruction, and other administrative tasks, “it would be a lot easier on the wallet,” Hale said.

certification are considerable. Aside from the monetary costs, time requirements include 1000 hours of patient interaction, an exam initially and every five years, and 15 hours of continuing education per year. “Anyone considering becoming a CDCES, and making this a self-supporting or profitable venture, needs to do a lot of investigation first,” said Motsko. “I hate to say it, but be cautious about by AADE when it opportunities.”

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FEATURE

THE TOP CHALLENGES OF OPERATING MULTIPLE PHARMACIES Profitable, proven solutions from successful multi-store owners and operators

ELEMENTS | The business magazine for independent pharmacy | JUNE 2019 ELEMENTS | The business magazine for independent pharmacy | MARCH 2020

17 19 13

ndependent pharmacy owners have always had to strike a balance between patient care and keeping their business

Like Clayton, Ritzman Pharmacies turned to their pharmacy management system, PioneerRx, to help. “Your tools are only good

running smoothly. But as their business expands to three, five,

tools if you use them. Pharmacy systems today have got a lot of

or twenty pharmacy locations, so do operational responsibilities.

information built into them that can help you save cash,” Hendler

Multiple locations mean more patients, more employees, and

said. “The problem is, a lot of folks don’t use them.” Getting to know

more challenges. Success reaps bigger rewards, but mistakes

their pharmacy management system and taking advantage of all the

breed bigger consequences. To help tackle the unique challenges

information it provided was crucial in helping Ritzman stay profitable.

of operating multiple pharmacies, we spoke with leaders from

For a better cost of goods, Ritzman used ProfitGuard, a unique

three independent pharmacy businesses on the biggest issues

group purchasing service that compares bids across multiple

they face juggling multiple locations and the solutions they use to

wholesalers and guarantees improved contract terms and pricing

rise to the challenge.

for its members. It also provided Ritzman with a proprietary, automated purchasing tool that maximizes wholesaler rebates and savings on every item of inventory. Hendler estimates ProfitGuard

CHALLENGE #1: Making Ends Meet

saved Ritzman $200,000 a month on its cost of goods, or about $10,000 per store per month for the 20-store chain. And the

The challenge looming largest in the minds of owners of multiple

automated tool reduced ordering time for the Ritzman staff by two

pharmacies is the financial hit they are taking from PBMs.

hours per day in each store, giving that time back to the pharmacies

Increased DIR fees and low reimbursements are making it difficult

to work with patients.

to make ends meet. Jennifer Clayton, CEO of Clayton Drug, which has three

Bretton and Stacey Walberg own and operate 11 retail pharmacies and one long-term care location, in Pennsylvania

locations in Iowa, said, “When you’re small, it’s a lot harder to

and Ohio. They focus their efforts on synchronization, which

weather the reimbursement changes as well as the drug price

reduces expenses and saves the pharmacy substantial time. “It

fluctuations, and that’s something we have very little control over.”

makes our pharmacies as efficient as possible so we can use

Instead, the pharmacy focuses on what it can control: its inventory

our staff appropriately,” Bretton explained. A large part of their

turnover. “It’s an art of making sure you have enough stock to

med sync process is creating adherence packaging for more than

serve your clients but also have enough cash flow to maintain

2,000 patients per month, which makes life easier for the patient,

your operations.” One inventory management mistake—like

physician, and pharmacy. Much of the adherence packaging occurs

overstocking on biologics—can cause the pharmacy to have a price

through their closed-door LTC pharmacy, which receives higher

swing of $50,000 in a matter of two weeks.

reimbursements and lower DIR fees. “That’s been the niche that’s

To keep a handle on turnover, Clayton uses Computer-Rx software to monitor fluctuations, assess order points, and review

been really helping us in the past couple of years,” Bretton said. Technology has also been instrumental to Walberg’s

reports. She keeps a constant eye on expensive medications,

profitability. “We really try to be proactive with technology so that

making sure to immediately return any if a patient discontinues

we are as efficient, effective, and accurate as possible,” Stacey said.

them. She also educates her staff on why inventory management

They use Parata systems at each retail pharmacy, which helps with

is so important, even if it’s not the most glamorous part of the job.

volume and efficiency, and they make frequent use of PioneerRx,

“If we can look at these reports and make that one of our primary

which touches nearly every part of their operations, including their

management skills, then we’ll have more money to create an extra

purchasing.

MTM day or more time for clinical services,” she said. David Hendler, who served as COO of Ritzman Pharmacies

“It really has the ability to be a one-place software where we can do data entry once, and it allows us to import or export that to

from 2015 to 2019, watched profit margins fall over the years from

other platforms without any difficulties,” Bretton explained. “The

the high 20s to under 10 percent due to the increasing influence of

other thing is that it has a robust capability to handle many suppliers

PBMs. Because pharmacies can’t control reimbursements, Ritzman

in the system. Instead of talking to five different third-party vendors,

also chose to focus on what they could control. “Where community

we import the EDI and allow the computer system to do the ordering

pharmacists can make the most cost-saving impact is through cost

for us. It’s something that has been tremendously helpful for us.”

of goods and through expense control,” he said. “Those are the only two areas that are left.”

pbahealth.com/elements

TIP #1: CALL YOUR LEGISLATORS After you’ve done everything you can to increase

said. The system gives them a big picture view of the pharmacy that

your turnover and reduce expenses to keep your

they wouldn’t have if they were running around putting out fires as

pharmacy profitable, it’s time to turn to a higher

they started. ”That has been very powerful,” Bretton said. “It was

power: your legislators.

our new initiative for 2020 and we’ve gained so much traction and foothold. It’s made a huge difference in our organization.”

There is currently a bipartisan effort in Congress to

They also perform in-store surveys for employee satisfaction, to

increase transparency, eliminate DIR fees, and loosen

see how well they feel they are being equipped or trained for their job.

the grip that PBMs have on the industry. It’s crucial that

They use the results from those surveys to stay connected with people

independent pharmacists make their voices heard.

on the ground and make changes to strengthen their workforce.

Contact local lawmakers and tell them about your

Even though she’s busy juggling the business aspects of the

experience with retroactive fees and spread pricing, and

pharmacies, Clayton finds time to work as a staff pharmacist at one

encourage them to push for laws that help you get paid

of the locations. “I feel like staffing as a pharmacy owner and being

appropriately for services.

down in the trenches with the pharmacy team has been really important,” she said. “Not only am I telling them how to do things,

“It’s important that we keep contacting our legislators and not lose the battle,” Clayton said. “If we don’t see

I’m doing it with them.” She and her store managers email on a daily basis and have

some kind of change with PBM practices in the next five

conference calls once or twice a week to keep each other clued in

years, it’s going to be very difficult for independent rural

on what’s happening at each store. She said, “The benefit of having

pharmacies to survive.”

the three stores is that we can share and learn from each other.”

CHALLENGE #2: Communicating Effectively

TIP #2: CREATE AN ENTREPRENEURIAL OPERATING SYSTEM

With multiple locations, owners can’t just make an announcement in the store and be sure that all of their employees are in the know.

If your communications are getting lost in translation,

Communicating effectively to all employees means that owners and

you may find that an Entrepreneurial Operating System

managers have to be organized and intentional.

(EOS) can help clarify your message.

To Hendler, good communication bridges the people, process, and execution of the business. “When you’re communicating about

EOS provides tools for leaders to communicate

a new initiative to gain patients, you have to be very clear about

their vision and get staff members on board. Using

what you want to accomplish. The steps also have to be clear, and

EOS methods, pharmacy owners can communicate

then training goes along with that,” he said. “No one thing can

efficiently and effectively, and they can have

happen in a vacuum.”

confidence that their team can handle day-to-day

No matter how a message was communicated—be it by email,

business operations.

phone, or an intranet system—Hendler tried to make “eye contact” to ensure everything was fully understood. Even if multi-unit

“It was our new initiative for 2020 and we’ve gained so

managers aren’t necessarily looking at staff members face-to-face,

much traction and foothold,” Bretton Walberg said of

they can check in with questions that confirm understanding.

EOS. “It’s made a huge difference in our organization.”

To stay connected with all their stores, the Walbergs have recently adopted the philosophy of an “entrepreneurial operating system.” Once a week, they meet with a team that includes their director of operations, business development manager, controller, marketing manager, and clinical consultant pharmacist, and discuss the issues that are facing the pharmacies. “Everyone takes four problems, and then next week we come back and all those things have been solved. Suddenly, we’ve conquered 28 things,” Bretton

ELEMENTS | The business magazine for independent pharmacy | June 2020

TIP #3: USE YOUR FREE RESOURCES CHALLENGE #3: Marketing Your Brand

Traditional marketing methods like newspaper or radio advertisements are pricey, and while you shouldn’t

With locations in several different towns, owners of multiple

abandon them, there are more cost-effective methods

pharmacies must strike a balance between presenting a unified

to spread the word about your pharmacy.

brand and catering to the needs of individual communities. “We feel that it’s important to have a consistent image out

Don’t underestimate the power of social media when

there, one that really shows who we are as a local, family-run

it comes to marketing, where you “can get a lot more

independent business. We’re not a chain or a big corporate

bang for your buck,” said Bretton Walberg. You can pay

company,” said Stacey Walberg.

to advertise online or boost your posts to increase your

The Walbergs have found success in communicating on

reach, which has worked for the Walbergs. But you also

social media with short videos. When it comes to paid marketing

can gain visibility and engagement with free, regular

efforts, they still run ads in their local papers, but the bulk of their

posts. Use memorable graphics, offer healthcare tips,

marketing money is spent on supporting little league teams, rotary

ask your audience questions, or host a contest.

clubs, schools, and church groups in their community. “If there is a community function asking for local businesses to be there, we’re

“Social media has come a long way for us, and it’s

there,” Stacey said. “We’d do county fairs, especially when we started

something that we’re focusing on more than ever

doing strip packaging, because we found that people really needed

before,” said Stacey Walberg. “We can make short

to see it and touch it. Print or TV advertising wouldn’t do it justice.”

videos in-house or do a live feed and see that there are

One of their most successful marketing efforts has been the “Waffle Wednesday” they host at local senior centers. Members of the pharmacy staff cook waffles and provide free breakfast to residents, and the event serves as an opportunity both to get to know the community and let people know about the services they provide. Personal interactions also lie at the heart of Clayton Drug’s marketing efforts. “Since we’re in smaller communities, each community has its own needs,” Clayton said. “We obviously do Facebook and social media, and we use local newspapers and radio stations. But what I found, and what I’ve always found, is that if you provide a good service, word of mouth in a small community is your best source of marketing.” Two of Clayton’s pharmacy locations are participants in CPESN’s Flip the Pharmacy initiative, which encourages staff members to provide more education at the pharmacy window. She explained, “Someone might not be sold on something the first time you talk about it, but if you continue to talk to a patient about a service or product you think might benefit them, they come around to it and start asking questions about it.” Often, Clayton Drug pharmacies will have flyers at their pharmacy counter to educate patients about new products or services, and then patients will hear about them again from the pharmacy technician. Clayton attributes the success of their medication therapy management program to the face-to-face marketing they do with patients who walk into the pharmacy.

pbahealth.com/elements

viewers watching.”

CHALLENGE #4: Managing, Not Micromanaging When a pharmacy grows to more than a couple locations, owners

retail locations. Rather, we allow them to operate within a scope of

and operators can no longer be present as a manager 100

practice,” Bretton said. “We don’t tell them where to put their pens

percent of the time. Managing managers and creating consistent

and where to put their scrap paper.”

performance becomes essential. “A big thing from a multi-unit

Despite the independence of the managers, the Walbergs want

perspective is that you have to rely on others to get stuff done,”

to ensure patients still have a uniform experience no matter which

Hendler said. At Ritzman, Hendler developed standard operating

pharmacy they’re walking into. “We rotate positions throughout our

procedures to ensure managers were on the same page and each

company,” Bretton said. “Everybody knows how to do data entry,

pharmacy ran smoothly. “The more things that each store is doing

everybody can count, everybody can run the cash register.” This

the same way, the better chance you have to achieve high-level

way, patients get stellar service at every location—even if the star

execution,” he said. “Creating those processes and documenting

cashier is out on vacation.

them is very important.” Clayton Drug holds quarterly meetings to discuss policies and procedures for their pharmacies, and Clayton says that participating in Flip the Pharmacy has helped them formalize their meeting and management structure. “We have a Flip the Pharmacy technician lead, and we also have a front-end lead,” she explained. “The pharmacy manager is responsible for meeting with the different leads in the store to talk about expectations and goals. We

TIP #4: DEVELOP SOPs

also have an inventory manager, and we’ll talk about our monthly goals and quarterly goals.” Most of the upper management employees at the Walbergs’

Having standard operating procedures (SOPs) written down can help your staff stay on the same page even

pharmacies are pharmacists, and they are afforded a certain

if they’re not in the same store. But that’s not their

degree of independence when it comes to the day-to-day

only purpose.

operations of their stores. “We do our best not to micromanage our “You’re not always developing an SOP because you expect everyone in the entire organization to read and understand it. That’s not how things work in the real world,” Hendler said. Developing SOPs can keep your pharmacy efficient because the process forces you to re-evaluate how you’re doing things and ask if there is a better way to get things done. “SOPs make you map out what kind of process you have in place currently and take the opportunity to pick it apart and make sure it still makes sense.”

ELEMENTS | The business magazine for independent pharmacy | June 2020

CHALLENGE #5: Balancing Multiple Demands Pharmacists today are pulled in multiple directions while they’re on the job. It’s a stressor that Clayton sees her staff pharmacists dealing with daily. “We’re in this zone right now where we’re transitioning out of the dispensing role and into more of a clinical role, but we’re expected to do both at the same time,” she said. “Trying to find a way to do that within an eight-hour shift is hard, and it’s hard to place that expectation on the pharmacist.” Many of the clinical services Clayton Drug provides are free to patients, and data is being collected to prove their value to insurance companies. Even though their popularity bodes well for the pharmacy’s future, it can result in team members being pulled in several different directions. “You have someone on the phone, there’s somebody at the window, and there’s someone waiting for a blood pressure test,” Clayton said. “You can only do so much at one time.” Running with a lean staff means Clayton Drug has to get a little creative to make sure all patients are getting the care they need, whether they come in for dispensing or clinical services. Clayton

TIP #5: SAVE TIME AND MONEY WITH PROFITGUARD

has found that using technicians at the top of their license has been crucial in helping pharmacists balance their many responsibilities.

Take the time-consuming task of ordering drugs off

Hendler also saw pharmacists being pulled between the

your pharmacy managers’ plates with a purchasing

pharmacy’s business interests and their patient-facing role while

solution like ProfitGuard.

he was at Ritzman. But in this respect, pharmacies with multiple locations have an advantage that single-location stores do not.

ProfitGuard’s Navigation Report is an analytic tool

“You have a great opportunity to look for things that you can bring

that helps you make the best purchasing decisions

upstream and do more efficiently in a central environment. Then,

in the shortest amount of time. Every day, you’ll

you free up pharmacists to have more time to spend with patients,”

receive recommendations about which NDCs to buy

he said. Managers of multiple pharmacies should always be looking

and where to purchase them. It will make ordering

for things they can pull off their pharmacists’ plates. Ritzman took

a breeze so your pharmacists have more time to

ordering out of individual stores’ responsibilities by adopting

spend with patients and you can focus on other

ProfitGuard, which helped the chain centralize its buying.

parts of the business.

“The whole concept of centralization, and having a core group that’s managing the business outside of the pharmacies, can make a multi-unit situation really appealing for an operator,” Hendler said. “I can accumulate a bunch of functions done at individual stores and open up the stores’ time for other things while using less overall manpower.” While owners of single stores have to force themselves to designate time to think about strategy and financials among the chaos of everyday pharmacy business, larger operations can designate an employee—or a team of employees—to think about the pharmacy’s business performance as their full-time job.

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SPOTLIGHT

A BETTER WILL CALL

PerceptiMed’s scripClip reduces will call process from minutes to seconds for Wildcat Pharmacy

ith a low-tech will call system, it can take pharmacy

with the technician staying on another day to make sure everything

employees a minute or two to find the prescription they’re

was working and everyone was able to use it.

looking for. Those minutes quickly add up to hours and days worth of work. That was the experience of Greg Mullins, pharmacist and owner

Pharmacists hesitant to install automated will call because of the hassle of learning new software don’t need to worry—the learning curve for scripClip isn’t steep. “We were all good to go the

of Wildcat Pharmacy. The pharmacy had been using a system of

very next day after the install,” Mullins said. “I’ve had a couple of

plastic bags on hangers. “No electronics, no program, just plain old

new hires since then, and it’s extremely simple to learn and use.”

bags,” he said. “We tried to keep them in alphabetical order, but if we got busy and hung an M name in the B section, we’d have to

MORE EFFICIENCY, FEWER ERRORS

start at the As and work through a couple hundred bags until we

In addition to helping pharmacy employees find prescriptions

found what we were looking for.”

quickly, scripClip has also been a boon for Wildcat’s inventory

After learning about PerceptiMed’s scripClip system at a trade show a year and a half ago, Mullins was eager to adopt the modern technology into his pharmacy’s will call. “We were very impressed

management. With the software, pharmacies don’t have to lose inventory to the prescriptions that are waiting to be picked up. “If we’ve filled a prescription for someone but we know they’re

with their knowledge,” Mullins said. “Anything we wanted to ask of

not going to be in for another three days, and another person

the system, it could do.”

comes in and needs that medication now, even if there’s no more

Right away the scripClip system increased the pharmacy’s

on the shelf, we can type in the NDC and the bag will light up and

efficiency and freed up employees to work on other tasks. “It has cut

ding,” Mullins explained. Because they can use the prescription

the will call process from minutes to seconds,” Mullins said. “I would

waiting in will call for the person who needs it right now, they don’t

not want to go back to not having it in my pharmacy.”

have to risk losing the sale or the patient. It’s also useful for pulling old prescriptions out of will call. In

HOW IT WORKS

the past, the pharmacy would have to create a paper report and go

PerceptiMed’s scripClip automates the pharmacy’s will call. Each

through each bag to find the ones that needed to be pulled. With

prescription bag has the ability to light up and make a dinging

scripClip, all they need to do is enter a date into the computer and

sound when you type in a patient’s name. The simple system

all the bags that are older than that date will light up. Then it’s only

eliminates any time spent digging through bins or flipping through

a matter of pulling all the lit-up bags and either calling patients with

hangers. Pharmacies can set up the software so bags light up

reminders or returning the medication to stock. “It used to take an

with different colors for every computer, eliminating the risk that

hour to do and now it’s just a few minutes,” Mullins said.

two employees using the system at the same time will grab the

Staff members no longer have to worry about putting bags

same bag. For medications that are stored cold, there’s another

in the correct alphabetical order, and scripClip does even more to

device that will light up and ding to remind employees to retrieve

reduce human error. The software eliminates the risk of putting

prescriptions from the fridge.

a prescription bottle for one person in another person’s bag and

ScripClip also works with your pharmacy’s existing bins or

losing track of it. “If you have six bottles, and five are for one

hanging system, so there’s no need to remodel the pharmacy

patient and the sixth is for another, it alerts you on the screen if

or bring in new hardware. Adopting the system is as simple as a

you’re trying to put them all in together,” Mullins explained.

technician coming out to install the software on the pharmacy’s

And because the pharmacy staff isn’t spending nearly as much

existing work stations. For Mullins, this process took about a day,

time sorting through bags or correcting errors, they have more

pbahealth.com/elements

“It has cut the will call process from minutes to seconds. I would not want to go back to not having it in my pharmacy.”

time to devote to other pharmacy tasks. “It did free up our staff to fill prescriptions, take phone calls, and wait on customers,” Mullins

WITHOUT AUTOMATION

WITH AUTOMATION

PACKAGING AND FILLING BAG

14.5 seconds

8.3 seconds

RETRIEVE TWO BAGS

59.5 seconds

16 seconds

MISSING BAG SEARCHES

12 minutes 44 seconds

0 seconds

RETURN 5% OF BAGS TO STOCK

43 minutes

9.5 minutes

said. “It helps to improve customer service and wait times for filling prescriptions because there are more employees to help with that.” QUICK FIXES Like all software, scripClip sometimes experiences technical glitches, but in Mullins’ experience, those have been few and far between. In the rare case that something does go wrong, the company is just a phone call away, and Mullins has always found a live person on the other end of the line—no need to leave a message and wait for someone to get back to you. “We’ve never had an issue the person doesn’t know the answer to and can’t fix immediately,” Mullins said. “That’s pretty impressive because I can’t say that for everything we use in the pharmacy.” Most of the time, the technician on the phone can walk the pharmacy through what they need to do to fix the problem themselves. For more complex issues, the technician can come into the system remotely and make necessary fixes without a delay.

Data: PerceptiMed Will Call White Paper ELEMENTS | The business magazine for independent pharmacy | JUNE 2020

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MONEY

COVER YOUR BASES What kind of insurance coverage does your pharmacy need?

f a storm ripped through your town and damaged the roof of your pharmacy, how would you pay for it? What about if your

Another factor evaluated by the insurance company underwriter is the ratio of pharmacists to prescription volume.

delivery driver got in a car accident? Or you accidentally dispensed

“Lopsided ratios are potential warning signs for a loss in the

the wrong medication, and a patient sued you?

future,” Egan said.

With thin profit margins, unplanned expenses like these can

Insurance agencies also want to know about other facets

be a killer, which is why pharmacies need to make sure they have

of the business, like if a pharmacy provides durable medical

a full suite of insurance to cover them. Fully protected pharmacies

equipment, respiratory equipment, or rentals.

will have multiple lines of insurance, and cookie cutter policies from national or neighborhood insurance agents probably won’t cut it. “There are coverage forms that are standardized and used by

FIND THE RIGHT COVERAGE When you buy health insurance, you typically find yourself trying

the majority of insurance companies in the country, and those forms

to choose between a high deductible plan with low premiums or

exclude, from a professional standpoint, many activities pharmacists

a low deductible plan with high premiums. But when it comes to

do on a daily basis,” said Michael Egan Jr, program director at the

pharmacy insurance, that relationship doesn’t play a huge role.

Pharmacy Insurance Network, a division of The Selzer Company.

For the large percentage of retail pharmacies, deductibles are only

Because of this, pharmacies have to be aware of their specific needs

found on the policies that provide first-party coverage like property

to make sure they are getting the right kind of coverage.

and auto insurance. “When you switch from a $1000 deductible to a $5000, typically the savings aren’t substantial enough to justify

HOW AT-RISK IS YOUR PHARMACY?

that increased deductible,” Egan explained. “You’d have to have five

Before you can get an insurance policy, the insurance agent will

or six years of no claims to realize the savings of having a higher

request information regarding the operations of the pharmacy

deductible.”

including historical insurance claim experience. The historical

With that in mind, the key to finding the right insurance

claims reports are called “Loss Runs,” and they identify the claims

policies is making sure they provide the coverage you need. This

that were reported and paid during the past three to five policy

can be harder than it seems. Egan commonly sees pharmacies with

periods, even if you had zero claims. Eligibility is determined

“Swiss cheese coverage with a lot of gaps in it.” Most insurance

differently for different kinds of insurance policies, but Egan said,

agents develop one-size-fits-all plans for major players and

“Underwriters are using previous loss experience to predict future

don’t spend time learning the needs of smaller businesses like

loss experience, and then using that data to support the price of

community pharmacies, he said, which is why it’s important to find

the policy.”

a provider that specializes in independent pharmacy.

For property insurance, the location of your building plays a

One of the gaps Egan often sees in coverage is professional

big factor in price. Crime statistics in your neighborhood or living in

liability. Most pharmacies don’t properly scrutinize the details

an area susceptible to natural disasters like hurricanes can affect

of the policy, which will vary among insurance companies and

how much you pay.

commonly fall short. Boilerplate insurance policies often use

“Professional liability is a unique underwriting gem when it

language that excludes consulting, diagnostic, or referral services

comes to pharmacies,” Egan said. “That’s really where the most

like blood tests; prescribing or administering drugs; and managing

exposure is.” Professional liability insurance covers claims made

drug therapy. In other words, the bulk of pharmacists’ job duties.

against the pharmacy for bodily injury caused by professional error.

“If a pregnant woman comes in and asks what kind of Tylenol

To determine your eligibility and rates, underwriters will go through

she should take, that’s consulting,” Egan said. “Or they may show

your operations. One of the most important eligibility factors is

a patient how to use diabetic test strips, which could trigger the

if you perform sterile or non-sterile compounding. While most

blood test exclusion.”

patient-facing pharmacies only do non-sterile compounding, Egan

For pharmacists who want to dig into the nuts and bolts of

explained, “Sterile compounding is a lot riskier for the underwriters.”

their coverage, Egan recommended looking specifically at what is

Pharmacies that perform sterile compounding do have insurance

excluded from the policy to see if the services they provide are on

options, but the cost is significantly higher.

the list. Professional liability insurance designed with pharmacies

ELEMENTS | The business magazine for independent pharmacy | June 2020

in mind typically has very few exclusions. Egan said, “The only exclusions you might run into are requirements that you are performing services you are licensed for and you are not breaking the law.” Even if you’re happy with your coverage from an agency that has experience with pharmacies, Egan urged that owners shouldn’t blindly renew their policies year after year. Though the coverage could remain flawless, their insurance company may be passing on un-justified rate increases that are cutting into the pharmacy’s bottom line. If that’s the case, it’s probably time to shop around.

Are you covered? There are lots of ways things can go wrong, which is why there are so many different types of insurance. Here’s a list of available coverage options to determine which policies are best suited for your pharmacy.

Property and Casualty Insurance insures the building and business property within the building, including prescriptions, over-the-counter merchandise, improvements, and office furniture. You’ll need it if your pharmacy experiences loss because of a natural disaster or theft. General Liability Insurance protects

pharmacies from third-party lawsuits that result from normal business operations. If a patient suffers a slip-and-fall in the pharmacy and decides to sue, general liability insurance will cover the costs.

Professional Liability Insurance exists

for when claims are made against the pharmacy for bodily injury caused by professional error. It’s crucial for pharmacists, who are especially vulnerable if they dispense the wrong dosage or drug to a patient.

Workers’ Compensation provides unlimited medical expense coverage for employees that are hurt on the job and provides loss of income protection while the employee is recovering. Most states require that businesses with employees carry workers’ compensation coverage. 30

pbahealth.com/elements

Commercial Auto Insurance covers any delivery vehicles a pharmacy has. It will provide protection in case the vehicle is damaged in an accident. It also protects the pharmacy from lawsuits against damage their driver caused another party while using the vehicle. Umbrella Insurance increases liability limits

on your auto, general liability, and professional insurance policies. If your professional liability insurance has a $1 million limit and your umbrella policy has a $1 million limit, that gives you $2 million in coverage.

Cyber Liability Insurance protects

pharmacies in the case that their data is compromised. If a pharmacy’s private health information is compromised by a hacker, cyber liability insurance will cover the fines and penalties associated with HIPAA and the cost of notifying everyone affected.

Employment Practice Liability Insurance covers pharmacies in the event

that an employee sues for wrongful termination, discrimination, or harassment. This is usually not covered by a general liability insurance policy, but it can be built in at a nominal cost.

OUTLOOK

ALL SYSTEMS GO How two pharmacies improve operations with their pharmacy management systems

pharmacy management system is the beating heart of pharmacy technology. It has the ability to touch every part

Holt also appreciates how the software serves the compounding part of his business. “A lot of pharmacies like ours will have two

of the store, from inventory management to phone automation

different pharmacy systems for compounding and retail,” he said.

to accounting. With so much power in one piece of software,

With PioneerRx, patients who are prescribed both compounded and

independent pharmacies that learn to use it to its fullest potential

traditional retail drugs can be found on a single profile.

can dramatically improve their business operations. There are dozens of pharmacy management systems on the

At Allen’s pharmacy, Computer-Rx has improved and simplified the ability to measure and track inventory. “We know what our

market, and it can require a lot of research for pharmacists to find

value is and what our inventory is at any moment,” he said. From

the right one for their pharmacy. Cliff Holt, CEO of Hurricane Family

the time a prescription is entered into the system, Allen can easily

Pharmacy and three other independent pharmacy locations in

see where it is in the workflow process. “You always know where it’s

Utah, estimates he looked at around 20 different systems before

at, whether it’s been filled, if it’s pending because of an issue, or if

settling on PioneerRx around six years ago. The pharmacy system

it’s on the pickup shelf.”

that he’d been using for 15 years was no longer up to snuff. “When

Computer-Rx interfaces with VOW, a pharmacy-focused phone

I started using it, it was the best thing on the market, but when I

automation system, and patients automatically get calls when their

finally got around to kicking it out of my stores, it was one of the

prescription has been filled. If their meds have been sitting on the

worst on the market,” he said. “They’d stopped innovating and

shelf for a few days, patients will get another call to remind them to

stopped updating.”

pick up their medication. And it’s all done without a pharmacy staff

He chose PioneerRx because it was nimble and easy to use. Now, the software has grown and added many new features, putting a lot more power in the hands of the pharmacists. Vic Allen, owner of Vic’s Family Pharmacy in Idaho, was also

member ever having to pick up the phone. Many of Allen’s patients have downloaded Computer-Rx’s mobile app, Rx 2 Go, to help manage their prescriptions. “It’s free to them and free to us,” he explained. “Our clients can see their profiles through

struggling with an out-of-date pharmacy management system

the app, see if there are refills available, and use the barcode scanner

when he began looking for an alternative around eight years ago.

to scan their bottles and put them right in our queue.”

A colleague recommended Computer-Rx to him, and while he was attending a trade show he met with reps from the company and

MED SYNCHRONIZATION

was impressed with their presentation. “It was logical for me to

Holt and Allen set high goals for medication synchronization, and their

switch,” he said.

pharmacy management systems have been essential to achieving them and making the whole process easier and more efficient.

EFFICIENT INVENTORY MANAGEMENT

“The syncing process has been awesome,” Allen said of

The pharmacy management systems have become an

Computer-Rx’s medication synchronization tools. “We’ve definitely

indispensable tool for efficient inventory control for both

increased our volume and our efficiencies.” The software interfaces

pharmacies. Hurricane Family Pharmacy has a retail pharmacy, a

with PrescribeWellness to keep patients synced and adherent.

compounding lab, and an adherence lab with packaging machines,

Holt set a goal for his pharmacies to be at 70 percent

and Holt uses his system to keep them all running smoothly. “We

synchronization. “That took a little bit of buy-in, but the good thing

were burning a lot of miles between the med-pack room and

is that Pioneer has a really robust synchronization feature,” he

the retail part of the pharmacy grabbing drugs,” Holt said. But

said. Synchronization is mandatory for patients using his delivery

his pharmacy system has given him the ability to maintain two

service, and since the outbreak of coronavirus, the number of

separate inventories for the two different areas, eliminating the

patients using delivery has skyrocketed.

need to run back and forth.

pbahealth.com/elements

PioneerRx helps them sync not only individual patients but also families and entire neighborhoods, which saves delivery drivers time and gas mileage. FINANCIAL REPORTING Both owners benefit from their system’s financial reporting. Before adopting PioneerRx, Holt’s pharmacy management system didn’t make financial reporting easy. “My financial acuity was to look at my checking account every morning to see if I had money in there to pay the bills. I was just flying blind,” he said. But with PioneerRx, it takes only a few minutes to run reports and see the balance sheet, the income statement, and cash flows for the pharmacy. “I get timely financials every month without taking much time to work on it at all.” Computer-Rx allows pharmacies to build customizable reports that they can save as a template or run on a regular schedule. GETTING UP AND RUNNING Because pharmacy management systems are so large, with so many features available, pharmacy owners may worry that switching will slow down their business. Allen says that when he hires new employees that have worked with other systems, Computer-Rx is very easy to pick up. “On the inventory management side, the logic of the system is very friendly,” he said. “I’d say it takes between two to four weeks to be up and running and comfortable in the system.” But for new employees that don’t have much experience using pharmacy management systems, Allen has seen it take a few months for them to get their bearings. “Switching software is expensive and painful,” said Holt. “It’s going to hurt for at least 30 days.” But when it comes to learning how to use PioneerRx, he said, “The basic stuff is super simple. I can get a technician typing on the system pretty quickly.” PioneerRx client pharmacies can have a technician come to their store to teach them about the system, meaning staff members can learn to use it more efficiently. The simple fact that pharmacy management systems can do so many different things is often a bigger source of frustration than technical difficulties. Holt says that because PioneerRx is always growing and adding features, it’s difficult to get a handle on, but he said, “It’s not a bad thing.” Holt advises hiring an employee whose sole job is to master the system. “For instance, we do a lot of deliveries, and we had a paper we had to fill out for every delivery that had 10 or 15 items to fill out by hand. Pretty labor-intensive when you’re doing 90 of those a day,” he said. But the technical engineer discovered a way for PioneerRx to automate the process so it prints out all the necessary information on the delivery receipt—all the pharmacy has to do is check a few boxes. Holt added, “We had no idea it could do that! You don’t know what you don’t know.”

Integrated Systems Your pharmacy management system should make all parts of your pharmacy more efficient. Most pharmacy management software offers integration with third-party programs to keep everything running on the same frequency. When choosing a new pharmacy management system, think about what software you currently use and check with the vendor to make sure everything will work together. Your pharmacy management system should be able to work with: • Robotics • Compliance packagers • Will call retrieval • Mobile apps • Inventory management software • Pill counters • Immunization services • Medication therapy management • Medication synchronization • Phone automation

Audit Defense Your pharmacy management system can be the strongest weapon in your arsenal when it comes to defending against audits. Your pharmacy management system should automatically record materials that might be required by an auditor, including: • Inventory records • Payment documentation • Coordination of benefits • Copies of prescriptions • Proof of prescription pick-up or delivery • Electronic signature logs • Copies of pharmacy correspondence Source: Mirco Merchant Systems white paper, “Manage Pharmacy Audit Risk with Technology and Internal Controls”

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