Elements Magazine - March 2015 Vol.4 Iss.1

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ELEMENTS Customer Service Pharmacy-specific tips from a customer service expert

Progressive Pharmacy

How one pharmacy focuses on innovative solutions to stay successful

Metrics to Know The numbers pharmacy businesses need to be measuring VOL. 4 ISS. 1 | MAR 2015 | pbahealth.com/elements

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ELEMENTS

The business magazine for independent pharmacy

STAFF & CONTACTS Matthew Shamet - Publisher and Editorial Director Kirsten Hudson - Editor Kellie Paxton – Art Director Chloe Holt – Contributing Writer Kathleen Barbosa – Contributing Writer Interested in advertising? elements@pbahealth.com

Contents Departments 27 SPOTLIGHT:

5 NEWS:

Provider Push Learn how you can help the campaign for pharmacist provider status.

6 TRENDS:

Mobile Pay A technology trend to watch in 2015.

8 RETAIL:

Women Shoppers What are you doing to welcome them to your pharmacy?

11 SOLUTIONS:

Customer Service, Patient Satisfaction How to connect with your patients across the counter.

ON THE WEB //

Progressive Pharmacy How Bypass Pharmacy, an independent pharmacy in West Virginia, focuses on innovative solutions to stay successful.

31 MONEY:

5 Accounting Mistakes to Avoid Don’t overlook these important accounting practices.

34 OUTLOOK:

Prescription Fraud Tips to identify forgeries and fraudulent prescriptions.

38 NOTES:

Inside Your Facebook Page Discover what your pharmacy’s Facebook page can tell you.

Feature: Metrics to Know

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The numbers pharmacy businesses need to be measuring.

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

10 Ways to Turn Front-End Shoppers into Buyers

Use these tips to boost front-end sales and convert shoppers into buyers.

Find the article at pbahealth.com/shoppers-into-buyers.

ELEMENTS is published quarterly by PBA Health. Copyright© 2015 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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NEWS

Provider Push

Learn how you can help the campaign for provider status

For decades, pharmacists have been one of the few health care professionals whose services are not recognized by federal law. But now, momentum in support of provider status for pharmacists is building.

Private payers and the government are increasingly looking to pharmacists to help cut medical inefficiencies that cost the system billions. Medication errors alone cost the U.S. $300 billion annually. These costs, coupled with the Association of American Medical Colleges’ prediction that the U.S. will face a shortage of 45,000 primary care physicians by 2020, are driving payers and legislators to look for solutions. And new legislation could make pharmacists a part of the fix, said Stacie Maass, senior vice president, pharmacy practice and government affairs, with the American Pharmacists Association (APhA).

Expanding patient access to health care through pharmacistprovided care is the goal of legislation introduced in both chambers of Congress in late January. If passed, the Pharmacy and Medically Underserved Areas Enhancement Act would reimburse pharmacists for care they provide to Medicare Part B beneficiaries in medically underserved communities.

“Pharmacists are currently underutilized in health care,” said Nick Smock, Pharm.D., MBA, President and CEO of PBA Health, a pharmacy services organization dedicated to independent pharmacies. “If the federal government recognized pharmacists

as health care providers, it could open access to services, education and care to millions of Americans.”

Tell your story The time is now for independent community pharmacists to show their support.

“The momentum is real,” Maass said. “We’re seeing advancement at the state level for our profession as well as increased recognition of the value of pharmacists and their services by organizations like the National Governors Association.” In late January, the National Governors Association released a report that explored ways states can integrate pharmacists into the health care delivery system.

“We really need every pharmacist involved,” Maass said. “We need this to be a grassroots effort because it can’t come from the top down. It really has to come from a grassroots level on up to members of Congress.”

To support the federal legislation, Maass encourages pharmacists to share their stories of care with their elected officials.

“You don’t have to go to Washington to make a difference.

We need pharmacists to go to their member of Congress in their district and talk about the services and care they are or can provide,” she said.

“No one can tell the pharmacists’ story better than the pharmacist.”

Provider Status Stats of voters agree that pharmacists have the education and professional training to do more than fill prescriptions

of voters think of pharmacists as “health care providers”

of voters think pharmacists should be considered part of each patient’s overall health care team

of voters believe their quality of care would improve if pharmacists were members of the health care team

Source: American Pharmacists Association

Follow Elements magazine on Facebook and Twitter for pharmacy business tips and advice,

Sign up to support provider status and learn more about other efforts to promote APhA’s campaign at pharmacistsprovidecare.com.

news announcements, industry information and exclusive offers.

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TRENDS

Mobile Pay A technology trend to watch in 2015 While you may have your eye on the latest pharmacy robotics system or a computer system update, you might want to pay attention to technologies that aim to create a smoother and safer payment process. The way people pay is set to transform in 2015.

The payment process is going mobile. Mobile payments allow people to pay for products and services merely by waving their smartphones at the register.

No cash or card needed. This process works through near-field communication (NFC) technology or, less commonly, QR codes.

Although NFC technology has been around for several years, it didn’t get much attention until late 2014, when Apple introduced its mobile wallet, called Apple Pay, and added NFC technology into its latest iPhones.

Other mobile pay options, such as Google Wallet and SoftCard, have been around for several years, while new options, such as CurrentC from MCX, are still being developed.

At the register, you have a chance to improve the customer experience by allowing your patients to choose how they pay. Is your pharmacy ready for new payment technology?

According to the 2014 NCPA Digest, 15 percent of independent community pharmacies still aren’t using point-of-sale (POS) technology, and only 45 percent of pharmacies have systems that utilize mobile commerce and signature capture technologies. New technologies have moved well beyond these basics.

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Analysts predict that U.S. mobile payments will grow from $52 billion in 2014 to $142 billion by 2019.

Much of that growth will depend on national retailers and local merchants, such as independent community pharmacies, being willing to adopt the technology.

As mobile payment technology continues to spread in 2015, here are six things you should know.

1. It’s already present in pharmacies Large national pharmacy chains, such as Walgreens, CVS and Rite Aid, began accepting mobile payments as

Use of mobile payment technology is expected to grow in coming years. It's a trend for your pharmacy to keep an eye on. ©iStock. com/peterphoto

TRENDS

early as 2012. Recently, CVS and Rite Aid have joined with other merchants, like Walmart, to offer CurrentC payment options in their stores.

2. You probably need a system upgrade Right now, about 82 percent of small businesses don’t have a POS system that is NFC-capable, according to an October 2014 survey from Newtek, a business that provides payroll products and services. Those small businesses would need to update their systems in order to accept mobile payments. However, the survey also showed that 93 percent of small business owners have no intention of upgrading at all. If you’re interested in upgrading your pharmacy’s system, talk to your POS provider.

3. Mobile pay has advantages for businesses and consumers Mobile payments are more secure than credit card swipes. Instead of using consumers’ account numbers to make a transaction, cards stored in mobile wallets are assigned unique tokens. These tokens are then paired with a random string of numbers, unique to the time and location of a specific transaction.

Because of this, any hacked data is essentially useless.

Additionally, mobile wallets easily allow businesses to integrate online promotions and loyalty rewards into customer transactions.

4. Large-scale adoption requires consumer use to catch up Research released by VeriFone, a company that provides POS and electronic payment solutions, in early 2015 showed that even though mobile pay is garnering a lot of media attention, it still has a long way to go before it’s widely used. Right now, only 4 percent of U.S. adults use mobile wallets as their primary form of payment.

Additionally, a November 2014 survey from Retale, a mobile app and website that aggregates weekly

retail circulars, found that only 36 percent of adults have used mobile pay at all. Many small businesses will likely wait for the technology to become more commonly used before adopting it. This could be soon; the Retale survey also found that 56 percent of adults are interested in using mobile wallets.

5. Expect young people to lead the way According to the Verifone research, 50 percent of the population is unfamiliar with mobile pay technology. But when you look at people under 40, that percentage drops significantly. Only 36 percent of young people don’t know about mobile pay, and 67 percent believe stores should accept smartphone payments. This indicates that implementing mobile payments in your store could boost your pharmacy’s image with this demographic.

6. The EMV liability shift could help push mobile pay forward Europay®, MasterCard®, and Visa®, known as EMV, is the global standard for the inter-operation of payment cards and POS systems, and it relies on chip cards and pins to make transactions more secure. If small businesses don’t update to an EMV payment system

by October 2015, they’ll be liable for fraudulent transactions that occur in their businesses, if the customer used an EMV card. Currently, card issuers are liable. Credit card companies are encouraging merchants to update their POS systems before then.

This deadline could benefit mobile pay systems because most systems that are EMV-enabled are also NFC-capable, which would allow for the widespread adoption of mobile pay in stores. However, it’s still unclear how the liability shift will directly affect merchants; it’s likely that many businesses will choose not to update until the effect of this shift is felt.

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RETAIL

Women Shoppers What are you doing to welcome them to your pharmacy?

If you haven’t thought about how to make your pharmacy appeal to women, now is the time. The U.S. Department of Labor estimates that women make 80 percent of health care decisions for their families and that women are, almost universally, the primary caregivers. Are these women shopping in your independent community pharmacy?

Besides their importance as primary health care decision makers, women are also valuable frontend shoppers. A study

by Hamacher Resource Group, Independent Pharmacy Shoppers: Who, What, and Why?, found that more than two-thirds of independent pharmacy shoppers are women.

If your female customers are filling their prescriptions and then heading elsewhere for their health and wellness shopping, you could be missing out. But with the right marketing, products and in-store merchandising, you can persuade them to further explore your front end, while also attracting new shoppers.

When choosing products to stock for women in your front end, remember that women’s roles today extend beyond mother and caregiver. According to Pew Research, 20 percent of women today don’t have children. So, it’s important to cater to women who aren’t family-oriented, too.

Here are some tips on how you can make your pharmacy appeal to women.

of women,” said Dave Wendland, vice president of Hamacher Resource Group. “And carry products that not only meet the health care needs women are shopping for, but that also provide pampering for them.”

Some ideas include small hand lotion or lip balm giveaways; free multivitamins, especially for women who are pregnant; and “hot tea” days where women can try a new flavor for free.

“Don’t forget to recognize and appreciate women for the work they do as primary caregivers,” Wendland said. An easy way to do this is to offer a special coupon or discount just for women. You could even dedicate a specific day in your pharmacy to celebrating women with special products or events available. Or, celebrate holidays dedicated to women, like National Women’s Health Week in May.

“Run promotions that recognize the needs and concerns of women, and carry products that not only meet the health care needs women are shopping for, but that also provide pampering for them.”

Celebrate women in your pharmacy Use promotions and products to show women you care.

“Run promotions that recognize the needs and concerns

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Provide the information they need As the primary health care decision makers in their families, women are often in search of, and will appreciate, reliable health information.

“Women want to be well-informed about their decisions,” Wendland said. “Make sure to provide them with information they can trust, and advice they can depend on.”

Offer literature, like brochures or flyers on women’s health issues. This can be general information or specific to different demographics. But women are likely to be looking for health topics that affect their families too, so any information you can offer them will be helpful and appreciated.

Women are the primary caregivers for their families, and the primary shoppers of independent community pharmacies. Is your pharmacy appealing to them?

Create a welcoming in-store environment Make sure that every aspect of your store is inviting. Be available to your female shoppers, and make sure you provide them with personal service and attention.

“It’s important to create an in-store environment that is welcoming and comfortable—the opposite of the chaos they may be dealing with at home,” Wendland said.

Pay attention to your store’s décor. Use lighting, color and boutique-style setups to create a front end that is calming and inviting. And, make sure you have the products women need in stock and readily accessible.

Use end caps and displays to make it easy for women to find the products they’re looking for, and make sure you’re on hand to provide personal recommendations.

Also, promote options in your pharmacy that save her time, such as a drive-thru window, curbside pick-up and online prescription refills.

“Ultimately,” Wendland said, “a pharmacy needs to anticipate her needs and create solutions that are clearly presented.”

Start with these suggestions, and be sure to get feedback from regular customers. Understanding how your female customers shop will put you well on your way to ensuring that your store is always appealing.

3 Ideas to Go Above and Beyond Dave Wendland, vice president of Hamacher Resource Group, shared these easy ways to make your pharmacy stand out to the women in your community.

1. Get involved in the community Make connections with groups that women are likely to be a part of. For example, establish a relationship with local oncologists specific to women’s health; local breastfeeding or lactation society groups; or assisted living or long term care facilities. Let these groups know about the clinical services and products you provide related to women’s needs.

2. Stock specialized products Supply specialty items that would appeal to women but that aren’t usually found in pharmacies. Luxurious bath and body products, for example, or even “hot flash” pajamas.

3. Staff a women’s health expert Depending on the products and services you offer, staffing a specialist for women could help build your pharmacy’s reputation as an expert in women’s health.

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SOLUTIONS

Customer Service, Patient Satisfaction How to connect with your patients across the counter

By Chloe Holt

Your patients already value the customer service your independent community pharmacy provides. That’s why they come to you—for the personal attention and individualized solutions you offer them.

Good customer service will satisfy your patients, but an outstanding customer experience will make them truly enthusiastic about your pharmacy.

“The pharmacist can come to the rescue, not only by providing medical expertise, but by just being the nicest person that patient has spoken to all day,” said John DiJulius, customer service expert, author and consultant. “The pharmacist wearing the white jacket can also be superman wearing the cape.”

DiJulius spoke with us about why it’s important for independent community pharmacies to provide worldclass customer experiences to their patients, and how standout customer service can transform a pharmacist into a hero—and a friend.

As you work to expand your pharmacy’s services, don’t forget about the other role pharmacists have (and have had for decades.) Being someone who your patients trust and rely on.

“Pharmacists are there to do three things,” DiJulius said. “Be a health expert, make an emotional connection and give people hope for tomorrow.”

Only one of those is directly related to health care.

Remember that a huge part of the pharmacist’s role in patients’ lives has nothing to do with dispensing medications or providing services. In this realm, it pays to focus more on being someone who cares.

And while it’s important to stay professional, DiJulius warns of coming across as too professional—and cold.

“Don’t be so consumed with filling scripts,” DiJulius urged. “Be someone who makes patients smile and feel good. Physically and emotionally. Be a friend who cares about them.”

Some ways to do this include addressing your patients by name, asking about their families and recommending products based on your interactions. If you engage with your patients, show that you care and build their trust, then you’ll gain their loyalty.

“The pharmacist wearing the white jacket can also be superman wearing the cape.”

The most important role You hear a lot today about the expanded role of the pharmacist in health care. Pharmacists don’t just fill prescriptions anymore. They offer vaccination services, provide screenings, counsel on diet and nutrition, and more.

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SOLUTIONS

Speaking patient talk Part of showing you care means getting on the same level.

“Speak patient talk, not the technical jargon,” DiJulius said. “Think about all the things the patient could be going through, including the worst case scenario. Have empathy and compassion.”

“Everyone in your pharmacy who interacts with a patient needs to show them they’re someone who cares,” he said.

Discuss your patients’ symptoms and solutions with them in simple terms, and put yourself in their shoes.

Work with them to improve their health, or even just their day, and you’ll find that your patients look forward to interacting with you each time they return.

Problems don’t have to be negative When you come up against a customer service issue, how you handle the experience can set the tone for how patients’ view your business.

Unhappy patients create a prime opportunity to put your customer service skills to work. “If a patient’s insurance doesn’t cover a particular medicine or the prescription needed isn’t in stock because it’s so rarely requested, none of those are the fault of the business, but they are your problem,” DiJulius said. “Every business has to understand that and be prepared to handle those situations.”

“These scenarios repeatedly happen, so why do so many businesses act like a deer in headlights when they occur?” he said. “Know that they are going to happen, and be prepared for them.”

Put protocols in place to address common issues that occur. Then, when they do happen, you can focus on showing your patients that you empathize with their situation, and explain how you’re going to help them find the best solution.

“The vast majority of the time the patient is going to be appreciative,” DiJulius said, “and so much more loyal because of it. Problems are just opportunities for you to be a hero to your patients.”

“When people come to a pharmacist, they are at their most vulnerable state. That is a golden opportunity to own the customer for life,” DiJulius said. “You come to the rescue, solve their problem, make them realize it will get better because you care, and that tomorrow is going to be better because you provided them with a plan. In doing so, you become a friend who cares about them.”

The Five E’s of Patient Interaction When someone approaches the pharmacy counter, greet the person within three seconds, suggests customer service expert, author and consultant John DiJulius. As you begin to interact with the patient, be sure to incorporate the five E’s.

About the Expert John DiJulius is the founder and CVO (chief visionary officer) of The DiJulius Group, a customer experience consulting firm. As a speaker, author, entrepreneur and customer service authority, DiJulius teaches companies around the world about the importance of delivering a world-class customer experience. DiJulius is passionate about redefining customer service, and firmly believes that it can be a business’ greatest advantage.

Well-known organizations across America use his philosophies to mold their customer service models, yet DiJulius is dedicated to the small business, as well. Recently, DiJulius published his new book, “The Customer Service Revolution,” which is available now.

Improve your customer service skills and check out nine things to never say to patients on page 14.

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SOLUTIONS

What Not to Do

Nine things you should never say to your patients, according to customer service expert, author and consultant John DiJulius.

1. “No problem.”

This statement is meant to convey to your patients that helping them isn’t a problem for you—and that’s exactly why you shouldn’t say it. Saying this makes it about you, when it should always be about the patient. Try to answer a request with “my pleasure” or “absolutely.” These responses are much more patientoriented, and much more professional.

2. “No.” This word should be completely eliminated from your vocabulary. Don’t focus on what you can’t do. Explain to your patients what you can do instead.

3. “I don’t know.”

If a patient asks you something you don’t know the answer to, don’t be willing to leave it at that. You can say, “I don’t know” as long as it’s followed by, “I will be happy to find out for you.”

4. “It’s not our policy.”

Using this phrase takes away from the personal experience that patients expect in independent community pharmacies. Avoid sticking to policies, and instead work with your patients to find individual solutions.

5. “I had no idea; they do that all the time.”

Don’t blame a problem on someone else, even if the problem at hand is the fault of another employee, your wholesaler, insurance companies or others.

If a patient is approaching you, then it’s your responsibility to resolve the issue with the patient now, and address the problem internally later.

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6. “That’s not my job.”

Don’t tell your patients what they need to do to solve a problem when you can do it for them. If there’s an issue with their prescription, call their doctor for them. Here is where your customer service can shine.

7. “Can you explain what happened to me again?”

Don’t make patients repeat themselves. Encourage employees to take ownership of each problem they encounter until it’s resolved. If they need your help, your employees, not the patient, should be recounting the problem.

8. “Do you remember who you spoke with last time?”

Questions like this make your patient do the work for you.

Keep records of who talks to patients, when and what about so that you’re always prepared to follow up.

9. “It’s not our fault.”

Problems will arise in your pharmacy that aren’t your fault. Maybe your patient’s insurance isn’t covering the medication, or a co-pay for a necessary medication is more than your patient can afford. While it isn’t always your fault, it’s always your problem. Work with your patients to find a solution.

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Metrics to Know The numbers pharmacy businesses need to be measuring

By Kirsten Hudson

Pharmacists are more likely to think in terms of health conditions and medications than in terms of assets and sales. But independent community pharmacies today are also in the retail business and need to think like retailers. Considering income statements and balance sheets just as much as health care and outcomes can make or break your business.

“It’s important for pharmacy owners to understand the numbers side of the business so they can gauge whether or not they’re succeeding,” said Clark Balcom, Senior Vice President and Chief Operating Officer of PBA Health, a pharmacy services organization that provides business products and services for independent community pharmacies. “They—like all businesses—need to recognize trends and learn when to make changes in their operations and strategies. Only by regularly looking at the numbers are they able to do that.”

The market is tough for pharmacies. “Pharmacy is such a restricted business today with respect to how they get paid,” Balcom said. “They have to learn how to operate on thin margins. Successful independent pharmacies will do that by being enterprising—they’ll be looking to grow and expand their businesses.”

Tracking and measuring meaningful metrics about your business can give you the insight you need into your pharmacy’s performance. Whether you’re communicating with bankers, suppliers, prospective buyers or employees, these metrics provide an answer to an all-important question: How healthy is your business?

Get ready to dive into your numbers. Clark Balcom, pharmacy business expert, explains the top categories of metrics pharmacies should pay attention to, how to calculate them and what to do to improve your numbers.

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Sales Volume & Growth Businesses have to expand and grow in order to succeed. “When you think about growing sales, there are only so many ways you can do that,” Balcom said. “Start looking into adding clinical services in conjunction with prescription growth.

It’s also important to let key employees know that growth is always an expectation.”

Average Prescriptions per Day For a more detailed look at total prescriptions, calculate average prescriptions per day.

How to calculate: Total Prescriptions (for a month) Number of Business Days (in that month)

Total Prescriptions In independent community pharmacies today, 90 percent of sales are from prescriptions, so growing prescription sales is a must. This metric indicates the total number of prescriptions filled by the pharmacy and successfully picked up by the patient. This number showcases whether the business’s volume is expanding or contracting.

Want this number to:

Want this number to:

Average Return-to-Stock Prescriptions per Day For a more detailed look at total return-to-stock prescriptions, calculate average return-to-stock prescriptions per day.

How to calculate: Total Return-to-Stock Prescriptions (for a month) Number of Business Days (in that month)

Total Return-to-Stock Prescriptions This number reflects the total number of prescriptions filled by the pharmacy but never picked up by the patient. It means lost sales. “More important than the lost sale, however, is the potential clinical problem,” Balcom said. “This number can be an early indicator of a potential disruption in a patient’s proper use of medication or adherence.” And, you have Star Ratings to consider. “Within certain therapeutic categories, the Centers for Medicare & Medicaid Services (CMS) will consider a disruption in refills a negative in terms of how you get measured by plans, so now reimbursement and network participation can be increasingly at risk,” he said.

Want this number to:

Total Sales This figure is the sum of total revenues, including reimbursements, co-pays and other store sales.

Want this number to:

Total Lost Return-to-Stock Sales Want this number to: This number reflects the total unrealized revenues attributed to filled prescriptions that patients didn’t pick up.

How to improve: Filling prescriptions not picked up by patients is wasting resources. Look into improving total prescription rates, enhancing patient compliance and clinical programs, and improving inventory control.

Want this number to:

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Average Sales per Day Every month, look at your pharmacy’s average sales per day.

How to calculate: Total Sales (for a month)

Prescriptions & Sales per Top Prescribers Keep track of the total number of prescriptions and Successful sales coming from each prescriber. pharmacy owners (and their employees) know the prescriber relationships that drive their businesses, and they work diligently to build and preserve those Balcom said. relationships,

Number of Business Days (in that month)

Want this number to:

Average Lost Return-to-Stock Sales per Day Every month, look at your pharmacy’s average lost return-to-stock sales per day.

How to calculate: Total Lost Return-to-Stock Sales (for a month) Number of Business Days (in that month)

Want this number to:

Marketing & Sales Expense (as a percentage of sales) This metric is a key performance indicator and goes beyond tracking sales or profits. It looks at what you’re doing to cause sales to happen in the first place.

Prescriptions & Sales per Top Patient It’s important to know the total number of prescriptions and sales coming from each patient.

“You have to know who your best patients are,” Balcom said, “and work carefully to build trust, provide great care and go the extra mile to ensure that those patients are highly satisfied with your services.”

Profitability Profitability translates to your earning power. For example, do you have enough earning power to get a loan, or for someone to be interested in buying your business? Keep in mind that profitability doesn’t mean cash flow. “You can end up with something that generates a lot of margin, but if it doesn’t convert to cash in a proper timeframe, you can still go belly up,” Balcom said. “When you look at profitability, start at the very top of the business and simply look at how you’re doing overall,” he said. Use the following metrics.

Gross Profit Margin (dollars) This metric indicates what’s leftover from sales to cover fixed costs, other operating expenses, interest and taxes.

In pharmacy, it’s primarily all of your sales minus what it costs to buy the inventory to support those sales.

How to calculate: Total Sales — Total Cost of Goods

This number should be: No less than 3% of sales

How to improve: Growing and expanding your business will only happen through investing in marketing. “You need to have someone out there calling on doctors and marketing programs and services to the public,” Balcom said. “You have to have someone looking at market demographics and identifying things like, ‘Should I be in diabetics?’

Somebody has to carry that flag and owners have to make the investment.” Your competitors, namely national chain pharmacies, are investing huge dollars in marketing; you need to participate, too.

Gross Profit Margin Rate (percentage) This metric reflects the percentage of every $1 in sales that’s available to cover fixed costs, other operating expenses, interest and taxes. For example, if a pharmacy has a gross profit margin rate of 25.74 percent, then $0.2574 of every $1 in sales is available to cover these costs.

How to calculate: Gross Profit Margin Total Sales This number should be: More than 25% for retail pharmacy

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Inventory Cost of Goods (as a percentage of sales) This metric reflects the percentage of every $1 in sales that’s consumed by inventory expense. For example, if a pharmacy’s inventory cost of goods as a percentage of sales is 74.26 percent, then $0.7426 of every $1 of sales is consumed by inventory expense. This is the reciprocal view of gross profit margin rate.

How to calculate: Total Inventory Cost of Goods

Average Inventory Cost per Prescription Category When reviewed in combination with the average fee per prescription, this metric can give you insight into factors that affect your margin performance. For example, pharmacies can probe a decrease in margin and determine if it’s due to a declining trend in category price, or to an inflationary trend in category supplier pricing (or both).

How to calculate: Total Inventory Cost (in a given category)

Total Sales Total Number of Prescriptions (in a given category) This number should be: Less than 75% for retail pharmacy

Average Fee per Prescription Category This metric looks at the average fee per prescription in a given category, such as all prescriptions, brand only, generic only, over-the-counter only, cash only, all third party prescriptions or by individual insurance plan.

“Ultimately, the numbers need to tell you if you can afford to be in that business,” Balcom said.

“That’s never an easy decision for pharmacies. They don’t want to lose any patients, but if your average fee per prescription for a certain insurance plan is significantly negative, then it’s possible that you can’t afford to be in that business.”

How to calculate: Total Sales (in a given category)

Productivity & Operating Efficiency As a retail business, you need to operate at maximum efficiency. “Pharmacies have to know what hours of the day it makes sense to have certain staffing levels,” Balcom said. “They have to know what days of the week they should be open—and when. And, they have to pay attention to the numbers in order to see those things.”

Make sure to closely watch important expense categories for pharmacies, such as payroll, general operating expenses and rent. Here’s how.

Payroll Expenses per Employee Pharmacies have to hold the line on operating expenses, and the biggest one is payroll, Balcom said. This metric represents the average payroll expense per employee.

Total Number of Prescriptions (in a given category)

How to improve: Look beyond your storefront, and think and act strategically. “There comes a point where the business itself can’t do all of the things necessary for the business to succeed,” Balcom said.

It’s important to look beyond the local level and see what you can do more broadly. “If they’re seeing reimbursements consistently go down year over year, maybe they need to stop and think, ‘Why is that happening?,’ ‘What’s empowering the PBMs to do that?,’ ‘How do I become a part of something bigger to change that part of my industry?’ They have to question relationships that exist in the industry and consider what they can do to help turn that tide.”

How to calculate: Total Payroll & Personnel Expenses Number of Full-Time Equivalent Employees

Sales per Payroll Dollar Expended This metric represents the total dollars in sales generated for every dollar expended for payroll and personnel expense.

How to calculate: Total Sales Total Payroll & Personnel Expense

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Payroll Expense (as a percentage of sales) “Payroll is huge, and paying close attention to payroll with respect to sales is a big part of efficiency,” Balcom said. This metric represents how much of every dollar in sales is consumed by payroll and personnel expense.

Rent Expense per Square Foot “Rent is always a significant expense in pharmacy that owners have to pay close attention to,” Balcom said. This metric represents annual rent on a per square foot basis.

How to calculate: Total Rent

How to calculate: Total Payroll & Personnel Expense

Total Square Footage

Total Sales Rent Expense (as a percentage of sales) This metric represents how much of every dollar in sales is consumed by rent expense.

Gross Margin per Payroll Dollar Expended This metric represents the total dollars of gross margin the pharmacy generates for every dollar expended for payroll and personnel expense.

How to calculate: Total Rent Total Sales

How to calculate: Gross Profit Margin (dollars) Total Payroll & Personnel Expense

Total Operating Expenses (as a percentage of sales) This metric represents how much of every dollar in sales is consumed by operating expenses.

How to calculate: Total Operating Expenses Total Sales

Sales per Pharmacy Square Foot This metric represents the total dollars in sales generated for each square foot of “facility asset” used to support sales.

How to calculate: Total Sales Total Square Footage

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Cash Flow, Working Capital & Asset Management Efficiency Managing your pharmacy’s cash flow efficiently means having plenty of cash on hand to pay your bills, employees and suppliers. “Cash is king to every business,” Balcom said. You need to make sure you don’t have cash tied up unnecessarily, and you need to align your receivables cycle with your payables cycle. “When you sell something, you want to collect cash faster than you have to pay your suppliers,” he said. Paying attention to the following metrics can help.

Aged & Past Due Accounts Receivable Pharmacies need to make sure they’re collecting cash for credit sales and paid claims as soon as possible. A regular review of aged receivables, and especially past-due receivables, is a must. Pay attention to the number of days it takes before a receivable actually gets converted to cash.

Accounts Receivable Turnover This metric reflects the average number of times accounts receivable turns per year. A healthy pharmacy will always turn accounts receivable measurably faster than accounts payable.

How to calculate: Total Annualized Portion of Sales Coming from Credit Sales or Insurance Claims (from the income statement)

Inventory Turnover This metric reflects the average number of times a pharmacy turns its inventory in a given year.

How to calculate: Annualized Inventory Cost of Goods (from the income statement) Total Inventory (from the balance sheet) This number should be: More than 10

Total Accounts Receivable (from the balance sheet) Example: If 90 percent of the pharmacy’s sales come from insurance and in-house charge accounts, then this number would be calculated as: Total Sales x 0.90

Inventory Turn Days This metric captures how many days it takes, on average, to turn the pharmacy’s inventory. Another way to look at it is, how many days of on-hand inventory is the pharmacy keeping on the shelf ?

Total Accounts Receivable This number should be: More than 18

How to calculate: 365 (number of days in a year) Inventory Turnover

Accounts Receivable Turn Days This metric captures how many days it takes, on average, for credit sales and insurance claims to convert to cash.

How to calculate: 365 (number of days in a year)

This number should be: Less than 37 days

Accounts Payable Turnover This metric reflects the average number of times accounts payable turns per year. A healthy pharmacy will always turn accounts payable slower than accounts receivable.

Accounts Receivable Turnover This number should be: Less than 20 days

Total Inventory It comes straight from the balance sheet and requires no calculation, but it’s still important to keep a close eye on it.

When you see a bottle of inventory, pretend you’re looking at a stack of cash because that’s what it is: cash sitting on a shelf, Balcom said.

How to calculate: Annualized Inventory Cost of Goods (from the income statement) Total Accounts Payable (from the balance sheet) This number should be: Less than your Accounts Receivable Turnover

Total Inventory (as a percentage of sales) This number is the same as Inventory Cost of Goods (as a percentage of sales) under Profitability, except you look at it from the perspective of cash flow and working capital efficiency.

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Accounts Payable Turn Days This metric captures the average number of days the pharmacy is taking to pay suppliers. Pharmacies need to make sure they collect cash (or convert credit sales to cash) faster than they pay their suppliers. This is called aligning the pharmacy’s accounts receivable and accounts payable cycles.

How to calculate: 365 (number of days in a year) Accounts Payable Turnover This number should be: More than your Accounts Receivable Turn Days

Sales to Assets (Asset Turnover) Pharmacies have assets—buildings, computers, counters, shelves—to produce sales. If you’re buying assets that don’t support sales, then you’re already violating a golden rule of business. This metric represents how many sales dollars the pharmacy is generating for every dollar that’s invested in assets.

How to calculate: Annualized Total Sales (from the income statement)

Solvency, Stability & Liquidity These measures determine your pharmacy’s “staying power.” Creditors look at the following metrics to see if your pharmacy has the right balance between debt and equity. They check to see if you have sufficient assets to cover all of your liabilities; if you have earnings in excess of the interest you owe on debt; and how your assets are paid. For example, are your assets paid out of the equity of the business or are they financed with debt? “Pharmacies need to look at their assets and liabilities and the operating performance of the business each year to determine if it’s a stable business,” Balcom said. “They should also be looking at monthly and annual trends to make sure things are heading in the right direction.”

Current Ratio This metric reflects how many dollars of current assets the pharmacy has to pay for each dollar of current liabilities.

How to calculate: Current Assets Current Liabilities This number should be: More than 2

Total Assets (from the balance sheet)

How to improve: Always pay attention to how well your assets support sales, and to how well those assets support profitability or returns on those sales.

Asset efficiency is a very important measure because if you’re not doing a good job, it probably means you’re buying a bunch of wasted assets. You need to stop doing that and get rid of those you already have, Balcom said.

Quick Ratio This metric reflects how many times the pharmacy can immediately cover its current liabilities if it had to.

How to calculate: Cash + Accounts Receivable Current Liabilities

Return on Assets This metric represents how many operating profit dollars the pharmacy is generating for every dollar invested in assets.

How to calculate: Operating Profit (earnings before interest and taxes from the income statement) Total Assets (from the balance sheet)

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This number should be: More than 2

Debt to Equity (Net Worth) Ratio This metric reflects what is commonly referred to as “bankers’ or creditors’ risk.”

How to calculate: Total Liabilities Total Net Equity This number should be: Less than 2

Debt Ratio This metric reflects the percentage of pharmacy assets that are financed by debt.

How to calculate: Total Liabilities Total Assets This number should be: Less than 50%

Equity Ratio This metric reflects the percentage of pharmacy assets that are financed by equity.

How to calculate: Total Equity Total Assets This number should be: More than 50%

Times Interest Earned This metric reflects how many times the pharmacy’s annual earnings exceed the interest payments the pharmacy owes.

How to calculate: Operating Profit (earnings before interest and taxes from the income statement) Annualized Interest Expense (from the income statement) This number should be: More than 7

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As you measure your pharmacy’s metrics, keep in mind that numbers are limited unless you use them to improve your business. “They’re historical by nature,” Balcom said. “They tell you what has happened, not what’s going to happen. You have to take them and do something.”

Tracking the right numbers consistently and responding to them will set you up for creating a more successful business. And it’s not as hard as you might think.

What’s Next?

If you’re interested in improving your metrics—and learning to better respond to them—take a look at ProfitGuard, a service from PBA Health that can help you manage your business better. Learn more at pbahealth.com/profitguard.

Tracking 101 When it comes to tracking your metrics, spreadsheet software is a pharmacy’s best friend. Use these tips to make the most of your spreadsheets.

About the Expert Clark Balcom is the Senior Vice President and Chief Operating Officer of PBA Health, a pharmacy services organization dedicated to independent community pharmacies. Balcom is committed to advancing the role of community pharmacy in the delivery of convenient, affordable and essential health services. He is a financial, business and technology integration expert. He began his career with Accenture and spent many years aligning strategies, people, processes and technology in the delivery of multiple industry and corporate solutions for Fortune 500 companies. Since joining PBA Health in 1996, Balcom has been a leader in the development of the company’s principal products and services. He remains active in the daily innovation and delivery of solutions that help independent community pharmacies succeed.

• Color-code your metrics. Use the standard colorcoding of red to designate “bad” and black to designate “good.”

• Update regularly. Track your metrics on a monthly basis. That way, you can look quarterto-quarter, semester-to-semester and yearto-year. It may also be helpful to compare a month, quarter or semester to the same period in the previous year.

• Use charts and graphs. Visual representations can make recognizing upward and downward trends easier.

• Include benchmarks. Incorporate up-to-date industry benchmarks next to each metric, so you can see if you’re performing better or worse compared to other pharmacies. (You can easily find benchmark data in the annual NPCA Digest from the National Community Pharmacists Association.)

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Your Business Profile Fill in this worksheet to get an overview of the health of your pharmacy business.

Sales Volume & Growth

Gross Margin per Payroll Dollar Expended $

Total Prescriptions

Total Operating Expenses

Total Return-to-Stock Prescriptions

Sales per Pharmacy Square Foot $

Average Prescriptions per Day

Rent Expense per Square Foot $

Average Return-to-Stock Prescriptions per Day

Rent Expense

% of sales

% of sales

Total Sales $ Cash Flow, Working Capital Total Lost Return-to-Stock Sales $

& Asset Management Efficiency

Average Sales per Day $

Aged & Past Due Accounts Receivable $

Average Lost Return-to-Stock Sales per Day $

Accounts Receivable Turnover

Marketing & Sales Expense

Accounts Receivable Turn Days

% of sales

Prescriptions per Top Prescriber

Total Inventory $

Sales per Top Prescriber $

Total Inventory

Prescriptions per Top Patient

Inventory Turnover

Sales per Top Patient $

Inventory Turn Days

Profitability

Accounts Payable Turnover

Gross Profit Margin $

Accounts Payable Turn Days

Gross Profit Margin Rate Inventory Cost of Goods

% % of sales

days

% of sales

days

days

Sales to Assets (Asset Turnover) $ Return on Assets $

Average Fee per Prescription Category $

Solvency, Stability & Liquidity

Average Inventory Cost per Prescription Category $

Current Ratio

Productivity & Operating Efficiency

Quick Ratio

Payroll Expenses per Employee $

Debt to Equity (Net Worth) Ratio

%

Sales per Dollar Expended $

Debt Ratio

%

Equity Ratio

%

Payroll Expense

% of sales

Times Interest Earned

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SPOTLIGHT

Progressive Pharmacy How Bypass Pharmacy focuses on innovative solutions to stay successful Bypass Pharmacy, an independent community pharmacy with three locations in southern West Virginia, is always looking for ways to improve. The pharmacy consistently invests in new technology and develops pharmacy services with patients’ needs in mind.

“I think in order to experience growth and success, you can’t just open a pharmacy and fill prescriptions,” said Kelly Dyke, pharmacy program director at Bypass Pharmacy. “Our pharmacists and owners are very proactive.”

The first Bypass Pharmacy location opened in Beckley, West Virginia, in 2010. Since then, the pharmacy has added two locations—one in Beckley and one in Beaver, West Virginia. The pharmacy is in a highly competitive market, surrounded by national chain pharmacies and other independents.

Bypass Pharmacy’s 22 employees, including six pharmacists, are dedicated to serving their community and offering personalized fast and friendly service.

“We believe in superior customer service, face-toface solutions and we employ forward-thinking business practices,” Dyke said. “We try to offer services that can’t be matched other places.”

Keeping up with the competition With competition in the area, Bypass Pharmacy recognized that it needed to expand its business hours in order to stay relevant for busy patients.

“With market conditions, I don’t think that independent pharmacies can afford to be open just five days a week,” said Sid Ilangovan, R.Ph., president and owner of Bypass Pharmacy. “We need to be on par with the chains.” Sid Ilangovan co-owns the pharmacies with his brother, Ula Ilangovan, R.Ph. Sudhir Rajoure, Pharm.D., is part-owner of one of the pharmacy’s locations.

Bypass Pharmacy has two locations that are open seven days a week. One is adjacent to a hospital and surrounded by three national chain pharmacies.

That location also features late hours. The

pharmacy stays open until 9 p.m. on weekdays and 7 p.m. on weekends. Staying open later at that location has been very helpful for patients visiting the emergency room, Dyke said.

Bypass Pharmacy’s other two locations stay open until 7 p.m. on weekdays, and they open from 10 a.m. to 3 p.m. on weekends.

Extended hours have paid off with new patients. Dyke said patients have moved their prescriptions to Bypass Pharmacy after driving by late at night and noticing that the pharmacy was open.

Tech-minded pharmacy Technology and data play an important role in keeping Bypass Pharmacy on track. Sid Ilangovan has a master’s degree in Information Systems and an interest in leveraging information technology (IT) to benefit health care.

Two years ago, Ilangovan said, Bypass Pharmacy hired an IT staff member to analyze the pharmacy’s data, such as tracking drug margins.

Ilangovan pointed out that in a regular workflow, pharmacists and technicians don’t have time to closely watch the profitability of each prescription. Dedicating a staff member to manage the pharmacy’s data helps them monitor daily price fluctuations on generics, track inventory and order right.

“We have to stay on top of it every day,” Ilangovan said.

Most of all, tracking this data helps them buy wisely, which Ilangovan said is key to success for independent pharmacies today.

Bypass Pharmacy also uses technology to communicate with patients and to boost efficiency.

Robots and pill counters help fill scripts, and the pharmacy uses text alerts to inform patients when their prescriptions are ready. IVR machines allow patients to request refills 24 hours a day.

“We consistently check our capabilities against the leading chains and make sure we’re on par with their capabilities,” Ilangovan said.

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SPOTLIGHT

Bypass Pharmacy has three independent community pharmacy locations in West Virginia, including this one in Beaver, West Virginia. All of the pharmacy’s locations include extended hours to better serve patients.

Currently, the pharmacy is working on a project to update its website and to make it mobile responsive across all devices.

A community focus As part of a small neighborly community, Bypass Pharmacy recognizes that being active in the public sphere is essential to a successful business.

“Without the local community we are nothing,” Ilangovan said. “Being in a small town, we have great visibility, and we bump into our customers wherever we go.”

Bypass Pharmacy participates in local health fairs and support groups, and attends women’s and caregiver events. The pharmacy also sponsors local sports teams and plans to work with schools to educate children about prescription drug safety.

The pharmacy’s neighborly attitude toward the community is essential for business. Ilangovan said he encourages his employees to view everyone as a potential customer and to treat everyone the way they would want to be treated. “We approach everybody with compassion and empathy,” he said.

And that’s good promotion for the pharmacy. “Our staff is our best marketing tool because they share our vision for success by offering superior unmatched customer service,” Dyke said. “We know our customers by name, and most of the time, we know their family, and we stand with them to celebrate the good times, and offer them a helping hand during the bad.”

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Community outreach is part of the pharmacy’s efforts to cultivate trust and goodwill with people before asking for their business. “You want to build those relationships first, so they start coming to you,” Ilangovan said.

Building relationships Part of Bypass Pharmacy’s success comes from working to build relationships not only with patients but also with area physicians.

The pharmacy’s staff regularly visits physicians’ offices. “We want to make sure they know we’re open seven days a week, and we provide them with information about our drive-thru, free delivery, free mailing service and compounding,” Dyke said. “Those are big areas of interest right now.”

Office visits help forge open communication between the pharmacists and physicians. “We stay in touch with our local physicians and anytime our pharmacists have a question about a prescription, or a doctor has a question about a drug, we don’t hesitate to pick up the phone and call each other,” Dyke said.

New service offerings Diversifying its services is important to Bypass Pharmacy. Some of the services the pharmacy offers include immunizations, Medication Therapy Management (MTM), compounding, compliance packaging and medication flavoring. The pharmacy is also equipped to dispense specialty medications.

SPOTLIGHT Dyke said patients also appreciate the preventative care strategies they provide.

As the pharmacy recognizes needs within its community, the owners and staff work to develop services that address those needs and help patients live healthier lives.

One need they recently identified was weight loss.

“West Virginia tops the charts with obesity and health issues,” Dyke said. “We had a lot of patients coming in who had an interest in losing weight and getting healthier.”

Bypass Pharmacy recognized this as an opportunity to help the community and started a weight loss program.

The pharmacy is using TAKE CHARGE®, a lifestyle modification program made for independent pharmacies.

This program helps patients get healthy, but it also helps boost the pharmacy’s bottom line. Bypass Pharmacy sells nutritional shakes and snack bars offered through TAKE CHARGE, and also charges a fee for the initial and follow-up consultations with patients to check body fat index and other factors.

continue its growth by enhancing outreach programs and forging partnerships with community stakeholders, all while maintaining its commitment to customer service and helping patients.

“As an independent pharmacy, you want to make a profit and you want to try to promote good business, but it’s not all about profit,” Dyke said. “We want to make sure the community knows we care about them and that we care about their health.”

“At the end of the day, when we can make a difference in a life, whether it’s a child, senior citizen, or terminally ill patient, that reward is more than enough,” she said.

A popular service One of Bypass Pharmacy’s most popular services is diabetes counseling and education, Dyke said.

The pharmacy offers free one-on-one or group classes to educate patients about general diabetes topics, to recommend blood sugar goals and to inform them about blood sugar management.

“We educate patients on the importance of diet, exercise, and medication compliance, and we coordinate with their physicians for the correct pharmacotherapy,” Dyke said.

Bypass Pharmacy is also certified and contracted with West Virginia’s state employee insurance program (WV PEIA) to offer face-to-face diabetes counseling.

As part of the program, patients periodically come to the pharmacy for consultations. During the consultation, the pharmacist will review the patient’s lab work, gather information from specialists and primary care physicians, and talk with the patient about adherence to his or her dietary and exercise recommendations. “We’re kind of the liaison between all of their specialists and their primary care physician,” Ilangovan said.

This program is a win-win for patients and Bypass Pharmacy. Patients who participate in the program have no co-pay for their diabetes medication, and Bypass Pharmacy is compensated for providing counseling.

Overall, Ilangovan said it’s a successful program.

Moving forward In the future, Dyke said Bypass Pharmacy hopes to

Bypass Pharmacy is always looking to diversify its services. Currently, the pharmacy offers compounding, compliance packaging, immunizations, medication flavoring, Medication Therapy Management (MTM) and more.

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MONEY

5 Accounting Mistakes to Avoid Don’t overlook these important accounting practices Accounting is an essential aspect of your business, but as a pharmacist, you might feel in over your head. Even if it seems like you’re getting by from month to month, you’re probably not maximizing your potential outcomes. Worstcase scenario, your lack of accounting expertise could be putting your pharmacy at risk.

“The pharmacy owner who believes he can be an accountant as well as a pharmacist spends precious hours stressfully doing the books that most often end up inaccurate,” said Phil Reck, a mentor with the Service Corps of Retired Executives (SCORE), a partner of the U.S. Small Business Administration that counsels America’s small business owners.

Your accounting needs to be accurate to not only handle your day-to-day cash flow, but also, to be able to set long-term goals for your pharmacy.

Accounting is the “language of business,” and if utilized correctly, can give you important insights into your pharmacy’s financial health. If managed incorrectly, however, it can cause your business to sink before you even know what’s happening.

Here are some common accounting mistakes small business owners make. Avoiding these in your pharmacy can set you up for success.

Not knowing where you stand If you don’t know the state of your finances, or if you aren’t using reliable, accurate numbers to guide you, then you might as well be driving blind. Without this knowledge, you can’t set goals for your pharmacy, find areas to improve on or even see what you’re doing right.

“Eventually,” Reck said, “the owner will find the business is dying a slow death.”

It’s important to have reliable numbers, and to know how to use them. For example, you can use resources such as the NCPA Digest from the National Community Pharmacists Association. The digest highlights independent pharmacy financial trends, so you can see how your pharmacy’s numbers stack up.

Not having a formal system in place Your accounting procedures are the foundation of your pharmacy business. Without a system in place, your business lacks the structure it needs to operate efficiently and effectively.

“I call this managing your system by the seat of your pants,” Reck said. “You need to make a time commitment to put proper systems in place, and a dollar commitment to acquire the right system to do the job.”

Know what you need to do, and how and when you’ll do it.

Not keeping track of expenses If you aren’t keeping track of your expenses, then you can’t properly manage your business. You need to make sure that you’re recording all of your spending, and saving all receipts. Additionally, it’s important to keep your personal and business accounts separate.

Not properly recording your spending might not directly hurt your business, but it will cost you eventually.

“Small business owners without proper record keeping pay income taxes they wouldn’t have had to pay if they’d captured all their expense deductions,” Reck said.

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MONEY

Not staying on top of receivables and reimbursements Monitoring money coming in is just as important as watching what goes out. And as a pharmacy owner or manager, you aren’t only keeping track of payments from your patients for your products and services, but reimbursements from their insurance, too.

“As in all health-related industries, collecting payment from the client’s insurance can be very challenging,” Reck said. “Lack of a proper system to track your outstanding receivables and reimbursements will result in a loss of thousands of uncollected dollars.”

Not hiring a professional Sometimes, the most important part of managing your accounting is knowing when to ask for help.

“Accountants don’t attempt to fill their own prescriptions,” Reck said. “They understand the value of using a pharmacist.” Accountants, just like pharmacists, are experts in their field and they can save you a great deal of time and money in the long run.

A professional accountant can serve as a valuable business advisor, but make sure you find someone who is a good fit. You need to meet with your accountant regularly, and make sure he or she speaks in terms you understand.

Then, you’ll have someone who’s more than just a bookkeeper and tax preparer.

“Quite often, the owner sees only costs and not the value,” Reck said. But when it comes to your accounting, it pays to look beyond the upfront costs to see the future value of your investments.

Elements | pbahealth.com/elements

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OUTLOOK

Prescription Fraud Tips to identify forgeries and fraudulent prescriptions

By Kathleen Barbosa

Prescription drug abuse affects millions of people in America, and as an independent community pharmacist, you play an important role in curbing this dangerous and expensive epidemic.

Over the past few decades, prescription drug abuse has grown significantly. Today, it’s the second-most popular category of illicit drug abuse, according to the Substance Abuse and Mental Health Services Association’s annual report, the National Survey on Drug Use and Health.

And, prescription drugs account for 45 percent of drug overdose deaths, which is more than cocaine, heroin and methamphetamine combined, according to the Centers for Disease Control and Prevention (CDC).

The abuse of prescription drugs is costing the U.S. government—and the health care system—billions. It’s estimated that fraudulent prescriptions and prescription drug abuse costs the health care system $42 billion and the criminal justice system $8.2 billion each year.

With mounting abuse and increasing attempts to obtain prescription drugs illegally, pharmacists need to understand how they can keep their businesses and their patients safe from drug diversion.

Know what to look for Pharmacists play an important role in battling prescription drug abuse because of their proximity to fraudulent scripts.

“They’re on the front lines because they’re the ones seeing the prescription first—long before law enforcement,” said Karin Caito, a spokesperson for the Drug Enforcement Administration (DEA).

She suggests that pharmacists learn their prescribers’ and patients’ typical patterns.

Pay attention to how the physicians in your area typically prescribe. Learn the common medications they prescribe, their refill patterns and even their handwriting, to clue you in when any of these are out of the ordinary.

If you notice a physician suddenly prescribing a commonly abused drug that he doesn’t normally

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Ways to Recognize Non-Legitimate Scripts • The prescriber writes significantly more prescriptions (or in larger quantities) compared to other practitioners in the area.

•

The patient appears to be returning too frequently.

(For example, a prescription that should last a month in legitimate use is being refilled on a biweekly, weekly or even a daily basis.)

• The prescriber writes prescriptions for antagonistic drugs, such as depressants and stimulants, at the same time. (Drug abusers often request prescriptions for "uppers and downers" at the same time.)

•

The patient presents prescriptions written in the names of other people.

• A number of people appear simultaneously, or within a short time, all bearing similar prescriptions from the same physician.

• People who aren’t regular patrons or residents of the community show up with prescriptions from the same physician.

Source: Pharmacist’s Guide to Prescription Fraud, Drug Enforcement Administration

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OUTLOOK

prescribe, such as hydrocodone, oxycodone or benzodiazepines, you know to be suspicious.

You should also be on alert for patients who bring in prescriptions from physicians or hospitals that aren’t in your area, or if they try to fill scripts that are out of the ordinary for them.

If you see any of these troublesome signs, or if you’re uncomfortable filling a prescription, the DEA recommends these courses of action.

First, call the physician or the hospital that prescribed the medication to confirm the script and ask the patient for identification. If you think the script is forged or that the medication will be abused, refuse to fill the script and call the local police department.

If you think you’ve recognized a pattern of prescription abuse, you should also contact your state board of pharmacy or the local DEA field office.

Abuse trends Be sure to pay attention to drug abuse trends today. One trend, Caito noted, is using older Americans to obtain illegal drugs. Abusers will either steal prescription medication or offer to buy it from older patients who have a legal prescription.

Caito said that often, these older patients don’t realize they’re not getting all of their medication or that they even had a prescription for those drugs.

Also, sophisticated computer systems today enable drug abusers to scan and replicate scripts and physicians’ signatures. This high-quality reproduction results in realistic-looking forged scripts, and the ability to produce more scripts.

Some patients are also crossing state lines to fill fraudulent prescriptions or to fill prescriptions for abuse.

Be sure to pay extra attention to out-of-state scripts.

“We suspect that abusers think there isn’t a monitoring program that links between states,” Caito said. Every state, except Missouri, has its own monitoring program that links doctors’ offices and pharmacies. The states’ systems are also connected.

If you follow common sense, sound professional practice and proper dispensing procedures, you’re on your way to putting proper safeguards in place to prevent drug abuse in your community.

Drug abuse, in numbers 52

– Million people have used prescription drugs for nonmedical reasons at least once 20 – Percent of abused prescription drugs obtained through a script are filled at a pharmacy 1 – Controlled prescription drugs are increasingly the choice of first-time users

Sources: The Centers for Disease Control and Prevention; National Institute on Drug Abuse; National Survey on Drug Use and Health

5 Ways to Identify Forgeries 1. Prescriptions that feature handwriting that looks too good (for example, the physician’s handwriting is too legible) 2. Quantities, directions or dosages that differ from usual medical usage 3. Prescriptions or directions that don’t comply with standard abbreviations or appear to be copied from textbooks 4. Prescriptions that appear to be photocopied 5. Prescriptions written with different colors of ink or written in different handwriting Source: Pharmacist’s Guide to Prescription Fraud, Drug Enforcement Administration

Elements | pbahealth.com/elements

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NOTES

Inside Your Facebook Page Discover what your pharmacy’s Facebook page can tell you Are you getting the most you can out of your pharmacy’s Facebook page? Understanding your fans and how they interact with your page can give you an advantage when deciding what and when to post.

You don’t have to guess blindly about what your fans want to see.

Information to help you is already available. It’s called Facebook Insights, and you can use it to monitor your Facebook page.

With this tool, you can track your most popular posts, your fans’ demographics, your page’s overall audience and more.

If you’ve never looked at the Insights feature, now’s your chance to learn more about your Facebook page and how to improve it. Here’s a breakdown of the information provided on Facebook Insights.

Overview This section is a snapshot of the past week. It displays your page’s total and new ‘likes,’ the number of people who saw your posts, and your page’s engagement based on ‘likes,’ comments, shares and clicks. The overview is a great way to quickly glance at the past week’s performance, so you can see what’s working—and what’s not.

38

Elements | pbahealth.com/elements

Likes This section displays the current number of people who have ‘liked’ your page. It also lets you know when a fan ‘unlikes’ your page.

You’ll also see where your ‘likes’ are coming from, so you can determine if your fans are finding your page on a mobile device, through a paid promotion (such as a suggested page,) or by other means.

Reach This section displays a post’s reach, or the number of people who saw the post. That photo you posted letting patients know you have flu shots? You can see how many people saw it in this section. You can also view reports of positive engagement, including ‘likes,’ comments and shares of your posts, as well as negative engagement, such as users hiding your post or ‘unliking’ your page.

Visits This section allows you to click on a date and see what your users are looking at on your page, such as your Timeline or reviews. It tracks when your page is mentioned in a post, or when traffic is driven to your page from outside of Facebook, such as from a mention on Yelp or another website.

Posts This section highlights when your fans are most likely to be online, so you can post at the most popular hours. It also documents what types of posts, such as pictures, links or status updates, receive the most engagement from your users, so you’ll know what to post more of.

People This section helps you get to know who’s engaging with your page with demographic information like gender, geography, language and age.

For more Facebook Insights tips, check out our article How to Use Facebook Insights at pbahealth.com/how-to-use-

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