Keith Loria is a contributing writer to Medical Economics.
Examine the most essential financial key performance indicators for pharmacy businesses.
To be successful, independent pharmacists must identify the most essential financial key performance indicators (KPIs) for their businesses. For pharmacy owners, having a simple awareness of their pharmacy’s specific KPIs is crucial, according to Christopher Cella, RPh, national vice president for McKesson RxOwnership, a no-fee resource for independent pharmacies seeking financial and ownership transaction guidance.
“Some owners need help identifying what measures are important and what needs to be monitored from a financial standpoint,” he said. “Once that is established, how do their results match up against other owners in similar market areas, demographics, and services? After you know what your financial results are, you need to understand how to interpret these results as well as understand what levers can be or need to be adjusted to change your results.”
Matthew Johnson, PharmD, chief pharmacy officer for FDS, a Fort Worth, Texas-based pharmacy solutions company, said pharmacists must identify critical actions that drive volume and profitability—and then determine which ones are most advantageous. “In an environment with high unit costs and low margins, profit takes precedence over revenue,” he said. “Utilize shorter feedback loops. Use KPIs that can be measured on daily and weekly cadences. A quarterly view is helpful, but it is far too long to wait before correcting the course.”
All pharmacists should ask themselves certain questions. For instance, do you manage your expenses? Or do you consider your store to be operating efficiently if at the end of the month there is money left over in your account after paying expenses?