Don’t let the losses add up

Does your business have ‘leaky bucket’ syndrome? In other words, are you losing income you should have banked but haven’t? Adele Curran looks at how you can start plugging the leaks

As we head further into 2023 against the backdrop of the ongoing funding crisis within community pharmacy, it may seem there is little you can do except hope that the representative bodies achieve a new funding deal that works for pharmacies.

While that would be very welcome indeed, you need to have a good ‘Plan B’. You probably feel that you have stripped out all non-essential costs and have no more room for savings, but this may not be the case.

Having worked with more than 40 pharmacy groups in the UK, I’ve seen many pharmacies lose income, unbeknownst to them. Losses can come from lots of places, and may add up to significant sums. We call this the ‘leaky bucket’ – money you should have banked but won’t.

Electronic script claiming, poor endorsing practices and stock management are all areas to look at to start plugging these leaks.

There are also opportunities for growth with the existing contract that will make a big difference to your revenue, such as making the most of NHS services. It’s all about using the numbers to gain real insight into potential problems and their solutions.

The key focus for pharmacy owners should be on streamlining costs, operational efficiencies and delivering continuous growth.

Here are a few example questions you should ask – whether you’re an independent pharmacy owner or a manager for a group.

ARE MY CONTRACT HOURS TOO LONG – OR NOT LONG ENOUGH?

By looking at data within your PMR and service systems, it is easier to deduce when your pharmacy is most busy. Using either the labelling data or the EPS queue data, you can see which are the busiest hours for your pharmacy teams.

Without changing your contract, you can assess the best times for the teams to focus on services rather than dispensing. If your spine queue is behind, adding some additional hours may help clear the backlog. Remember, an impatient patient is normally an unhappy one.

AM I MANAGING MY STOCK EFFECTIVELY?

It is estimated that an average pharmacy disposes of up to £10,000 worth of out of date stock each year. How do you stop this from happening?

If your stock is not live, managing a stock process is more difficult, but it’s not impossible. Accessing your dispensing data to identify medicines that were previously active (i.e. dispensed at least twice in 12 months) but haven’t been dispensed in the last four months will give you a shortlist of suspects.

If you are an owner or operations manager for a community group, repeating this process in other branches and in reverse may give you a solution to move your dead medicine from one branch to another branch that is still dispensing that product.

As with dead stock, keeping volumes of stock in branches with slow dispensing may again lead to out of date situations down the road. Investing in a ‘by product’ scanned stocktake will enable you to see medicines you may need to take a look at.

ARE MY MEDICINES BILLS TRANSPARENT?

With the volatility of the medicines markets at the moment, the prices of your medicines may be changing on an hourly basis, never mind daily or weekly. At the very least, pharmacy owners should be requesting digital item-by-branch statements from their wholesalers at the end of each month. This should allow you to see the weighted cost of the monthly order.

By also downloading your CSV version of the PPDs each month, you should be able to see issues with under-cost dispensing. While this may not give you much comfort for the historic months, it should flag medicines that should be considered for SSPs or concessionary pricing going forward.

Cascade management: most pharmacies are using some form of cascade system that allows them to send their preferred orders to the correct wholesalers. While updating your cascade with your up to date pricing may seem like a tedious effort, the transparency of real margin and branch ordering compliance is a true win. With the added comparison to end of month statements, you can ensure your quoted pricing is actually your charged one.

Ordering compliance: did you ever wonder how the margin in a branch can differ so much from another of your branches even though they could both be doing the same amount of items?

With the best will in the world, a busy, stressed pharmacist can and will bypass some of our ordering processes to get medicines quickly for patients.

Identifying medicines on statements that are not ordered within the cascade can highlight these margin-decreasing practices. Once you can see it, you can deal with it. This may also highlight dispensing fraud, where medicines are ordered outside of your cascade but the volume of dispensing does not warrant the order.

With the abundance of data available to pharmacies both from inside and outside of the PMR, it is easy to get overwhelmed and do nothing. Getting the data from your suppliers and the NHS in a usable format will always be a good starting point. 

Adele Curran is chief operating officer at RWA Pharmacy