To be profitable, pharmacies need to establish key performance indicators (KPIs) for their business. KPIs are the key indicators of your pharmacy’s progress toward your goals. They provide a starting point for improving your operations, give you data to analyze and use in your decision-making, and emphasize what is most important to you. It all comes down to the well-known precept in business management – You can’t manage what you can’t measure.
Figure out what measures are the most important, and then see how they compare with other pharmacies in your market.
Whatever your KPIs are, measure them frequently to make sure you are going in the right direction.
When establishing your KPIs, financial planners recommend focusing on costs that you can control, ones that directly affect your financial results. Three of the most significant are inventory, payroll, and utilities. A change in any one of these will directly impact your bottom line.
When dealing with inventory, some pharmacists suggest using some drug synchronization process. They say you should order inventory just in time for when you fill the next prescription. Look at expiration dates and the rate of drug turnover so that you don’t stock too much and lose money because of unused medication.
For payroll, determine if you are paying your people according to market averages. For utilities, keep an eye on the thermostat. It also helps to put lights and air conditioning on timers.
Synchronizing your supply of various medications to match higher and lower demand times will also help increase profits. Some products are always in high demand, while others are more seasonal. Also, focus on medications with the highest profit margins. You can also prioritize late refills with an eye toward profitability.
Pharmacists need to pay close attention to monthly profit and loss statements and balance sheets. This way, they can stay on top of revenue, profits, and expenses and make adjustments promptly.
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