READY FOR MORE PHARMACY BOOSTING KPIS? Consider These KPIs After Your Critical 3 Are Green
Since we entered the digital age, the number of KPIs businesses can track has exploded. You could spend all day tracking and reporting on hundreds of KPIs. Not all KPIs are created equal. Let’s look at some additional KPIs you should spend your time on, once you have
your Payroll Ratio, Inventory Turns, and Expense Ratio all in the green zone.
Stay focused on what matters most, and add these metrics for tracking your pharmacy’s performance.
PBM Revenue Ratio Goal: Less than 85%
To figure out this ratio, you will take all your revenues from PBMs (including patient copays) and divide that number by your total pharmacy revenues from all areas. Once you multiply by 100, you will have your percentage. Most pharmacies are in the high 90s. That is just the nature of the beast. However, for pharmacies that have focused on diversifying their revenue streams, such as unique OTC lines or clinical-based revenue, they can see this number drop to the 50s and 60s. If you want to break away from the tyranny of PBMs, this is your number to track.
Every pharmacy has a normal attrition of patients. You need to add about 1% of your total patients just to maintain your pharmacy. If you are looking to grow, then set your goals higher.
Tip: Use a referral program to add new patients..
Number of Days of Cash on Hand Goal: Greater than 15
Your bookkeeper or accountant should be giving you this number monthly. It is a multi-step calculation. First, you need to calculate your average daily expense rate. Take your expenses for the month and divide by the number of days in the month (or you can use a standard 30 days). The second step is to take your cash balance (the amount of readily available cash in your bank) and divide it by your daily expense rate. The resulting number will tell you how many days of expenses you can pay with your current amount of cash. This number helps you understand how healthy your cash flow is.
Tip: Here are some ideas for alternative revenue streams: RPM , Worker’s Compensation , or Weight Loss Coaching .
Monthly New Patients Goal: Varies; often, higher is better.
To monitor this number, you will need to run a report from your pharmacy management software (PMS). Many have this report pre-built in. If you are not sure, just send a message to your support team, and they should be able to tell you the steps. The goal for new patients isn’t always higher is better. You can grow yourself out of business because of the high amount of accounts receivable (AR) in pharmacy. Adding too many new patients can lead to a severe cash flow crunch. However, if you aren’t growing, you are shrinking.
Tip: Go through our 5-Day Cash Flow Challenge to improve your cash flow.
We are here to help! We can work directly with you, your team, or even your accountant to help craft the perfect menu of KPIs to track for your pharmacy and goals. Reach out to the DiversifyRx team at anytime.
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