Say Goodbye to Negative Margins!
How to Tackle Negative Margin Prescriptions in Your Pharmacy
Your pharmacy’s profitability often hinges on managing the fine details of your business operations. That’s why watching the little details impacting your bottom line is crucial. One area where you can boost your pharmacy’s financial health is by reducing those pesky negative margin prescriptions. These are the prescriptions where what you pay for the drugs is more than what you get back in reimbursements. Let’s dive into how you can tackle this issue and see improvement in your cash flow and overall profits. WHAT’S THE DEAL WITH NEGATIVE MARGIN PRESCRIPTIONS? First, let’s talk about understanding and tracking these negative margins. Your negative margin KPI is a snapshot of how often you lose money on prescriptions. You calculate this KPI by finding the number of prescriptions where you broke even or lost money and then dividing that by the total number of prescriptions you filled during the same period. Keeping tabs on this monthly is vital because it helps you set and reach profitability goals — ideally, you want to keep this number below 5%, or even better, aim for zero. SMARTER BUYING SAVES THE DAY One big way to cut down on losses is to rethink where you’re buying your drugs. Are you getting the best deal possible? Platforms like MatchRx, Real Value Rx, EzriRx, JamsRx, TRxADE, and others are great for scouting out better prices. It’s all about buying smarter, not harder, to help boost those margins. BILLING ACCURACY IS KEY Billing might not be the most exciting part of your day, but it’s crucial. With all the complexities of pharmacy billing, errors can sneak in easily. Check regularly to ensure you aren’t being paid at U&C, your AWPs are properly updated, and the quantities you are billing are accurate. Small mistakes can lead to big losses. EXPLORING ALTERNATIVES Sometimes, the best way to handle a negative margin prescription is to look for an equally effective alternative. Talking with prescribers about other medication options in the same class or different dosage forms helps manage costs without skimping on patient care. THINK OUTSIDE THE BOX WITH MAIL ORDER If certain prescriptions just aren’t profitable, why not coordinate with a patient’s mail-order pharmacy? Services like RetailMyMeds specialize in this and can simplify the process. This way, you can provide excellent service without financial strain.
THE LAST RESORT Deciding not to fill a prescription is a tough call and should be your last resort. You must consider the wider impact, like potentially losing a patient’s family members or friends as customers. But if you’ve tried everything else, sometimes you must make that hard decision. SUPPORT AND SOLUTIONS We’ve discussed calculating this KPI in previous newsletters, but it’s not just about crunching numbers. It’s about making changes that fix the problem. RetailMyMeds, for example, has helped hundreds of pharmacies turn this challenge into a profit- making strategy and happens to be owned by a fellow member! Tackling negative margin prescriptions is about making intelligent, informed decisions that balance good patient care with your pharmacy’s financial needs. With careful adjustments and strategic thinking, you can turn this part of your business around and see real benefits to your bottom line. Let’s make sure those prescriptions start pulling their weight!
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