If your pharmacy is still operating as we begin 2025, congratulations – you have survived one of the worst periods of time for community pharmacy in the United States!   The field has definitely been tilted against you.  While we continue to hope for proper oversight and regulation of the major payers within our industry, we must continue taking matters into our own hands to ensure our pharmacies’ future.

 

There was a time when you could focus on being a good practitioner and operate a profitable pharmacy.  Those days are gone.  Today it takes specialized business acumen/savvy along with a lot of continuous attention and effort to succeed in what has become one of the most challenging business environments ever known.  While no one is immune to the current state of affairs within the pharmacy industry, there are examples of community pharmacies which continue to “weather the storms” better than most others.   These pharmacies offer a blueprint that can be followed by other pharmacies.

 

Lessons learned from leading pharmacies are the keys to community pharmacies moving from just surviving towards thriving again in 2025, and include:  

  1. Diversifying your sources of revenue

By which we mean - to establish and grow revenues that are not controlled by the typical 3rd party payers and provide better profit margins in order to improve the profitability of your pharmacy business.  Some common examples of these better revenue sources that can improve profitability include LTC and LTC At Home, 340B, specialized programs targeting specific disease states and patient groups, billable clinical services (in certain states), targeted niche front end products, etc.   Too many pharmacies still only “dabble” in these areas and as a result do not gain the profitability advantages they can represent.   Another important element needed to make any of these revenue generating opportunities transformative for your pharmacy is marketing, an area that many pharmacies do not invest enough in.  It remains true that how well you do something can be more important that what you do – put another way, 30% of success comes from a good idea while the remaining 70% is determined by the quality of implementation and determination.  

 

  1. Optimizing pharmacy operations, including streamlining Rx dispensing processes to gain more efficiencies and increase productivity. 

What we hear too often from pharmacy owners is that they and their staff are already too busy, burdened with existing responsibilities to have time to work on new initiatives.   That is why it is equally important to also focus internally – on how your pharmacy operates day to day.   If your pharmacy has not yet adapted to take advantage of more modern techniques for managing operations, your pharmacy will continue to fall further behind the leaders in the industry, and struggle financially.  

 

Top managed pharmacies have transformed their pharmacy operations by applying and emphasizing best practices.  Two key areas that should be at the top of every pharmacy’s priority list are medication synchronization (medsync) and inventory management.  These important strategies have been emphasized at most industry conferences over the last number of years.   It is no longer sufficient to simply have a medsync program or a perpetual inventory system.   These strategies must be the foundation for how you organize and manage your pharmacy operations, which you leverage to stay lean and efficient while increasing productivity.  

 

These leading pharmacies rely on their medsync programs as the primary approach to managing patient med refills, staying organized and on time every cycle.  The benefits include more Rx fills in less time along with less patient misses, complaints and phone calls, resulting in higher customer satisfaction while also gaining more available staff time to work on other initiatives – like revenue generating activities.   Medsync can also become one of the advanced inventory management techniques that help pharmacies get ahead. 

If your pharmacy is not yet effectively managing the majority of your Rx refills in this manner, you are falling further behind.  

 

To get ahead in 2025, pharmacies need the benefits made possible by applying advanced inventory management strategies.  However, none of these inventory advantages can be gained without a proper perpetual inventory approach already in place.  Today the majority of pharmacies have computer systems that are capable of perpetual inventory management, however just by having these systems does not mean that your pharmacy has accomplished perpetual inventory.  The simplest definition of perpetual inventory is that your inventory records accurately reflect the items and quantities physically on your shelves at all times.   Perpetual inventory is more than just a capable computer system and is more than just matching your inventory records to a physical inventory count once per year.  It begins with a discipline applied by the pharmacy’s management and staff to ensure that the actual on shelf inventory is completely and accurately reflected by the inventory records/system, with regular checks for verification.   When this discipline is matched with a capable computer system, you can achieve and maintain perpetual inventory for your pharmacy, and are ready for more advantageous inventory strategies, which can make the difference between a good year and bad year financially.  

 

  1. Improve profitability from Rx dispensing

Profit margins from Rx dispensing have continued to shrink at alarming rates.  For several years I have heard pharmacy owners asking if this year will finally represent the “bottom”, only to find the next year delivers even further cuts.   The major players responsible for setting drug reimbursement rates continue to treat Rx dispensing and the pharmacy profession as a “loss leader”.  It is vitally important that pharmacies do not simply accept this situation, but instead do everything within their control to change this narrative.   A key component of this strategy is buying better - purchasing your drugs at lower costs when possible.  Drug purchases represent the largest cost for each pharmacy.   Next to reimbursement rates, costs of drug inventory are the most significant factor in a pharmacy’s profitability.   Back in the “good ol’ days” a pharmacy typically had a trusted relationship with one primary wholesaler that often lasted for years and worked well enough that the pharmacy did not have to continually shop around for better pricing.   Unfortunately, those days are gone and with margins on Rx reimbursements continuing to shrink, pharmacies can no longer assume or trust that their primary wholesaler can/will meet their minimum profitability needs.  That does not mean your primary wholesaler always represents a higher cost, but it does mean they won’t always represent the lowest available cost.   Just because your wholesaler deal was good enough three years ago does not mean it is good enough this year.   If you haven’t shopped around lately, It is time to begin and determine what other sources are available and viable for your pharmacy.   It will take time and effort, but the benefits can be significant.  

 

  1. Leverage your numbers to make better decisions

To get ahead in 2025, pharmacies need to be bold, but can’t afford big, costly mistakes.   Decisions shouldn’t be guess work.  Feel and “winging it” aren’t good enough any longer.  Instead, good decisions should be the result of analysis based on data.   The key is utilizing the data that each pharmacy has available to it.    If your existing pharmacy computer system doesn’t have good reporting capabilities or is too difficult to work with, invest in another tool that can help you tap into your pharmacy data and make it available in useful ways.   And then, regularly review your data, including your financials.   Too many pharmacies have historically determined how well they were doing based on the balance in their bank accounts.   While an important variable, it won’t help you figure out the why or what to do next.  Plus, these days it can be downright depressing!  

 

To start moving forward - back towards prosperity, we recommend you begin by knowing your target or “nut”.  How much is needed to…  For example, what is the minimum amount of gross profit dollars needed to cover monthly costs (operating expenses + debt repayment and interest)?   What is the average margin$ per Rx needed to cover dispensing costs (after drug acquisition cost).   If reimbursement rates continue their lower trends, how much money does the pharmacy need to bring in from other sources to make up the difference?   Similar to planning a trip, it is important to know three variables:  a) where do you want to go,  b) where are you starting from,  c) when do you want to arrive or how long do you want to take to get there?   By knowing your own numbers and applying these questions, you can begin to map out your pharmacy’s plan forward.

 

These four mentioned aspects are important to operating a successful pharmacy in 2025.   What sets the leading pharmacies apart from the rest is how well they have applied each of these strategies and are leveraging them for their advantage.   It is not yet too late for other pharmacies, but time is of the essence.   Community pharmacies currently operate in unforgiving conditions.  It is proving true that our very survival is at stake.    If your pharmacy is behind in any of the operating strategies listed here, it is vitally important that you take action today to change that for the better. 

 

If you are unsure how to get started or what to do next, PEAK Pharmacy Solutions is here to help.  This is what we do, helping pharmacies upgrade and transform their business to meet today’s challenges and succeed.  

Reach out to us:   info@peakrxsolutions.com   (814) 636-0663