Key Performance Indicators for pharmacy


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1. Payroll Ratio:

The payroll ratio is an expense, but it’s also an efficiency measurement. The goal ratio for pharmacies is less than 14%. A higher ratio could be a symptom of many of issues and does not necessarily mean that you have too many people on your team. The solution lies in evaluating each employee and determining how to increase their efficiency in producing more revenue.


2. Net Dollars/Prescription

Net dollars per prescription measures your bottom line. This number will reveal any significant gaps you had between your gross margin per prescription on the top and how much you have left to your bottom line. If you have a healthy gross margin per prescription, but a lower net dollar per prescription, that tells you that you need to dig deeper in your data to understand what is happening. The best way to understand is to review your financial statements regularly.


3. Number Rx/Employee Hours

Your prescriptions per employee hour lets you know what your employees produce and measures their true output. Begin by tracking this metric over a month to get an understanding of your benchmark and then begin to put a plan in effect to make improvements. The first step in an improvement plan is to work on your team culture and training so that you know if you have the right employees in the right seat on the bus. The right employees mean filling your team with high-performers so that you’re increasing the amount of prescriptions you fill without increasing payroll hours, therefore increasing your efficiency.


4. Dollar OTC/Employee Hours

Increasing over-the-counter (OTC) sales increases your bottom line and therefore important to measure your OTC dollars per employee hour. A n effective way to improve upon this number is to create an incentive program for your employees to track who sold the most OTC dollars per hour. There are many creative ideas you can use that will empower your employees and allow them the flexibility to succeed.


5. Return to stock %

As an efficiency metric, this business KPI measures the percentage of prescriptions you fill and then get returned to stock (RTS). RTSs are extremely wasteful in an already tight workflow system. There are a number of reasons why you’re filling prescriptions that are not being picked up. Measuring this KPI will allow you to root out the problem, whether the patient is unaware they have a prescription to be picked up, a high copay, or something that indicates a workflow issue in your pharmacy.


6. Inventory Turn

If you want to run a leaner, more profitable pharmacy, you must start with your inventory. Most pharmacies have far too much inventory on their shelves and this is one of the biggest causes of cash flow issues. At a minimum, you should review your inventory turns annually, with your goal being a ratio greater than 16. PDS members have access to an inventory optimization program that they are guided through with their PDS team. If you’re not a PDS member and want to improve this ratio, you’ll learn ways in the webinar to find the right balance of inventory for your pharmacy.


7. Volume

A mistake many owners make is assuming volume equals profit and equate increasing dispensing activity with increased profits. The key is targeting your approach to acquire the right volume. Whether it is a prescriber who gives you more profitable prescriptions or a local employer who has a good insurance plan, seek on improving the volume that is more profitable for your business.


8. Gross Margin per Prescription


When you track your gross margin per prescription, you’re measuring how effective you are at dispensing. You must keep tracking this measurement to spot the trends in your pharmacy so you know where to focus your efforts. Increasing your GM/Rx has a direct impact on your ability to pay expenses, the profitability of your pharmacy and, of course, your bottom line. One way to increase your GM/Rx is to diversify your business, such as the prescriptions you’re dispensing, your prescribers, or your insurance groups.

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