NCPA Executive Update

NCPA Executive Update delivers insights on legislative, regulatory, policy, and industry developments from NCPA CEO B. Douglas Hoey, Pharmacist, MBA, to NCPA members and pharmacy leaders every Friday.

"Don't Step in the Bucket" | NCPA Executive Update | April 1, 2016

by NCPA | Apr 01, 2016
"Don't Step in the Bucket" | NCPA Executive Update | April 1, 2016

April 1, 2016

"Don't Step in the Bucket"

Dear Colleague,

Doug Hoey

I was watching my 9-year old daughter, Amy, practice her hitting at her first softball practice this spring. At the risk of being one of "those parents," I called out "Don't step in the bucket!" as she swung.

For those that haven't heard the expression, stepping in the bucket is when a batter's front foot steps toward third base rather than stepping forward toward the pitcher when swinging which often results in a weak swing. This is understandable. New players to baseball have been told all of their lives to "Get out of the way!" of objects being hurled at them. Now these kids' parents are screaming at them to "step into the ball." You can see why there might be some confusion.

Anyway, after some practice the players learn not to "step in the bucket," yet it's still an easy habit to fall back into. There are some basic, fundamental ways in which independent pharmacies can avoid "stepping in the bucket" with their business.

Keep Cost of Goods as Low as Possible

This is so basic that many pharmacy owners I talk to feel like they have this covered but haven't really checked in years. The relationship with your wholesaler is key when it comes to keeping your COGs as low as possible. They have programs to help make sure you are buying efficiently and maximizing your cash flow.

Your buying group is another key relationship to help you lower your COGs. They also have a variety of programs to help you keep your COGs as low as possible. Even the pros check in with their batting coach. Check in with your wholesaler and buying group to make sure you are taking advantage of the programs they offer. Talk with your fellow pharmacy owners about tips they have found to lower their COGs.

Keep Expenses Down

The biggest expense for the average independent pharmacy is personnel. No one wants to have to reduce hours or eliminate positions, but an annual assessment of your current staffing levels is appropriate and could save tens of thousands of dollars.

Technology Should Fit Like a Glove

Here's a picture of Babe Ruth's baseball glove.

Here's a picture of the 2015 National League MVP Bryce Harper's glove.

Which one would you rather use?

Equipment has improved. Likewise, the capabilities of today's pharmacy management systems are light years ahead of where they were even a decade ago. They can cue your business for adherence opportunities and help streamline your business to make it operate more efficiently. Your system vendor should fit you like a glove and be a prized piece of equipment that helps you get the job done.

Get Paid As Much As Possible

The most basic ways to make more money are to make more money from your product or service, reduce the cost of your product or service, or do both. Getting paid more is even more challenging than lowering COGs and reducing costs because of the take-it-or-leave-it contracts that, at least to date, pharmacies have little choice but to sign. PBMs sell a network of pharmacies (i.e., YOUR pharmacy). Your PSAO should be an important partner in guiding you through the network contract signing process; with 27 states now having passed some form of MAC legislation, your PSAO has become even more essential in helping pharmacies understand those new laws. In some states, the PBM has to respond to MAC appeals, but the pharmacy has to submit the appeal—which oftentimes is a service offered by your PSAO.

There are other ways to increase incremental revenue. For some pharmacies it's improvement in the non-prescription side of their business. NCPA's Front-End Overhaul is created to help pharmacies grow their non-PBM touched revenue. For other pharmacies, it's growing their business by addressing specific needs in their community such as special packaging or expanding their LTC business.

Playing softball is fun for Amy. She may surprise me and someday be an all-star college player, but so far one of my proudest moments for her on the ballfield is that after two years of my instruction, she consistently puts her baseball glove on her non-throwing hand! That's basic. Sometimes she would forget, though. Take a look at your business to keep from stepping in the bucket.

Best,

Doug Hoey

 
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NCPA Executive Update delivers insights on legislative, regulatory, policy, and industry developments from NCPA CEO B. Douglas Hoey, Pharmacist, MBA, to NCPA members and pharmacy leaders every Friday. We welcome your comments at info@ncpanet.org.

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