In a typical pharmacy, the majority of revenue — somewhere between 93%-97%, according to PDS — comes from prescriptions. But with dwindling reimbursements and other factors, relying so much on one source of income may not be the best business decision. How can you turn things around so non-Rx revenue accounts for more?
This year’s PDS Super-Conference had an answer: the service-based pharmacy model. Making the switch to a service-based model was the theme of the event and presenters dove into what pharmacies would have to do to get there, from credentialing to billing to coaching.
What exactly is a service-based pharmacy model? It is a clinical-based revenue program offered by PDS that would enable pharmacists to be compensated for clinical services and counseling most already provide. As a pharmacist, you would be able to manage your pharmacy as a traditional retail business as well as a provider office. Your pharmacy is already being measured against the quality of services you provide to patients; tracking your encounters would enable you to get reimbursed for the time you spend on services such as consultations, patient education, immunizations, drug interventions, and much more.
One area where you can expect to see some headway as far as reimbursements is in pharmacogenomics testing (PGx). At the event, Brad Tice, Pharm.D., Founder and CEO of RxGenomix and Cari Lalande, Pharm.D., Director of Clinical Pharmacogenomics at RxGenomix, shed some light on this service. PGx is considered part of medication therapy management and focuses on medication metabolism and patients’ response to medications. Some health plans already reimburse pharmacists for providing PGx services and is one opportunity for independent pharmacists.
DIR fees were also a hot topic at the PDS conference. According to a recent analysis, pharmacy DIR fees reached $9 billion in 2019 alone, so some consideration was given to how to mitigate their effect on the pharmacy business. One suggestion offered was to select strategic expenses that yield some type of ROI and invest in the training and software designed to help reduce DIR fees. Hand-in-hand with this is educating pharmacy staff so they better understand how to manage the finances of a business and improve cash flow. Another strategy is prioritizing non-adherent patients on medication that have an impact on your DIR fees. Increasing the adherence of even a few such patients goes a long way toward improving performance metrics and reducing DIR fees (depending on the patient’s plan).
To increase profitability, Dr. Lisa Faast, VP of Business Development at PDS, suggested paying attention to three categories:
- Maximizing revenue independent of PBMs: This involves services that can be administered in the pharmacy that generate revenue or opportunities to invest in products. Some services include allergy testing, lab wellness tests, PGx interpretation, CBD, OTC supplements, and weight loss coaching.
- Optimizing reimbursable revenue: It is important to check a patient’s formulary to understand what medications their plan is reimbursing, particularly for commonly used ones such as Natesto, Probichew, Glycopyrrolate, and Lactulose.
- Reducing expenses and increasing efficiencies: Investing in services like synchronization and understanding business finances are some of the ways to improve efficiencies and lead to an increased bottom line.
Pharmacies continue to face the challenges of a changing industry, so taking the right steps for your business will make a difference. Moving to a service-based model and approaching business with a provider mindset only stands to be beneficial. At Amplicare, helping pharmacies tap into non-prescription sources of revenue and mitigate the effect of DIR fees has been a core focus. As you consider necessary adjustments to your business, integrating our software can provide actionable opportunities to improve your pharmacy workflow and grow your bottom line. To learn more about our platform, reach out to us. For more on PDS’ service-based pharmacy model, visit this page.