December 08, 2021
Business is complicated because we make it so. We look for hacks, secrets, and quick fixes instead of doing the boring (but effective) processes over and over and over.
It would be like a football team running a "hail mary" every play rather than plotting their way down the field.
Before I expose the easy $100k+ profit you are leaving on the table, let me first tell you why this matters so much to the longevity of your Pharmacy…
Pharmacy A and Pharmacy B are both great local Pharmacies. However, what their average patient values are much different.
See, Pharmacy A prioritizes increasing their patient lifetime gross profit (what the average patient is worth to their Pharmacy).
Now, if both Pharmacy A and Pharmacy B were able to run effective marketing campaigns and attract new patients at an average cost of $25, they both would happily do that. Pharmacy A would make more profit for each new patient ($125-25=$100), but Pharmacy B would still get a 3:1 return on their marketing ($75-$25=$50).
BUT, business is not played that way.
Pharmacy A, because it wants to grow, may get more aggressive in their marketing efforts. By spending more and wanting to reach more patients, they may be willing to spend $80 to get a new patient to their Pharmacy.
What happens to Pharmacy B in this scenario?
They can no longer afford to market for new patients.
They would lose money competing at those acquisition costs.
Pharmacy A would start to take ALL of the new patient opportunities in the area and slowly squeeze Pharmacy B out of business.
THAT is what happens when you neglect increasing the lifetime gross profit of each patient.
Companies like Walmart, CVS, and Walgreens have departments dedicated to this kind of data and analysis. Neglect it, and you weaken the likelihood that your Pharmacy sees another decade in your community.
Although there are dozens of ways to increase your average gross profit per patient, the obvious one is adherence.
“Thanks, genius.”
While many roll their eyes at this statement, I don’t think many understand how much easy profit they are leaving behind.
Do this simple math for me:
Unique patients you filled Rx for this month x average gross profit per patient x three extra months of refills x .5 (about 50% of your patients are on consistent medications month over month)
Example:
1000 Unique patients x $96 (8 Rx per patient x $12 gross profit per script) x 3 months of extra refills x .5 = $144,000 in gross profit.
Nearly $150,000 in gross profit JUST from helping these patients be more adherent.
No extra supplement sales, no new patients, no DME sales, nothing.
JUST prescriptions.
With a good MedSync Program + Adherence Packaging (pouches), your Pharmacy can increase your bottom line by a Pharmacist’s salary or two.
Instead of chasing a new marketing program or stocking your front end with new gifts, focus on what your customers already come to you for. Maximize that first, then (see other blogs) we implement other verticals to increase your patient lifetime gross profit.
You would have to sell nearly $300,000 worth of gifts, supplements, or other products (assuming 50% margin) to have this big of a difference on your income statement.
Don’t overlook simple.
