Pharmacy Checks and Balances: Preserve Business Value and Quality of Life
By Bonnie Bond, MBA, CPA, and Katie Musorofiti, MSIA, CPA
The common image of a community or independent pharmacist is someone in a white lab coat, filling pill bottles and discussing dosage and drug interactions with patients at the counter. Behind the counter is another story. Pharmacists are health advocates, but they are also community members who are trying to build a business and life balance.
Too often, pharmacists are limited in their roles by the numbers — not by the number of patients or scripts filled, but by the numbers on their profit and loss (P&L) statement. Focused on purchasing inventory, paying bills and processing payroll each month, they end up taking on too much administration. This leaves pharmacists with little time to assess how they stand financially. Without current and accurate accounting, they are unable to make growth-minded business decisions.
The burden of daily and weekly administration should not fall on the pharmacist alone. While there are few studies on the health of pharmacists, some reports indicate that they face the same pressures and risks of burnout as physicians; complex industry requirements are only complicating matters further.1
Pharmacists do not go to school to be accountants. Therefore, the following pharmacy business checks and balances can move independent pharmacists from the back office to the front counter and into the community. At the same time, these checks and balances can empower the pharmacy team to be more engaged in the business and learn skills that add to long-term business value and personal satisfaction.
The variety of areas outlined here are not a solution on their own, but they work in tandem to free up the pharmacist’s time and improve team involvement. Once they are in place, independent pharmacists can build a more sophisticated back office accounting process that provides accurate financials for business-growth decisions.
Daily Sales and Script Reports
Point of sale reports and script audit logs can tell a lot about a pharmacy’s business, tracking everything the pharmacy sells in a given day and how it was sold — and the sales tax that was collected. The point of sale report should reconcile with the daily bank deposit. Any small discrepancies can snowball through the month and lead to unnecessary and time-consuming, month-end adjustments.
Train in a tech or clerk to pull the point of sale report and script audit log every day. Have point of sale data reconciled daily against the daily bank deposit. Outsource this daily reporting to a CPA that works regularly with independent pharmacies. In this way, the pharmacist creates a simple administrative process that supports accurate accounting, sales tax returns and also accurate financial statements for making business decisions.
Weekly Third-Party Adjudication
A pharmacy should be in contact with its third-party adjudication service every week. Regular monitoring is critical to support accurate and timely claims processing and receivables. Without this attention, a pharmacy can miss windows for reimbursement as well as inaccuracies that can lead to lost revenue.
A healthy receivables report should show 95 percent of receivables aged in the 0 to 60 days column. That remaining 5 percent in the 61-90 days column should be pursued with the help of the pharmacy’s assigned adjudication or reconciliation analyst. The analyst can investigate things like rejected claims, late processing, inaccurate pricing and inaccurate receivables.
Weekly administration of receivables can be delegated to a trained technician or clerk who opens the mail, enters any paper payments, contacts the analyst and reviews receivables reports. That way the pharmacist can oversee an accurate receivables report and address more complex claims reimbursement discrepancies related to pricing or inventory management on the pharmacy side.
Pharmacy Outsourced Payroll
One of the biggest time savers for pharmacies is to outsource their payroll to a corporate payroll service. Not only can the payroll service process payroll, it can also apply, adjust and track withholdings for tax and other reporting purposes. Employees can access their pay stubs and have automatic deposit services to their personal bank accounts.
This might seem like a common sense decision in the age of technology, however, there are still community and independent pharmacists processing payroll on their own, taking precious evening or weekend time to make sure that employees are paid. This is not only taking them away from family or time to focus on growing the business, it can also lead to inaccuracies for withholdings and tax compliance.
Investigate an outsourced payroll service by consulting with fellow pharmacists or your CPA. Moving to an electronic system will alleviate issues with missing documents, inaccurate timekeeping or processing deadlines — saving the pharmacy time and money in the long run. These services can also typically sync with the pharmacy’s accounting systems for more accurate financial and tax reporting.
Online Bill Paying
Moving accounts payable to an online interface is another way to free up the pharmacist’s time from the back office. The pharmacist will still have final approval of all outgoing payments, but a trusted employee can handle the administration of setting up payments in the system for e-payments.
By choosing a service that requires electronic owner approvals, the pharmacist can log into the system when the bills are ready to be paid, review the list of payments, approve or reject, and move on with the day.
Value of Proactive Pharmacy Operations
The value of delegating administrative tasks to the pharmacy team is three-fold. First, the pharmacist can free up time to focus on patient care, top line growth and more attention to education, friends and family. Secondly, accurate accounting and financial statements will guide business decisions. Whether or not the pharmacy has a bookkeeper, the checks and balances outlined here are the first steps toward a more sophisticated accounting process tied to oversight by a knowledgeable CPA. And lastly, employees will be more engaged, as they have a role in the sustainability and growth of the community pharmacy.
Again, these pharmacy business checks and balances aren’t the total solution, but they are a great place to start for financial accuracy, team engagement and more confidence in the future — a future for the community pharmacy and the pharmacist’s long-term health.
This article was originally published in the Winter 2020 issue of North Carolina Association of Pharmacists magazine, The Pharmacist, page 20, written by Sykes & Company, P.A. team members Bonnie Bond, MBA, CPA, and Katie Musorofiti, MSIA, CPA
References
1 Barker, Alex. Pharmacists and burnout: the first step is to acknowledge the data about providers. Pharmacy Times. 2018 Dec 05. https://www.pharmacytimes.com/contributor/alex-barker-pharmd/2018/12/pharmacists-and-burnout-the-first-step-is-to-acknowledge-the-data-about-providers
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