The Bottom Line Pharmacy Podcast Bonus Episode: Reimbursement Changes, Diversified Revenue, and More! | Special Appearance with the Pharmacy Owners Alliance
Reimbursement changes have sparked updates to KPIs and financial benchmarks for independent pharmacies.
In addition to reimbursement changes we’re also seeing pharmacies find more opportunities to add diversified revenue sources such as long-term care and compounding.
On this special bonus episode of The Bottom Line Pharmacy Podcast, Scotty Sykes, CPA, CFP sits down with POA Executive Director David Mayper as a featured guest to discuss KPI updates, new financial benchmarks, opportunities for pharmacies, and more!
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If you want to read and follow along, the transcript is below
David Mayper: Scotty, I appreciate you joining us today.
Scotty Sykes: Thanks for having me, David.
David Mayper: From Sykes Company. If it’s okay with you, I’ll start asking questions and see how you think about various things here.
Scotty Sykes: Sure.
David Mayper: Okay. How are the independent pharmacies you’re handling doing over this first six-month period?
Scotty Sykes: Well, it’s certainly an interesting time right now. Here we are early March and we got through January. I’ve seen some January numbers, a lot of January numbers, and we’re definitely seeing a, obviously we’re seeing a change in reimbursement. We’re seeing that impact of financial statements. We’re seeing that impact on the margins. As far as determining how that’s going to impact the industry over the next, you know, six months to a year, it’s going to take some time to see how this all plays out, but the industry is going to be facing some, some new KPIs and benchmarks with this change in reimbursement, and so the next six months is going to be interesting, but the first part of it so far this year, January and February I haven’t seen, I think I’ve only seen one February right now, but January was literally all over the place. You have some pharmacies that maybe push a lot of revenues before the end of the year and that can skew the next month to a certain degree with timing differences perhaps. So, you really saw a mixed bag in January, which you normally do in pharmacy, but it’s just going to be interesting to see how this all plays out. But things have certainly changed. It’s definitely different.
David Mayper: And what do you see the keys to success as far as independent pharmacy going forward in the short term and then beyond?
Scotty Sykes: Well, in the short term, you know, being that we are an accounting CPA tax firm we obviously stress accounting fundamentals, so if you’ve been in any of our talks or heard anything we talk about, we always stress that as step number one, because having a grip on what your pharmacy’s doing and having a solid understanding of what your pharmacy is doing from its gross profit, its metrics, its KPIs, its cash flow, that allows you to then manage and proactively address you know, how you approach your pharmacy business. Now we are definitely seeing pharmacies reach out into other areas other than just filling prescriptions, and that’s kind of been the trend, as it should be for the past couple years, most notably the long-term care side, medical at home is definitely picking up. You know, most pharmacies have that opportunity built right into their pharmacy already. And that’s pretty can be a turnkey solution there for a lot of pharmacies. There’s proven resources and vendors to assist you with that. So long-term care has definitely been picking up steam. I’ve seen some pharmacies branching into compounding. And then the list just goes on from there. So, we’re definitely seeing those pharmacies, though, find those areas that they could branch out and do things differently aside from just filling those prescriptions. And then they’re diving in, and that’s what you’re gonna have to, that’s what pharmacies are gonna have to do and continue to do as they evolve into the health care centers of their community which is the opportunity I think pharmacies have in front of them.
David Mayper: Well, that sounds good. What advice are you giving the independent pharmacies to prepare for all this?
Scotty Sykes: Well, just that. You know, find those areas, those niches that you can take advantage of in your community, whatever it may be. You know, you could be the only independent in your area and there could be some opportunities with that in terms of you know, point of care testing, vaccinations. We have pharmacies doing the nurse practitioners within the pharmacy. And a lot of states, or not a lot of states, but a few states have gone on allowing pharmacies or pharmacists to prescribe for the point of care testing. And so it’s a culmination of those factors of those various opportunities that are out there. I know the NCPA, they have a huge list on their website of those areas of opportunity, of course, they are a great resource as well. Again, the accounting fundamentals because if you don’t even know, you know, how you performed in January and your balance sheets tied down and, or frankly, you don’t even know what 2023 tax is going to do you know you’re operating in the dark from the get go. So, you got to have the accounting piece is fundamental. And of course, we stress that all the time. And you know, right now, given the environment that pharmacies are facing, and this is a difficult time for pharmacies, you know, we somewhat knew that it was going to be a difficult time right now you know, we were speaking last year saying, you know, a lot of people were out there speaking, get ready for the DIR fees to hit like they’re going to, and the net reimbursement on top of it. That’s going to hurt your cash flow. So, we pretty much anticipated this and it’s, to what extent, nobody knew. But, so this is a difficult period of time right now, and I think that provides opportunities for pharmacies to really, and I’ve said this previously, pharmacists wear a lot of hats, and they’re doing a lot of work. I’ll tell you, some of the hardest working folks out there, and one of those hats is political. I mean, you have to be involved in the political side of things and right now is a good time to put that hat on and go to your congress men and women and your local, your leaders, I know the NCPA is going to fly in and bring attention to this matter because it is a serious it’s a serious matter right now and when pharmacies are facing and when you’re going through tumultuous period like they’re going through right now getting in front of those leaders to help draw attention to that is an opportunity to hopefully bring about positive change in the future.
David Mayper: Very good, and what support do you envision an organization like POA should be bringing to its membership?
Scotty Sykes: Well, certainly, you know resources in terms of thought leaders in the industry and giving your members every opportunity to hear and see and experience and to some degree what others are doing, what’s working, what’s not working, what resources are out there, what vendors can help them. Bringing those to their attention. And you know, you can lead them to the water, whether they drink it or not, that’s another thing, but giving those opportunities to jump in and jump in if they so desire is I think the best thing you could do.
David Mayper: Very good. Scotty, I appreciate you giving us a few minutes of your time here and thanks very much.
Scotty Sykes: Glad to be here.
More resources about this topic:
Podcast – Navigating the Complex World of Pharmacy Reimbursements
Podcast – Clinical Services Opportunities for Your Pharmacy
Podcast – Long-term Care Franchise Ownership
Podcast – Understanding Long-term Care at Home Pharmacies
Podcast – Cash Flow and Improving Bottom Line for Long-term Care at Home Pharmacies
