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01/17/2023

Pharmacy U presenters Mike Jaczko & Max Beairsto on...benchmarking your dispensary

We have been helping pharmacist-owners sell their businesses for decades now, and we have often been surprised that the one part of their operations to which they are closest – the dispensary – is also one to which they pay the least attention in terms of measuring performance.

Mike Jaczko and Max Beairsto will be presenting at Pharmacy U Toronto

In previous articles, we’ve talked about how important benchmarking is to successfully prepare your pharmacy for sale. We started with inventory management and professional services benchmarking – two areas that pharmacist-owners often overlook – and today we are putting the spotlight on the part of pharmacy operations that potential buyers arguably care the most about: dispensary operations.

We have been helping pharmacist-owners sell their businesses for decades now, and we have often been surprised that the one part of their operations to which they are closest – the dispensary – is also one to which they pay the least attention in terms of measuring performance. Perhaps pharmacists are just too close to behind-the-counter work to take a step back and think about the bigger picture. Or maybe they think they know it so well they don’t need to worry much about dispensary performance. But we can confidently say this: measuring and benchmarking what’s going on behind the counter can help pharmacist-owners improve profitability and maximize return when it comes time to sell.

As the old business maxim says, if it’s worth doing it’s worth measuring. Benchmarking is a process of finding out where you are and determining where you want to go. And doing so is nowhere more important than in dispensary operations.

How to measure

So how do you measure the efficiency of your pharmacy dispensary? The gold standard metric is Scripts per Labour Hour. Basically, it is a measure of the number of prescriptions your team of pharmacists, pharmacy assistants and pharmacy technicians fill per hour of work. Easy to calculate, Scripts per Labour Hour will give you a quick and easy way to tell how efficient your dispensary is.

Importantly, the metric can also point to areas where you can improve efficiency, especially if you gather more granular data. For instance, if you calculate Scripts per Labour Hour for individual team members, the metric might point you in the direction of potential improvements through staffing or training. From a valuation point of view, it can also give you an idea of how well your dispensary stacks up against your industry counterparts – and it will suggest whether you should try to improve it to help attract buyers.

How does your pharmacy measure up?

On average, Canadian pharmacies fill six Scripts per Labour Hour. To give a real-world example: a team of two – a pharmacist and an assistant, let’s say – will fill at least 12 prescriptions every hour, or 96 prescriptions over the course of an eight-hour shift.

This might be the right benchmark for your pharmacy. Or it might not. The six Scripts per Labour Hour number is an average, not necessarily a benchmark. For some pharmacies, the target should be higher or lower. A below-average benchmark might be more appropriate for a low-volume dispensary, or a pharmacy that provides a high volume of professional services. On the other hand, a high-volume dispensary that completes a lot of short-term prescriptions, or one that uses automated systems to fill scripts, should probably set the bar higher than the average of six.

If your dispensary performance comes in over the benchmark – well, good for you! But if it comes in below benchmark, what can you do?

How to handle below-benchmark performance

As we noted above, sub-standard dispensary performance presents an opportunity for you to look at staffing and training. Is your dispensary adequately staffed – or perhaps over-staffed? Do your technicians and assistants have the right training to do their jobs as efficiently as possible? Are there steps you can take as a manager to make their jobs easier (and faster)?

There are also possible technology fixes – for instance, pharmacy automation. Automation systems can handle a range of administrative chores and even dispensing, and several suppliers make them available through some banners (who often offer discounts). Not every pharmacy, however, will need the entire suite of services automation systems can provide. A low-volume dispensary might not get much benefit from a bottle-filling machine, but a system that automates administrative tasks or even simply answers phones could free up a limited staff’s time and resources to focus on dispensing more efficiently.

What about Compliance Packing Efficiency?

Another metric we sometimes are asked about is Compliance Packing Efficiency – how long it takes dispensary staff, on average, to fill compliance packs. The metric applies largely when pharmacist-owners are trying to decide whether to try to improve efficiency by hiring a central fill service.

The relevant comparison in this case is between the time it takes your pharmacy dispensary to fill a compliance pack on average and the time it takes to check packs. On average nationally, it takes between 15 and 30 minutes for a dispensary to fill a set of four compliance packs, and it takes five to 10 minutes to check that set.  No doubt there is a lot of variation in these times from store to store, but they provide a good base from which to factor in wage costs versus central fill costs and then make an informed decision.

And making informed decisions is what benchmarking is all about. If you are looking to improve your pharmacy’s business operations, maximize profitability and ensure you attract buyers when you decide to sell, then benchmarking dispensary operations is a great place to start.

Mike Jaczko and Max Beairsto will be presenting at Pharmacy U Toronto

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