Revenue Recovery: How Community Pharmacies Can Overcome Loss Of Revenue

Community pharmacies often face loss of revenue, impacting financial health and their ability to serve communities effectively.

Addressing this problem is essential to ensure the sustainability and growth of these vital healthcare providers.

However, community pharmacies are unaware of the extent of their lost revenue.

Therefore, in this blog, we’ll focus on:

• Common reasons for revenue loss
• Tips to support revenue recovery for community pharmacists

Common Causes of Loss of Revenue for Community Pharmacists

Research has shown that the average pharmacy generates a gross annual profit of £223,448.

However, the figures don’t necessarily paint the full picture, with pharmacists nationwide experiencing a loss of revenue in areas that can often be addressed.

Identifying and addressing these areas is crucial for maintaining financial health and ensuring sustainable operations.

Community pharmacies face various challenges that can significantly impact their revenue. Understanding these

issues is crucial for identifying areas needing improvement. Here are some common causes of revenue loss:

Missed Reimbursements

Errors in billing and coding are common problems that lead to reimbursements being delayed or refused, with mistakes often stemming from inadequate staff training or a lack of regular audits.

Ensuring accurate and timely submission of claims is essential for maintaining steady cash flow. Advanced pharmacy management systems can help automate and streamline these processes, reducing the likelihood of human error.

Issuing reimbursements, especially given the complex, diverse requirements of the NHS, can be hard. Given the complexity of these processes, underpayments or missed payments are common.

Therefore, pharmacies must stay updated with the latest guidelines and take extra care in adhering to guidelines to avoid loss of revenue

Inventory Management Issues

A report by the Department of Health estimates that unused medicines cost the NHS around £300 million every year.

Inefficient inventory management leads to overstocking, resulting in medications expiring before they can be used or sold.

This not only ties up capital but also leads to loss of revenue. Automated inventory systems can play a critical role in maintaining optimal stock levels, thereby reducing waste and supporting revenue recovery.

Moreover, poor management of suppliers can lead to higher procurement costs and inefficient stock levels.

By regularly reviewing supplier performance and negotiating better terms, pharmacies can effectively manage costs, whilst establishing strong relationships with suppliers can also lead to more favourable conditions and reliable stock availability.

Underutilised Services

In 2019, community pharmacies were one of the most visited healthcare settings in

England, with 1.2 million health-related visits every day, a figure that’s grown since the introduction of the Pharmacy First scheme.

Yet, despite the high daily footfall, many community pharmacies fail to promote their most profitable services.

These include vaccinations, health screenings, and medication therapy management (MTM).

With promotion lacking, patients remain blissfully unaware of these services, and they’re massively underused.

Proactively marketing these services can significantly boost their usage and, consequently, the pharmacy’s revenue.

Likewise, the uptake of these services would be massively improved with renewed customer engagement strategies to communicate to patients that they can take advantage of the available services, thus generating additional revenue.

Utilising patient management tools and mobile applications can enhance communication and follow-ups, encouraging patients to return for services they might otherwise overlook.

Service Quality Issues

Sometimes, it pays to get the basics right.

75% of consumers say a bad interaction with a business can ruin their day and in the world of community pharmacy, reputation and word of mouth go a long way.

Frequent issues with service quality can lead to a loss of repeat business, which directly impacts revenue.

Investing in comprehensive staff training and improvements in customer service can enhance patient satisfaction and loyalty, fostering a steady customer base.

Operational Inefficiencies

Inefficient workflows can waste time and resources, affecting overall profitability. Streamlining processes and leveraging technology can significantly improve efficiency. By identifying and eliminating bottlenecks, pharmacies can operate more smoothly and cost-effectively.

High turnover rates or understaffing can also have a detrimental impact on pharmacy operations and increase training costs.

Recruiting staff is often a challenge for community pharmacists, therefore, investing in staff retention strategies and effective scheduling can help maintain operational stability and efficiency, ensuring that the pharmacy runs smoothly.

Pricing and Reimbursement Issues

Sometimes pharmacies dispense medications at a loss due to price concessions and insufficient reimbursement rates from the NHS.

Understanding and navigating these pricing mechanisms is crucial. Pharmacies must monitor reimbursement rates and adjust their pricing strategies to ensure they’re not consistently operating at a loss.

How Community Pharmacies Can Mitigate Loss of Revenue and Support Revenue Recovery

By enforcing strategic processes and leveraging advanced technologies, pharmacies can avoid the aforementioned shortcomings, reduce revenue losses, and improve their financial stability.

Missed Reimbursements

Innovative pharmacy management software such as Cegedim’s Pharmacy Manager can automate and streamline billing and reimbursement processes.

This technology minimises human error and ensures that claims are submitted promptly, reducing the likelihood of missed reimbursements.

Providing ongoing staff training is essential to keep them updated on the latest reimbursement procedures and coding practices.

Well-trained staff are less likely to make errors, improving the accuracy of claims and reducing the risk of revenue loss.

Regular audits of billing and reimbursement processes allow pharmacies to identify and correct errors quickly. A proactive auditing approach helps prevent significant revenue losses and ensures compliance with reimbursement policies.

Inventory Management Issues

Inventory management software helps track stock levels, expiry dates, and reorder points efficiently, ensuring pharmacists maintain optimal stock levels and reduce the risks associated with overstocking and expired medications.

It’s also beneficial to regularly review supplier contracts and negotiate better terms to save costs and improve supply chain efficiency. Tracking supplier performance can also ensure timely deliveries and competitive pricing.

Finally, adopting a just-in-time inventory strategy can significantly reduce holding costs and minimise waste. This approach ensures that inventory levels remain lean while still meeting patient demand.

Underutilised Services

Marketing pharmacy services such as vaccinations, health screenings, and medication therapy management through various channels, including in-store displays, social media, and community outreach, can increase service utilisation.

For example, Cegedim’s Pharmacy Display allows community pharmacists to share personalised, pharmacy-specific content and showcase their products and services.

Using patient management tools to send reminders and follow-ups for services can enhance patient engagement, whilst regular communication through apps and text messages fosters customer loyalty and increases service uptake.

What’s more, pharmacists can integrate additional services into the pharmacy’s regular workflow making them more accessible to patients. Streamlining operations in this way can encourage patients to use these services more often.

Service Quality Issues

Investing in customer service training for staff can improve interactions with patients, leading to positive customer experiences. This can result in repeat business and increased loyalty.

Similarly, collecting and acting on patient feedback helps continuously improve service quality. Promptly addressing issues raised by patients can reduce customer churn and subsequent loss of revenue.

It’s also important to remember that human-centricity goes a long way. Communication with patients about their prescriptions and your services builds trust and reliability and helps patients understand their treatments and services, improving their overall experience.

Operational Inefficiencies

Reviewing and optimising workflows to eliminate redundancies can significantly improve efficiency. For example, tools like Cegedim’s Pharmacy Intelligence Hub provide real-time insights into operations, helping to streamline processes.

Implementing flexible staffing models and investing in staff retention strategies ensures optimal staff availability during peak times. Effective scheduling improves service delivery and operational efficiency.

Benefits can also be attributed to using technology to automate routine tasks. In doing so, pharmacists can free up staff to focus on more valuable activities, improving overall productivity and operational efficiency.

Pricing and Reimbursement Issues

With new NHS developments becoming commonplace, pharmacists need to stay informed about pricing and reimbursement policies, including understanding Category M adjustments and price concessions.

Providing training for pharmacy managers on financial management and pricing strategies can help them make informed decisions that maximise revenue.

Monitoring pricing and reimbursement rates and modifying strategies accordingly also helps minimise losses from dispensing at a loss. This ongoing adjustment ensures that the pharmacy remains financially viable.

The Pharmacy Report 2024 includes additional information on how community pharmacies can effectively mitigate revenue losses and support their revenue recovery efforts.