How to benchmark a pharmacy’s behind-the-counter performance

In previous blogs, we’ve discussed the importance of benchmarking when preparing your pharmacy for sale. We’ve covered inventory management and professional services benchmarking, and in this article we focus on the bread-and-butter of most Canadian pharmacies: dispensary operations.

As transaction advisors who have helped pharmacist-owners sell their businesses across the country, we know that the efficient and profitable dispensing of medications is often the most important quality potential buyers are looking for. So it makes sense that making the most of your dispensary operations can go a long way towards maximizing return when it comes time to put up your pharmacy for sale.

You can’t improve efficiency without first knowing where you’re starting – and, second, knowing where you want to go. That means measuring the right performance metrics and benchmarking your pharmacy’s performance accurately.

The gold standard metric to measure the efficiency of your pharmacy dispensary is Scripts per Labour Hour. Basically, it measures the number of prescriptions filled per hour of work by your pharmacists, pharmacy assistants and pharmacy technicians.

Why does it matter? Most importantly and obviously, it gives you an overall indication of how efficient your pharmacy is at dispensing medications. Getting more precise can yield specific action items; for instance, if you measure the time per script for each dispensary employee, it might reveal opportunities for training or better staffing decisions. It can also give you an idea of how your pharmacy dispensary is performing against its industry counterparts – and whether you need to work to improve that performance to attract buyers when selling a pharmacy business.

What level of performance should you aim for? The national average Scripts per Labour Hour for Canadian pharmacies is six. That is, your dispensary should on average be filling one prescription every 10 minutes.

It’s important to note that this is an average, not a benchmark, and there are several reasons why a particular pharmacy should target Scripts per Labour Hour performance above or below six scripts per hour. A pharmacy that fills a lot of short-term prescriptions should aim higher; so should one that uses automated systems to fill scripts. On the other hand, a low-volume pharmacy or one with a high volume of professional services delivery will have a harder time meeting the average, and so it should probably set a benchmark that is lower than six. When getting ready to sell a pharmacy, ensure that your benchmarking records are clear and concise, to ensure that buyers have accurate historical data.

What can you do if Scripts per Labour Hour comes in below your benchmark? One option is to adopt a pharmacy automation system, available from a number of suppliers and through some banners. These systems can handle a wide range of administrative and even dispensing tasks for a pharmacy, but whether and how they are appropriate for your business depends on several factors. A low-volume pharmacy, for instance, would have little use for a bottle-filling robot; on the other hand, automating administrative tasks or even answering phones might free up your limited staff to dispense more efficiently.

Even short of automation, measuring Scripts per Labour Hour can indicate areas for improvement in dispensary staffing and training. That alone makes it well worthwhile for any pharmacy.

The other dispensary metric we are sometimes asked for advice about is Compliance Packing Efficiency – that is, how long it takes dispensary staff, on average, to fill compliance packs. Pharmacist-owners usually want to know this to help them decide whether to use a central fill service for these packs to improve efficiency.

We begin by measuring how long it takes for dispensary staff to fill compliance packs (in minutes per pack filled) and then compare that to the time they spend checking centrally filled packs. The national average time for filling a compliance pack is between 15 and 30 minutes; the average for checking a pack is five to 10 minutes. Of course, these times can vary widely from store to store, but by comparing the two numbers and factoring in wage costs versus central fill costs, the pharmacist-owner can make an educated decision.

And that’s really what benchmarking is all about: enabling educated decisions that will improve your business’s operations and maximize profitability.

Read our entire Benchmarking Series: