Is waste eating away at your pharmacy’s profits?

In previous blogs, we’ve talked about how pharmacist-owners can measure their pharmacy’s performance and improve it by using the right benchmarks. But what if you do all that and discover that your pharmacy’s profitability is still lagging? Finding the right answer matters, obviously. The more profitable it is, the more money an owner will get from selling a pharmacy business. And quite often the answer is relatively simple: waste.

Identifying and eliminating operational waste can make a big difference when an owner decides to sell a pharmacy.

Savvy potential buyers will probably take a very close look under the hood. They will comb through financial records and indicators of the business’s health like competitive landscape, location, staffing and store facilities, but they will also look for the subtle factors that might be undermining profitability.

If they find wasteful practices, then potential buyers are much more likely to come in with a lowball offer. And the pharmacist-owner might very well decide to take it.

You don’t want to be one of those pharmacist-owners. You want to drive the value of your pharmacy through waste reduction wherever possible. That process begins with knowing where waste can occur and figuring out what to do about it.

Where do you start? One useful approach is offered by Lean Six Sigma. It’s a management system that took off in the early 2000s as a way to reduce waste and defects. It’s actually a hybrid of two philosophies: the Lean methodology adopted by Toyota in the 1940s, and the Six Sigma approach developed at Motorola in the 1980s.

The details of Lean Six Sigma can get pretty technical, and they don’t all apply to your typical pharmacy operation. But the way it thinks about waste can be very useful, indeed. So, if you’re searching for what’s undermining your pharmacy’s efficiency and therefore its profitability, here are eight areas of waste that Lean Six Sigma highlights:

How often does someone in your dispensary fill an order in error? How often do prescriptions require reprocessing? How much time and money are wasted when you have to do that? And how can you fix it? Better technology? Staff training? More staff? Or maybe just different staff?

Does it often happen that your dispensary fills a prescription that no one picks up? Could an appointment-based model help prevent that from happening?

How often does this happen? A technician waits for a pharmacist to finish something before they can finish their own task. Or vice versa. It might be just a few minutes, but if waiting occurs frequently throughout the day, then the wasted time can really add up. How can you stop playing the waiting game? Look at staff scheduling, at dispensary resourcing, and at whether better communications can help avoid so much standing around.

The scope of practice for pharmacists and technicians is expanding everywhere these days. But are you still running your dispensary in the old-fashioned way? Are you maximizing the talents of your staff? Do you trust them to take on all the duties their roles allow? If not, why not? Are there opportunities for more training or new hires? Think about how to more efficiently delegate low-value and high-value tasks to get the most out of everybody.

How efficient is your delivery system? Are there ways you can improve it?

Goods that are just sitting around eat up space and resources. If they don’t move, you lose. Most pharmacist-owners we know manage their dispensary inventories pretty well, although appointment-based models and other strategies can often make it even better. Front-of-store is too often another story, however.

Here’s one many pharmacist-owners don’t even think about, but they should. If it takes five extra steps to get from the counter to the dispensary for every prescription, and you have to make the trip 20 times a day, that’s 100 yards wasted. Or about 11 miles a year. Multiply that by the number of dispensary staff you have, and you could be wasting hours and hours of time just getting from Point A to Point B. Spending just a little bit of money on better design can pay a big dividend.

Do all the tasks in your dispensary and front-of-store really serve any purpose? It’s worth taking a look and deciding whether they are really necessary. One of the most common examples of extra processing in pharmacies is over-documentation, in particular when it comes to professional services. Redundant efforts equal wasted time, and time equals money.

Considered individually, these areas of waste might seem like no big deal. But project their impact over time and they can do a lot to undermine the profitability of your pharmacy.