Grading Your Pharmacy’s Performance

If you’re primarily focused on your overall sales, reimbursement rates and acquisition costs to gauge your pharmacy’s performance, you’re only getting part of the picture. Instead, it’s important to regularly review a variety of metrics to ensure all aspects of your store are operating optimally. Here are some examples of metrics that can help you fully and accurately grade your pharmacy’s performance:

Metrics to Determine Your Current Profitability

Gross Profit Margin (dollars) and Profit Margin Rate (percentage), which are the most used metrics to measure a pharmacy’s financial health. When your gross profit margin is low, you will likely have a difficult time covering your operational expenses. Alternatively, when it’s high, you’ll have room to invest in and expand your pharmacy.  

Rx Inventory Turnover, which is a metric used to measure the annual cost of goods sold against the value of your Rx inventory. This is important to know because inventory is the biggest operational cost for pharmacies. When left unchecked, your profitability may be impacted by sending money on inventory that’s just collecting dust on your shelves.

Non-Rx Gross Profit Percentage, which indicates how much of your gross profit is from other areas, like cash-pay services and OTC items. This metric is important because it enables you to monitor and grow sales for things that don’t rely on reimbursement from an insurance payor. Read more >