The negative stories you hear about corporate pharmacy will all sound the same. Not enough technician hours. Too many metrics to follow. Overly high sales and script quotas we can’t meet. Micromanagement around every failure to meet goals.
Every day, staff pharmacists and pharmacy managers play dumb and hold back in terms of performance because they don’t want to set the bar too high. They think, “If I work too hard this year, next year will be even harder.”
“If I don’t spend my hours, next month I won’t get any.” Over and over, they play victim in a war against headquarters.
Thus, the bane of every corporate professional is the same. We all have to bow down to and live by these dreaded budgets.
Retail pharmacy is no different. We have budgets to follow for technician payroll, prescription count, sales, immunization quotas. Every pharmacy leader is responsible not only to know the budget limits, but also use them to make good business decisions. And every now and then, the fear of the budget and the uncertainty behind it drives our behaviors. Sometimes, for the better, but many times for the worse.
Sometimes, all we see and hear is punishment from the supervisor if we fail to comply. It could be a phone call about your action plan. Maybe even coaching and corrective action. Or worse, relentless store visits that plague your staff from getting work done and serving patients. How do we beat this game of dollars and cents so we can focus on being healthcare clinicians?
Why are Budgets So Important?
First off, we have to learn what the budgets really mean before we can defeat them. On one hand, budgets are annoying because they take away our sense of autonomy. On the other, if we are running business with someone else’s money, we have to tread carefully.
The real question is: who comes up with these seemingly inflated goals and unrealistic expectations? Why am I expected to administer 1,500 flu shots this year, but the store down the street only has to do 250? At the store level, we don’t get to see how these budgets are calculated, nor do we get any say in the matter after they are posted.
But the fact is, budgets are forecasts made by computers and algorithms, nothing more, nothing less. They are based off variables such as last year’s performance, current events, growth trends, and other factors that companies pay hundreds of thousands dollars to acquire.
They aren’t arbitrary numbers people pull out of a hat and assign at random. What they do represent is a baseline expectation to reduce risk and keep business profitable. If we can’t keep the lights on or pay the rent, we can’t do our jobs or save any lives. Remember, no margin, no mission.
Don’t Fear the Budget
Since profit directly supports our mission to deliver world-class healthcare, it only follows that we have a duty as business leaders to adhere to budgets. Our pharmacy business is allotted a certain amount of money to operate, pay its staff, and deliver on key healthcare and business outcomes. But let’s make one thing clear: the budget is not the leader. You, the Corporate PharmD, are the business owner, and you call the shots.
The important principle is that no one metric or budget is the most important. Treat the budget limits like clinical lab values and look at the bigger business picture.
If we wholeheartedly believe that immunizations prevent hospitalizations, we should recommend the flu shot and other vaccines such as pneumonia, shingles, hepatitis, etc. to as many patients possible. The budgeted immunization goal will indicate what we did last year combined with our current growth this year. If we truly care about our community and want to prevent illness, why wouldn’t we meet or surpass our budgeted goal? The goal is not important by itself, but the purpose behind it is.
Similarly, if headquarters budgeted our pharmacy to use only 100 technician hours a week this month, do we have to follow it? The answer is: it depends.
The budgeted hours are derived mainly from estimated prescription count (plus other variables), and every pharmacy in the company is treated equally. Therefore, the only way to know if you should spend more or less than 100 technician hours is to analyze how many prescriptions you fill. Let’s say your company gives you 1 technician hour per 10 scripts, which means you are expected to fill 1,000 prescriptions a week.
Armed with a report on your daily, weekly, and monthly script count, you now have the power to decide how to run your pharmacy business and take care of your team and patients.
Take Measures Into Your Own Hands
So, the next time you feel there aren’t enough hours in the day, ask yourself, “Is it just my feelings, or are we actually serving more patients or filling more prescriptions?” Print the sales and scripts reports throughout the day and learn to justify a flex in hours. If you flex up today, you’ll have to pay those hours back somehow. But if by the end of the week, the scripts continue to grow, this is called script compensation, or sales compensation. In short, the business just made more money than expected.
Now, if you’re in a leadership position, such as management, chances are you reap the benefits of this sales compensation. Maybe not now, but at your annual review. However, in addition to the potential future benefits, the real reward comes from the power you now have to manage and lead your pharmacy business.
If your pharmacy takes in an extra 70 prescriptions a week (roughly 10 prescriptions per day) above forecast, that should give us license to spend additional technician hours to compensate for the time to produce and serve. Similarly, if you successfully set up a flu clinic that attracts 100 people on one day, it only makes sense that you allocate at least 10 extra hours to do this. The saying goes, “you have to spend money in order to make money.”
Be a Responsible Business Owner
But what if there is only foot traffic, without the corresponding increase in sales and scripts? This is a conundrum all retail businesses face. Customer service increases loyalty and protects our long-term business growth and strategy. As business owners, we must factor this in our staffing decisions. Sometimes, we must overspend for this dilemma. But if this continually happens day after day, chances are there’s more that the leader and team can do to increase sales conversion.
By the end of the month, the purpose behind the budgets will become more clear. At this point, we have 4 weeks of business analytics to reference our performance. How did we measure up in terms of achieving our business goals? Were we more or less profitable than expected? If we filled more prescriptions than our technician budget demanded, were we able to simultaneously deliver amazing customer service? In the same manner, did our teams face unusual and unnecessary stress (i.e. did they take their paid 15 min breaks)?
If we didn’t meet script budgets, ask yourself, “Did we experience slow days where my team was not as productive?” As the leader, it’s important for us to be curious and assess performance in both directions. Running a profitable pharmacy business requires the Corporate PharmD to be fair and responsible.
Don’t Hold Back
In addition to being fair to the company, integrity calls you to be true to yourself. If you have a budgeted goal, don’t hold back. More prescriptions don’t just benefit others. They are a testament that your pharmacy is successful and that your patients need your healthcare services. Administering more flu shots over budget means you save more lives. Going over technician hours isn’t the end of the world if you need to preserve your customer service brand.
Exceeding goals means that you are making a larger footprint, adding more value, and impacting more people in your community. Who cares if next year’s goals will be higher? That also means you will be budgeted with more hours. Your team will be bigger because you are strategically going to hire more help. More scripts for us means more hours to play. It’s game time, my corporate beasts.
To summarize, the budgets are only estimations on paper. If that’s all we needed to run a business, pharmacy managers and leaders would be out of jobs. Metrics, reports, and budgets are to be used as guidelines for performance, and nothing more. So, stop practicing mediocrity and remember why you took the Pharmacist’s Oath.
We promised a lifetime of service, to work with the best of our abilities, and to hold ourselves to the highest principles.
As business leaders, we are expected to calculate the Year-To-Date script growth and forecast next year’s demands. It takes an ownership mindset to be able to navigate through all the information and make good business decisions. It’s up to us to strategize day in and out, and to protect our pharmacy from unnecessary stress and risk. Ultimately, we do all this to benefit our patients, our teams, and our company. Only when we fully embrace our role as Corporate Pharmacists can we then escape these chains that shackle us.
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Business Tips from The Corporate PharmD
- Take time to understand how budgets are calculated
- Use budgets and purpose to justify making business decisions
- Remember to look at the big picture of the pharmacy profit and loss
- Learn to leverage sales compensation in business decisions and conversations with corporate higher-ups