Getting to the bottom of actual dispensing profit (and how to improve it)

Shortages on the TV, minimum wage increases, lower dispensing fees, prices spiking. If you run a dispensary, even a fleeting sight of these may have delivered a cold, sinking feeling in your stomach. It’s a feeling that demands an answer to the question – “how will it all affect our profits?” – and the problem is, that without the means to figure this out – it can leave you groping in the dark for ways to make things better.

Knowing the basics of exactly how much you’re buying and selling stock for is business 101 – but it’s made unfeasibly hard for dispensaries and pharmacies.

Historically, so many systems have not provided many of the puzzle pieces.  Some portals or PMRs don’t show you tariff or concessions, certain suppliers have smoke and mirrors pricing, and you then have to wait months for FP34s for what you’re dispensing right now.

And that’s before clawback, PAs, AAs or dispensing fees.

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Many teams rely on accountants looking at the ‘books’. That was something that surprised Edward Down, when he joined Caythorpe & Ancaster surgeries, that the team only knew if they were doing well if “Our accountants tell us we’re making money.”

But accountants work on last year or last quarter’s results. How do you know how profitable ordering is now – and do they have all the info to be able to say?

There’s not been one obvious way for managers to bring everything together. That’s why we put a lot of effort into bringing all the possible data we can into one place – our monthly purchasing profit report.

For member Michelle Pilo-Beech at Hardwicke House Group Practice, it’s one of the main reasons they are members: “Our visibility on profits has increased. Both through using the e-CASS ordering portal and monthly profit reports, which provide clearer and timely financial insights.”

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They can dig into the detail into seeing profit/loss on every single product that has been ordered via e-CASS. For Michelle, that’s helpful because, “We can easily identify areas of loss or lower margins, and review these accordingly. “

That can mean using MDS deals better, switching to profitable brands, or if ordering through a supplier or discount scheme is actually hurting the bottom line.

It also lets them know if the changes they made in the last month are working – so rather than worrying at the point they order, teams can feel good that what they're doing is working.

“The reports allow us to regularly review dispensing data, and visibility of tariff and clawback on e-CASS means staff are confident in making more informed decisions.”‍

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In short, the info gives them a way to manage stuff, not just more things to worry about. As Rachael says - “the value is not just in seeing a number, but in understanding the story behind it.”

Whether that’s upping your net profit, allowing your team to have some ‘quick wins’ by showing them new products to order or cutting out costly errors, it can make ordering less fraught for managers, and their teams.

Rachael's key tips to understand your profits:

• Use a system that includes net pricing, concessions & clawbacks at the point of order
• Know your clawback %
• Understand your generic/branded mix
• Chat with other dispensaries & compare how different schemes, suppliers & formularies impact the bottom line
• Audit supplier price tiers, discounts, MDS deals – make sure you understand all the levers impacting prices