Four tips on making smarter purchasing decisions
Rising drug costs and declining reimbursements significantly impact profits, and long-term care pharmacies today have to do more with less. Most pharmacies spend a significant portion of their total budget on drug acquisition, so it's no surprise that a core component of success revolves around making the right purchasing decisions.
By analyzing data from reports generated from routine purchasing decisions, you can gain valuable insights to identify potential savings and opportunities for new revenue streams. Review the following four steps to better understand your purchasing decisions, the impact of industry trends and how data can improve your bottom line.
1. Understand the generics landscapeWith ongoing increases in generic prices and lagging reimbursements, an awareness of the generics landscape and how it impacts your business is critical to maximizing your opportunities and promoting growth.
A robust reporting system can be a big asset in predicting real savings. For example, a Contract Compliance report can help identify non-contract purchases which can be directed to contract items. A Lost Opportunity report can display price differentials between generics associated with these non-contract items that could help you make better decisions in the overall purchasing process.
In addition, comparing industry reports against your internal data can help you gain control and navigate the ever-changing generics landscape. For example, by monitoring generic launches and the number of suppliers at launch, you can better predict pricing in the coming months.
2. Watch for patterns
Watch for patterns in your overall purchases. You may be paying too much attention to the details, and not enough to the larger picture. Ask questions when evaluating your purchasing habits and reviewing your reports, such as:
- What drugs are your facilities requesting the most?
- Are you purchasing the right packaging sizes?
Review drug spend reports by Therapeutic Class or Generic Code Number, which can help identify purchasing trends unique to your customer base. These reports can also help you determine whether or not expanding into specialty or other new markets may help increase revenue.
Generating data on your fastest-moving and in-demand drugs can provide you with valuable insights. If you compare last month's purchases to monthly averages via a Time Series report, you can view purchasing decisions over time. A month-over-month or year-over-year report can provide a more holistic look at purchasing and a better gauge to recalibrate your overall strategy.
3. Evaluate your data in parallel with industry trends.
With frequent market and regulation changes, revisiting reports is important. Understanding market share and contract compliance issues is a critical component of growth; however, staying informed can be a time-consuming task. External resources from reputable pharmacy organizations are often the first to publish breaking industry news.
A pharmacy-management system that presents readily accessible, newsworthy data can play a big part in helping you determine what to buy and when. A Cost-Change report can help identify products that have undergone a price change during a specific time frame, and determine the cause, based on the information you've collected.
4. Foster relationships with customers.
When you analyze available reports, you gain powerful knowledge that can be shared. The goal is to inform existing and potential customers that you understand their specific needs and assure them that your business strategy is consistent with theirs. This is particularly important with long-term care pharmacies, given the Medicare Part A capitated rates. In order to successfully help their customers manage the bottom line, long-term care pharmacies need to demonstrate measurable cost savings. Using reporting and data to support these cost-savings claims, the long-term care pharmacy can transform the relationship with the facility from one as a vendor to a strategic partner.
Smarter Purchasing Starts with Data
Pharmacies today are being forced to take a closer look at the bottom line and identify ways to operate more profitably. Paying greater attention to the industry at large and your pharmacy's performance is crucial, though it's hard to make sound decisions without good data. If you are searching for ways to increase efficiencies, promote growth and transform your pharmacy, start with data generated from your business operations. Look for reports that can help you analyze past decisions, understand industry trends and provide the foundation you need to make improvements over time.
Rich McKeon is Vice President of the McKesson Alternate Site Pharmacy business. For more information about long-term care, infusion and specialty pharmacy solutions, email email@example.com, or visit www.McKessonAlternateSiteRx.com