Written by 12:02 pm Pharmacy Operations

Retail Pharmacy Metrics – Part II

One of my favorite authors on business and management is Peter Drucker who once said “what’s measured improves.”  Maybe that’s too hopeful.  But when in comes to managing a retail pharmacy, measurement is often the first step to improvement.  In part I of this article I introduced what are, in my opinion, The 5 Most Important Retail Pharmacy Metrics.  This article concludes what we began by giving you 5 more very important tools which help evaluate the overall success and growth of your pharmacy.

I sometimes refer to these next 5 as the “forgotten” metrics.  They aren’t the core statistics and therefore sometimes get left unnoticed.  But mark my words, failure to keep track of these 5 things will be as incrementally disastrous to your overall business success as failure to measure the others. 

Retail Pharmacy Metrics Part II

6.  Average Daily Rx Revenue

Simply put:  What are your average daily sales dollars?  Given a relatively stable margin, your growth in total sales dollars for prescription drugs indicates a growing business.  When averaged out over the course of a month, and then compared month to month, an intelligent manager will expect to see this number increasing.  Without increases in sales (unless offset by bigger margins) your business will not be able to keep up with the naturally increasing costs of personnel, supplies, fees, services, etc.  Think of your average daily Rx revenue like a child whom you expect to see grow year after year.  When an otherwise healthy child stops growing – there is cause for concern.  The same is true with your daily average Rx revenue.  No, Rx sales aren’t the only important sales for your business, but this article is exclusively about the Rx side of your business.

7.  Return to Stock

The phrase “return to stock” simply means a prescription that was filled, but never picked up by the patient, and is eventually put back into the prescription inventory.  The prescription has been, as we say, “returned to stock.”  Most retail pharmacies will reverse claims and return to stock any prescription not picked up within 10-14 days.  Failure to do so may put the pharmacy into violation of their 3rd party insurance contracts.  It’s also simply bad inventory practice to leave such prescriptions hanging in the bin too long.  Ideally you want to minimize the frequency of this because such prescriptions are “lost” sales, and worse than that, represent wasted effort and contribute to poor inventory control.  From a clinical perspective, a “return to stock” prescription may indicate a compliance issue with the patient as well.  Pharmacies utilize a number of techniques to help prevent too many prescriptions being returned to stock such as phone calls to patients or automated messages and text alerts when a prescription is ready.  However it is accomplished, it is important for the manager to pay attention to this measurement of efficiency and sales.  

8.  POS Sales Per Hour

Another metric often used to help manage and grow a pharmacy business is the “sales per hour” figure.  Although there are different ways to display this type of data, one helpful approach is simply to evaluate how many prescriptions are rung out at the register every hour of the day.  In other words, how many are rung between 8am and 9am, then between 9am and 10am, and so on.  At first this may not seem very important, but for those who work in busier stores with limits on their staffing, knowing this number will help the alert a pharmacy manager to schedule their employees appropriately to the needs of the business. 

Can I make a side-comment here?  One area that pharmacy managers and owners often get into trouble is that they schedule their staff simply according to the personal needs, expectations, history and preferences of the employee.  This can spell disaster if it isn’t corrected.  Rather than using your existing staff to meet the needs of the business, the manager or owner sometimes hires additional staff to cover the busy hours and the result is inflated payroll and a failing business.  As a business grows – it changes – and so your staffing hours may need to change as well. 

9.  Top Performing Prescribers

There’s an old saying “know which side your bread is buttered on.”  You need to know where most of your prescriptions are coming from and, ideally, what the value of those prescriptions are.  Most pharmacy software systems can generate a monthly report to show how many prescriptions were filled from “Dr. A” and from “Dr. B” and so on.  Your top performing doctors and clinics deserve your appreciation and attention. 

Growing a pharmacy business is mostly about growing good relationships.  Sadly, some owners think they simply have to sell the right product at the right price and all will be well.  That may work for a while, but there will always be someone lurking in the shadows to sell it faster and cheaper.  Building good relationships with local providers is critical, and starting with your top performing doctors and practitioners only makes sense.

10.  Top Day Ever

Finally, I am a big advocate of goal setting and reaching higher, so I always try to encourage pharmacies to post their “best day ever” somewhere in the pharmacy to motivate growth and measure success.  How many prescriptions did you fill on your busiest day ever?  Put it on a white-board with the date.  Have someone on your team update this whenever that record is broken.  Your “Best Day Ever” board becomes a simple, tangible, and effective motivator of your staff.  There is simply something psychologically powerful about “breaking a record.”  Pushing this number higher every so often provides an opportunity to thank everyone for their efforts and displays their accomplishment.  How about buying pizza for the staff every time that number is broken?  Just a thought!

11.  Year Over Year

I said I would stop at 10, so this last one is a freebie (oh wait, they were ALL free!).  Anyway, I just throw in this last one for your consideration.  Once a pharmacy has been open for a year or two, you can begin to track your growth “year over year.”  By breaking the year down into business “weeks” you can evaluate your sales and figures from, for example, week 12 of year 1 with week 12 of year 2.  How did you perform in January of 2013 compared to January of 2014?  Looking at things by “year over year” helps you not only see your progress, but also predict your future results as well. 

So there you have it.  As I mentioned in the first post, this article was not intended to exhaust every meaningful metric that the experienced business owner needs in order to be successful.  Hopefully they were a good introduction to the concept, and will give the beginning pharmacist or new pharmacy manager some sense for how their business needs to be measured if it plans to improve.


©Jason Poquette and The Honest Apothecary.  Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Jason Poquette and The Honest Apothecary with appropriate and specific links to the original content.


Last modified: April 17, 2023