Metrics for Your Pharmacy

For pharmacists seeking to analyze the success of their business, metrics are a key area of focus. These numbers help pharmacy owners achieve a deeper understanding of their situation and gain an advantage in an industry with very tight margins.

Accounts receivable turnover and accounts receivable turn days are two important metrics for pharmacies. A/R turnover is a metric for gauging efficiency. It is calculated by adding total sales from insurance claims and credit sales, then dividing that number by total accounts receivable. Determining A/R turn days is simple: divide 365 by the A/R turnover. A pharmacy’s goal should be for A/R turn days to be less than twenty—this ensures that money from sales is being received in a timely manner, thereby preventing cash flow issues.

Another important metric is a pharmacy’s gross profit margin rate. This is calculated by subtracting total cost of good from total sales, then dividing that number by total sales. The resulting percentage represents the pharmacy’s inventory and cost to obtain inventory, per every dollar of sales. For a pharmacy, the gross profit margin rate should be at least 25 percent. This metric is very helpful in keeping inventory expenses under control and helping pharmacy owners to recognize the source of their gain or loss.