ComputerTalk likes to feature pharmacies who are investing in technology to not just solve business problems but to allow for growth. In our Sept/Oct issue, I spoke with Kevin Fearon, R.Ph., COO at Absolute Pharmacy in North Canton, Ohio, and Mary Jo McElyea, Absolute’s business manager, about their recent investment in a Synergy Ultra. Fearon and McElyea see the niche for LTC pharmacy is to bridge that gap between a skilled nursing facility and home by offering compliance packaging to increase patients staying at home. To do this well, Fearon and McElyea saw the solution in blaster packaging. In a classic example of working with a vendor to get what the pharmacy needs, Absolute asked for verification in machine and SynMed built it. Synergy President Jean Boutin says the company was happy to listen to what Absolute needed. “SynMed blister pack automation really became their tool of choice to diversify their packaging options and offer new services,” says Boutin. Read the feature story here. Get a checklist of what to consider here.
Making the Investment
Of course, installing automation is a financial commitment to your business. Automation can range in price from $4,500 to $7,500 for a table top counter to $145,000 for compliance packaging robots. These larger installs had been the purview of hospital pharmacies, but LTC and community pharmacies see this packaging to do what Absolute is doing: catching the patient at discharge and staying the pharmacy as choice. The financial side of installing automation of any size does require planning. Here are things to consider.
- Do you want tabletop, vial filing or compliance packaging?
- How many scripts are you filling now and what do you expect to pickup? Is there a pharmacy closing and you plan to absorb the extra volume, or do you want to offer new options to facilities?
- Review your budget, your current expenses and commitments.
- Decide what you need now and consider the slack to allow for growth.
- Calculate delivery, installation, and training (usually included in the list price).
According to Ardy Cortez with Americorp USA who handles financing for many pharmacy automation vendors, the price for automation ranges from $4500-$7500 for table top counters to $145,000 for packaging automation. Samantha Cockburn at Synergy Medical advises that for blister pack automation, i.e. the ability to efficiently and accurately replace manual production of 1,000+ multidose blister cards per week, a pharmacy should estimate $5,000 per month in payments over five years, and an annual maintenance cost between $15,000 and $20,000.
Ask your vendor who they use to finance and talk to your bank. If you plan to own at the end of the lease, which Cortez says most in the market do, there is a lower operating rate and the purchase price is fair market rate at the end of the lease. A lease means owners can take advantage the 179 tax deduction. As you decide on financing, consider the deposit, many companies want 50% down, which can be wrapped into the financing, says Cortez. Cortez’s company can also make the first payment and work that into the payment plan. Ask when the first payments are due; usually it gives time for the robot to be built, installed, and operational before the first payment is due. A line of credit can be a short-term solution as well as you consider your cash flow issues, including covering payroll and inventory. Leasing gives you the ability to depreciate the hardware and write off the interest. Graduated leases might be helpful as you bring on new business. Ask yourself if it is beneficial to have two years of lower payments and then bump them up for cash flow reasons. Read all documents carefully to verify there are no penalties for paying down a loan early. We wrote a thorough case study in our July/August 2015 issue that includes a list of financing terms. Read the case study. Another resource is an article that explores financing options for automation systems by Live Oak Bank’s Jimmy Neil. Read the article here.
The pharmacies who install robotics following a similar line of thinking: look carefully at what you need now but allow for growth. Then consider the budget and work out a financing options that lets you do the most you can.