If you’re not maximizing the use of your POS system you could be losing precious dollars.
When I first started working with retail pharmacies back in the early ‘70s, a high-tech pharmacy consisted of a Royal typewriter, a bottle of correction fluid, and a roll of clear Scotch tape. The modern pharmacy management system, with its ability to manage prescription files, organize patient profiles, bill third-party payers, and check for drug interactions, has truly become the essential professional tool for pharmacy.
But as margins continue to decline, and patients demand even more personal services, I had to wonder if a point-of-sale (POS) system has emerged as the essential business tool for pharmacy.
According to Robyn Amberg, a freelance marketing consultant, the answer is yes. And, she says, professional services are a must for any successful pharmacy. “But,” she adds, “in order to provide these services, pharmacies also need to meet payroll, purchase supplies, and pay the rent. That clearly means every community pharmacy needs to be run like a business.”
Olin Sykes, owner of Sykes and Company, a CPA firm based in Edenton, N.C., and specializing in serving independent pharmacy, says he tells his clients that having, and using, a POS system is one of the most critical business decisions they can make. Sykes adds that managing from POS system reports, knowing your margins by department, and consciously making decisions designed to improve sales and profits are all critical. “If you are not doing that you are literally throwing money out the window,” according to Sykes.
Fifteen or 20 years ago many pharmacy managers dismissed POS systems as “glorified cash registers.” The feeling was that a POS system’s primary benefit was in the front end and its most appealing feature was eliminating the need to put price stickers on front-end merchandize. But since most community pharmacies do 90% or more of their sales in the pharmacy, the value of this feature did not make for a compelling sales argument.
Little by little, as margins eroded, savvy pharmacy owners started to understand the value of many features a POS system has for the prescription department. Today the NCPA Digest, sponsored by Cardinal Health, reports that nearly 85% of pharmacies have a POS system.
McCown says he purchased his POS system somewhat reluctantly, since he was opening a pharmacy with very little front end. But, he says, the people at PioneerRx were persuasive on the benefit of the system to the pharmacy, so he included it when he purchased his pharmacy management system. Now, he say, he can’t imagine running his mostly compounding pharmacy without it. And, he quickly adds, one of the best tips he got from the PioneerRx support team was to collect email addresses and cell phone numbers. Today, his one-year-old pharmacy finds plenty of reasons to send out targeted emails and texts, which he says, “have resulted in a number of positive comments and new customer referrals.”
Chichi Ilonzo Momah, Pharm.D., owner of Springfield Pharmacy in Springfield, Pa., says her flexTRAX POS system has worked well for her 2,400-square-foot traditional-format pharmacy. Momah says that with the majority of her sales coming from the pharmacy, she knew she needed to get a POS system to process credit cards and FSA transactions. But, she adds, since installing the system she has come to value it for a variety of other functions. She says she has learned to review the data on front-end sales on a routine basis and make changes based on facts, not feelings.
Momah’s first major change came within a year of installing the system. Momah says she realized the space devoted to greeting cards was not justified by their sales. So she made the decision to remove half of the cards and fill in the space with DME. And, she says, despite some predictions from others that DME would not sell due to third-party restrictions, the products are selling well on a cash-and-carry basis. And, she adds, they add to the professional feel of her pharmacy.
Jeff Harrell, Pharm.D., is the owner of a small chain based out of Ilwaco, Wash. He is the former chair of the NCPA Steering Committee for Innovation and Technology, and is a self-professed geek. Despite his positive bias toward technology, he studiously employs what he calls the technology litmus test — that being, “Will the system make me money?” And he is a perfect example of a pharmacist who has taken a POS system far beyond the glorified cash register stage.
One example: With four retail stores, he has assigned one person to focus on doing front-end price updates. This means that his prices are always updated to reflect promotions, manufacturer price changes, or even suggested changes in price due to seasonality or market opportunities.
When it comes to the front-end, Justin Buckland, market analyst for QS/1, has two comments that might help pharmacy managers think more carefully about ways their POS system can help.
First, Buckland says, he suspects too many community pharmacies fail to realize that while the front-end might only represent 5% to 10% of sales, it accounts for 80% to 90% of a pharmacy’s image. The way a pharmacy’s front end looks and how merchandise is presented are critical marketing functions, he says.
Another opportunity, according to Buckland, is in implementing strategic pricing. He says QS/1 supports the zone pricing services of the Hamacher Resources Group, which enables pharmacies to select price zones that will maximize both sales and profits. Pricing things right is important for both profit and image, according to Buckland.
Harrell works hard to professionalize his pharmacies, and has taken advantage of his QS/1 POS system to do just that. When people come in to pick up their prescription, his pharmacy team counsels them at the pharmacy counter. Then the team places the prescription in a plastic container and directs the patient to the cash register up front for final checkout. This method, Harrell says, separates the pharmacist from the cash register; and since the sale has not yet been concluded, patients are more likely to purchase other items. This is a process that would not be possible without a POS system, Harrell says.
When it comes to managing the front end, few pharmacies do a bigger or better job than Zitomer Pharmacy in New York City. The visually impressive operation encompasses 15,000 square feet on three floors, including 5,000 square feet of toys in an upscale Manhattan location.
Frank Vella, VP of pharmacy operations for Zitomer, says that despite the size and scope of the store, pharmacy is still the cornerstone of the business. As a testament to that, he says, one key feature of his POS system is that it supports 3,500 house charge accounts.
But, Vella says, “We have a very big seasonal business, so it’s important to have our usual inventory, seasonal, and postseasonal inventory at appropriate stock levels.” To that end Zitomer recently upgraded to an Epicor Eagle POS system and, according to Vella, the new system has enabled them to improve sales and margins due to better retail pricing algorithms. And, he says, they have done this while reducing front-end inventory by 15%.
Ojai Rexall Drug owner Dutch Atchley, R.Ph., of Ojai, Calif., chimes in on the value of inventory control. This well-established 5,000-square-foot full-line pharmacy prides itself on its gift section. Atchley says that with the constantly eroding margins in the pharmacy department, he and his management team have worked hard to find niche products, promotions, and merchandizing techniques that add to both the pharmacy’s profits and the hometown feel.
One of the primary goals of this article is to encourage ComputerTalk readers who already own a POS to take full advantage of their system. To help with that goal, Retail Management Solutions has created a special POS user’s checklist.
To that end they make sure they enter every item into their POS system. This includes vendor and item number quantity, along with color, size, and style when available. While they don’t devote all their time to the POS system, Atchley says he has three full-time people trained to manage various POS functions. In addition to his primary wholesaler, he sends and receives orders electronically with American Greetings, Leanin’ Tree, and a general merchandise supplier, L&R Distributors.
With all the data in his Retail Management System’s (RMS) POS, Atchley can use movement history to more effectively gauge promotional buys. For example, when it comes to seasonal items he can see not only what he bought last year but also how much of it he sold at pre-sale, sale, and closeout prices.
Atchley, who has been in the business for 40 years, says that in his opinion, “The only way community pharmacies are going to survive is to manage the data.” He says now that things are set up, he can place orders, update prices, adjust min-max reorder points, and stay in stock on fast movers — all in a matter of minutes.
Rob Tinsley is the VP of pharmacy services for the Independent Pharmacy Cooperative (IPC). A major part of what he does is coach pharmacy managers on ways they can take full advantage of technology to provide professional services and improve profitability. He is a proponent of the management philosophy, “If you can’t measure it, you can’t improve it.” Thus he finds himself encouraging pharmacy owners to take greater advantage of the POS they already own.
To reinforce the importance of a POS system, Tinsley says that the reports a POS provides should serve as the foundation for almost every business decision a pharmacy makes. To the list of capabilities not already mentioned he adds that a POS system helps with staff scheduling and perpetual inventory, opens the door to mobile applications, and is being used very successfully in improving sales of products that are of specific importance to specific patients.
Because most modern POS systems interface so well with the pharmacy’s prescription processing system, information on prescription medications can flow to the POS system screen and facilitate a number of patient care programs that also increase OTC sales. For example, it was found that PioneerRx has a program with FLAVORx that prompts pharmacy staff to offer medication flavoring at the time of patient pickup, if flavoring had not already been requested when the prescription was dropped off. This works in many cases, as many pharmacies do not reconstitute liquid antibiotics until the patent comes in to get the medication. QS/1 has a program that identifies drug nutrient depletion opportunities and prompts the staff to suggest appropriate products.
Regarding nutrient depletion, RMS recently announced a program with Ortho Molecular Products. According to Mike Gross, VP of sales and marketing for RMS, the two companies report that the pilot program saw a fourfold increase in the sales of Ortho Molecular Product’s professional-grade nutrients, such as their probiotic and CoQ10. This free module identifies a drug nutrient depletion opportunity and then posts a message on the POS terminal alerting pharmacy personnel to recommend a specific product when the patient picks up his or her prescriptions.
Along these lines, QS/1’s Buckland suggests that pharmacists should be asking their patients what over-the-counter (OTC), vitamins, and natural remedies they take. He says they have created a way for this information to be entered into the pharmacy management system to aid in patient counseling or in providing other enhanced-care services. The pharmacist can also program the system to remind technicians to ask about OTCs.
Buckland says that another reason for this feature is QS/1’s concern that potential negative interactions between an Rx and OTCs is an overlooked area. He cites as examples the recent switch of Rhinocort and Flonase to OTC status. “Just because they no longer require a prescription doesn’t mean negative interactions won’t happen” he says. With this thought in mind, Buckland also challenges pharmacists to think of creative ways they can hold onto sales of meds switched, such as by reminding patients of the value of having the pharmacist check for drug interactions.
Loyalty programs are often perceived as the holy grail or killer application, and the desire to gain such a capability has been a primary driver in getting many pharmacies to purchase a POS.
Springfield Pharmacy’s Momah says she has implemented a simple yet effective loyalty program. Enrolled customers get one point for every dollar spent in the front end, and one point for each prescription. The points accumulate on her flexTRAX POS system, and when a customer gets to 100 points, they can be redeemed for $5 worth of front-end purchases. She says the program seems to be well received, and it draws more attention to front-end purchases. And, she adds, not having to bill a third-party payer is an added benefit to increased front-end sales generated by her loyalty program.
PioneerRx’s president, Jeff Key, says one simple thing PioneerRx does that seems to help is to rank patients by purchases. Patients ranked in the top 25% of a pharmacy’s sales are identified on both the pharmacy and POS screens, alerting staff that the particular customer they are waiting on is a VIP. The hope, according to Key, is that pharmacy personnel will make an extra effort to provide a little extra personal attention to this customer.
Epicor’s senior product manager, Keith Lam, prefers to call loyalty programs “patient engagement programs.” He suggests that pharmacies find ways to tailor the program to fit the unique personality of their pharmacy. Then, he says, they should use the data in the system to provide rewards and other offers that fit the profile of a particular patient. For example, he says, some customers may prefer to receive offers based on a particular characteristic, such as being a veteran or senior citizen. Or, he says, it could be based on product purchases such as vitamin or cosmetic purchases. “The more you can do to customize your rewards, the more effective your program will be,” he says.
And once again from Adam McCown, who noted how important it is that you get email addresses and text numbers: Enrolling people in a loyalty program is a way to gather them in a socially acceptable manner. Robin Amberg advises including birthdates on the enrollment forms, as her experience with PrescribeWellness indicates that sending people a Happy Birthday greeting is a great way to impress them and get referrals.
What’s Trending in POS?
According to IPC’s Tinsley, one of the next big things in technology is mobile. RMS’s Gross agrees. He says mobile tablets are a great way to provide a curbside pickup service for pharmacies unable to offer drive-up windows. Another way pharmacies benefit is by having pharmacy personnel take the mobile device with them onto the sales floor. He says that this has proven to be particularity useful for items that sell better with a professional consult, like nutritionals, DME (durable medical equipment), or diabetic supplies. And, he says, mobile devices have proven useful in sidewalk sales.
Epicor’s Lam says that one great application they promote is special orders. Because the Epicor POS system can access wholesaler and other vendor catalogs, pharmacy staff can consult with customers about items not normally stocked and then order them right from the POS system. The POS system prints a barcoded label right at the cash register.
When the special item is received and scanned, the system alerts the receiving clerk that the item is a special order. The item can then be put in a will-call area. The system also texts the customer to let him or her know the product has arrived. This process, according to Lam, ensures that special orders are not put on a shelf someplace and lost.
One final mention on what’s trending. QS/1, GSL Solutions, and PerceptiMed — and perhaps others — are actively marketing automated will-call bin management systems that tie into POS systems. The goal is to simplify, speed up, and improve accuracy for both the prescription pickup and the return-to-stock process.
Tung Nguyen, Pharm.D., manager of Alisal Pharmacy in Salinas, Calif., has installed the ScripClip system from PerceptiMed. This system supports several types of prescription bags, all of which are equipped with multicolor-capability LED lights activated by a wireless transmitter. When a patient presents for a prescription, the clerk enters his or her name on the POS screen, and a color-coded light flashes in the handle of the hanging bag containing the waiting patient’s medication.
Nguyen says that filled bags are put on his will-call bin rack in random order, as his staff no longer needs to move bags around to find a spot in alphabet order. He says the system supports multiple registers, as it automatically identifies each POS register with a different-colored light, preventing a clerk from accidentally picking up another clerk’s flashing prescription bag. And if a patient has medications in two or more bags, the system directs the staff member to all of them. Then it double-checks that all items are accounted for at the register.
Disaster Preparedness Checklist
Check out the NCPA Foundation’s Disaster Preparedness Resource suggestions to help minimize the potential consequences of a disaster and access to the Pharmacy Disaster Support Center for disaster-specific checklists, resources, and tools related to preparedness, response, and recovery user’s checklist.
So there you have it: The ComputerTalk case for how and why a POS system has become the essential tool for the business of pharmacy. The challenge, as always with any technology purchase, is deciding how much power you need and how many bells and whistles you want to pay for.
But since most retail pharmacies, big or little, old or new, already own a POS system, the bigger challenge for most pharmacy managers is determining how to take full advantage of the POS systems they already own. Doing so will help them run a more efficient and profitable business. CT
Bruce Kneeland is an industry consultant who helps retail pharmacies better serve their patients. He can be reached at email@example.com.