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Pharmacy Calculator

Making the decision to add or drop a provider from those you accept is not easy. Many pharmacies use factors such as number of potential customers, or the name recognition of the client. Making the decision should be for the most part, should be a financial decision.

Will you make money because you have decided to add another provider? With this Pharmacy Calculator, we will assist you in giving consideration to several factors. We will include things such as front end sales, the reimbursement rate, the cost of borrowing money, and your experience with receiving payment from that third party.

To fully utilize the Pharmacy Calculator, you will need:
Your financial statement representing 12 months
Information denoting the percentage of your square footage dedicated to the pharmacy
The sales breakdown from your front end and your pharmacy section
The payment schedule from the provider you are considering
The interest rate for borrowing money from your bank

Step One
Begin this exercise by determining how you want to calculate the cost of your filling a prescription. When you click on your choice, enter the required information. As this is not an exacting calculation, you may one to perform the exercise with more than one option.
Option #1: Ratio of sales in your pharmacy to the front end sales. To get all of the answers possible with this calculator we suggest that you include these numbers regardless of which option you have chosen.
Option #2: Square footage of the business
Option #3: A combination of the two methods in which you assign percentages of certain expenses between the front end and pharmacy

Selecting the first option, utilize the next two questions:
Enter the gross sales for your business for the past 12 months

Enter the gross sales from the pharmacy part of your business

Click Step Two to continue.

Selecting the second option, utilize the next two questions:
Enter the total square footage of your business

Enter the number of square feet that the pharmacy part of your business occupies

Click Step Two to continue.

Selecting the third option, utilize these questions:
Enter the total operating expenses for the past 12 months

Utilizing this option, you have determined that some of your expenses should be charged more to one of the two sides of your business. Complete the chart for up to 7 expenses by entering their name, the annual amount of this expense, and the percentage you want to charge to the pharmacy.

Expense	Amount	Pharmacy
	$	%
	$	%
	$	%
	$	%
	$	%
	$	%
	$	%

Click Step Two to continue.

Step Two

The next step of this exercise is to calculate the cost of filling the "average" prescription. Enter the number of prescriptions you fill during a year.

Based upon the information you have entered, your cost to fill a prescription is: $ .

Step Three
The third step asks the question of the capacity of your business to fill prescriptions.

You entered the number of prescriptions you are filling each year as being . Based upon your current staffing, and the capacity of your business, how many prescriptions do you believe you could fill with out incurring any additional expense.

How many prescriptions do you expect to fill for the program you are considering?

Based upon the information you have entered, if the next number is positive you can expect to be able to handle this new program without any additional expenses. If the number is negative, you will need to adjust your staffing expense, and prescription facility with the following exercise:

Enter the total cost of staffing your buisness for the past year. Be sure to include workman's compensation, insurances, and any benefits.
$
The next number is a net personnel cost to fill a prescription: $
To continue, multiply the capacity deficit (you may want to select a larger number to ensure profitability) by the net personnel cost and then change your 12 month operating expenses to include this additional amount.

Step Four
The fourth aspect of this calculation is one that is often overlooked by a pharmacy - the time delay in collecting the payment from the Third Party Administrator and the cost of this delay.

Enter in the box below, the number of days after you fill the script that you receive payment from the administrator.

Enter in the box below, the cost of money as an annual rate. To answer this question, you may want to ask a banker what they would charge you for an unsecured loan in an amount equal to your end of the month accounts receivable.
%

Step Five
The information about the reimbursement from a third party is the most critical part of this calculator. Enter the reimbursement formula offered by the third party administrator:
AWP - + $ .

Enter the cost of goods from your wholesaler:
AWP -Ba

In making these calculations, the size of your average prescription is going to influence the answers you will receive. Enter that number here
$ .

The final analysis
Based upon the information you have provided, for each prescription you fill for this program, you can expect your profit to be: $ . This number is applicable only to the prescription filling part of your business.

As part of your business comes from the front end sales, we have calculated a ratio of front end to pharmacy sales for your business. In addition to the answer you have already received, and based on the information you have provided, you should anticipate this additional amount of sales from the front end of your business: $

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