Update on our store!

[MountainPharmD]

Slight correction. Pharmacy itself cannot be a 340B entity. They service 340B covered entities (even if the pharmacy is owned by the entity) patients with qualifying prescriptions. The downside of covered entities owning their own pharmacy is that PBMs will slash reimbursement to 340B CE owned pharmacies. Get around this by having the pharmacy managed by a separate entity.

I've read PBMs will start slashing reimbursement to contract pharmacies as well. I think the 340B gravy train is about to stop.

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[Its Z]

I've read PBMs will start slashing reimbursement to contract pharmacies as well. I think the 340B gravy train is about to stop.

How will PBM know which prescriptions are being processed as 340B? During your normal adjudication, no one knows if the prescription is 340B or not since the switch data intercept occurs post adjudication.

The one potential new rule (340B Mega Rule) that's about to be released that can potentially affect the profitability is they may mandate covered entities may not pick and choose profitable 340B prescriptions and fill both brand and generic regardless if it's profitable or not. This will affect Walgreens the most because they're the only one with their own system that only fills 340B prescriptions (pick and choose) that benfit Walgreens. That's why I do not contract with them. CVS will be fine since they're the only chain that requires both generic and brand for 340B.

 

[marscole]

Dear Doctor M,
Greetings!! Congrats for your hard works and achievements. I wonder how you begin with this business? You're graduating from UB, and you moved to FL, and how do you see the demands for that particular area?
Thank you!!

 

[HouTX]

PM you Z, hopefully you can point me in the right direction

 

[BenJammin]

All right Z...I need some advice on 340B.

You're way too late. 340b ended July 1st.

 

[MountainPharmD]

Quite easily Z. By audit and/or requiring all pharmacies to report their 340B status.

 

[Its Z]

You're way too late. 340b ended July 1st.

really?

 

[Its Z]

Quite easily Z. By audit and/or requiring all pharmacies to report their 340B status.

Actually anyone can go to HRSA OPA website to see who's registered as 340B covered entity and contract pharmacies.

So PBM will audit every pharmacy and every prescription retrospectively see which was 340B and then take the reimbursement away?

Cool... that will be an awesome Post Edit software ..... there's an opportunity right there for some.

 

[MountainPharmD]

You're way too late. 340b ended July 1st.

All right! I guess I don't need to worry about it then...

 

[MountainPharmD]

Actually anyone can go to HRSA OPA website to see who's registered as 340B covered entity and contract pharmacies.

So PBM will audit every pharmacy and every prescription retrospectively see which was 340B and then take the reimbursement away?

Cool... that will be an awesome Post Edit software ..... there's an opportunity right there for some.

PBM's own the pharmacy profession. They can do what ever they want. I just got done filling out Caremark's 49 page application to become a preferred pharmacy. There were at least 4 places I had to indicate if I was a 340B contract pharmacy, if I mailed prescriptions out or I did any compounding.

 

[Doctor M]

PBM's own the pharmacy profession. They can do what ever they want. I just got done filling out Caremark's 49 page application to become a preferred pharmacy. There were at least 4 places I had to indicate if I was a 340B contract pharmacy, if I mailed prescriptions out or I did any compounding.

They own all of us. i ran a compound through, had to reverse it and rebill, and when we rebilled, it was not covered. really? ok, so you covered it 20 mins ago, now its not. cool. compound was made already. Gave it to the patient...They amend their contracts to their benefit, always...there is nothing for you to sign to accept the amendment...just know that they are there to stick it in your rear end...we have hired counsel; yes we have a lawyer on call because these PBMs can try to make your life miserable. I give it right back.

 

[MountainPharmD]

The one potential new rule (340B Mega Rule) that's about to be released that can potentially affect the profitability is they may mandate covered entities may not pick and choose profitable 340B prescriptions and fill both brand and generic regardless if it's profitable or not. This will affect Walgreens the most because they're the only one with their own system that only fills 340B prescriptions (pick and choose) that benfit Walgreens. That's why I do not contract with them. CVS will be fine since they're the only chain that requires both generic and brand for 340B.

Am I correct in thinking this new Mega Rule will be beneficial to contract pharmacies? Walgreens is not the only company that utilizes a 340B system that picks and chooses only profitable rx's. SunRx owned by MediImpact does the exact same thing. Only prescriptions that hit a certain profitability point for the covered entity hospital are filled as 340B. As it's set up now the contract pharmacy gets the shaft. The 340B patient savings on low aquisition cost generics come from the reduced profit margin to the contract pharmacy.

 

[BF7]

First off, congrats to DoctorM and his partners! This thread brings big smile to my face. I've been a Pharmacy owner for 4 years now and it was the best decision of my professional life. I began my career working for Albertsons Pharmacy, then I worked at 2 PBMS; one in a mail order operation and for the last PBM in the Clinical Services Department processing Prior Authorizations. A PBM consolidated my previous employer and I was left without a job but I was given 4 months of severance pay. So I used some of that severance pay as a down payment ($15,000) on a very large loan to buy an existing store. It was nerve racking at first but by month 3, I was seeing just how profitable the business of Pharmacy can be, but even more rewarding was the level of professional respect that a Pharmacy owner gets from our patients. It is completely unique to independent Pharmacy and even if the financial rewards were equal, that sense of self respect and the professional dignity that you leave work with everyday is well worth going into ownership by itself.

Regarding my store, I bought an old fashioned store complete with a Soda fountain and lunch counter. We do sandwiches, Ice Cream sundaes, Frito pies etc., and I have a wide variety of Candy and Toys for children in my 3900 square foot building. I am always looking to find like minded Pharmacists to talk to and network with. BF7

 

[BF7]

Very interested with your ownership posts. I have seen a bunch of pharmacies close, med. shoppes and a bunch of independents. I also know of pharms that were going to buy the stores from existing owners. the banks would not loan them the money based on tax returns etc of the stores. also, accountants would not recommend buying them. these were stores doing 700 to 1200 rxs per week. Perhaps these owners were just tired of it. Perhaps they didn't manage things well and paid themselves a bit to much. Perhaps Doctor M and his partner will start a rebirth of independent pharmacies. One can only hope.

Pharmacies are unique businesses and it takes an accountant who has experience looking at Pharmacy financials to be able to properly evaluate a "Pharmacy's financial health"...and quite honestly a lot of Pharmacists are not the best businessmen and they don't realize that when they are getting ready to sell, it is imperative to meet with an accounting service who can provide the proper expertise on how to make your financials look most appealing. I can tell you that it is every pragmatic Pharmacy owner's goal to make your NET PROFIT look as close to ZERO as possible for Tax purposes. If you can show a loss , even better. Howevere, when it comes time to sell your business, your goals and your financial strategy needs to change drastically.
Regarding bank financing, there are only a few players giving Pharmacy loans....Live Oak Bank 1st Med Financial and First financial bank (of Arkansas). To make a long story short...the average Gross profit for a Pharmacy is 22-25%..so you take your net sales, multiply it by 0.23 and that will leave you with your gross profit, from which you pay out your staff salaries, electric bill, computer system bill, etc.... (everything but the MEDICATIONS)

 

[BF7]

Am I correct in thinking this new Mega Rule will be beneficial to contract pharmacies? Walgreens is not the only company that utilizes a 340B system that picks and chooses only profitable rx's. SunRx owned by MediImpact does the exact same thing. Only prescriptions that hit a certain profitability point for the covered entity hospital are filled as 340B. As it's set up now the contract pharmacy gets the shaft. The 340B patient savings on low aquisition cost generics come from the reduced profit margin to the contract pharmacy.

Pharmacies that are "losing" at 340B simply haven't leveraged themselves with a proper reimbursement structure....whether that be in the form of a flat fee (say $20) for every RX filled for the covered entity (you'd win on the MAC'd out generics)or in the form of a flat fee for drugs with a retail price of less than $50 ( $20)and a spread percentage of 30% of the drug retail price(+ the $20 flat fee ) for medications that have a retail price of greater than $50. I utilize Macro helix and I work directly with the Hospital administrators..it has to be a win-win or there's no point.

 

[Doctor M]

Here is an update: We are retiring after 5 years.

 

[southpharmindy]

Congratulations! Are you guys selling the store or just scaling your own hours back?

Thats the career path I want to follow.

 

[Doctor M]

Congratulations! Are you guys selling the store or just scaling your own hours back?

Thats the career path I want to follow.

Sellinh or closing, which ever comes first

 

[Momus]

Sellinh or closing, which ever comes first

If it is about the money, closing makes absolutely no sense if it's a good business. You can just manage remotely hiring other pharmacists.

 

[farmadiazepine]

I'm guessing the LTC or living facility or nursing home idea you had worked out really well? Congratulations!

 

[type b pharmD]

Pharmacies that are "losing" at 340B simply haven't leveraged themselves with a proper reimbursement structure....whether that be in the form of a flat fee (say $20) for every RX filled for the covered entity (you'd win on the MAC'd out generics)or in the form of a flat fee for drugs with a retail price of less than $50 ( $20)and a spread percentage of 30% of the drug retail price(+ the $20 flat fee ) for medications that have a retail price of greater than $50. I utilize Macro helix and I work directly with the Hospital administrators..it has to be a win-win or there's no point.

Macro helix for win win . One entity I worked with made almost 5 million /yr on 340b small volume, utilizing heavy purchasing power

 

[Doctor M]

If it is about the money, closing makes absolutely no sense if it's a good business. You can just manage remotely hiring other pharmacists.

In your eyes. Walking away with more money than many of you will make in 10 lifetimes, it makes sense. If you have ever owned an independent, the time and effort it takes at some point will make no sense. That time is now.

 

[Momus]

In your eyes. Walking away with more money than many of you will make in 10 lifetimes, it makes sense. If you have ever owned an independent, the time and effort it takes at some point will make no sense. That time is now.

I doubt you can get anywhere close to $52M (4o years X $130k X 10 lifetimes) for your pharmacy closing or selling >_>;

 

[Doctor M]

I doubt you can get anywhere close to $52M (4o years X $130k X 10 lifetimes) for your pharmacy closing or selling >_>;

Lets just say im done no need to continue. No more audits no more chargebacks, no more bs.

 

[Doctor M]

I doubt you can get anywhere close to $52M (4o years X $130k X 10 lifetimes) for your pharmacy closing or selling >_>;

Ok ok,We all tend to over exaggerate maybe 3 lifetimes or 4.

 

[BF7]

Macro helix for win win . One entity I worked with made almost 5 million /yr on 340b small volume, utilizing heavy purchasing power

We do about 350-500 Rxs per month on 340b... If we maximize our opportunities we add about another $10-15k per month in gross profit. $5million per year is likely a significant amount of volume of Rxs more than the typical store does... You'll need to provide more detail for that to be believable.

 

[BF7]

Sellinh or closing, which ever comes first

I've been an owner for 4.5 years... I've done very well when compared to my career as an employee but I'm nowhere near retiring and I don't have any partners.congrats on your profitable exit from pharmacy.

 

[BF7]

Sellinh or closing, which ever comes first

Wait... Selling or closing? Those are 2 entirely distinct and different avenues and one is likely to end up enriching you while the other is likely going to result inyou selling assets at cents on the dollar.

So did u list your store with a broker?

 

[type b pharmD]

We do about 350-500 Rxs per month on 340b... If we maximize our opportunities we add about another $10-15k per month in gross profit. $5million per year is likely a significant amount of volume of Rxs more than the typical store does... You'll need to provide more detail for that to be believable.

Way more volume. Probably 10x more 340b scripts per month than that but also w organizational purchasing power that reflects at least 1200 rx /day

I shouldn't have said small volume .. to me a volume of 100/day is small.

 

[Doctor M]

Wait... Selling or closing? Those are 2 entirely distinct and different avenues and one is likely to end up enriching you while the other is likely going to result inyou selling assets at cents on the dollar.

So did u list your store with a broker?

We have a potential buyer.

 

[kvl1027]

We have a potential buyer.

Congrats! I understand completely. If you can get out now and make some serious cash, then why not. Is someone looking to take over the business or are you selling out to a chain? Let me know if the buyer falls through, I'm working in Tampa now.

 

[Doctor M]

Congrats! I understand completely. If you can get out now and make some serious cash, then why not. Is someone looking to take over the business or are you selling out to a chain? Let me know if the buyer falls through, I'm working in Tampa now.

Take over the business. Everything is in place. Staff, drugs, hoods, EVERYTHING. Last resort will be to sell to a chain. If you are interested, let me know

 

[southpharmindy]

5 million a year in sales is not hard to believe. The average store is about 200 rxs a day and roughly 3.5 million a year in sales. 5 million a year would be a store that does between 400-500 rxs a day. You're looking about about 20% profit so of the 5 million you'd be bringing home 1 million. Now not every pharmacy does 400-500 rxs a day; thats a huge store. The average store would do about 200 a day and bring home 700k.

What makes Dr. M store unique is the compounding. There are significant profit margins on the compounds; 1000% or more. On the sterile compounds it is a lot more.

He also has a large long term care business.

I'd be doing the same thing if I were in his shoes. Its why everybody goes into business for themselves. At some point you make enough money that you can walk away.

 

[Doctor M]

5 million a year in sales is not hard to believe. The average store is about 200 rxs a day and roughly 3.5 million a year in sales. 5 million a year would be a store that does between 400-500 rxs a day. You're looking about about 20% profit so of the 5 million you'd be bringing home 1 million. Now not every pharmacy does 400-500 rxs a day; thats a huge store. The average store would do about 200 a day and bring home 700k.

What makes Dr. M store unique is the compounding. There are significant profit margins on the compounds; 1000% or more. On the sterile compounds it is a lot more.

He also has a large long term care business.

I'd be doing the same thing if I were in his shoes. Its why everybody goes into business for themselves. At some point you make enough money that you can walk away.

We actually got rid of the LTC and just went all out on the compounding.

 

[BF7]

5 million a year in sales is not hard to believe. The average store is about 200 rxs a day and roughly 3.5 million a year in sales. 5 million a year would be a store that does between 400-500 rxs a day. You're looking about about 20% profit so of the 5 million you'd be bringing home 1 million. Now not every pharmacy does 400-500 rxs a day; thats a huge store. The average store would do about 200 a day and bring home 700k.

What makes Dr. M store unique is the compounding. There are significant profit margins on the compounds; 1000% or more. On the sterile compounds it is a lot more.

He also has a large long term care business.

I'd be doing the same thing if I were in his shoes. Its why everybody goes into business for themselves. At some point you make enough money that you can walk away.

If you're referencing my post above it was in regards to a comment by a poster who stated that they worked at a pharmacy bringing in around $5million on 340b claims... Had nothing to do with doctorm's store.

 

[BF7]

We actually got rid of the LTC and just went all out on the compounding.

Are you PCCA affiliated? My new store will be and I wanted to get your feedback on if you felt their training and support was worth the pricey fees...

 

[Doctor M]

Are you PCCA affiliated? My new store will be and I wanted to get your feedback on if you felt their training and support was worth the pricey fees...

Yes, it is worth it. PCCA all the way

 

[kvl1027]

Are you PCCA affiliated? My new store will be and I wanted to get your feedback on if you felt their training and support was worth the pricey fees...

It's worth it. The AWPs on their proprietary bases are where the reimbursement is for compounds.

 

[BF7]

It's worth it. The AWPs on their proprietary bases are where the reimbursement is for compounds.

Thank you gentlemen.

 

[southpharmindy]

So if you go with PCCA do you ever see reimbursement from medicare or state medicaid? Or is it still just private third party?

 

[southpharmindy]

If you're referencing my post above it was in regards to a comment by a poster who stated that they worked at a pharmacy bringing in around $5million on 340b claims... Had nothing to do with doctorm's store.

I see that now! I was like 5 mil isn't that rare. It would be in that case. I bet they're talking about the covered entity.

 

[Old]

Ok ok,We all tend to over exaggerate maybe 3 lifetimes or 4.

Don't live in Florida and I have read many of your postings about your store and success. It has been a breath of fresh air in the ever shrinking independent pharmacy situation. However, 3 years at a 130k for 40 years times 3 lifetimes , I think is 15.6 million. I have seen alot of independents get bought out and I am probably missing something but I don't think you are anywhere close to that. This is just based on your postings here concerning size and volume but over the years but I have never seen any prices like that. Never. If you can get that, kudos to you and your partner.

 

[ExpressMaiL]

Sellinh or closing, which ever comes first

Congratulations on your exit. I opened up a pharmacy earlier this year from complete scratch and I've been lucky enough to break even 6 months in. I'm now planning a second location for 2015. I wouldn't be caught dead standing at a retail store working my ass off for absolutely nothing in return (no offense, retail). Working for yourself is the only way to go... it's every man's calling. I feel great because I look at my business and I can appreciate every little detail. From breaking my back while installing base boards or delivering meds to a patient's home at 5 in the morning, I am proud to call the pharmacy my own. From an idea and vision to a paper application... from floor planning and inspections to licensing and the first prescription filled... seeing everything come to fruition is a true feeling and sense of accomplishment. Better than sex or the most satisfying meal I've ever had. I sleep like a baby because I know I had such a productive day at work. I'm a better person now to my friends, my parents, my girlfriend, even strangers. I can cold call clients and sell my business in 20 seconds, literally.

You get a lot more when you invest your own time and money into a business. Of course there are risks, but what a dull life if you stay within the confines of "safety." My second location will be the next chapter of adventure in my life.

Who dares, wins.

 

[BenJammin]

Congratulations on your exit. I opened up a pharmacy earlier this year from complete scratch and I've been lucky enough to break even 6 months in. I'm now planning a second location for 2015. I wouldn't be caught dead standing at a retail store working my ass off for absolutely nothing in return (no offense, retail). Working for yourself is the only way to go... it's every man's calling. I feel great because I look at my business and I can appreciate every little detail. From breaking my back while installing base boards or delivering meds to a patient's home at 5 in the morning, I am proud to call the pharmacy my own. From an idea and vision to a paper application... from floor planning and inspections to licensing and the first prescription filled... seeing everything come to fruition is a true feeling and sense of accomplishment. Better than sex or the most satisfying meal I've ever had. I sleep like a baby because I know I had such a productive day at work. I'm a better person now to my friends, my parents, my girlfriend, even strangers. I can cold call clients and sell my business in 20 seconds, literally.

You get a lot more when you invest your own time and money into a business. Of course there are risks, but what a dull life if you stay within the confines of "safety." My second location will be the next chapter of adventure in my life.

Who dares, wins.

Quick question: from graduation to opening day of your store, how much time elapsed?

 

[ExpressMaiL]

Quick question: from graduation to opening day of your store, how much time elapsed?

Approximately 21 months.

 

[BenJammin]

Approximately 21 months.

If you don't mind me asking, how did you acquire the capital to start one from scratch that quickly? PM me if you want to keep it private

 

[ExpressMaiL]

If you don't mind me asking, how did you acquire the capital to start one from scratch that quickly? PM me if you want to keep it private

I graduated from pharmacy school with $300 in my savings. I come from a poor family. It was three main things, a substantial raise, financial management and lots of risk.

 

[BF7]

I graduated from pharmacy school with $300 in my savings. I come from a poor family. It was three main things, a substantial raise, financial management and lots of risk.

congrats.Who's your wholesaler? What type of dating did they give you? What bank financed you? What's your avg gross profit per rx? Did you lease or buy a building? What computer system do you use? How do you like it? do you taker Medi-cal? I hear thats got the worst reimbursment in the nation

 

[BF7]

If you don't mind me asking, how did you acquire the capital to start one from scratch that quickly? PM me if you want to keep it private

I took $15K in severance and put only that toward a 1 million dollar loan from my bank (with 12% down from the seller that became due in month 25 of my ownership at 8% interest over 7 years). It didn't require that much down to buy an existing with the seller contributing. Starting a new store would likely require 20% down unless you have some other asset to leverage.

 

[ExpressMaiL]

congrats.Who's your wholesaler? What type of dating did they give you? What bank financed you? What's your avg gross profit per rx? Did you lease or buy a building? What computer system do you use? How do you like it? do you taker Medi-cal? I hear thats got the worst reimbursment in the nation

I'll PM you. We're starting to get into trade secrets here, haha.