Above all else, a successful pharmacy is a successful business. That’s why you’ll want to address a range of important considerations that go well beyond running your pharmacy practice. Those considerations include:
- Developing an effective business plan
- Budgeting and business projections
- Evaluating third-party contracting
- Instituting human resources management
- Planning and executing marketing programs
From managing operating costs to marketing clinical services, the NCPA Ownership Academy is a great source for learning about business basics. Of course, our Ownership Advisors can also provide you with guidance to point you in the right direction to find the information you need to become a successful pharmacy owner
Determine the corporate structure of your business
Working with your attorney and CPA, you can decide what type of corporation or legal entity your pharmacy business will be. Determine if there are other legal decisions that need to be made and what their impact will be on your business — both now and in the future.
Naming the corporation is another important aspect of this process. Many businesses have two names: a corporate name that is the business’s legally registered name; and a “doing business as” (DBA), which is how the public knows the business. Health Mart Systems, Inc.®, a pharmacy franchise operated by McKesson, recommends that franchisees establish both a corporate name and a DBA. Health Mart recommends this two-name structure to protect both the independent pharmacy and Health Mart. Additionally, the pharmacy should not include “Health Mart” in its corporation’s name for these reasons:
- By not having Health Mart in the corporate name, it is very clear that there is no structural or ownership relationship between the pharmacy and Health Mart Systems, Inc.
- Should the pharmacy decide to terminate the franchise agreement with Health Mart, the owner would need to file a corporate name change with the state’s department or agency of corporations, which can be expensive and time-consuming. On the other hand, changing a DBA is very simple.
Accounting for pharmacy success
Setting highly efficient finance and accounting practices can be a significant aspect of your pharmacy’s success. You’ll want to begin by selecting the best financial methodology and accounting software for the business.
Discuss with your CPA and industry experts what financial information needs to be gathered, how it should be organized, and how and when it should be reported. This is important; you should be able to measure and manage your business from day one.
Spend time with your CPA and industry experts to learn how to understand various financial reports that are necessary to track your income, expenses, profit and so on. This is a skill that is easily learned and mastered, and one that could pay large dividends as you manage your growing business. Visit the NCPA Ownership Academy to learn more.
Applying for tax numbers is often another requisite of the process. There are a number of federal, state and local tax authorities that you may need to contact. Your attorney and CPA can help with the following:
- Federal tax ID number
- State tax ID number
- Sales tax authority
- Local taxing authority, such as the city and/or county
Once your financial processes are in place, you’ll want to establish credit for the business. Work with your pharmaceutical distributor to establish your credit so that you will be ready to place your initial inventory order.
Following the rules of the trade
There are several licenses that you may need to have before you can open your pharmacy or assume ownership. The requirements of each state and city are different, so allow time to understand what is needed. If you’re purchasing an existing pharmacy, determine which licenses can be transferred to your name and which will need to be issued directly to you.
Some of the licenses that you are likely to need include:
- State pharmacy license: Contact your state’s board of pharmacy to apply for your state pharmacy license.
- DEA number: Contact the Drug Enforcement Administration for a DEA number so that you are licensed to order and dispense prescription narcotics.
- NABP/NCPDP number: Contact the National Association of Boards of Pharmacy (NABP) to obtain a NABP/NCPDP number so that you may bill third-party payers.
- NPI number: Contact The National Plan and Provider Enumeration System (NPPES) to apply for a NPI number for the pharmacy and, if applicable, for the pharmacists who will be providing patient care.
Before you open your doors, you may also need to pass a final state inspection. Work with your state’s board of pharmacy to schedule this inspection, if required.
Leases and contracts
If you are starting a new pharmacy, it’s advisable to have your attorney approve contracts and leases prior to signing. Some examples of contracts and leases include:
- Building/store lease
- In-store vending machines, such as copiers or photo-processing kiosks
- Collection service contracts, such as water, utility or phone
- Business or franchise contracts with third parties, such as UPS or the United States Post Office
- Building and/or parking lot maintenance contracts
- Drop-ship vendors for front-end products
- Direct accounts with suppliers of gifts, cards and so on
- Pharmacy automation equipment
- Pharmacy services, such as compounding
One of our Ownership Advisors can work with you to help establish contracts with third-party payers through organizations such as AccessHealth®.
Visit the NCPA Ownership Academy to learn more.