November 12, 2019
Inside: Know the risks your pharmacy faces and learn practical strategies to mitigate them.
Running a business is fraught with risks. Large companies employ full-time risk management officers to anticipate any potential roadblocks, but for a small business like an independent pharmacy, risk management falls to the owner.
In order to manage risks, you have to know what they are. The U.S. Small Business Administration recommends that businesses perform a SWOT analysis to determine which risks could pose a problem.
A SWOT analysis is a tool for businesses to identify strengths, weaknesses, opportunities, and threats. If you are honest about each of these categories, the exercise can help you identify what challenges you may face and how you can mitigate them.
When your pharmacy is prepared for both internal and external risks, you should be able to ride out storms to succeed in the future. Read on to learn what risks your pharmacy is susceptible to, and what you can do to prevent them.
Internal risks can also be thought of as “weaknesses.” They happen within the normal operation of your pharmacy. Here are a few internal risks that you could encounter while running a pharmacy.
When a pharmacy makes a medication error—whether it’s giving the patient an incorrect dose or giving them the wrong medication entirely—it can open up a world of negative consequences.
Lawsuits, criminal charges, and the loss of patients’ trust are just the beginning of a pharmacy’s woes after making a serious medication error. Fortunately, if you take proper precautions, you can reduce the chance of making mistakes with patients’ prescriptions. These include:
The potential to violate the Health Insurance Portability & Accountability Act (HIPAA) is another risk that pharmacies run. Fines per violation can cost up to $50,000.
It’s a lot less painful to avoid racking up those fines in the first place, but that might prove difficult since the Health and Human Services Office for Civil Rights is cracking down on patient privacy. Use these methods to keep HIPAA violations from occurring in your pharmacy:
As you search for a good deal on medications, you run the risk of acquiring pharmaceuticals that are counterfeit or substandard. These drugs may have a lower price tag, but they potentially come along with contamination, harmful ingredients, incorrect active ingredients, incorrect dosing, and more.
When you turn around and dispense these drugs to your patients, it could harm them and put your pharmacy in legal jeopardy. To avoid dispensing these illegitimate pharmaceuticals, use these strategies:
If they aren’t performing their jobs as best they can, your employees can become a significant risk to your business. Whether employees are stealing from the pharmacy (which is the second largest cause of shrinkage in your store) or low morale that causes performance to suffer, your pharmacy needs to have a risk management plan in place to address these human risks.
A few things you can do to ensure your employees’ performance is always up to snuff include:
In some ways, financial risks are just the cost of running a small business. To grow your pharmacy, you’ll have to make strategic decisions that may not always pan out in the end.
These are risks you want to take. It’s a risk to open a new pharmacy location on the other side of town, but it could end up paying off. Instead of never taking any financial chances, take these steps to insulate yourself from the worst consequences:
External risks come from outside your pharmacy, and they can also be thought of as “threats.” These can often be unpredictable, and unlike internal risks, pharmacy owners have no control over them. That doesn’t mean that pharmacies can’t be ready for external risks when they do happen. Knowing what these risks are and how you’ll address them can go a long way in mitigating their consequences.
An economic downturn can have an outsized effect on small businesses. During the Great Recession a decade ago, bankruptcies by small businesses rose 74 percent.
Taking precautions while the economy is still performing well can help to insulate the impact of a downturn. Here are a few steps you can take:
In a highly regulated industry like pharmacy, changes in local, state, and federal laws can wreak havoc. This year saw new regulations on hazardous waste, opioid prescriptions, and more. More generally, employment laws like minimum wage and overtime laws are constantly changing.
If you don’t stay on top of these new regulations and stay compliant, you could face fines from regulatory agencies like the EPA, FDA, EEOC, or others.
As an independent pharmacy, you might be more susceptible to robbery or burglary than your chain store counterpart. A Colorado State study found that 42 percent of robbers and burglars targeted locally owned stores because they seemed like they had more security weaknesses to exploit.
Take these steps to deter would-be burglars:
Small businesses are especially vulnerable to cybercrime. This can come in the form of phishing, ransomware, denial of service attacks, keylogging, and more.
After a cyber-attack, the average small- or medium-sized business will spend $1.56 million getting business operations back up to speed, according to Keeper Security’s 2018 State of SMB Cybersecurity. And that doesn’t even account for losing patients who no longer trust you with their data.
Here’s how you can lessen the damage:
Extreme weather can also cause extreme damage. Beyond the cost of repairs, disasters can cease business operations, halting revenue for as long as it takes to get the business running again. That could come from problems as simple as an extended power outage or as complicated as flooding.
Based on your location, you probably have a good idea which natural disasters are most likely to affect your pharmacy. You won’t face a hurricane in Minnesota, but you’ll almost certainly face snow and ice storms.
Use what you know about your region to prepare for extreme weather events:
This white paper includes 30+ formulas to calculate the most important metrics for independent pharmacies. You’ll learn to think like a retailer, discover the methods to track and measure meaningful pharmacy metrics, and learn ways to use pharmacy metrics to get insight into business performance.
PBA Health is dedicated to helping independent pharmacies reach their full potential on the buy side of their business. The company is a member-owned organization that serves independent pharmacies with group purchasing services, expert contract negotiations, proprietary purchasing tools, distribution services, and more.
PBA Health, an HDA member, operates its own VAWD-certified warehouse with more than 6,000 SKUs, including brands, generics, narcotics CII-CV, cold-storage products, and over-the-counter (OTC) products.
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