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More Profitable Than You May Think

As reimbursement changes continue to cause stress on a practice’s revenue, physicians and clinic managers are looking at new ways to make up that income without compromising patient care. One area many clinics are looking at is at the tip of the physician’s pen — the prescriptions he or she writes. Point-of-care dispensing has gained popularity as physicians and clinics seek out ways to add to their bottom line. Having the medications primarily prescribed in-office for patients is not only convenient, but the practice also receives the benefit of additional revenue.

An in-office dispensary offers a more seamless and efficient way to deliver improved quality of care to patients, of which patients are happy to take advantage. A recent survey commissioned by a company, Purkinje, found that 84 percent of the public would like to be able to get their prescription drugs directly from their doctor and 62 percent said it would help them better manage their health.

The benefits of an in-house dispensary go both ways. The patient benefits by saving a trip to the pharmacy. Physician dispensaries are generally competitive with drugstore pricing. This often results in better compliance, since the patient walks out of the office with the medicine prescribed and there is no wondering whether the patient will pick up his medication immediately, procrastinate for awhile or forget about it altogether.

“There is also protection of patient privacy, improved medication tracking and enhanced medication compliance,” said Dennis Wozniak, an area representative for Physicians Pharmaceutical Corporation, which markets an in-office pharmaceutical dispensing program. “Physicians benefit from it as well as they have greater patient satisfaction, improved medication tracking, enhanced medication compliance, reduced pharmacy call back administrative expenses and increased practice profits.”

"The more sophisticated specialties can really see a profit from in-house dispensing. It is ideal for pain management practices, OB/GYN and gastroenterologists,” said Wozniak. “Practices with three to ten physicians writing a minimum of 25 prescriptions a day each that are filled in the office are those practices that should be considering a dispensing opportunity.”

An in-house pharmacy is similar to a traditional pharmacy. Many of the drugs offered are the same; record keeping is the same and so is the requirement to educate patients. With a “pharmacy” in the practice, practitioners pick up the insurance payment, the co-pay and mark-up — enhancing that practice’s revenue. “In the pharmacy world, you get paid first before you actually fill the prescription,” said Wozniak. “Patients do not care where they get the script filled, they go because of insurance and location."

Setting up an in-house dispensary does not require extensive legalities or personnel. In the state of Tennessee, a physician’s medical license allows for dispensing medications. “As far as personnel to run the program, we highly recommend a pharmacy technician to oversee your drug dispensing operation. Physicians have the right and are allowed to dispense medication to their own patients,” said Wozniak. “It has to be run as a ‘business’ within the practice. It has to be done professionally.”



Existing office space should suffice, since usually a small exam room or a large closet area is all that is needed. The space should be secure because most states require controlled substances be stored under lock and key. The basics are a cabinet or two and a computer. Many commercial distributors have software that is required to administer their program.

Patients have to be sold on the idea of having their prescription filled in-office, so all staff members must understand that this new part of the practice must be marketed to patients as convenient “one-stop” shopping. Patients have the right to buy medications wherever they choose, but they should be made aware of your service.

One popular means of dispensing medications is physician-office dispensing, which is a less costly alternative. A vendor supplies the medications, based on physician prescription patterns, either in bulk or in pre-packaged units. With pre-packaged medications, the medicine is already in a useable container in a standard dosing amount. This allows a practice to accurately and quickly provide medications to patients who can take them home immediately.

The easiest way to launch your own in-office dispensary is to contract with a commercial distributor. These vendors supply prepackaged drugs, replenish inventory and have software systems that allow you to record patients’ prescriptions and process insurance claims. Many vendors conduct on-site training sessions that involve setting up the hardware, installing the software and showing the staff how to use the system. Another alternative is to order stock bottles of medications from distributors that supply pharmacies and dispense them on your own.

“With Physicians Pharmaceutical Corporation, we buy the medications in bulk and sell it to the practice for what we pay,” said Wozniak. “We also work with our practices to see that they are smart in how they order drugs. They are not going to be a full scale pharmacy, rather they stock the medications they most typically prescribe and have on hand about a month’s supply of what they need.”

The key to a successful dispensing program is to identify physician prescribing habits. Doctors typically prescribe the same medications repeatedly, and the ideal in-office formulary consists of the most frequently prescribed medications in the most commonly ordered strengths and package sizes. In-office dispensing is not meant to replace the full-service retail pharmacy, but rather to provide a subset of medications that make up 80 percent of prescriptions, depending on specialty. The bulk of medications that are sold point-of-care are commonly prescribed antibiotics, allergy medicines and pain medications.


As the Purkinje survey pointed out, three out of four Americans would have their prescription filled in their doctor’s office instead of a pharmacy if given the choice, suggesting physicians are missing an opportunity to improve patient satisfaction and enhance revenue by not dispensing medicine in their office. “Pharmaceuticals are big business, and they are the most profitable business going,” said Wozniak. “In a retail pharmacy, the actual pharmacy portion takes up only 10 percent of the entire space in the store but accounts for 90 percent of the revenue. As every prescription starts when the doctor writes it, he should be making some of that money the pharmacy is making.”

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