Physician Dispensing – Economics II

This post continues my discussion of the economics of physician dispensing. If you take a general practice physician and look at his/her prescribing patterns, you will notice similar trends among practices.  As an example, I will use a mature family practice with a single physician.  We tracked his prescriptions and medication dispensing over a five day period.  He averaged 19 prescriptions a day.  About 53% of his scripts are items that can be dispensed from his office.  So, every day he is dispensing about 10 items to his patients.

In this case, the physician’s average price per prescription is $15.  The average cost to the physician for each medication dispensed is $3.25.  The clinic is generating $11.75 per script of gross profit; $117.50 per day.  Let’s assume that the practice is operating 45 weeks of the year, this makes the physician’s annual profit $26,438.  In this case, the physician did not need to add any additional head count and most of these items are less expensive to the patient than going to a pharmacy and using their health insurance.

Conclusion: medication dispensing is not a “get rich quick” program but a viable supplement to a responsible practice.  With virtually no additional overhead cost, medication dispensing can add enough cash to help offset costs in other areas and increase the physician’s net revenue from the practice.  In addition, pharmaceutical dispensing helps save the patient money and adds value through convenience.  Sounds like a win-win to me.

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