NATIONAL COMMUNITY PHARMACISTS ASSOCIATION

Operating Expense ManagementWe evaluated two separate components of operatingexpenses—payroll expenses and other operating expenses.Payroll expenses include all wages, employee taxes, andbenefits for all staff including owners. Other operatingexpenses include advertising, insurance, store supplies,containers and labels, delivery expenses, office postage,pharmacy computer expense, rent, utilities and telephone,and “all other operating expenses.” These are the itemsfrequently referred to as overhead.Payroll expenses, as a percentage of sales including owners,decreased by 0.2 percentage points in 2008 to 13.5percent for all pharmacies. The number of employees alsodecreased which allowed payroll expenses as a percentageof total sales to decrease. As prescription volume increased,pharmacists were challenged with becoming more efficient;thereby filling more prescriptions with less staff. For 2008,average payroll expenses as a percentage of sales declinedby 2.2 percentage points for the Top 25 Percent. Otheroperating expenses remained relatively the same at 6.5percent for all pharmacies and 5.6 percent for the Top 25Percent of pharmacies.Staff Costs Per EmployeeStaff cost per employee represents on average the amountof compensation, taxes and employee benefits paid duringthe year for each non-owner employee. Independent communitypharmacies paid median staff costs of $42,804 peremployee. That’s a 6.7 percent decrease since last year.Staff costs per employee for the Top 25 Percent remainedalmost constant in 2008. However, staff costs per employeefor the Top 25 Percent were 4.1 percent lower than the costsfor all pharmacies at $41,046 (compared to $42,804 for allpharmacies). Their staff were also more productive, that is,they generated more sales per employee ($455,306 for theTop 25 Percent compared to $447,344 for all pharmacies). STAFF COST PER EMPLOYEE PAY R O L L E X P E N S E S AS A P E R C E N TAG E O F SA L E S 122009 NCPA Digest, sponsored by Cardinal Health