NATIONAL COMMUNITY PHARMACISTS ASSOCIATION

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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
Pharmacy Staff Positions2006 2007 2008Non-owner pharmacists 1.9 1.6 1.6Technicians 4.6 3.7 3.8Other positions 5.6 5 3.9Total non-owner employees 12.1 10.3 9.3Working owners—pharmacists and other positions 1.3 1 1.2Total workforce 13.4 FTE Employees 11.3 FTE Employees 10.5 FTE EmployeesHourly wages for staff pharmacists, technicians and clerkscontinued to increase in 2008. Staff pharmacist wagesincreased to $50.45 and pharmacy technician wages increasedto $13.24. Clerk/cashier wages increased slightly to$9.05 per hour.Pharmacies reported the number of full-time equivalent(FTE) employees working during the year. Averageresponses showed staff decreases for 2008. This may bedue to the necessity of controlling employee costs as grossmargins remain flat. For purposes of this report, each2,080 hours of work is considered one FTE (full-timeequivalent) employee.ProductivityOptimum productivity is the result of efficiently controllingpayroll expenses while maximizing results, or sales(that is, the effectiveness of workers’ efforts). Total payrollexpenses as a percentage of sales is a benchmark for measuringcost efficiency. “Sales Per Employee” is a benchmarkfor measuring employee productivity.In 2008, for all participating pharmacies, sales per employeeincreased to $447,344. The Top 25 Percent had 1.8percent higher productivity than the average for all pharmaciesas measured by the sales-per-employee ratio.Operating Results 13
Page 1 and 2: National Community Pharmacists Asso
Page 3 and 4: [October 2009]Dear Valued NCPA Memb
Page 5 and 6: Figures1. Average annual sales (in
Page 7 and 8: Figure 1 • Average Annual Sales (
Page 10 and 11: Operating Results To determine how
Page 14 and 15: Financial PositionManaging Assets a
Page 16 and 17: Table 2 • 2008 Common-Sized (Aver
Page 20 and 21: ProfitabilityExpense ManagementThe
Page 26 and 27: If a pharmacy is to make a profit,
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Page 30 and 31: AssetsTABLE 11 • 2008 Common-Size
Page 32 and 33: TABLE 13 • 2008 Median Financial
Page 34 and 35: Geographic SummaryConditions of the
Page 36 and 37: TABLE 16 • 2008 Median Financial
Page 38 and 39: Rural/Metro Pharmacy LocationPharma
Page 40 and 41: AssetsTABLE 20 • 2008 Common Size
Page 42: Common-Sized Balance SheetThe balan

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