Key performance indicators (KPIs) for community pharmacies

The importance of KPIs in community pharmacy

The traditional role of dispensing prescriptions remains the core income for most community pharmacies across the UK. However, with the community pharmacy contract for 2026/27 in England still under negotiation and NHS funding increasingly unpredictable, it is essential for pharmacy owners to recognise the importance of diversifying and optimising other revenue streams. By monitoring financial key performance indicators (KPIs), pharmacy owners can maintain control and make informed decisions in an environment characterised by rising costs and funding uncertainty.

Benefits of KPI monitoring

KPI monitoring provides pharmacy owners with clear, objective data on the financial health of their business. This data helps identify risks, recognise opportunities, and ultimately increase profitability. While tracking standard financial KPIs such as profit margins and cash flow is crucial, there are several pharmacy-specific metrics that can further guide business strategy and resource allocation.

Example pharmacy KPIs

• Paper script switching:
  Monitoring the monthly number of paper prescriptions switched between exempt and chargeable by the Prescription Pricing Authority (PPA) is vital. This can have significant financial implications for pharmacy owners.
• NHS service provision:
  Tracking New Medicine Service (NMS) completion rates against the number of eligible patients, as well as Pharmacy First consultation rates, provides insight into NHS service uptake. These services offer substantial revenue potential.
• Revenue split:
  Maintaining visibility over the split of revenue and profit generated by NHS prescriptions, over-the-counter (OTC) sales, and private services allows pharmacies to identify which areas contribute most to their bottom line.
• Vaccination uptake:
  Measuring flu and COVID vaccination rates helps monitor patient uptake and identify opportunities to increase service provision and revenue.
• Staff costs:
  Calculating staff costs as a percentage of revenue can highlight whether staff scheduling is optimal and identify opportunities for cost savings.

Strategic use of KPIs

By measuring and analysing KPIs, pharmacy owners can pinpoint where to focus resources and efforts, such as advertising, cost optimisation, or staff training. Each pharmacy business should determine the KPIs that are most beneficial to monitor, tailored to their unique circumstances and strategic goals.

Staying in control amidst uncertainty

Although KPIs cannot eliminate uncertainty around NHS funding or future contractual changes, they do empower pharmacy owners to stay in control of their business. Objective data supports proactive management, risk mitigation, and the identification of new opportunities, helping to ensure continued profitability and sustainability in a challenging environment.

How Larking Gowen can support your pharmacy

At Larking Gowen, we work closely with community pharmacy owners to turn KPI data into meaningful, actionable information. By implementing appropriate accounting software, producing tailored management reports, and supporting budget and cash flow monitoring, we help you understand your numbers in real time rather than retrospectively.

Our specialist pharmacy team can help you identify the KPIs that matter most to your business, interpret trends, and use this insight to support informed decision-making, improved financial control, and long-term sustainability in a challenging funding environment.

Need help?

Get in touch with your usual Larking Gowen contact or email enquiry@larking-gowen.co.uk.

Jo Benton