For IPC being a Cooperative is more than just representing our members at the bargaining table. It also means that our members have a stake in our success, which is why we share 100% of our profits with them in the form of member equity and patronage dividends.
You, like many of our members, may be asking yourself, what is member equity and when will I get patronage dividends?
What is IPC Equity
IPC Group Purchasing Organization members have equity in the Cooperative and are eligible for yearly patronage dividends. This member benefit is funded through the profits of the Cooperative, most of which comes from administrative fees and the IPC warehouse.
Rather than hold on to these profits or give them to shareholders (which we don’t have), we return them to you in the form of patronage dividend payments. Now we don’t pay out every penny from every year right away, as we do utilize some of these funds for cash flow and capital expenditures so we can continue our operations.
This means that the yearly patronage payment you’re actually receiving has two components:
- Cash payout
- Retained equity payout
IPC pays the cash portion of the current year’s patronage along with the board authorized release of any prior year(s) retained equity component of patronage. The total of each year’s cash and retained equity components of patronage is reported to you on tax form 1099-PATR.
It Pays to Be a Member
When we tell our members that we’re a Cooperative, we mean it. Since we were founded more than 40 years ago, our mission has always been to benefit independent pharmacies. Sharing 100% of our profits with our members is just one of the ways we continue to keep that promise.
This is because we recognize that without our members we would cease to exist. We know this industry operates on thin margins, but it’s our hope that this profit-sharing model allows you to focus less on dollars and more on taking care of your patients.
How It’s Calculated
If you’re already aware of our profit-sharing model, you have likely noticed that the payments are not the same every year. A simple way of explaining this would be to say that our profits are not the same every year.
In reality, there’s a bit more to the equation. Each member’s specific payout is impacted by their relative participation in IPC contracted purchases from McKesson as well as our warehouse and vendor programs. Ultimately, each purchase made through IPC is an investment for your pharmacy.
Additional Benefits of Equity
The profits are temporarily held to fund working capital, help IPC keep the lights on and purchase inventory for our warehouse. We also use it to improve our ability to service our members. In short, you can trust that whatever amount is held goes towards bringing you a diversity of products and improved services.
At the end of the day, it all comes down to one thing – when the Cooperative profits, you profit. Thank you for your service to your community and continued membership with IPC!
You can view your IPC year-end dividend and equity payment history at any time by logging in at www.ipcrx.com.